Budapest Business Journal 20/05

BBJ

VOL. 20, NUMBER 5

I MAR 9, 2012 – MAR 23, 2012

Budapest Business Journal

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DEVELOPERS SEE GREEN

environmentally friendly solutions are coming to the office market 14

FOCUS

BUSINESS

PROFILE

Strategies for cautious growth

Raising funds like pros

Taxes and death

“Keep growing” is back on the menu of the corporate world. Hungarian companies are taking up the challenge, but their visions are slightly different from those of the global community.

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The future of funding for non-profit organizations is not encouraging.

Those who want to keep operating need to take a page from the books of forprofit organizations. 10

Interview with Andrew G. Vajna, the government commissioner for the Hungarian film industry, on how the new National Film Fund will shape – and save – the industry.

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Contents NEWS

SOCIALITE

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EDITOR-IN-CHIEF:

András Rác a.rac@bbj.hu COPYEDITOR:

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NEWS

digest

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NEWS

bi-weekly

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MARKET WATCH

Energy

Tamás Deme PROOFREADING:

Robin Marshall

FOCUS

EDITORIAL STAFF:

Strategies for cautious growth

Patricia Fischer, Anikó Jóri-Molnár, Gabriella Lovas, András Szarvasi, Ági Vinkovits, Zsófia Végh, Dániel Csordás (graphic artist) LISTS: BBJ

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Taxes and death

Research (research@bbj.hu)

NEWS AND PRESS RELEASES: news@bbj.hu

Although Hungarians are renowned for their pessimism, the findings latest surveys comparing the views of global CEOs and their Hungarian peers seems to prove the contrary.

DESIGN:

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Tamás Tárczy PHOTO EDITOR:

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Tamás Botka (publisher@bbj.hu) OPERATIONS DIRECTOR:

Balázs Román ADVERTISING:

Absolut Media Zrt (hirdetes@amedia.hu)

BUSINESS

SALES:

Viola Farkas (viola.farkas@bbj.hu) CIRCULATION AND SUBSCRIPTIONS:

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SPECIAL REPORT

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BBJ-PARTNERS

Netherlands Hungarian Chamber of Commerce

Outlook remains dreary With bank financing remaining inaccessible to most developers and the business environment still uncertain, office developmentt activity is not expected to pick up in n 2012. The market foresees only three reee speculative and two major built-too-suit developments.

What We Stand For: The Budapest Business Journal aspires to be the most trusted newspaper in Hungary. We believe that managers should work on behalf of their shareholders. We believe that among the most important contributions a government can make to society is improving the business and investment climate so that its citizens may realize their full potential.

The Budapest Business Journal, HU ISSN 1216-7304, is published bi-weekly on Friday, registration No. 0109069462.

It is distributed by HungaroPress. Reproduction or use without permission of editorial or graphic content in any manner is prohibited. ©2011 BUSINESS MEDIA SERVICES LLC with all rights reserved.

The Budapest Business Journal’s print run is audited by MATESZ, 1034 Budapest, Bécsi út 122-124, a member of IFABC.

Crisis-tailored office furniture Recession has arrived in offices.

Now companies face shrinkage not only in their budget, but also in their desk-size.

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SPECIAL REPORT

Developers see green De A part of corporate social As re es responsibility, environmentally fr friendly ri solutions are coming to the fo forefront or on the Hungarian office ma m market. More office buildings define th themselves he as green, though not all ca a prove it with documentation. How can mu m much do green certificates count when itt ccomes to choosing an office to rent?

SPECIAL REPORT

Someone’s got to give As part of the natural evolution of the social web, crowd funding has reached Hungary: three sites were launched simultaneously in mid-January to catalyze funding

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BI-WEEKLY

FOCUS

Slovakia refusing entry to Hungarian president was not against EU law

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Strategies for cautious growth

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digest

It occurred to me that nothing is more interesting than opinion when opinion is interesting HERBERT BAYARD SWOPE, THE NEW YORK EVENING WORLD, 1921

Hungarian football has seen better days. The national team of the 1950s, the Magical Magyars, which won an Olympic gold in 1952, was admired and celebrated. But since the socalled Golden Team broke up, the quality of Hungarian football has been in decline. For decades, the state did not invest in talent support and failed to develop new stadiums.

Despite some recent soccer success in Hungary, which means not much more than that the national team almost managed to qualify for the 2012 UEFA European Cup, football fans find it hard to be proud of their favorite teams. Players of several Hungarian teams, and also some referees, have been involved in a Europe-

before Kutasi’s fatal decision, six REAC players were taken into custody on bribery charges, while another 19 members of the club are being questioned on whether they were involved in match-fixing.

Kutasi’s death was well covered in the local and international press. Besides publishing the basic facts and circumstances of the director’s death, most articles also wonder what could have led to this tragedy.

MARCH 2, 2012 Boston.com, the online unit of the American daily The Boston Globe, itself owned

by The New York Times Company, decided to stay on a politically correct path and stay objective in Kutasi’s case. It’s article focuses on

MY LIFE IS OVER. EVERYTHING I FOUGHT FOR HAS COLLAPSED Róbert Kutasi, the director of second-division team REAC

wide match-fixing scandal.

The most tragic current issue is that of Róbert Kutasi, the director of second-division team REAC (Rákospalotai Egyetértés Atlétikai Club), who committed suicide on March 1 after crying out in public that those for whom he worked had betrayed him. Days

Index brings up the possibility that Kutasi himself was involved in bribery.

Privátkopó.hu previously released an article saying that, “in the near future, a director of a second-division football club in Budapest might come into the picture in connection with the bribes.”

AMBASSADOR DEFENDS MEDIA FREEDOM MARCH 2, 2012 In a letter to the editors of The Washington Post, Hungary’s ambassador to the United

MARCH 2, 2012

MARCH 2, 2012

The article on Italian news portal Sky.it, titled “Hungary, match-fi xing: suicide of the director of REAC” offers a more populist view of the case. It clearly states that Kutasi’s death was a direct consequence of the arrest of the six REAC players.

“He fought for years against the phenomenon of illegal gambling,” the article states, placing Kutasi in the position of a victim. The article also mentions that the same match-fi xing scandal affects Italy as well. It is noteworthy that the site is inaccurate in giving the date of the suicide as being March 2, one day after the actual tragedy.

“Bribery scandal: in the shadow of suspicion”, an article on hvg.hu, the online edition of Hungarian weekly HVG, is not afraid of using hard words. It states that the death of Kutasi has not taken Hungarian football in a new direction. In fact, the suicide has only placed the already bad situation into a darker context, it says.

As hvg.hu had already published a post that covered the factual side of the case, this article gives little information on the circumstances of the suicide.

Instead, it reveals the structural shortcomings of local soccer and states that the entire world of Hungarian football is filled with uncertainty. The main thesis of the article is obvious: in such a fundamentally broken system, no one can stand above the suspicion of being involved in bribery.

This case is about far more than just Kutasi himself, the article concludes: the main problem is the lack of a stable economic environment which would guarantee a better sports financing system, and the lack of a legal basis for professional soccer in Hungary. There might even be more tragedies to come, hvg.hu says at the end of its article, painting a dark vision of the future of the sport in this country. ■

MARCH 2, 2012 The Hungarian online news portal Index details the circumstances of Kutasi’s suicide. He leaped from the 17th floor of a tower building, and according to one eyewitness jumped through a glass window while two people were trying to stop him.

After devoting a few paragraphs to Kutasi’s career as a club leader, the article says that bribery might not have been the only reason for Kutasi’s frustration, but it fails to suggest what could have depressed him so much.

Also, citing online crime magazine Privátkopó.hu,

the Hungarian media are as diverse as ever, and opposition voices abound.”

“Incredibly, the writers also talked about dictatorship in Hungary and attacks on the United States”, Szapáry’s article continues. “Would such a country represent U.S. interests in Libya and rescue two American journalists from Moammar Gaddafi’s prisons? Would it erect a statue to Ronald Reagan and set up an institute dedicated

Protesters protect liberal Klub Radio in Budapest

THE HUNGARIAN MEDIA ARE AS DIVERSE AS EVER, AND OPPOSITION VOICES ABOUND György Szapáry, Hungary’s ambassador to the United States

States György Szapáry defends media freedom in Hungary.

The short piece is an answer to an op-ed article published about a week earlier by Mark Palmer (former US ambassador to Hungary), Hungarian author Miklos Haraszti, and Charles Gati, a professorial lecturer at Johns Hopkins University. In their joint article, they wrote that media freedom is so restricted in Hungary that Radio Free Europe’s Hungarianlanguage broadcast should be restarted to provide balance.

Szapáry claims in his reply that “anyone with a genuine interest can see on the ground that

to the life and work of former U.S. representative Tom Lantos and the promotion of human rights? Would its parliament enshrine the fundamental values of the West in the nation’s new Basic Law? The current Hungarian government has done all that.” Szapáry concludes that “Presenting a make-believe picture of Hungarian reality benefits no one but the extreme right-wing party Jobbik”, and closes his letter by claiming that the current “democratic, conservative government” provides the bulwark against extremism. ■

REUTERS / Bernadett Szabó

FOOTBALL CHIEFS COMMITS SUICIDE

the facts confirmed by the police only. Still, it emphasizes that it was solely the players suspected with illegal activity; the club leaders are known to be clean. It describes Kutasi as “a leading anti-corruption figure in Hungarian soccer” and does not attempt a conclusion as to what could have led Kutasi to take his own life.

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bi-weekly

QUOTE OF THE WEEK

To judge whether we need a new path, we will need to see this year’s growth outlook, the first-quarter data.

NATIONAL ECONOMY MINISTRY STATE SECRETARY ZOLTÁN CSÉFALVAY

NEWS FOR THESE PAGES IS FROM THE BUDAPEST BUSINESS JOURNAL’S DAILY BRIEFING, HUNGARY A.M.

ECONOMY FORINT UNDER ATTACK, ANALYSTS SAY Market analysts at the Skandinaviska Enskilda Banken (SEB) on March 6 said that the Hungarian forint continued to weaken after several foreign analyst houses came up with sell recommendations. According to online portal portfolio.hu, Hungarian officials said that the European Union (EU) is likely to approve the reduction of the development subsidies, the so-called cohesion funds, as Hungary does not meet the EU’s fiscal criteria.

The previous week, SEB recommended buying USD/HUF with a 227.20 target. Since Friday, March 2, the HUF eased seven units to the USD, which corresponds to an over 3% depreciation in three days.

EC PROPOSES THAT ECOFIN ASK HUNGARY TO MAKE ADDITIONAL FISCAL EFFORTS TO CONTROL DEFICIT The European Commission on March 6 adopted a recommendation to propose that the European Union’s Economic and Financial Affairs Council (EcoFin) ask Hungary at a March 13 meeting to

make additional fiscal efforts to meet its government’s 2012 deficit target of 2.5% of GDP and to ensure that the country’s 2013 deficit will remain below the 3% threshold even after the phasing out of oneoff measures. The EC noted that Hungary would have six months to take the required measures if EcoFin adopts the recommendation.

HUNGARY-IMF AGREEMENT EXPECTED IN Q2, STATE SECRETARY SAYS Hungary’s government expects to conclude a precautionary financial-assistance agreement with the International Monetary Fund during the second quarter of this year, National Economy Ministry State Secretary Zoltán Cséfalvay told Reuters on March 1. The expectations of some analysts that such an agreement would be reached only by the end of June were “too pessimistic”, he said. Cséfalvay noted that “I have always said we would agree in the first quarter. Now it is March 1, so it would be rather difficult to say it will happen in the first quarter. Even though I think it is in the interest of all sides to reach an agreement as soon as possible, technically this will stretch beyond the first

quarter.” Cséfalvay said that the recent strengthening of the forint to below 300 to the euro reflected greater confidence in Hungary. He said that the government has maintained its forecast of 0.5% GDP growth in Hungary this year, though added that “To judge whether we need a new path, we will need to see this year’s growth outlook, the first-quarter data.”

He did not exclude the possibility of tapping the markets earlier. “What’s happening is a slow rebuilding of market confidence, which takes quite a while as I see it. This will not happen overnight.”

HUNGARIAN HOUSEHOLDS PAY 3% OF GDP IN INTEREST ON LOANS While the loan stock of Hungarian households to GDP was still moderate in international terms last year, the ratio of interest expenditure, at over 3% of GDP, is among the highest in Europe, dampening consumption and growth prospects, a fresh study by National Bank of Hungary (MNB) researchers shows. The rise of the interest burden mostly stemmed from the rapid lending expansion until the 2008 crisis, which made households net loan repayers from net borrowers before. Households’

net interest revenue evaporated already in 2003-2005 and their net interest payment to banks doubled between 2006 and 2009 and only slightly dropped in 2010-2011. This adversely affected their disposable income as well as consumption, with all the negative effects on growth, the study, published on March 7 in the MNB periodical MNB Szemle, said. Hungarian households spent more than 3% of GDP last year on payment of interest on loans, as against just 1% in 2011, the authors of the study, Peter Faykiss and Peter Szigel, estimated. Household loan stocks rose to 40.6% of GDP by September 2011 from 10.7% in 2001.

HUNGARY DEFAULT INSURANCE COSTS REACH FIVE-MONTH LOW ON ECB LTRO Default insurance costs on Hungary’s sovereign debt reached a low not seen since September of last year in markets in London on March 2, falling on optimism after the European Central Bank’s long-term refinancing operation (LTRO). According to CMA DataVision, a major CDS market data monitor in London, Hungary’s five-year credit default swaps (CDS) traded around 500bp Fri-

Photo: sxc.hu

Slovakia did not violate European Union laws when it denied entry to Hungarian President László Sólyom in 2009, advocate General Yves Bot of the European Court of Justice said in an expertise published on March 6. The senior official said that traveling by heads of state, being part of diplomatic ties, were governed by national laws rather than EU principles, and suggested that the Court should dismiss Hungary’s claim against Slovakia. The expert’s proposal, however, is not binding for the Court. On August 21, 2009 Sólyom was scheduled to attend the unveiling ceremony of a monument in Komarno but he turned back from the border after the Slovak government had made it clear that his presence would be unwelcome. day, falling from 507.0bp late Thursday. Hungary’s five-year CDSs climbed over 525bp at the end of September last year. A CDS contract valued at 500bp means that the cost to insure every €10 million worth of bond exposure against default is €500,000 a year for the benchmark fiveyear horizon.

