Budapest Business Journal 21/24

DEALS OF THE YEAR 2013 BUDAPEST

VOL. 21. NUMBER 24

PAGES 08-11 DEC 13, 2013 – JAN 16, 2014

BUSINESS JOURNAL HUF 1,250 | €5 | $6 | £3.5

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NEWS

HAND− PICKED DEALS

A year of elevation The government promised this year would be one when things would get tangibly better, as reflected by the overall performance of the economy as well as the money people have left in their pocket at the end of the month.

Now, there are just a few months left to show whether all that has been achieved will be enough at the 2014 general elections. The Budapest Business Journal takes a look back at the economy in 2013.

03 NEWS

Allen & Overy’s M&A lawyer Hugh Owen relocated from the firm’s Bratislava office to Budapest this fall to oversee the regional M&A market from here. He is optimistic about Hungary’s transaction market in the long−term, but in the short run, he believes that the good tradition of Hungarian entrepreneurship and technological expertise will produce some exciting opportunities in the IT sector.

12

No new taxes in 2014 Tax consultants agree that the 2014 tax rules, which were approved by parliament on November 18, contain no dramatic changes, unlike those of the previous few years. The package aims to support families and businesses, fight the black economy and simplify the overall system.

07 BUSINESS

How not to become a terrible boss Buzzwords such as ‘inspiration’, ‘creativity’ and ‘ decentralization’ ruled the day in a startup conference on management. Missed it? Find out what makes a good cyber age leader inside.

17 Q&A

Gérard Legris, Coordinator of the European Parliament and Commission joint secretariat. 16

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Budapest Business Journal | Dec 13 – Jan 16

SUBSCRIPTIONS Call +36 1 398-0344, or email circulation@bbj.hu BUDAPEST BUSINESS JOURNAL 1 year HUF 27,500+VAT 6 months HUF 13,750+VAT 3 months HUF 6,875+VAT Newsletters HUNGARY A.M., ENERGY TODAY, REGIONAL TODAY 1 year HUF 179,000+VAT 6 months HUF 104,900+VAT 3 months HUF 58,900+VAT BOOK OF LISTS 2012-2013

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THE EDITOR SAYS

NEXT ROUND OF SOLIDIFICATION One of the main criticisms leveled against the Orbán government is that it has systematically dis− mantled traditional checks and balances in the pub− lic domain to ensure its views and interests are rep− resented and preser ved.

True as that may be, opponents of the govern− ment, whether they are politicians or other actors, don’t seem to realize one fundamental thing: if the dominance of Fidesz and its policies over the Hun− garian public realm seems over−imposing now, it isn’t even close to what will take effect in the next governmental term.

In fact, the dominance of Fidesz will appear rel− atively minor in the 2010−2014 cycle, if, as all the polls predict, the right wing is reelected. Some things are small, some are essential, while yet others will have to play out for us to see their full effects.

Fidesz is only revving up its efforts to shape the parliamentar y system into its own image. A recent change to house regulations banned the use of var− ious props and signs that the political opposition favored as a gimmick to get their message across through the press. Representatives will also have to adhere to greater discipline and welcome the speaker by standing from their seats accompanied by a loud greeting.

The press will likely see its liberties tested with the approach of the elections in light of a new law that promises possible prison sentences for the produc− tion and distribution of libelous materials. Absent any high profile cases, it’s difficult to predict how

the courts will approach this situation, especially seeing that various local courts and second instance bodies often reach contradictory verdicts.

Even more importantly, the next elections after these, in 2018, will be held with voter registration in place, something the government postponed for 2014 in response to the vocal domestic and international outcry on grounds of limiting democratic privileges.

There are reports that the opposition left wing par− ties are already drafting scenarios to deal with what is now shaping up to be a clear defeat. Poll num− bers and the unending internal bickering both point in that direction. But through all this, they are also missing what may be their last chance for quite a while to win the right to govern.