BUSINESS STABILIZATION IN HUNGARY’S INDUSTRIAL REAL ESTATE MARKET Budapest’s industrial real estate market performed in line with expectations in 2011, showing stable and balanced activity at a relatively low level, real estate agency Colliers International Hungary said on March 5. Supply and demand, as well as rents, was mostly stable during the year, with a slight improvement noticeable toward the end of the year. “In line with Colliers’s forecast, speculative developments decreased sharply in 2011, while demand was largely similar to the previous year,” said Tamás Beck, director of Industrial Agency at Colliers. Supply remained virtually unchanged during

2011, with only one building delivered in the second half of the year in pre-lease transactions. Thus, the overall stock of industrial space built for lease in Budapest and its vicinity stood at 1,807 million sqm at the end of 2011. The stock consists of around 90% “big box” buildings. Developers continue to be quite passive toward the market, holding to the position that they will not launch new projects until there is limited vacant space on the market. However, there is ample available vacant land capacity, so if there is demand, they would be able to react quickly to market developments and build new buildings relatively quickly.

NUMBER OF MANDATORY LIQUIDATIONS UP 18.5% IN FEBRUARY The number of mandatory liquidation procedures initiated against Hungarian companies came to 1,878 in February, up 18.5% from a year earlier, company information provider Opten said on March 2. The number of voluntary liquidations jumped 47% to 3,321 in February. There were 3,170 new companies registered in Hungary in February, down 22% from a year earlier.

László Sólyom, photos: REUTERS/Viktor Veres

Slovakia refusing entry to Hungarian president was not against EU law

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Double-counted share turnover on the Budapest Stock Exchange was HUF 472.5 billion in February, down 38.2% from January, the BSE said, citing data compiled from brokers. Including turnover of investment fund units, compensation coupons, certificates, government securities, corporate bonds and mortgage bonds, spot market turnover was HUF 486.7 billion, down 38.2% from January. JanuaryFebruary, share turnover was HUF 1,237 billion, down 8.2% from the same period in 2011.

Erste Investment generated the most turnover in February, brokering deals worth HUF 64.4 billion, followed by Concorde Securities with HUF 62.6 billion and Wood and Company with HUF 57.6 billion. On the derivatives market, turnover of BUX futures fell to HUF 33 billion from HUF 49 billion in January.

Deals for individual shares declined to HUF 67 billion from HUF 76 billion in January, and turnover in foreign currency futures was HUF 191 billion, down from HUF 251 billion in January. Turnover of grain futures was HUF 3.1 billion in February, up from HUF 1.49 billion in January.

MINERAL WATER BOTTLER SZENTKIRÁLYI REVENUE CLIMBS 13% IN 2011 Revenue of mineral water

bottler Szentkirályi rose 13% to HUF 6.05 billion in 2011, the company told MTI. In volume terms, sales rose 12% to more than 161 million liters in 2011. Revenue and sales volume rose at rates well over the respective 4.7% and 0.5% for the market as a whole, data compiled by market research company ACNielsen shows. This year, Szentkirályi projects a 14% revenue increase.

published by the company show. MOL’s treasury share stock fell to 5,146,955 at the end of February, or 4.92% of registered capital, from 5,793,316, or 5.5% of registered capital, a month earlier. OTP Bank had 4,716,080 treasury shares, or 1.68% of registered capital, at the end of February, practically level with the 4,716,106 at the end of January. Richter had 135,141 treasury shares, or 0.72% of registered capital, little changed from 135,026

HUNGARIAN TOM TAILOR PUT INTO LIQUIDATION Tom Tailor Hungary Kereskedelmi Kft, the Hungarian unit of German apparel retailer Tom Tailor, has been put into liquidation. The unit began winding up its business nearly a year ago. Subsequently, tax authorities initiated legal proceedings against the firm and finally a court issued an order last week to put the company into liquidation. Tom Tailor Hungary Kereskedelmi Kft once had 14 outlets, which were gradually closed; the last store was shut in September 2011. The German parent company will now carry on its business in Hungary through Tom Tailor Retail Kft, established in 2010.

MOL TREASURY SHARE STOCK FALLS IN FEBRUARY Treasury share stock of Hungarian oil and gas company y, data MOL fell in February,

representative sample of 1,000 people. The number of those who would not reveal their party preference has also decreased. The increased openness about party preference favored the two main parties.

Although both parties’ support grew by two percentage points each, the growth for the MSzP is bigger proportionately.

Among eligible voters, FideszKDNP enjoys a 20% support and the MSzP would have 13% of the votes, Portfolio.hu

continue until the end of the school year in which the affected person reaches their 18th birthday?”, and “Do you agree that employers should be required to assign two-thirds of basic vacation time based on the request of employees?”.

DOMESTIC PARLIAMENT LOOSENS GUN CONTROL RULES

PARTY SUPPORTS AMONG ALL ELIGIBLE VOTERS

20% at the end of January. Treasury share stock of Magyar Telekom was unchanged at 390,862 shares or 0.0375% of registered capital.

E-STAR ALTERNATIVE 2011 REVENUE MORE THAN DOUBLES ON ACQUISITION Hungarian energy service company E-Star Alternative’s revenue more than doubled to €69.5 million in 2011, lifted by

talk of the town A STORY THAT HAS WINGS Articles about life after Hungary’s national airlines Malév grounded its planes on February 3 fill the papers week by week.

Most recently, dailies Magyar Nemzet and Népszava revealed that a consortium of investors led by former Malév CEO Tamás Déri wanted to establish a new national carrier.

Déri refuses to comment until a final decision is made, according to Népszava, but his consortium could announce their plans in days.

Meanwhile, banks and travel agencies keep arguing about

the acquisition of Polish peer EETEK, the company’s consolidated IFRS report for the period published on March 1 shows. Revenue rose from €28.7 million in 2010. E-Star Alternative’s net profit fell to €1.3 million from €5.3 million, partly on €2.6 million in acquisition-related costs, the company said in the report. E-Star Alternative had total assets of €116 million on December 31, 2011, up from €62.7 million 12 months ear-

whose responsibility it is to refund the prices of valid Malév tickets that could not be used because of the airline’s bankruptcy. The banks will compensate those who paid for their tickets by credit card. But those who bought their tickets through a travel agency or an online ticket portal will need to be more patient as, in such cases, buyers were connected with the banks of the agencies or the portals.

For now, both the resellers and the banks say that the other party should refund the prices of the tickets.

AMONG VOTERS WITH FIRM PARTY PREFERENCE

13%

39% 26%

lier. Net assets rose to €22.7 million from €14.3 million.

TELEVISION GENERATES LESS, RADIO MORE AD REVENUE IN 2011 Revenue from television advertising fell but that from radio ads inched up last year, István Ottó Nagy, head of advisory services at Ernst & Young, said at a press conference on March 1. Revenue from television advertising fell 6% to HUF 54.9 billion, but revenue from radio advertising edged up 2% to HUF 4.6 billion last year, Nagy said. The data was based on a survey of 52 television broadcasters and four radio stations, said Levente B. Málnay, chairman of the Hungarian Electronic Program Services Association.

POLITICS SMALLEST GAP BETWEEN PARTIES Hungary’s ruling Fidesz-KDNP (Christian Democrats) coalition and the main opposition, the Socialist Party (MSzP) continue to have a great lead in popularity polls ahead of the other parliamentary parties, but pollster Tárki’s latest survey shows that the big rivals have not been closer to each other since the 2010 elections.

Support for both the FideszKDNP coalition and the MSzP has grown slightly over the past month, Tárki summed up the findings of its February poll, which was conducted with a

reports. Among voters with firm party preference there are similar changes. Support for the ruling coalition went up to 39% from 37%, while that of MSzP grew to 26% from 23%. This marks the smallest gap between the popularity of the two main parties since the 2010 general elections.

OPPOSITION GREEN PARTY LMP GATHERS SIGNATURES FOR REFERENDUM Green opposition party LMP on March 5 launched a campaign to gather signatures for a referendum that will seek to roll back government changes to rules on labor and education. LMP has until April 2 to gather at least 200,000 signatures for the referendum which seeks to keep secondary school education mandatory for Hungarians up to the age of 18 rather than the recent reduction to the age of 16 ; extend the period during which Hungarians are eligible for job-seeker benefits back to 260 days; reduce the maximum trial employment period for new hires to 100 days; and give employees, rather than employers, the right to decide when they take time off for two-thirds of their allotted vacation. The questions on the referendum would read: “Do you agree that job-seekers’ benefits should be paid out for a period a 260 days at the most?”, “Do you agree that trial periods with regard to work for longer than 100 days should not be allowed?”, “Do you agree that mandatory schooling should

Source: Tárki

BOURSE SHARE TURNOVER DECLINES IN FEBRUARY

Hungarian Parliament passed an amendment on March 5 submitted by deputy prime minister Zsolt Semjén and Hungarian interior minister Sándor Pintér simplifying the purchase of guns for those holding an official permit. The change in gun control rules removes the requirement to renew firearms permits every five years, making them valid indefinitely. The stated aims of the Hungarian government’s gun policy are self-defense, film and photo production, target shooting, teaching, sports shooting, protection of property and hunting. Some of the provisions will enter into force on the day following the promulgation of the act, and others on May 1.

AIRPORT POLICE REJECT RYANAIR COMPLAINTS OVER STRICT CONTROL The Hungarian police do their job in line with European Union practices and under EU regulations at Budapest’s international Liszt Ferenc airport, the spokesman of the national police force told MTI on March 3. György Makula was responding to low-cost carrier Ryanair’s complaints about what the company sees as too stringent control and announcing the cancellation of 13 flights over the next two weeks. Police insist that pilots and flight attendants leave incoming flights for passport control though they only have 25 minutes before the return flight takes off. According to Ryanair, there is no such practice at any of the 170 other European airports the company uses. In a statement Ryanair said that two of their flights had not received take-off permits on March 1 and 2, after the crew refused to go through the control procedure due to the short time between the flights. Airport operator Budapest Airport said on its website that it would mediate in settling the dispute between the police and the airline company.

Your first address if you like to start business in Slovakia! cegekalapitasa.hu

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energy HUNGARY’S MOL TO INVEST IN EXPLORATION IN CROATIA MOL Nyrt, Hungary’s largest refiner and operator of Croatia’s INA Industrija Nafte d.d., plans to boost its spending on exploration and field development in Croatia this year to $191 million, up from $34 million in 2011. MOL’s program in Croatia includes drilling seven exploration wells and five production wells, as well as enhancing oil recovery at existing facilities, the Budapest-based company has said in a statement.

The Hungarian refiner owns 47.47% of the company, with an option to buy another 1.6%. The Croatian government holds 44.84%.

HUNGARY EYES E.ON GAS UNIT FOR RUSSIA TALKS Hungarian state-owned electricity wholesaler MVM Zrt may represent the country in talks on imports of Russian gas if it takes over the local gas unit of Germany’s E.ON AG, Napi Gazdaság has reported. The contract between

E.ON and OAO Gazprom is set to expire in 2015, the newspaper said, citing an interview with Pál Kovács, state secretary at the development ministry. “In relation to talks aimed at buying the gas business of E.ON, it seems there may be a radically different situation from 2015,” Kovács said. “We are now looking at the possibilities of state involvement.”

IRAQ KEEN TO PLAY ROLE IN NABUCCO Iraq is very interested in shipping its natural gas reserves through the planned Nabucco pipeline for Europe, the country’s oil minister said. Asim Jihad told Trend news agency that his country is keen to play a role in the much-lauded pipeline project. “Iraq’s officials have repeatedly stated that the country is interested in participation in this project,” he was quoted as saying. Nabucco authorities have said they’d look to feeder lines, notably from Iraq, to provide additional capacity to the planned

pipeline. The International Energy Agency said political turmoil in Iraq could get in the way of broader energy developments, though Jihad brushed off the critique by saying all parties in Iraq were ready to discuss Nabucco.

GDF SUEZ TO INVEST MORE THAN €100 MLN IN ROMANIA IN 2012 GDF Suez SA will invest more than €100 million ($134 million) in Romania this year in wind and gas projects, exceeding its annual investment average, said Eric Stab, GDF Suez’s country manager in Romania. The operator of Europe’s biggest naturalgas network will invest about €75 million in a 48-megawatt wind farm in eastern Romania, to be completed in November, and the remainder in its gas business, Stab said.

GDF Suez has invested between €60 million and €100 million on average in the past few years in Romania (the figure for 2011 was about €75 million).

SERBIA’S GAS MONOPOLY MULLS PROJECTS WITH GE FOR PIPES Srbijagas, Serbia’s national gas company, has discussed with General Electric Co possible cooperation on pipelines and gas-fired plants in the Balkan country. State-owned Srbijagas met with GE officials on “joint projects” such as “gas plants, pipelines, interconnections to Romania and Bulgaria, compressor pumps for the South Stream, underground gas depots” and a liquefied natural gas terminal east of Belgrade, the company said in a statement. Serbia is preparing for the South Stream pipeline that will cross its territory, bringing gas from the Black Sea to Western Europe.

It plans to sign a new, ten year contract in March with Gazprom for natural-gas imports that should more than double deliveries to the Balkan nation to five billion cubic meters a year.

EU POLITICIANS STRONGLY BACK ENERGY SAVING LAW Members of the European

Parliament has backed a set of energy saving proposals, clearing the way for a possible deal by the end of June on a law that could boost jobs, household incomes and cut fuel import bills. The Parliament’s industry committee backed a resolution on energy saving proposals by 51 for, six against and three abstentions. It also voted in favor of immediate talks with the Council of EU ministers, avoiding time-consuming extra parliamentary sessions. Advocates of energy efficiency say it is an obvious, environmentally friendly spur to growth. But ministerial debate could be difficult and the business lobby and major energy firms have objected to what they consider prescriptive measures. Energy Commissioner Guenther Oettinger has repeatedly told EU ministers of the need to deliver a promised 20% improvement in energy saving by 2020. The bloc is only expected to make it halfway to meeting the 20% target, unless it implements changes covered by the new draft law.

ARBITRATION BEST WAY TO GET LOWER GAS PRICES FROM RUSSIA Poland finds inter-company arbitration proceedings more effective than negotiations via diplomatic channels at lowering the price for natural gas imports from Russia, Prime Minister Donald Tusk has said. In a rare concession to European utilities that have long pressed for pricing relief, Russian’s Gazprom agreed in January to lower the price to several European importers, but not Poland’s PGNiG SA, by an undisclosed amount due to changing market conditions.

“The Russians are willing to talk,” Tusk was quoted by Dow Jones. “Not only our experiences but those of others show that arbitration, rather than working it out politically, is a more effective guarantee of getting lower prices, so we’re using it.” Gas distributor PGNiG has filed an arbitration claim in Stockholm.

Poland relies heavily on Russia to cover its gas needs, importing about two-thirds of the gas it consumes from Gazprom. GP

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focus

Strategies for cautious growth “Keep growing” is back on the menu of the corporate world.

Hungarian companies are taking up the challenge, but their visions are slightly different from those of the global community.

lion, representing a serious drop from the previous year’s HUF 692 billion. A total of 132 transactions were closed, which shows a stagnating market.

From these two sets of data, it is clear that transactions became smaller in size: from the previous average of HUF 5.2 billion down to HUF 2.1 billion. Reasons for this could include the limited financing available and the uncertain investment climate. But a growing number of transactions show increased activity by investors, mainly due to the Jeremie funds.

BBJ ANIKÓ JÓRI-MOLNÁR

Even just a year ago, the crisis seemed never-ending. The slogan we heard so many times about the crisis being a new opportunity turned worn – in fact, the crisis became the only opportunity.

For the first time in 15 years, PwC Hungary issued a separate survey about Hungarian company CEOs and their expectations alongside its Global CEO Survey: turbulent times have brought the need for presenting as many views and strategies as possible, tailored to the local market.

Like their global peers, businessmen in Hungary are skeptical about the recovery of the world economy, but they are deeply convinced about the growth of their own enterprise. However, what is a sustainable goal in other parts of the world might not have the same priority here.

Strategies are important everywhere, but in Hungary they change faster and more often than in other parts of the world, mainly because of the instability of the domestic market (i.e. because of legal or tax changes). PwC’s survey showed that only one-fifth of CEOs plan ahead for longer than five years and that financial market players are the most ambiguous in that matter. We highlight the most important elements of growth that are of a global nature, along with their local manifestations.

PREFERRING THE FAMILIAR Most of the CEOs asked by PwC placed increasing market share on familiar markets at the center of their strategies. And even if they are eyeing other markets, local companies rather target neighboring countries

BUSINESSES WORRY MORE ABOUT INTERNAL THAN EXTERNAL THREATS than going for developing markets, as global multinational enterprises do.

In the last few years, the number of companies successfully operating on foreign markets has decreased due to the crisis. But some SMEs decided to take this logical step to escape the effects of the crisis, the Hungarian Investment and Trade Agency told the Budapest Business Journal. For example, export promotion activities in the environmental and renewable energy sectors have visibly increased, with a record number of exhibitors applying for trade shows.

The construction industry, which was hit hard by the crisis, is another sector that sees many looking abroad. Material producers’ exports are limited by the costs of transport and therefore to the closer region and the Balkans, but building contractors can move further, to the CIS countries and the Arab world, while China is also targeted by Hungarian construction firms. Other exporters prefer to stick to traditional destinations such as Germany, but after a successful HITA event, Azerbaijan also emerged as a new target country.

PwC’s survey respondents labeled mergers and acquisi-

tions among the most important opportunities for growth worldwide and in Hungary.

This option is especially attractive for companies in the financial, telecommunications, IT and media sectors. If this process takes off, it would boost the M&A market, which has picked up on a European level but has long been stagnating in Hungary.

In fact, M&As that took place in 2011 produced some ambiguous results. According to estimates by M&A advisory Invescom, Hungary-related transactions (excluding large transactions over HUF 100 billion) totaled HUF 281 bil-

EXTERNAL THREATS, INTERNAL SOLUTIONS Hungarian businesses worry more about internal than external threats: frequent tax changes are twice as bad as a tsunami and the shipments that get cancelled because of it. Lately, many countries have realized the benefits of a favorable tax environment, and even Hungary took steps towards a simpler and more investmentfriendly system, in CEOs’ opinion. However, they also noted that the economic environment and policies need to be more predictable in order to help businesses.

For their part, managers are working on balancing the internal environment by optimizing and restructuring financial and human resources. Rather than introducing innovative methods, efficiency tends to be boosted by cutting back on operating costs, and it doesn’t look like this will change in the near future.

Last year, a significant number of companies decided to outsource or restructure business functions and processes.

Such actions were especially popular in the financial, retail and consumer sectors, while telcos, IT and media companies have been trying to cut costs by in-house consolidation, the PwC survey shows.

“There is some movement, but not really in order to grow so much as to keep business activity level,” Attila Suhajda, head of the Hungarian Outsourcing Association reckons.

“To outsource some of its processes, an enterprise should understand them well and have a clear organizational struc-

ture, which most local SMEs lack.” However, from a costcutting perspective, outsourcing is usually worth it if it can replace at least one person in the workforce.

Suhajda also noted that outsourcing as an organizational innovation is highly popular among multinational enterprises and there is an increasing interest for Hungary on the global services market. If the country had reacted properly and created a more stable economic environment, even more shared service centers could have settled here.

Complementary to austerity, half of the managers worldwide plan to further invest in creating and supporting a qualified workforce in the next three years. In Hungary, retaining high-potential senior managers with the relevant specialization and experience has become a greater challenge for companies.

“Finding and keeping a talented workforce to remain competitive has been among the top three priorities of HR professionals for the last decade,” said Tamás Török, senior consultant at Aon Hewitt Hungary.

On the other hand, the PwC survey shows that CEOs in general don’t think of talent management as a high priority when trying to find a solution to profitability or efficiency issues.

But this inconsistency might be due to the fact that a crisis increases the importance of short-term results, when most of the energy is directed towards getting the maximum out of the workforce in the shortest possible time. “Those companies that keep talent management on the agenda don’t really do it for the instant profit but as a long-term investment,” Török agrees.

There is not even a standard process for measuring the return on this type of investment. When trying to attract talent, companies work on building their employer brands. Later on, keeping the most talented should be a constant effort instead of a campaign, with dedicated monitoring of churn one and three years after hiring. ■

The world according to CEOs PWC GLOBAL AND HUNGARY CEO SURVEY

BY PATRICIA FISCHER

ECONOMIC OUTLOOKS

WHY CHANGE STRATEGY?

Although Hungarians are renowned for their pessimism, the findings of these particular studies seem to prove the contrary: at a global level, nearly half of the queried CEOs said the global economy would decline in the next 12 months. On the other hand, only about one-quarter of Hungarian executives thought the same.

Uncertainty has never been a friend to businesses, and today’s world is anything but calculable. But while executives in other parts of the world look at uncertain economic prospects as the biggest threat to corporate strategies, their Hungarian counterparts are more worried about unpredictable changes in the regulatory environment.

34 %

H

48 %

CUSTOMER DEMAND

19 %

INDUSTRY DISRUPTION

42 %

CAPITAL STRUCTURE/DELEVERAGING

27%

CHANGE IN RISK TOLERANCE CHANGE IN REGULATION SHAREHOLDER EXPECTATIONS

STAY THE SAME

DON’T KNOW

IMPROVE

DECLINE

COMPETITIVE THREATS GOVERNMENT DEBT DRIVING PUBLIC SPENDING CUTS AND/OR TAX INCREASES AVAILABILITY OF TALENT

REVENUE GROWTH

H G

GLOBAL

12 %

15 %

GLOBAL

G

ECONOMIC GROWTH OR UNCERTAINTY

HUNGARY

4%

WHICH OF THE FOLLOWING FACTORS INFLUENCED YOUR ANTICIPATED NEED TO CHANGE STRATEGY?

HUNGARY

DO YOU BELIEVE THE GLOBAL ECONOMY WILL IMPROVE, DECLINE OR STAY THE SAME OVER THE NEXT 12 MONTHS?

53 % 38 % 38 % 25 % 13 % 63 % 13 % 16 % 41% 3%

66 % 65 % 39 % 25 % 34 % 41% 33 % 56 % 29 % 34 %

CEOs worldwide forecast growth in their companies both in the short and longer-term. But there is a significant difference in Hungarian CEO’s expectations for the near future and for the longer run.

HUNGARY

HOW CONFIDENT ARE YOU ABOUT YOUR COMPANY’S PROSPECTS FOR REVENUE GROWTH OVER THE NEXT 12 MONTHS AND THE NEXT 3 YEARS? NEXT 12 MONTHS

GLOBAL NORTH-AMERICA WESTERN-EUROPE ASIA PACIFIC CEE LATIN AMERICA MIDDLE EAST AFRICA

NEXT 3 YEARS 10

50

100

H G

NEW GEOGRAPHIC MARKETS NEW PRODUCT/SERVICE DEVELOPMENT INCREASED SHARE IN EXISTING MARKETS MERGERS AND ACQUISITIONS NEW JOINT VENTURES AND/OR STRATEGIC ALLIANCES

51% 34% 22% 18% HUNGARY LAYOFFS

6% 23% 23% 16% 3%

GLOBAL

WHICH ONE OF THESE POTENTIAL OPPORTUNITIES FOR BUSINESS GROWTH DO YOU SEE AS THE MAIN OPPORTUNITY TO GROW YOUR BUSINESS?

Increasing shares on existing markets is at the center of expansion strategies at both Hungarian and global companies, but global executives think that conquering emerging markets and strengtening their positions on them are also important. The top target countries of multinationals worldwide are the BRIC countries, Indonesia and Turkey.

HUNGARY

GROWTH POTENTIALS

18% 28% 30% 12% 10%

HOW DO YOU THINK THE HEADCOUNT WILL CHANGE AT YOUR COMPANY OVER THE NEXT 12 MONTHS?

HUMAN RESOURCES The unemployment rate has been alarmingly high not only in Hungary but in other developed economies during the past years. However, there is some light at the end of the tunnel, as more than half of the queried CEOs worldwide said they planned to hire in the near future. In Hungary, the share of CEOs with a hiring intention is signiямБcanlty lower.

GLOBAL HIRINGS

PLANNED RESTRUCTURING ACTIVITIES When it comes to restructuring, Hungarian companies most often vote for cost-cutting measures. While global companies also use this tool, they are more focused on mergers and acquisitions, or on creating new strategic alliances.

WHICH RESTRUCTURING ACTIVITIES DO YOU PLAN TO INITIATE IN THE COMING 12 MONTHS? HUNGARY

COMPLETE CROSS-BORDER M&A

GLOBAL

DIVEST A BUSINESS OR EXIT A SIGNIFICANT MARKET OUTSOURCE A BUSINESS PROCESS OR FUNCTION INSOURCE A BUSINESS PROCESS OR FUNCTION IMPLEMENT A COST-REDUCTION INITIATIVE ENTER INTO A NEW STRATEGIC ALLIANCE

10

50

100

Source: PwC

END AN EXISTING STRATEGIC ALLIANCE

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Enterprise

TRENDS

Dreary outlooks for developers Developers see green Healthy workplaces

12 14 17

Raising funds like pros The future of funding for non-profit organizations is not encouraging. Those who want to keep operating need to take a page from the books of for-profit organizations.

BBJ ZSÓFIA VÉGH

Many can claim that their job has gotten harder as a result of the crisis, but those who carry the can are undoubtedly fundraisers. Not that their work was easy before: fundraising has always been surrounded by impediments. When it was not the crisis, it was the lack of transparency. People, initially enthusiastic about giving for a greater cause, became mistrustful due to the malpractice of some NGOs that did not quite use the money for what they promised to. Some have still not fully regained lost confidence.

Or it was the lack of a fundraising culture. A large number of fundraisers still confine their methods to simply mailing checks to addresses.

The big (read: successful) organizations obviously have more sophisticated methods, but even those may be of little help when cutting back is the defining trend of the season.

So it may be a surprise that the average donation given by individuals has not decreased in the past few years. Nor did the willingness to give. This is the experience of Tamás Miha, managing director of Human Dialog Kft, a company that runs fundraising and communications campaigns for NGOs. “People may drive less to save on fuel

or spend less on shopping, but they don’t economize on charity,” he said. That, however, will not likely save many NGOs from going bust. Not with the recent change in NGO legislation that slashes state funding for this sector. “Many organizations didn’t welcome the change but this move, at last, will push them towards greater independence,” Miha commented.

Though more difficult, self-reliance will be the path to stability. Heavy dependence on state funds and campaigning exclusively for the 1% of personal income taxes that taxpayers are free to distribute to the NGO of their choice, won’t (and never has) fund an organization for long. The consolidation of NGOs has already started, with several smaller groups disappearing.