Fidesz has already reshaped the constituency structure as well as the voting system itself to increase its own chances. With voter registration, it is essentially trying to exclude undecided voters from the overall process, typically the very ones that vote for the political opposition of any given time out of protest, rather than political loyalty.

In contrast, Fidesz can rightfully count on the active voting of its own, hardcore fan base who are ready to leap at a moment ’s notice to protest against whatever foreign interference they assume exists at any given time.

Not only is the opposition heading towards another defeat following the collapse of 2010, but its ineffectiveness is likely assuring Fidesz’ power will be solidified for many years to come.

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NOT-SO-HIDDEN COSTS Central to the government’s rhetoric is the idea that it has made living cheaper for the general public and this hasn’t cost ordinary people a thing. The special taxes, yet more special taxes, utility price cuts, and revisions to the operations of the business sector were all enacted so that corporations would have to fork out the money needed to keep the budget intact, since the public is already at the end of its rope.

That’s a message that resonates well with the gen− eral public, who are also apparently no closer to finally understanding that there is no such thing as a free lunch and that, just as before, they, the taxpayers, will end up paying for the presents that they have the government to thank for.

The usual government practice of catching up to the realities of its own pol− icies is once more costing the taxpayer even though they are supposed to be the beneficiaries. And this is by no means a new development.

Banks haven’t passed on the costs of their taxes to their clients, they just drastically increased other fees to accommodate losses. Businesses are struggling with get− ting their cash registers in a chaotic rollout that could cause many of them to fold, limiting market supply and raising prices at those that so succeed. Energy companies are downscaling their operations, leaving the state and consequently the taxpayer to face the financial aspects of the consequences from the mandatory utility fee reduction.

As the latest development, there is a good chance that fueling stations won’t be able to complete the till installa− tion by the legal deadline, meaning they won’t be able to operate next year. This is bound to cause not only a major inconvenience to the public, but also endangers basic ser− vices. All that after a forced process where the approval of one of the devices was sud− denly revoked after many business owners had already bought them.

The controversially intro− duced licensed tobacco shops also can’t be too confident that they won’t have the rug pulled out from under their feet on a whim. The govern− ment has recently decided to terminate a whole bunch of them, those in shopping malls that were actually mak− ing money (for themselves and the state), apparently to favor others who are losing out for whatever reason.

Each of these haphazard measures have a price tag attached to it, and they all have casualties, who are by no means the evil, foreign− owned corporations that should be made to pay for all the alleged profiteering they did during the reign of left wing governments.

Ultimately it is us, the taxpayers who have to realize that life isn’t getting cheaper, because we are paying for it, whether with our actual wallets, or through sustain− ing the difficulties that come from the implementation of these steps.

Steps, that happen all for our benefit, all at our expense.

THE TAXPAYERS WILL END UP PAYING FOR THE PRESENTS THAT THEY HAVE THE GOVERNMENT TO THANK FOR

BBJ

1 News

NEWS IN BRIEF

Investment volume up 9.8% in 2013

04

NEWS

Tax policy 2014: No new taxes

07

macroscope

HUNGARY’S ECONOMY NEARS END OF ITS YEAR OF ‘ELEVATION’

GERGŐ RÁCZ

Based on the timeline that Prime Minister Viktor Orbán laid out after being elected, 2013 was to become the year of ‘elevation’ after the 2012 ‘launch’ and the 2011 ‘reinvention’ that came on the back of 2010 being the year of ‘coming together’.

The labels dreamt up for the previous years are debatable, to say the least, but 2013, especially the second half of the year, has been pumping out figures that are ideal showcase material. The economy grew by a surprising 1.8% on the year in the third quarter, after positive growth in the preceding quarters as well. Unemployment is below 10% for the first time in ages; industrial output is also back into positive territory after prolonged contraction.

The introduction of utility cost cuts has also led to historic lows in terms of consumer price inflation. The latest figure from the Central Statistics Office shows CPI came in at 0.9% in November, and further similar measures are on the agenda.