This explains why some bigger NGOs have seen an increase in their funds despite the recession. Donations are being redirected to the more stable organizations. Between 2008 and 2010, the overall income of the International Children’s Safety Service (ICSS), an organization giving financial, social and health-related support and subsistence to children in need, has grown by approximately HUF 55 million, from HUF 297 million to HUF 352 million. A more than decent rise considering the economy.

Yet it takes far more work and time from the managing board to maintain the same amount of contributions, Péter Edvi, founding president of the ICSS admits. The NGO has an impressive list of donors starting with OTP Bank, MKB

Bank and Allianz and Erste, many of which are committed to funding a program created by it. MKB, for example, has supported the education of smart kids in need for 15 years, while OTP finances health care-related programs for ICSS. The leaders of these corporations, many of whom are boards members of ICSS, are also individual donors.

WORKING METHODS At this level of cooperation, partners don’t have to be convinced about the importance of charity. “The heads of these companies are clever people, they don’t need to be told three times that a child is hungry. It is down to their willingness whether they want to help or not,” Edvi said. Other organizations, however, have to use more tools to keep their contributors. Environmental group Greenpeace has tried and tested a number of methods in Hungary. direct dialogue is the one that seems to work the best.

This slightly formal term refers to volunteers wearing yellow-green jackets, the identifiable Greenpeace uniform, who recruit donors in the streets. Supporters enlisted this way now number 15,000. They are mostly young, as opposed to contributors recruited through direct mail. “While a lot of organizations are developing their DM activity, we are working to end it,” said Liza Baranyai, fundraising director of Greenpeace Hungary. “We lose 30-35% of this group every year. In the past two years, attrition has been particularly high.”

In 2011, the organization had income of HUF 130 million, HUF 110 million of which

IN SUCH A COMPETITIVE MARKET, IT IS WELL WORTH DEVELOPING DIAGNOSTICS FOR RARE DISEASES. resulted from direct dialogue.

To maintain an NGO solely from contributions, a pool of at least 10,000 to 20,000 permanent supporters is needed, Miha calculates.

Long-term partnerships pay off far more than revenues from the 1% personal tax income.

Still, 1% contribution works well for some, such as the Children Cancer Foundation, which raised HUF 397 million, HUF 369 million and HUF 261 million respectively in 2007, 2008, and 2009. But it also requires heavy spending on campaigns that can cost up to HUF 100 million. And since the personal income tax rate was cut in 2010, this source has dwindled.

TIGHT-FISTED FIRMS Donations from companies haven’t grown either. Unlike individual contributions, the shrinking economy has had a clear effect on firms’ charitable activities. “In general, we have seen a 25-50% decline in this field, but some firms went even higher,” said Tamás Lőcsei, partner at PricewaterhouseCoopers. Also, corpo-

rations’ focus shifted to more tax-deductable activities.

Lőcsei sites the example of sports. Due to an amendment in the law, companies that support one of the highlighted sports (water polo, handball, football, basketball and ice hockey) can obtain a double tax benefit. Firms can reduce their tax base by the amount of subsidies granted to a sports organization, and their payable tax by the amount of the support.

This modification has attracted a number of firms, leaving arts and culture significantly less of the pie. “The two main drivers behind companies’ CSR activities remain tax incentives and marketing/PR value,” Lőcsei explained. “Firms won’t give up CSR entirely. They will probably whitewash one kindergarten less with their employees, but make sure that even that receives proportionate attention.”

Taking all of this into account, non-profit organizations should really start looking at their business as a for-profit company. They

should raise funds as if they were raising capital, run efficient communication campaigns and treat donors as investors whom they are accountable to. Adopting such an approach will also help to overcome the long-ingrained image of these groups begging for money. ■

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Budapest Business Journal | Mar 9 – mar 23

Someone’s got to give As part of the natural evolution of the social web, crowd funding has reached Hungary: three sites were launched simultaneously in midJanuary to catalyze funding for the creative projects of individuals.

BBJ ANIKÓ JÓRI-MOLNÁR

To lose my house in an explosion is something I can hardly imagine. Or, I’d rather not imagine. But that is exactly what happened to Tamás Turcsán, one of the founders of crowd funding website Indulj.be.

He’s come a long way in the last year, from seeing his house burn down thanks to a faulty stove, to establishing a life on the support of others. “The village where we live supported us like a real community. Everyone tried to help, either with money, clothes, work or a kind word and love,” Turcsán writes in the first blog post of Ember a vízben (Man in the water), which he started to seek and find help for those in need.

This triggered a belief in people who “just like to help”, he stresses, when we talk about his new project. From there it was a straight path to crowd funding site Indulj.be, set up to support of unfunded but creative people.

And other forms of support really neglect such people, as the experiences of the founders of the other two sites also shows. Olivér Szarvasi of Creative Selector worked in research, development and innovation administration in Budapest and in Brussels, and saw that the mechanism was often too large or too slow for realizing really innovative ideas.

Initially Creative Selector nurtured and later rewarded ideas with creativity prizes.

But sometimes the world demands more than just

ideas and projects need money to be realized, so Creative Selector restructured to actually help fund projects via the crowd.

“This is an up-to-date form of funding timely projects,” Szarvasi says.

On the creative community side, the story of Dániel Blaski and Krisztián Aracsi, founders of Kezdheted.hu, is just as simple. If you see too many incredible minds with incredible ideas, most of them flushed down the toilet, and you’re into web design, why not just create a platform to promote them? Kezdheted (You Can Start) believes that every idea deserves attention and they help to get the necessary capital within an inspiring community.

PERSONAL APPEAL So let’s say I have a project with a creative purpose: I have always wanted to publish all my articles in a nice leatherbound edition. It has an estimated budget of HUF 200,000 that I’m currently lacking, but I upload my project plan and a video on one of the sites, set a deadline for raising the money, and let the party begin.

It seems there are many more creative ideas out there, so my project has to compete with the perfect “women’s chair” called Charrie, a first children’s book called Ercsi Tales by a talented young writer, and a device called Orditronic that lets you relieve stress by shouting in a sound-proof tube. They already enjoy the confidence of about a dozen people, and have collected 7-19% of the amount needed for implementation.

Supporters can select from

several pre-set amounts to give and in return they get unique treats from the project owners, making support even more appealing.

Of course, recent publicity has attracted fools as well. Site owners say they’re up to the challenge by allowing for upload only those projects that they personally approve.

There are also efforts to give advice on making the videos (“not too complicated or too amateur”), budget planning (“not too much to seem beyond reach and not too little to make crowd funding seem unnecessary”), and even offering an entire executive team for the best outcome.

BUILDING THE COMMUNITY You might have never dreamt about giving money to strangers for their vanity projects. Or you might have spent some hours browsing funny projects on Kickstarter (see the box below). Either way, you like to give, according to common crowd funding belief, and your demand was born the moment you saw what these sites have to offer. However, they all offer the same thing slightly differently.

Creative Selector believes that small streams make great rivers, so it gives project owners all the money they collect and charge 5% if financial targets are met or 9% if not (plus the bank’s money transfer fees). Supporters can give as little as HUF 500 and go up on a four-step scale to VIP and get rewards accordingly.

Kezdheted started out with sample projects but since then it has launched 15 real projects in ten categories, including arts, games and civil initiatives.

LAUNCH DATE

NO. OF PROJECTS

“Although our first project owners had very clear idea about the financing they wanted, we also give a wide range of advice to future participants to help them get the best out of their projects”, communications manager Tímea Kovács told the Budapest Business Journal. The site charges 15% of the total offerings, but only in the case of a successful project.

Compared to them, Indulj.be puts a twist on the process by not giving any money to the project owners, but gathering a professional executive team instead for every project and covering the costs of operation from a 10% discount they give. “We are counting on the companies to also use us as a research and marketing tool,” Turcsán noted.

Building a strong community in a country where charity has a weak tradition is essential, all three parties agree. In changing people’s

attitudes and building trust, social media is the best friend for both dreamers and creators. But regardless of the small-scale, low-risk investment and the unique rewards, it will always be a restricted playground for the more open-minded. ■

The three-year-old US venture is the model for most of the crowd funding sites worldwide. In 2011, Kickstarter featured 27,000 projects in 13 categories, among which 12,000 ended successfully. Supporters spent $100 million on the projects, mostly on movies, videos and music. Well-known projects include the new anti-Facebook site Diaspora.

First in the Eastern European region, Fondomat started out in the Czech Republic in 2011. It provides its service throughout the country for charities and individuals wishing to raise money for charitable endeavors, creative projects and business startups, according to Wikipedia. The site collects a 4% fee for fundraising campaigns. As of 2011, it offers funding in Czech koruna (CZK) and is bilingual (Czech and English). It currently has 21 projects running.

MOST SUPPORTED

LARGEST KNOWN OFFER

Creative Selector

01. 18. 2012

14

MÜ.SZI, HUF 89,665 by 11 individuals

HUF 10,987

Indulj.be

01. 16 .2012

8

Ercsi Tales, HUF 100,000 by 23 individuals

HUF 10,000

Kezdheted

01. 18. 2012

17

Adventure game “Time Flies”, HUF 46,110 by eight individuals

HUF 10,000+

12 2 Business BBJ

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Budapest Business Journal | Mar 9 – mar 23

SpecialReport

Dreary outlooks for developers Financing is still the toughest challenge facing the office market.

BBJ GABRIELLA LOVAS

“For most developers, financing, or rather the lack of it, is still the toughest challenge in 2012,” Futureal project director János Berki told the Budapest Business Journal.

“Banks are reluctant to provide lending and conditions are extremely tight, with required pre-lease ratios of 30%, 40% or even 50%.”

The project director says that office developments could be boosted by either the expansion of local businesses or with new foreign investors entering the market. “What do we see in Hungary? Local businesses are shrinking and foreign investors are leaving the country,” he added.

The expansion of shared service centers has also come to a halt, Berki noted. Labor in Hungary is not so cheap anymore and the highly educated young locals, who speak one or more foreign languages, are increasingly leaving the country to find jobs abroad. Another prob-

lem is that companies are having difficulties forecasting labor costs due to everchanging regulations.

Only three speculative office developments will be delivered this year, including Skanska’s Green House project, Atenor Group’s Váci Greens and the 3,000-sqm IQ Offices, according to the latest market report by property advisor Eston International. The combined volume of these projects is only about 36,000 sqm, the lowest since the turn of the millennium. Besides speculative developments, there are also two major built-to-suit projects in the pipeline: new Budapest headquarters for two of the Big Four advisory firms, KPMG (developed by Futureal) and PwC (Horizon Development).

The Váci út office corridor, the fastest-developing business district in Budapest, remains the main focus of developers, with four of the aforementioned five projects located in this area.

KPMG HEADQUARTERS Following a careful selection process, KPMG chose Futureal to develop its new builtto-suit HQ. The company will occupy half of the new 20,000sqm office building

on Váci út. The ten-year lease will begin in 2014.

Futureal found the best possible location for KPMG’s needs after an extensive selection process. “The ingredients are all in place for this: a great tenant, top location, excellent visibility and public transportation,” said Futureal Management CEO Tibor Tatár. The building will target a Building Research Establishment Environmental Assessment Method (BREEAM) Very Good certification.

PWC HEADQUARTERS In selecting Eiffel Palace, the former downtown headquarters of the historic Pest newspaper Pesti Hírlap, it was especially important for PwC that the building would be suitable for both the most advanced green technologies and the advisory firm’s needs. Behind the eclectic facade of the 1890s, the building will meet the strictest 21st-century requirements. PwC noted that international real estate developers had previously made several attempts to make use of the exceptionally well-situated property without success. No similar development has been previously carried out in the CEE

region, the company added.

The developer, Horizon Development, stressed the importance of creating an environmentally conscious building by preserving and restoring the architectural and aesthetic value of the facade elements, the exquisite cast-iron structure of the interior main yard and staircase of the building. This building will also be certified according to BREEAM standards.

PwC will rent three-quarters of the space from the beginning of 2014, with the remaining areas still waiting for new tenants. The owners of Horizon Development had already acquired a number of strategic plots in Budapest when they set up the company in 2006. Their references include the Eiffel Square and Promenade Gardens office buildings on Váci út and the Marczibányi Sports Center.

GREEN HOUSE The construction of the LEED Platinum pre-certified Green House by Sweden’s Skanska is going according to plan. The company says its green features will lower utility bills, which is one of the top operating expenses. LEED (standing for Leadership in Energy and Environmental Design) is a globally used green building evaluation system originating from the United States. ■

What the banks say...

OTP BANK

OTP Bank does not foresee a major increase in demand for office developments over the next 18 months, it told the BBJ. The refinancing of certain projects or the completion of stalled developments might generate some demand.

Office development financing has significantly decreased during the last three years due to falling demand and higher risks, OTP says. Credit conditions have tightened, but investors and project sponsors have become even more cautious than banks.

Demand is very low in the entire office segment and also for projects with a longer return period. The current business environment does not support the launch of new investments because of the uncertainties in investment returns, higher equity requirements and high financing costs.

K&H BANK

K&H Bank does not expect a notable pickup in market activity in 2012 due to the uncertainties on the real estate market.

Banks’ real estate financing policies, in general, have become more restrained. As market risks increased in the wake of the crisis, only those developers or investors with a stable background can get bank financing. Loan applicants are now required to provide higher equity and pre-lease ratios, as well as some extra guarantees. As the economic environment has remained unstable, the cost of loans has increased.

K&H Bank offers cash flow based medium- and long-term real estate project financing loans and leasing products.

RAIFFEISEN BANK

Raiffeisen Bank expects a slight improvement in terms of the number of new projects. The bank says it is in touch with a few ‘early bird’ investors, who are considering launching new, high quality office construction projects, as by the time they are delivered, vacancy rates will be much lower because of the very low number of handovers in 2012-13.

Raiffeisen is one of the few banks that is willing and able to finance transactions and developments in the office segment, albeit with strict credit conditions and margins reflecting the high country risks.

The parameters of development loans are tailor made for each individual project, Raiffeisen said. Demand for such loans is low, although the requirements of professional developers, such as an excellent location, high pre-lease ration and state-of-art technology, are similar to those of the banks. Thus, these projects have usually gone through a pre-selection process by the time the banks receive a loan application. In turn, the proportion of ‘non-professional’ investors has significantly dropped, the bank notes.

EUROPA DESIGN PALACE ANDRÁSSY ADDRESS 1022 Budapest Bimbó út 37 CONTACT:

(+361)274 00 01 (+3630) 948 0173 www.ergonomic.office.hu

The former headquarters of Pesti Hírlap will serve as PwC’s new HQ

Healthy is Beautiful The latest chair family of the US Herman Miller Inc. has been inspired by the principles of the Brooklyn suspension bridge. The frameless back of the SAYL work chair protects our health. The product, with a minimized use of material, is 90% recyclable and does not contain PVC. With this, it has achieved MBDC Cradle to Cradle and GreenGuard Certification.

2 BusinessSpecialReport 13

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Completions halved in 2011

Ten months before completion, Green House is 45% leased. Skanska’s contracts with ABB and the Avis Budget Group Business Support Center are a positive sign on an office market where preleases in speculatively developed buildings are rarely seen. The building with 17,800 sqm of leasable office space will be delivered in the second half of 2012.

Skanska, which has been present on the Hungarian market for 25 years, has more than 122,000sqm of commercial and retail projects developed in the country.

VÁCI GREENS The Váci Greens office development project in the Váci corridor was the first investment here by Belgian real estate developer Atenor.

According to the original ambitious district development plan, the multi-stage development would cover 100,000sqm with parks, commercial areas and terraces. The delivery of the first more than 15,000sqm Váci Greens building is scheduled for the fourth quarter of 2012. No decision has been made on developing the next two buildings and the feasibility of the rest of the plan is uncertain in the current environment.

The infrastructure works of the first phase of the project have been finished, according to the company’s Q3 report.

“We have taken the opportunity to apply for new planning permits that would enable us to increase the project’s surface area by over 10%, which has led us to postpone the building of the superstructure,” the company said. The superstructure works will only start when significant progress has been made on the commercial side.

Atenor is listed on the NYSE Euronext Brussels.

The company’s operations are concentrated in Belgium and Luxembourg, its core markets, as well as in Central Europe. ■

Annual leasing activity reached an all-time high with almost 400,000sqm in 2011, 28% more than in the previous year.

BBJ GABRIELLA LOVAS

LEED Platinum pre-certified Green House by Skanska is nearly half-leased 10 month before completion

Delivery of Váci Greens building is expected in the 4th quarter of 2012

MARGIT PALACE PALACE ANDRÁSSY

Last year, office completions in Budapest totaled a mere 87,425sqm, 49% less than in 2010, according to the latest office market report by the Budapest Research Forum.

Members of the BRF, the Hungarian property advisory profession’s biggest guild, include CBRE, Colliers International, Cushman & Wakefield, DTZ, Eston International, GVA Robertson and Jones Lang LaSalle.

Budapest office stock totaled 3,158,889sqm at the end of 2011, including 2,591,806sqm of ‘A’ and ‘B’ grade modern speculative office accommodation, and 567,083sqm of owner-occupied space.

Last year’s relatively favorable performance is due to only a couple of large transactions, such as the delivery of K&H Bank’s new headquarters, according to Futureal project director János Berki. He pointed out that the Laurus office building was the only true completion in 2011, as the other buildings had already been included in Budapest office stock.

Annual leasing activ-

19.2%

VACANCY RATE AT THE END OF 2011 ity reached a record high at 397,333sqm, 28% more than in 2010. The share of new leasing agreements within the total decreased from 48% to 39%, while expansions doubled from 8% to 16%. The share of renewals in 2011 amounted to 38%, three percentage points higher than in 2010.

Although leasing activity was high, it did not result in a much lower vacancy rate, as the market saw mostly relocations and lease renewals rather than new leases, noted Berki. In the competition for tenants, the winners will be the owners of newer, more modern office buildings.

Nothing is too expensive for the owner of a building that has been vacant for years, he added, referring to the extra services offered to lure tenants away from other offices.

On the upside, the vacancy rate decreased by 1.5 percentage points to 19.2% by the end of 2011.

Vacancy fell below 20% for the first time in two years, according to the BRF report.

COMPETING FOR TENANTS The K&H Group’s contract with TriGranit signed for the development of its new head office in 2008 was the result of a more than one-year, multiple-round bidding process, the bank told the BBJ. The number of bidders dropped to two by the third round, from 29 in the first and 11 in the second.

The 76,000sqm campusstyle facility with a threestory underground car park was built in the Millennium City Center. The 54,000sqm ‘building K,’ which contains 28,000sqm of office space, has been purchased by K&H, while the 22,000sqm ‘building H,’ with offices on some 9,500sqm, is being leased.

Investment costs reached €100 mln and the project has applied for a Gold Leadership in Energy and Environmental Design certification. K&H was the first in Hungary to launch a construction project certified by LEED, a globally recognized rating system for the design, construction and operation of high performance green buildings. ■

TERRAPARK A, B PALACE ANDRÁSSY ADDRESS 1027 Budapest, Henger utca 2.

BUILDING YEAR 2004 FREE SPACE 2416 sqm PUBLIC TRANSPORT Tram 4, 6 Metro 2 HÉV 5 BUS 86, 11 CONTACT Éva Szilágyi

ADDRESS 2040 Budaörs, Puskás Tivadar út BUILDING YEAR A: 2000, B: 2002 FREE SPACE A: 1200 sqm, B: 4350 sqm PUBLIC TRANSPORT BUS 240, 40 busz, TERRAPARK shuttle CONTACT Éva Szilágyi

Tel: +3620 / 9848 999 szilagyie@terrapark.hu

Tel: +3620 / 9848 999 szilagyie@terrapark.hu

The five-storey A-category building offers offices, service units and a two-storey underground parking lot for its future tenants. The building, which formerly housed trams, is under local heritage protection. The state-ofthe-art equipments of the facility meet today’s standards. It is accessible by car and public transportation; Déli railway station and the Danube is only a few-minute walk away.

The two most successful buildings of Terrapark offer A-category offices in green surroundings, at excellent location in the junction of motorways M1-M7. The buildings have been constructed in a contemporary and representative style. Technical equipments of the buildings meet modern requirements. The buildings have secure underground parking and surface parking spaces.

14 2 BusinessSpecialReport BBJ

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Budapest Business Journal | Mar 9 – mar 23

Developers see green As part of corporate social responsibility, environmentally friendly solutions are coming to the forefront on the Hungarian office market. More office buildings define themselves as green, though not all can prove it with documentation.

How much do green certificates count when it comes to choosing an office to rent?

BBJ ÁGNES VINKOVITS

It is nothing new that tenants are price-sensitive, but in times of economic downturn, lower operating

costs count even more than usual for businesses looking to rent office space. As such, lower overheads are still often communicated as the main advantage of green offices, although some developers find that environmental consciousness has already become a minimum requirement on the market. “If we want to have good tenants, being green is a must,” Christophe Boving, the general manager of property developer Codic Hungary told the Budapest Business Journal.

Adrienn Lovro, the head of ABLON Hungary Kft, shares this opinion, to a degree. “Today, green buildings have no marketing value,” she said, meaning that clients are not willing to pay higher rent for a green building.

However, a recent study published by research insti-

tute RICS showed that green office buildings in the US performed better during the economic downturn of 2008 and 2009 than comparable high-quality nongreen property investments.

This tendency has also appeared on the Hungarian market recently, Bianka Kepes, project manager of iroda.hu, an office rental website, told the BBJ. Green offices might not be rented at a higher fee, but they are more popular, she said.

WORTH THE SWEAT? Unfortunately for developers, building a green office cost more, especially if the owner wants to prove its commitment to the environment through official green certifications.

“According to our precalculations, meeting the BREEAM requirements means 2-3% higher con-

struction costs for our V48 project,” Pál Szilvási, the project manager of Codic Hungary told the BBJ. Codic’s V48 Office Building was the first in the CEE region to be pre-certified as “very good” under the 2009 version of BREEAM Europe Commercial.

Codic is especially proud of its certification because in 2009 the BREEAM assessment method had extra requirements added and the process was completed with an examination of the existing building. “Formerly, developers could promise anything they wanted and later it was not followed up whether the property was built according to the original plans or not,” Boving says, pointing out a shortcoming of the pre-2009 system.

MORE OPTIONS If they want official proof for, say, low energy consumption, the use of environmentally friendly materials or good accessibility, property developers can choose from several independent assessment methods, but the most prestigious are the British BREEAM system and LEED from the United States.

“We prefer BREEAM certification because we find its credit system more realistic in a European environment,” Szilvási said. For example, the LEED method gives points even if there is an underground station as close as one mile to the office building. “Just think about Deák tér or Arany János utca. It is nonsense.

Such requirements are far too permissive in Hungary,” he noted.

Still, achieving certifications demands long and precise work on the part of applicants. The time spent in data provision, together with the implementation of necessary changes, often reaches up to half a year, but according to developers, it is worth the effort. János Berki, a project manager at Futureal, the developer of Corvin Offices, recently awarded a “good” rating in BREEAM In-Use, notes that “after all, a certification of BREEAM’s caliber offers a sense of security.” ■

TELENOR HOUSE Telenor Hungary was one of the first environmental pioneers in Hungary, drawing attention to the benefits of a greener working environment when the company moved in 2009 into an environmentally friendly and state-of-the-art office building in Törökbálint. The heating and cooling system of the six-story building, which offers 14,000sqm of office space, is based on geothermal heat pumps and heat probes. The 168sqm of solar cells generate more than 60% of the energy required to produce hot water for people working in the building. As Törökbálint lies in the Budapest agglomeration, meaning employees have to drive further to get to work, Telenor launched a free bus service for staff to further reduce CO2 emission.

GREEN HOUSE Skanska’ Green House in district 13 is the first project in Hungary to have been pre-certificated as “Platinum” by LEED. The project will also be certified as an EU Green Building, verifying that it will use 25% less energy compared to the local regulations in Hungary. The building is expected to consume 30% less energy and 64% less potable water. It features direct geothermal cooling, grey water reuse, green roofs, solar heating for hot water supply and electrical charging points for low-carbon transport.

CORVIN OFFICES Green processes such as the collection and reuse of rainwater as well as the production of electricity by solar panels not only reduce the operating costs but also contributed to Corvin Offices I getting a “good” BREEAM In-Use rating.

Corvin Offices, located in Budapest’s district 8 and offering 19,700sqm of leasable office space, has opened in progressive phases since late 2009 and now hopes to become even more appealing to tenants with its green rating.

GATEWAY OFFICE PARK Gateway Office Park, a category “A” building complex developed by ABLON Group on the Pest side of Árpád Bridge, offers 36,050sqm of office space and was built keeping energy awareness and an environmentally friendly approach in mind. Most recently the project, which opened in 2008 and has an eye-catching, unique design with green roofs that endow the three-tower building with a green sheen at first sight, has received a “very good” rating under the BREEAM In-Use qualification system, both for asset performance and building management performance.

2 BusinessSpecialReport 15

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Budapest Business Journal | Mar 9 – mar 23

[ EXPERT OPINION ]

MASZNIK FERENC Managing Director What does it mean to pursue good corporate citizenship in the office furniture marketplace? Our OFFICE FOR NATURE program aims to fulfill this responsibility. The comfortable, friendly, and ergonomically designed and installed work environment is a fundamental requirement in the 21st century. Few have adequately considered, however, how these needs can be implemented in a sustained form. I think the green office today is an integral part of corporate responsibility and proper market behavior.

The extent of change that this new design approach called for can be compared to the design revolution that took place after the regime change in 1990. Replacing the Kádár-era furniture ethos, in place of colonial-style garderobe closets and hideous-looking monstrous office desks, more elegant, efficient and state-of-the-art furniture styles were designed and developed. Both ergonomically and in terms of material selection and color, today’s furniture selection has grown significantly. Meanwhile, the office-space development market segment has gone through explosive growth as well. It is enough just to think of the extensive conversion of buildings along Váci út.

Along the factory-laden avenue that was once loaded with industrial sites, today one can spot modern office buildings and a vibrant cosmopolitan boulevard. Where 20 years ago tool and diemaking machines were stored, today there may be a call center, where young enterpreneurs take care of a large volume of support service work globally. The office space interior is no longer a minor administrative issue and not merely a question of prestige. The work enthusiasm and resulting productivity of office staff largely depends on the office environment, which should be developed in a sustained mode because of the increasing number of employees. Particularly to the extent that we assume responsibility for these employees. And for me, only this option is acceptable. What we mean by this includes the efficient use of energy and the prefererred installation of recycled products, or perhaps, where it is possible, the savings on water use, as well as the switching off of lights at the office when they are not necessary.

This environmentally conscious behavior needs to be applied when installing office furniture as well. Furniture makers – recognizing this need – first joined the battle against formaldehydes. As a result, from furniture made without such cancercausing glues nowadays, we have arrived to a point that a majority of furniture is actually being shipped unpackaged. The lessened use of condensed polyesther, polyamid and paper-based packaging materials not only help reduce the piles of garbage accumulated as a by-product of this activity, but actually make the product itself less expensive. I am convinced that products that are overpackaged amount to senseless waste. And as I mentioned in the title of this expose, in the face of dire competiton in the marketplace, one needs to produce profit and not miscellaneous refuse!

And all this, of course, applies pressure and increased responsibility on producers and shippers as well. More attention and more precision is required in the process. However, with detailed planning, consciously guarded logistics, proper professionalism and careful attention, this can be achieved. Without these attributes, we would not have been able to accomplish the largest officefurniture acquisition project of the past 20 years.