BLACK AND WHITE This year presented a sharp contrast to the events of 2012. Last year was determined by a major international economic crisis that took Hungary with it to such an extent that a complete collapse and default was a realistic prospect for a brief period at the start of the year.

Closely related, the government pursued a confusing strategy, of persisting with its insistence that it wanted a safety net from the International Monetary Fund and the European Union, while just as persistently refusing to take

STORY HIGHLIGHTS ■

2013 proved more peaceful than 2012, shows upswing in several aspects ■ Government critics say measures now being enacted will have serious consequences later on

adequate steps to meet the prerequisites.

Thanks to the favorable global mood, fueled largely by stimulus measures in the United States and the Eurozone, Hungary actually paid off its earlier loan from the IMF – taken out at the height of the Lehman Brother crisis in 2008 – and even told the IMF to pack up its things and go, seeing as it has no longer had any business being stationed here.

The overall improvements are reflected in the economy’s performance, which allows the government to plan for 2014 with what it says will be a ‘boring’ budget typical of years when things are going along smoothly and no major interventions are required.

THE POSTPONED BACKLASH The arguments made to show the flipside of the fanfare invariably point out that the government measures are only cosmetic improvements that put off making actual sustainable changes, not to mention the fact that there will be a hefty price to pay for showboating later on.

Energy experts as well as opposition politicians warn that the utility price cut campaign, which has become the centerpiece of the government agenda, is seriously endangering the viability of the providers. As such, while making them pay more and earn less seems fair to the public, it also raises the prospect that their financial troubles will lead to the cancellation of necessary maintenance and upgrades, resulting in supply outages in just a few years.

Similar considerations could be applied to the budgetary planning. The government claimed a major economic success last year when its stringency measures successfully kept the budget deficit under control and the European Commission ended an excessive deficit procedure which had been in effect since Hungary joined the European Union in 2004.

The government maintained that its 2014 budget will not be one designed to raise votes in that year’s general elections, but nonetheless raised deficit

Photo: Imre Földi / MTI

After the landslide victory in the 2010 general elections, Fidesz and Viktor Orbán promised that each year from then on would take the country closer to prosperity.

The methods were often questionable, the potential consequences frequently ignored, but the family trophy case certainly has some numbers to show off when looking back at 2013.

PRIME MINISTER VIKTOR ORBÁN

targets to levels dangerously close to the EU’s 3% of gross domestic product tolerance threshold. Analysts have widely stated that the budget – which has fundamentally been approved by parliament, although it isn’t law yet – isn’t tenable and will necessitate corrections, just as with the multitude of amendments enacted on the past years’ plans.

Still, this is hardly a cause for headaches in the governing Fidesz party.

The latest European Commission report determined Hungary’s budget goals to be realistic, meaning there isn’t any immediate danger of reentering scrutiny.

Furthermore, given that the elections will likely be held at the start of April, the next cabinet can comfortably perform any corrections that are needed at the start of its new term. All opinion polls indicate that Viktor Orbán will, once again, lead that new government.

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04 News

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

NEWS

IN BRIEF

Budapest Business Journal | Dec 13 – Jan 16

Central banks carry out their work independently, and this is also true of the European Commission and [Rehn], who will continue to fulfill their tasks independently. Olli Rehn has no intention of resigning.

Pia Ahrenkilde Hansen, spokesperson for the European Commissioner for Economic and Monetary Affairs Olli Rehn, in response to a call by Hungary’s central bank governor György Matolcsy for Rehn’s resignation

MPS TO BEHAVE IN PARLIAMENT

Photo: Attila Kovács/MTI

A new regulatory package on the operation of Parliament will introduce strict rules that intend to force representatives behave and show discipline. The rules, which take effect when the next parliament convenes, will ban the use of props and banners, while the house Speaker will have to be greeted standing up. Opposition lawmakers condemned the autocratic flavor of the measure.