In the headquarters building of K & H Group along the Danube comprising 40 thousand square meter office space, we furnished 2,500 work spaces in a 4-week time span. We shipped 3,000 office cabinets, 5,000 chairs, and 2,500 desks using a 100 trucks during this time and we also furnished the entire building within this time frame.

Without any bragging, we can conclude that by achieving the maximum 4 points in this category, we also contributed to the accomplisment that this new headquarters building designed by Finta Studio attained gold certification in accordance with the american LEED qualification system. Leading building certification systems (the aforementioned LEED and the British BREEAM systems) have the highest quality expectations from suppliers. The plywoodbased and other recycled and recyclable materials and environmentally friendly glues used, while all furniture products, aside from perhaps edge coverings, were shipped unwrapped in truck containers, while our pre-assembled chairs and cabinets were made of similarly environmentally friendly materials. (LEED requirements even proscribe that finished products and base materials cannot be acquired (shipped) from a distance larger than 500 miles).

The custom-made auxiliary equipment individually ordered from domestic master furniture makers also reinforced our green approach.

By today, we have accomplished that all base materials used by Office Line, in terms of production, shipping and recycling criteria, make up the greenest office furniture stock offered in the marketplace. I think that beyond selective recycling and garbage disposal, we have additional tools for protecting our environment.

As a responsible executive, I maintain that in the business world, we can all do a lot together towards a more liveable environment. And it is important that we demonstrate how important the environment is, in which we live, not only at the level of words. The past two decades of corporate environmental consciousness shows that if there is enough willpower and professional knowledge behind it, change is possible. In 1989, the accident of the Exxon Valdez oil tanker, which spilled 40 million tons of oil in a territory of 260 square kilometers along the shoreline of Alaska, alerted the commercial world that unless we act together, we may leave a questionable heritage to our children.

www.office-line.hu

NOTE: ALL ARTICLES MARKED EXPERT OPINIONS ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILITY

While competing in the marketplace, one needs to produce profit and not miscellaneous refuse

16 2 BusinessSpecialReport BBJ

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Budapest Business Journal | Mar 9 – mar 23

Crisis-tailored office furniture In line with the current defining economic trend of contraction, office space too has shrunk over the past three years as well. No wonder: having carried out every conceivable cut in day-to-day operations, firms have started to look for savings in-house. They are giving up their lavish (or not so lavish) working environments and moving to more budget-friendly locations.

BBJ ZSÓFIA VÉGH

Moving presents an opportunity to renew the office furnishings as well, even if this adds to expenses. “With rents so high, optimal use of space is high on the list of priorities for tenants,” said Fruzsina Bittó, space planner of office furniture maker Haworth.

That is what makes openplan offices so popular now.

Companies can save up to 40% on this form compared to separate offices, not only in rent but in furnishing or redecoration costs as well.

Although rents vary greatly depending on office category, location, length of lease, etc., the costs of moving and furnishing are still considerable, so firms try to save where they can.

“Cleaning, whitewashing, replacement of fittings as well as furnishing the kitchenette and the dining room is preferred to be done by the office

Added extras In Hungary, it is still seen as special: - to refurbish a 40-person office exclusively with electric height-adjustable desks (Haworth) - to furnish an old mansion with modern furniture only, creating a unique atmosphere (Haworth)

Source: Haworth

- to set up a gym within an office (involving a twolane track and white wall bars) (Sarolta Kiss)

lessor,” said Péter Süle, sales director of Indotek, a property management company.

“But it is the tenant who usually furnishes the office.”

This thrift regarding services concerns office furniture suppliers as well. Most companies no longer hire a professional to plan the interior, they commission suppliers instead. “We have gradually become all-rounders,” Ferenc Gáspár, product manager of Icotrade Kft told the Budapest Business Journal. “They expect us to do the jobs of contractors but for the same fee, of course.”

As a result, furniture suppliers choose and buy the fabrics of the interior, such as rugs, curtains, and carpets, if necessary. In selection, firms will also opt to make what savings they can. “They seek what’s cheap,” Gáspár said.

TAILORED TO THE CRISIS Haworth has come up with

a collection tailored to the crisis. It has developed the “Very” seating family, whose Very Task chair is the operative version of a high-quality, ergonomic office chair.

Haworth has also designed simplified versions of highquality chairs for waiting areas. Both costs and space can be saved with bench desks or shared office desk configurations. These have shared frames and beams and recessed legs, all removable and adjustable.

Haworth has also launched a number of armchairs and sofas to replace the exclusive and costly pieces that have been prevalent in waiting areas up to now. Companies apparently aren’t skimping when it comes keeping up appearances; they won’t put cheaplooking pieces in public spaces. “In 2010, many firms resorted to smartening up only their meeting

R70 OFFICE COMPLEX ANDRÁSSY PALACE

and waiting rooms,” Bittó explained. That changed last year, when a number of firms announced calls for replacing all of their office furniture. Others postponed refurbishing from 20092010 to 2011-2012, helping Haworth’s figures last year.

There are some features most companies don’t save on. Ergonomics is one, though not everyone is quite clear on what the term means, Bittó said. Color is another: it is gradually making its way into office spaces.

The colors and logos of the company must appear in the design, and do so mostly in painted movable walls and office textiles. But colors are also popular elements of office spruce-ups, probably because they are cheap and easy to implement.

“Once we were asked to improve the mood of the workers of an international manufacturing company,”

said Miseta Georgina, marketing manager of Kinnarps Hungary, an office furniture manufacturer. The offices were at the assembly hall, near machinery and assembly lines. Kinnarps first carried out a color preference test among workers and based on the results, it pre-

- to design an office that accommodates clients who like both modern and classic design (m2design)

pared some designs, which were then put in the production hall. Workers could paint, correct and complement the blueprints. Finally, with the workers’ involvement, they recolored the offices. Ever since, Kinnarps claims, worker satisfaction has improved visibly. ■

Trendsetting TREND 1: Shrinking office space and desk size (convincing firms not to go under 160x40cm is hard)

TREND 2: High-standard meeting rooms (let the client believe we can afford it)

TREND 3: Open-plan offices (but let’s do that efficiently too: using storage shelves to separate stations)

TREND 4: Less room for smaller objects (why pay for big shelving units if we store data on a small stick)

VÍZIVÁROSANDRÁSSY OFFICE CENTER PALACE ADDRESS 1074, Budapest, Rákóczi út 70-72.

BUILDING YEAR 2001 FREE SPACE 4900 sqm PUBLIC TRANSPORT Tram 4-6, Metro 2, Bus 5, 7, 173, 178, 239 CONTACT CBRE

ADDRESS 1027 Budapest, Kapás utca 6-12.

BUILDING YEAR 2005 FREE SPACE 4331 sqm PUBLIC TRANSPORT Tram 4-6, 19, 41 Metro 2, Bus 11, 39, 86, 111 CONTACT CBRE

+361 374 30 40, www.cbre.hu;

Tel: +361 374 30 40 www.cbre.hu

Eston

+361 877 10 00, www.eston.hu This “A” category office building was built at 70-72 Rákóczi út in 2001. The excellent downtown location makes it easy to reach from both sides of the Danube. R70 Office Complex offers special services such as local post office, restaurant, wellness and fitness facility and conference room.

This office building located in the prestigious Kapás utca is just 5 minutes walk from Mammut Shopping Center – one of the largest shopping malls of Buda – and it is easy to reach both by driving and public transport.Built in 2005, the building has a modern external design and offers sophisticated technical features for an optimum office environment. Multiple services and peaceful atmosphere make Víziváros Office Center a friendly, homelike workplace for employees, while the building’s prominent central location and its prestigious image ensure a convenient, stimulating business environment for the companies.

2 BusinessTrends 17

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Budapest Business Journal | Mar 9 – mar 23

Healthy workplaces

Desk-ercise

Mobile revolution

Commitment to a healthy office environment is the privilege of a few

Dynamic sitting can significantly increase work performance

Corporate printing processes will be restructured

HUF

2 bln

58%

AVAILABLE IN THE HEALTHY LIFESTYLE PROGRAM TENDER

52%

OF PEOPLE SAID THEIR WELLBEING IMPROVED WITH A NEW WAY OF SITTING

OF WORKERS STILL CAN’T PRINT FROM THEIR MOBILES

Frequent back pain is just one of the milder consequences of sitting at a desk all day.

Millions of office workers also suffer from metabolic dysfunction or muscle atrophy because of a static lifestyle that stretches way beyond office hours.

Although research shows that particularly frequent, varied and small movements are very healthy, hitting keys on a keyboard or reaching for the mouse unfortunately don’t count as such. Naturally flexible office chairs, encouraging movement in sedentary office environments, appear to be a solution.

Commissioned by German office furniture maker Wilkhahn, the Center for Health at the German Sport University Cologne has scrutinized the effects of so-called three-dimensional seating.

The subjects continued working at their desks as usual, with one difference: the trial group used only chairs with three-dimensional movement mechanics that follow the positions and functions of the knee and hip joints, and subsequently stimulate the spine and shoulder.

Forwards, backwards and sideways movements are combined as a rotation.

After three months, concentration spans increased from the expected under-average index value of 22 to a normal value of 50 when the body was at its lowest ebb.

Concentration accuracy also improved from 55 to the above-average figure of 87. Concentration consistency showed that these performance and accuracy increases were also consistently maintained at an index value of 74 In a 2002 study, the Herman (previously 38).

Miller Research Group observed How healthy participants and cataloged movements of 40 felt also tallied with the office workers for a combined objective measurement total of 160 hours. As a group, criteria: 58% admitted that these workers spent 93% of their their feeling of wellbeing time sitting in an office chair – and according to the survey, improved thanks to the 45% of the time in a forwardchair, whereas the control leaning position. group stayed on a level ranging from lower than average to average. AJM

With the boom of the mobile market, rising demand for mobile printing solutions and the advance of the document management market are two major trends that will shape the coming years. Corporate printing processes will be restructured and integrating new technologies will become essential.

The increasing importance of complex solutions goes hand in hand with a consistent drop in the sale of hardware, while the share of combined hardware and software offers has been on the rise since 2007. According to data from InfoTrends, worldwide turnover of software solutions was €8 billion, while Gartner estimates $5.5 billion for the document management market by 2013.

Integrating new technologies and more advanced software solutions in managed print services and document management systems will be essential for companies in the near future. With the implementation of a mobile printing infrastructure, they can adapt to new printing habits and the changing needs of employees.

The potential in the market is clearly indicated by recent data from Gartner: smartphone sales will exceed 1.1 billion and tablet sales 326 million units by 2015 – a fivefold increase compared to 2011. According to a separate survey by Ziff Davis, 98% of employees use their smartphones and 44% use their tablets for work; however, 52% cannot Worldwide mobile device print from their mobiles, sales to end-users totaled 1.6 although they said it would billion units in 2010, a 31.8% be important to do so, an increase from 2009 (see Table IDC survey pointed out.

1), according to Gartner, Inc. Meanwhile, 38% of Smartphone sales to end-users respondents said the were up 72.1% from 2009 and accounted for 19% of total major advantage of mobile communications device mobile printing is that sales in 2010. they can initiate printing from anywhere to any device. AJM

Sick allowance 2009

Torso postures

Worldwide mobile device sales

8.6 mln

Number of days (million) Amount paid (in HUF million) Daily average number of persons

Source: Central Statistics Office

32.8 101,571 89,700

Sick allowance 2010 Number of days (million) Amount paid (in HUF million) Daily average number of persons

93%

Concentration

27.9 74,138 76,300 Source: Herman Miller Research Group

Source: Wilkhahn

Source: Canon

Every year, several initiatives are launched to support companies that do most for the health of their employees. In 2012 however, there seems to be less focus on the topic in both the state and private sectors.

Since November 2002, the “Healthy Workplace Program” has become one of AmCham Hungary’s most successful initiatives, with more than 90 companies joining. The chamber also issues a Healthy Workplace Award for its members in five categories, from small enterprises to large corporations and for best practices.

Obligatory criteria focus on such things as providing occupational health services consultations, workplace security, and the opportunity for first aid education at the workplace, as well as joining and supporting volunteer health programs.

These initiative go along with statesupported efforts to promote health awareness. From 2002 to 2010 the health and labor ministries together announced a yearly “Health Friendly Workplace” award in which hundreds of companies have participated.

Winning companies made great achievements in creating an environment conducive to healthy eating, opportunities for regular physical activity, and programs for quitting unhealthy habits, mental hygiene and self-care.

Without the prestige of an award, enterprises can still apply for EU and government-supported grants for developing health services at the According to data from the workplace. These cover Central Statistical Office, 100% of costs up to HUF Hungarian employees spent 10 million. more than 36 million days on sick All initiatives claim that allowance and 8.6 million days a healthier employee on sick leave – resulting in HUF means fewer absences 102.6 billion and HUF 49.3 billion in disbursals respectively in 2009. from the workplace, increased loyalty, higher motivation and a lower rate of migration among workers. AJM

1.6 bln

Total number of devices

1.6 bln

Smartphones

304 mln

Total number of devices

31.8%

Smartphones

72.10%

Source: Gartner

Top types of documents midrange employees want to print

Source: Ziff Davis Enterprise Research

18 2 BusinessPartnerWatch BBJ

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Office furniture suppliers

THE BBJ’S BOOK OF LISTS CONTAINS 100+ SECTOR-SPECIFIC LISTINGS OF LEADING COMPANIES. THE BOOK OF LISTS COMES FREE WITH A BBJ SUBSCRIPTION, OR CAN BE ORDERED SEPARATELY BY E-MAILING CIRCULATION@BBJ.HU

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ANTARES HUNGARY LTD. CO. www.antares.hu

1,475

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11 0

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Antares, Rovo, Igo, El Sack

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Office Depot, Garzon, Metro, Corwell, Vivax, Redola, RS 1995

(10) (90)

Ferenc Sustik – –

6763 Szatymaz, Kossuth utca 14.

(62) 583-510 – antares@antares.hu

1,404

1 1

Teknion, Reiss, Interstuhl, Quadrifoglio, LD Seating

K&H Bank, National Instruments, Mylan, Docler Holding, ESAB, SYKES 2002

Individuals (100) –

Ferenc Masznik – –

1117 Budapest, Budafoki út 91–93.

(1) 354-1620 (1) 354-1621 info@office-line.hu

Magyar Telekom, Tesco, Paksi Atomerőmű, GE Energy, GE Hungary, Budapest Bank, Unicredit 1994/96

Tamás Bagó (100) –

Tamás Bagó – –

1027 Budapest, Bem rakpart 30.

(1) 212-6186 (1) 212-7450 mobilart.bp@euroweb.hu

–

RS Áruházak (Budapest), Iroda 2000 Kft (Miskolc), Vivax Bútor (Debrecen), OrakoEkler Komplex Zrt (Budapest), Febrill Bútor (Budapest), Paksi Atomerőmű Zrt (Paks) 1997

József Ádám Délity (100) –

József Ádám Délity Mária Novák Döbrentei Zsanett TokodiBolvári

6345 Nemesnádudvar, Petőfi Sándor utca 7.

(79) 478-144 (79) 478-425 dbrt@delitybutor.hu

BP, TATA, Citibank, ING, MSD, Mercedes Benz, Shell, E&Y 1999

(100) –

Károly Kis – –

1138 Budapest, Váci út 135–139.B (1) 465-8060 (1) 350-6748 info@blue.hu

PSZÁF, Pest County Court, Prosecution Service 1951

Individuals (100) –

Jnr. László Persze Gáspár Hajdú –

3400 Mezőkövesd, Széchenyi út 10.

(49) 413-411 (49) 413-626 mezobutor@ mezobutor.hu

» »

Samsung, FKF Zrt, FGSZ Zrt, EOS Faktor Zrt 1996

István Báthori (50), Diana Báthori (50) –

Diana Báthori – –

1118 Budapest, Diófa utca 72.

(1) 342-5203 (1) 343-6086 bathori@bathori.hu

Public institutions, offices 1993

Ferenc Haklik (76.40), Csaba Molnár (19.30), Individuals (4.30) –

Csaba Molnár Éva Szolnoki Ferenc Haklik

1223 Budapest, Kápolna utca 10–26.

(1) 424-7668 (1) 226-7669 orako@orako.com

Tetra Pak, Unisys, Lexmark, KCI, IBM, HP 2000

– Kinnarps Marketing and Sales AB (100)

Rita Istiván Csilla Fehér Georgina Miseta

1133 Budapest, Váci út 92.

(1) 237-1251 (1) 237-1250 kinnarps.hungary@ kinnarps.hu

Abbott Laboratories (Magyarország) Kft, Boehringer Ingelheim, Erste Bank Hungary Nyrt, Evopro Kft, Geberit Kft, LogMeIn, Nalco Kft, Schwarzmüller Kft, Siemens Rt 1993

– Bene AG (100)

Frank Wiegmann, Wolfgang Neubert – –

1072 Budapest, Rákóczi út 42.

(1) 411-3411 (1) 411-3419 office@bene.com

Avis, Teva, KPMG, ING, Citibank, Ernst&Young 1994

(100) –

Ottó Feuertag – –

1022 Budapest, Bimbó út 37.

(1) 200-9998, (30) 948-0173 (1) 200-8428 europadesign@ europadesign.hu

1,404

5

6

MOBIL ART LTD. www.irodabutor.com

7

DÉLITY BÚTOR ZRT www.delitybutor.hu

8

BLUE BUSINESS INTERIOR KFT www.blue.hu

9

MEZŐKÖVESDI BÚTORIPARI KFT www.mezobutor.hu

10

BÁTHORI FURNITURE TECHNOLOGIES www.bathori.hu

11

ORAKO-EKLER KOMPLEX ZRT www.orako.com

1,400

1,302

910

550

520

520

1,000

640

– 1

820

1 1

504

– 2

280

1 1

287

– 1

KINNARPS HUNGARY KFT www.kinnarps.hu 476

12

13

BENE BUDAPEST KFT www.bene.hu

450

2 2

448

439

1 1

– 1

–

–

–

–

–

–

–

330

320

2 1

Office & Co / SitLand

Vénusz Irodabútorcsalád

Steelcase

–

Talisman Plussz, Jupiter, Vénusz, Smaragd, President, Quartz, Reneszánsz

–

Stulwerk, Antares, Trendline, Easy

Vénusz, Sinetika, Hobis, Santos

Kinnarps, Materia, Skandiform, Nordic Care, Drabert, MartinStoll

Bene, Arper, Artemide, Blå Station, Borks, Comforto, Fritz Hansen, Neue Wiener Werkstatte, Offecct, Zumtobel, Walter Knoll, Wilkhahn, Wittmann

Herman Miller, Wilkhahn, Actiu, IVM, Della Valentina, Sitland

EUROPA DESIGN ZRT www.europadesign.hu 14

–

–

–

–

–

–

MAIN CLIENTS IN 2011 OR PREVIOUS REFERENCES YEAR ESTABLISHED

OWNERSHIP (%) HUNGARIAN NONHUNGARIAN

TOP LOCAL EXECUTIVE CFO MARKETING DIRECTOR

ADDRESS PHONE FAX EMAIL

»

– Office Depot (Operations) Holdings B.V. (100)

Bart Sasse Ottó Kurunczi László Fülöp

1146 Budapest, Szabó József utca 6.

(1) 460-2300 (1) 460-2301 info@officedepot.hu

NAV Customer Service Offices, ORFK-BRFK, Quaestor Group, Magyar Építő Zrt 2003

A-SET Ingatlanhasznosító Kft. (100) –

Alajos Nagy Gáborné Láng Irén Hanzsek

8000 Székesfehérvár, Bakony utca 4.

(22) 512-220 (22) 329-403 garzon@garzon.hu

– Steelcase SA (100)

Zoltán Petró – Zoltán Petró

1027 Budapest, Horvát utca 14–24.

(30) 685-2640 (1) 214-0503 info-hu@steelcase.com

3D IMAGE DESIGN

DESIGN

ACCESSORIES

OFFICE LINE GROUP www.office-line.hu

2D DESIGN

Steelcase, Polyvision

–

CUSTOM FURNITURE

REPAIR

Uomo, Ergonóm, Fill, Forte, Garzon Manager, Metalo, Magnum, Mobility, Offsysis, Trend-Nova, Delta, Szigma

MAINTENANCE

Office Depot, Real Space, other

RENTAL

BRANDS CARRIED

DELIVERY AND ASSEMBLY

CONFERENCE EQUIPMENT

UPHOLSTERED FURNITURE

WORK CHAIRS

»

OTP Bank, Vodafone, Audi, BP, MKB Bank, General Electric, Citi Bank 1912

STEELCASE S. A. www.steelcase.hu

PARTITIONS

2,058

– 3

2,250

CONFERENCE TABLES

1,270

2 2

4,500

DESKS

»

9 9

OFFICE DEPOT HUNGARY KFT www.officedepot.hu 1

SERVICES

NET REVENUE FROM OFFICE FURNITURE SALES (HUF MLN) 2011

COMPANY WEBSITE

PRODUCTS CARRIED

NO. OF STORES NO. OF SHOWROOMS

TOTAL NET REVENUE (HUF MLN) 2011

RANK

Ranked by net revenue from accounting in 2011

1997

2 BusinessPartnerWatch 19

BBJ

WWW.BBJ.HU

3D IMAGE DESIGN

2D DESIGN

CUSTOM FURNITURE

REPAIR

MAINTENANCE

DESIGN

RENTAL

BRANDS CARRIED

DELIVERY AND ASSEMBLY

SERVICES

ACCESSORIES

CONFERENCE EQUIPMENT

UPHOLSTERED FURNITURE

WORK CHAIRS

PARTITIONS

NO. OF STORES NO. OF SHOWROOMS

CONFERENCE TABLES

PRODUCTS CARRIED

DESKS

COMPANY WEBSITE

NET REVENUE FROM OFFICE FURNITURE SALES (HUF MLN) 2011

TOTAL NET REVENUE (HUF MLN) 2011

RANK

Budapest Business Journal | Mar 9 – mar 23

MAIN CLIENTS IN 2011 OR PREVIOUS REFERENCES YEAR ESTABLISHED

OWNERSHIP (%) HUNGARIAN NONHUNGARIAN

TOP LOCAL EXECUTIVE CFO MARKETING DIRECTOR

ADDRESS PHONE FAX EMAIL

– Haworth Inc. (100)

Mathias Haase – Maik Haenel

1031 Budapest, Záhony utca 7.

(1) 201-4010 (1) 201-1995 info.hu@haworth.com

15

HAWORTH HUNGARY OFFICE FURNITURE KFT www.haworth.hu

264

264

1 1

comforto, art. collction, Dyes

IT Services Hungary Kft, AGCO, BT Global Services, Franklin Templeton Investments, AdNovum Hungary, Evosoft Hungary 1995

16

BRED OFFICE FURNITURE LTD. www.bred.hu

233

233

– 2

BRED, RIM

–

»

Kecskeméti Főiskola Tudósház, Nitroterv Zrt, MTV, Duna TV 1998

(100) –

János Nagy – –

6000 Kecskemét, Vasút utca 8.

(76) 484-776 (76) 484-776 bred@bred.hu

17

NEUDOERFLER OFFICE SYSTEMS www.neudoerfler.hu

198

–

UNIQUA, Syngenta, Samsung, OBI, Corning, ThyssenKrupp Presta, MOL, dm 1998

(30) Neudoerfler Office Systems GmbH (70)

András Bradács – –

1115 Budapest, Bartók Béla út 105–113.

(1) 203-8108 (1) 203-8107 info@neudoerfler.hu

18

FEBRILL BÚTOR KFT www.febrill.hu

185

E.ON, Medicontur, Tigáz, Linde, CBA 1991

Individuals (100) –

Eleonóra Hampó, László Herendi – –

1124 Budapest, Törpe utca 8.

(1) 213-7989 (1) 214-1519 info@febrill.hu

Immochan Mo. Kft, Lánchíd Társulat Zrt, SW Szállodaüzemeltető Kft, Mafish Kft, CAFÉ Frei Vendéglátó és Kereskedelmi Kft, SLOVNAFT, a.s., Rafinanz Service Kft, Medicatus Kft, CPB Management Kft 1991

Szilvia Pintér (96), Viktória Bede (4) –

Szilvia Pintér – –

1122 Budapest, Székács utca 11/A (1) 250-5952 (1) 250-5926 info@silcom.hu

Ramirent, TATA Consultancy, AISB Foundation, Casa Vero Kft. 2001

– Heikki Martela (100)

Tibor Ács – –

1134 Budapest, Róbert Károly körút 59.

(1) 784-0484 (1) 784-0485 info@martela.co.hu

19

SILCOM TRADE AND CONSULTING KFT www.silcom.hu

IRODABÚTOR MARTELA KFT NR www.martela.co.hu

»= would not disclose, NR = not ranked, NA = not applicable

79

»

198

1 1

Neudoerfler, Sedus, Viasit, HAG, Züco, Rexite, Caimi

180

1 1

Febrü, Vénusz, LAS Antares, RIM, Stulwerk, Nowy Styl

78

2 2

»

1 1

DVO, Meco, Della Rovere, Luxy, Diemme, Emmegi, LD Seating

»

This list was compiled from responses to questionnaires received by March 07, 2012 and publicly available data. To the best of the Budapest Business Journal’s knowledge, the information is accurate as of press time. While every effort is made to ensure accuracy and thoroughness, omissions and typographical errors may occur. Additions or corrections to the list should be sent on letterhead to the research department, Budapest Business Journal, 1075 Budapest, Madách Imre út 13–14., or faxed to (1) 398-0345.

The research department can be contacted at research@bbj.hu

[ PROMOTIONAL FEATURE]

HIGHLIGHTS FROM BUZZI BOOTH

MICRO-ARCHITECTURE FOR MAXI SPACES! Nowadays we work in open-plan offices, and we try to create a loft feeling at home as well. But this means places where we can make a quick phone call in peace or work by ourselves on our laptops have become rare.

Designer Alain Gilles’ solution is the BuzziBooth: a felty ‘phone box’ made of soundinsulating felt that dampens outside sounds.

Now you can have a moment alone even in the noisiest of surroundings.

WILKHAHN FOR TEAMWORKERS!

Desk-sharing, flexible teamwork and short-term integration of freelancers into project groups have become an integral part of our daily work routine. It has to be reflected in the working environment too. This table that can accommodate both individual persons or a group of eight. That can be simply linked with other tables to form a table configuration, and can be folded up in no time at all and rolled to the side of the room. The Confair folding table provides you with optimal conditions for free personal development.

3 Socialite

BBJ

PROFILE

Taxes and death

22

interview with ANDREW G. VAJNA, the government commissioner for the Hungarian film industry

Certainty and transparency boost investments The latest KSH data shows that investment volume in Hungary dropped yr/yr for the 16th quarter in a row in Q4, 2011 – the average yearly decrease being 4.5%. Some analysts believe that decline could stop in mid-2012; others project further falls, albeit at a slower pace than last year.

WHAT FACTORS, EVENTS, OR GOVERNMENT MEASURES DO YOU THINK ARE NECESSARY TO TURN THIS DOWNWARD TREND AROUND? NICHOLAS SARVARI PRESIDENT Canadian-Hungarian Chamber of Commerce

GABRIEL A. BRENNAUER ISTVÁN HAVAS PRESIDENT American Chamber of Commerce in Hungary Lack of growth prospects both in Hungary as well as on our major export markets, the deleveraging by the banks and the uncertainty of the global and Hungarian business environment all result in a lack of confidence among businesses to increase capacities. It is not a Hungaryspecific situation and there is little our government can do about it as they have little means to en enhance growth. Howev However, every th enhances measure that predictabi of the predictability Hungaria business Hungarian environ environment would positive influence positively compa companies to in start investment projects.

MANAGING DIRECTOR German-Hungarian Chamber of Industry and Commerce In order to invest, companies need growing markets, affordable financing and certainty regarding the general legal and administrative framework. Currently Hungarian investment activity is primarily driven by export demand, which is being reflected in the strong investment figures in the manufacturing industry – first of all in the automotive industry. Other sectors lack – to a different degree – some or even all of the three preconditions mentioned before. Since the Hungarian government lacks the means to create additional demand and may influence financing conditions only to a very limited extend, its main contribution to more investment could and should be the establishment of a calculable and reliable business environmen environment. A more focused use of European funds and investment investm incentives would also als help to kick off grow growing investments in the pr private sphere.

The volume of trade is generally a good indicator of international demand, which has been sporadic as a result of the global crisis. Although the local economy may feel this fall (which will fuel unemployment among other problems), governments need to plan strategically to incentivize growth in areas where demand may appear.

In Hungary, the unpredictability of the political environment and poor economic indicators haven’t really made the country an option for new areas of investment or trade. Hungary must find another strategy, as it no longer has the comparative advantage that made it interesting 15 years ago. Looking down the line, I would say taking advantage of newly developing opportunities, such as the pending EU free trade agreement with Canada, could see a multitude of opportu opportunity for SMEs in Hungary.

The government sho help should ma maximize th exposure the to this op opportunity – sstarting by res restoring the con dence of confi inve investors.

GERGELY MIKOLA CHAIRMAN British Chamber of Commerce in Hungary At the end of the day we come back to the same fundamentals. One is concerning European and CEE regional competitiveness, the other is the set of local issues that lift barriers for investment and reinvestment.

One principal element is taking persistent measures towards a predictable business environment.

If businesses see at least some years ahead, they will be much more willing and able to take conscious positive investment decisions. Otherwise, the closer the foggy bits are, the more likely decisions will favor other destinations. Another of the tools I see as essential is a well-designed and massive country image campaign: clear, simple messages, consistent usage of media and communication tools, in alignment with bilateral and multilateral business organizations.

A third is a transparent, timely, balanced and in-depth stakeholder dialogue before decisions are made.

And beyond the dialogue itself, taking responsible and professional views into serious consideration would be of paramount importance.

MARCH 19

MARCH 20

MARCH 21

FEB 23

Speed Business Meeting LOCATION SOFITEL Budapest Chain Bridge Hotel, Ballroom.

1051 Budapest, Széchenyi István tér 2 TIME 6 – 9 p.m.

FEE HUF 5,000 + VAT

Successful People event series with guest speaker Gábor Bojár, Chairman and CEO of Graphisoft LOCATION Ramada Plaza Budapest, 1036 Budapest, Árpád fejedelem útja 94 TIME 6 p.m.

FEE BCCH members: HUF 3,000 + VAT; non-members: HUF 5,000 + VAT ORGANIZER British Chamber of Commerce in Hungary CONTACT www.bcch.com

Business Forum with Árpád Kovács, President of the Fiscal Council LOCATION Budapest Marriott Hotel, 1054 Budapest, Apáczai Csere János u. 4.

TIME 12:30 – 2:15 p.m.

FEE AmCham Members in good standing: HUF 14,000 + VAT; non-members: HUF 29,000 + VAT ORGANIZER American Chamber of Commerce in Hungary CONTACT Anita Árvai, anita.arvai@amcham.hu; +36 1 428-2086

Business Lunch with Swisscham Hungary LOCATION Intercontinental Hotel, 1052 Budapest, Apáczai Csere J. u. 12-14 TIME 12:30 – 2 p.m.

FEE Members: HUF 5,000 + VAT; non-members: HUF 7,500 + VAT ORGANIZER The Netherlands-Hungarian Chamber of Commerce CONTACT www.dutcham.hu

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Budapest Business Journal | Mar 9 – mar 23

WHO'S NEWS

Name Fabrizio Centrone Current company/position CEO, CIB Bank Previous company/position head of CEE Area

Name Gergely Laczkó Tóth Current company/position managing director, GTS Hungary Previous company/position director, Kókai Tömítéstechnikai

Centrone has joined CIB Bank as CEO. Previously he was Head of Central Eastern Europe Area at Intesa Sanpaolo’s International Subsidiary Banks Division. He joined the group in October 1998, as Head of South Mediterranean & Asia as well as Head of America Region. He has served as a board member at several companies and banks. Prior to his banking experience, Centrone spent several years with Andersen Consulting (now Accenture), and in the planning and control department of Telecom Italia.

Laczkó Tóth is now managing director of GTS Hungary. Among his principal responsibilities will be the management, operation and leadership of the business in Hungary, as well as the exploration of new opportunities in the telecommunication and data center markets. He was previously director of the family-owned firm Kókai Tömítéstechnikai. Prior to that, he worked as marketing director at Pannon GSM/Telenor Hungary and held the position of CEO at Velux Hungary and at Tele2 Hungary.

Do you know someone on the move?

Send information to research@bbj.hu

Name Melinda Malinovszky Current company/position portfolio manager, Generali Alapkezelő Previous company/position portfolio manager, Takarék Alapkezelő Zrt

Name Eva Fenichel Current company/position membership & events manager, Canadian Chamber of Commerce Previous company/position communications manager, Shell Hungary

Malinovszky has joined Generali Alapkezelő as a portfolio manager. Her career started at Évgyűrűk Private Pension Funds in 1999. She then moved to Codex Zrt where she worked as an investment consultant, sales manager and treasury and bond sales manager until 2007. After that, she joined Takarék Alapkezelő Zrt as portfolio manager. Malinovszky holds a degree in financial risk management and investment analysis.

Fenichel joined the Canadian Chamber of Commerce in Hungary as membership & events manager on March 1. She was previously at Shell Hungary, where she worked as a communications manager responsible for Central & Eastern Europe. Fenichel will be responsible for organizing CCCH events, liaising with members and exploring new opportunities to grow membership. She has a degree in Business Administration and another in international trade relations.

SPONSORED BY

Name Győző Kroó Current company/position managing director, Canon European Hungary Previous company/position head of corporate service division, HP

Name Tammy Nagy-Stellini Current company/position managing director, Hays Hungary Previous company/position managing director, Hays Hungary

Kroó became managing director of the Hungarian branch of Canon European on March 1. He spent ten years at the Research Center for Physics (KFKI). At Digital he worked as a trade manager responsible for sales.

Following an acquisition by Compaq, he continued as a direct sales director. After another acquisition, Kroó continued his career at HP. In the past two years, he has led its corporate service division.

Nagy-Stellini is back as full-time managing director for Hays Hungary. Nagy-Stellini returned from maternity leave during which she kept in touch with the company.

Nagy-Stellini has been with Hays since 2002, initially based in the Czech Republic then moving to Hungary. Emőke Fülesi, acting country manager, will now head Hays’ newly-launched Executive division, as well as being Business Unit Manager for A&F, Sales & Marketing, Engineering and Construction & Property.

Chocolate and more Famous Hungarian family-owned company Szamos Marcipán has opened its new pride, the Szamos Gourmet House, at Vörösmarty tér in downtown Budapest. In addition to gourmet desserts, the house offers breakfast, lunch and dinner. The Chocolate Manufacture, operating in the house, is open for chocolate lovers who would like to make their own sweets (www.csokoladeiskola.hu).

Address: Budapest, Dist. 5, Váci utca 1 – Váci1 Commercial Building (entrance from the Deák Ferenc utca).

Opening hours: every day 8:30 a.m. – 9 p.m.

22 3 Socailite BBJ

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Budapest Business Journal | Mar 9 – mar 23

Profile

Taxes and death

interview with ANDREW G. VAJNA, the government commissioner for the Hungarian film industry

BBJ ÁGNES VINKOVITS

After immigrating to the US in 1956, Vajna went on to established himself as a producer of “Rambo”, “Angel Heart” and other blockbusters. In 2011, Hungary’s center-right cabinet named him as a government commissioner, and Vajna was faced with the enormous debt amassed by the preceding Motion Picture Public Foundation (MMKA). The first step was establishing the National Film Fund.

Q: IS IT A NEW OFFICE? YOU DON’T SEEM TO HAVE SETTLED IN YET. A: It is only a temporary place.

Since we have been thrown out of the ministry, we haven’t had time to find another office. We are too busy.

Q: WHAT ARE YOU BUSY WITH? A: With bureaucracy. Being a new state-owned company, we have to fight to establish our place in the state structure and meet all the bureaucratic requirements. At the same time, we have to handle the huge debt left behind by MMKA and also make progress with film plans.

Q: WHAT ARE YOUR EXPECTATIONS AS A GOVERNMENT COMMISSIONER? A: To establish a clear and transparent system. My personal aim is also to bring the Hungarian audience back to the cinemas to watch Hungarian movies. And we want to make so-called art films successful not only at festivals, but also at the cinemas.

Q: YOU AIM TO ACHIEVE TRANSPARENCY THROUGH A NEW FINANCING CONCEPT ALONE? A: I would not say that it is a brand new concept since it has always been a state-financed system. But MMKA, due to the lack of resources, continuously spent more money than it had and amassed a huge debt of more than HUF 7 billion. We would not make that mistake.

Q: SO YOU SAY THAT THE DEBT WAS DUE TO THE LACK OF RESOURCES AND NOT THE RESULT OF MALPRACTICE? A: It was a system without any discipline but with the aim to subsidize as many films and artists as possible. I do not think that it had much to do with corruption. No one made off with billions of forints. The money was wasted, rather, which is even worse. But we are not here to investigate or to criminalize the film profession. As I see it, this country is full of talented people who need a system to support their professional work.

Q: BUT WHAT IS THE GUARANTEE OF TRANSPARENCY? A: There are only two things guaranteed in life: taxes and death. But, for example, the single window system that we implement enables our accounting department to accurately follow the path of

the subsidies. We will also keep an eye on the entire production process and we will be able to immediately spot if anything goes wrong and not according to the original plans or to the script.

Q: A FELLOW OF THE FILM FUND WILL BE INVOLVED IN THE ENTIRE PRODUCTION PROCESS. WON’T THIS MAKE THE FILMS UNIFORM? A: No. Our control focuses only on financing issues and does not cover creative subjects.

Q: WHAT IS YOUR BUDGET FOR 2012?

A: We get HUF 4.8 billion, that is fourth-fifths of the tax revenues of the state lottery, which from this year contributes to the film fund by law, and we also have money from last year.

We started working in September only, so have almost the full 2011 budget.

Q: AND YOU STILL WANT TO MAKE ONLY SIX OR EIGHT MOVIES? A: That is what we can afford at the moment. But we also want to subsidize approximately 180 screenplays in order to have a bigger pool of film proposals we can pick from. A good script is the footing of a good film.

Q: THAT’S WHY YOU PLAN TO INVITE JOE ESZTERHAS AND OLIVER STONE TO HUNGARY, TO TEACH LOCAL FILMMAKERS HOW TO WRITE A SCRIPT?

A: I want to tickle the imagination of the Hungarian scriptwriters.

Q: YOU DON’T FIND THEM GOOD ENOUGH? A: That is not what I am saying, but I would like them to break out of the box they have lived in and see further than the good old Hungarian movies they have done. I want to motivate them to explore new things. I want them to know from where Joe Eszterhas gets his inspiration.

Q: WHEN WILL THE RESULTS OF THE NEW SYSTEM BE VISIBLE? A: We start shooting our first film this week, but our aim is not to produce a pile of films in a very short time. We are not in a hurry.

Q: AND YOU DON’T HAVE TO BE SINCE YOUR CONTRACT AS A GOVERNMENT COMMISSIONER HAS RECENTLY BEEN EXTENDED TO AN UNDEFINED PERIOD. A: I do not know what that means and I am not really interested. I use this position to make my voice louder when lobbying for the interests of the profession. I want to launch the new system, make it work and then leave.

Q: IF THE NEW SYSTEM WILL BE THAT EFFECTIVE AND TRANSPARENT, WHY DO ACCLAIMED PROFESSIONALS TIRELESSLY RAISE THEIR VOICES AGAINST IT? WHY HAS BÉLA TARR [SILVER BEAR-AWARDED

DIRECTOR AND CHAIRMAN OF THE HUNGARIAN FILMMAKERS’ ASSOCIATION] CITED THE VISION OF AN ANTIDEMOCRATIC SYSTEM OF FILMMAKING? A: Because the earlier system was convenient for them.

This I can understand. If I were they, I would also prefer to see a friend of mine as the one who decides on money.

But, by the way, it is interesting that the film professionals who are now so busy criticizing me did not show up two years ago when the entire film financing system collapsed. Where were they then? Where was Béla Tarr?

Why didn’t they solve their own problems? They needed me to solve them.

Q: FILMMAKERS HAVE WRITTEN SEVERAL PETITIONS IN THE PAST FEW YEARS CALLING FOR BETTER FINANCING. THIS YEAR THEY ORGANIZED THE HUNGARIAN FILM WEEK WITHOUT ANY SUBSIDIES FROM THE FUND. A: It is not about petitions.

They were sitting at home and waiting for the bank to come and take away their houses because the financing system at that time was not only bad, but did not even clear the matters of liability either. Now that I have attained the money and managed to change the law for better financing they come and shout that the system is bad. They don’t even give it time to prove itself. Just wait a minute, please. ■

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Budapest Business Journal | Mar 9 – mar 23

MY PERSONAL AIM IS ALSO TO BRING THE HUNGARIAN AUDIENCE BACK TO THE CINEMAS TO WATCH HUNGARIAN MOVIES. Photos: Németh András Péter