ECONOMY HUNGARY Q3 GDP CLIMBS UNADJUSTED 1.8% IN Q3 Hungary’s third−quarter GDP rose 1.8% in the third quarter from the same pe− riod a year earlier, a second reading of unadjusted data published by the Cen− tral Statistics Office (KSH) shows. In the first reading of the data, published on November 14, KSH said GDP was up 1.7% in the period. Adjusted for seasonal and calendar year effects, GDP rose 1.6% year−on−year and 0.9% quarter−on−quarter in Q3. On the out− put side, unadjusted growth in the farm sector shot up 27.6% (from a low base), and construction sector output climbed 7.3%. Growth in the industrial sector was 0.4%, but the manufacturing seg− ment expanded 1.7%. On the utilization side, gross fixed capital formation rose 8.2%. KSH said construction as well as machinery and equipment investments rose. Public consumption increased 4.4% and expenditures for household consumption edged up 0.1%. KSH noted that households’ hedonic consumption (the consumption of products based pri− marily on the desire to experience plea− sure and happiness) was down sharply.

Total final consumption increased 0.6%.

Exports climbed 6.0% and imports were up 5.8%, both accelerating from the pre− vious two quarters.

INVESTMENT VOLUME UP 9.8% IN 2013 The volume of investments in the national economy increased by 9.8% year−on−year in the third quarter of 2013, the latest round of figures released by the KSH show. The sta− tistical office noted that expansions were observed in the vast majority of subsectors as well. Investment in ma−

chinery and equipment rose by 10.1% and in construction by 9.5% YOY. The main contributor to the growth of the output value of investments was the 13.6% expansion in manufacturing, representing nearly one−third of total investment. Within this, outstanding growth in investment was seen in the manufacture of transport equipment and related supplying divisions as well as in manufacture of food prod− ucts, beverages and tobacco products.

RETAIL SALES CLIMB 2.5% IN OCTOBER Retail sales in Hungary rose a calen− dar year−adjusted 2.5% year−on−year in October after edging up 0.3% in the previous month, KSH said in a first reading of data published. Retail food sales rose an adjusted 1.2%. Non− food sales were up 3.3% and fuel sales climbed 3.7%. According to unadjusted data, retail sales were also up 2.5% in October, accelerating from a 0.8% in− crease in September. KSH will publish an update of the October data on its website on December 20. TakarékBank chief analyst Gergely Suppan said the rise in retail sales reflected improved consumer confidence, low inflation and a hike in teachers’ wages. The pace of the increase could come close to 4% in the coming months as another utilities price cut leaves households with more disposable income, he added.

INDUSTRIAL OUTPUT UP 6% IN OCTOBER Hungary’s industrial output rose 6% year−on−year in October according to both unadjusted and workday−adjusted figures, preliminary data published by KSH shows. In a seasonally− and work− day−adjusted month−on−month com− parison, output fell 0.5%. Ten−month industrial output was up 0.7% from the

Numbers in the news

11% of Hungarian employers plan new hires in Q1 2014, and 8% plan layoffs, a recent Manpower survey shows.

same period last year. Output fell 1.8% in 2012. The October YOY rises were the steepest registered in more than two years, although helped by a low base. Output dropped on the month, however, only for the second time so far this year after a 1% contraction in May. Unadjusted output rose YOY for the second month in a row. Between September 2012 and August 2013, un− adjusted industrial output fell YOY in all but two months. Adjusted output rose in October for the fifth month in a row.

In a seasonally− and workday−adjusted month−on−month comparison, output slipped after rising 1.8% in September.

Output dropped month−on−month for the second time so far this year.

DOMESTIC

HUF 54,000 the average amount Hungarians plan to spend on holiday presents this year, HUF 10,000 more than two years ago, a survey conducted

by GfK Hungária reveals.

FUEL STATIONS MAY NOT MEET ELECTRONIC TILL DEADLINE, PETROL ASSOCIATION SAYS Member companies of the Hungarian Petroleum Association may not be able to meet the January 1 deadline for switching to online tills connected electronically to the National Tax and Customs Office (NAV) at their fuel stations, the association told state newswire MTI. The tills used at fuel stations are technically special, because they operate connected to the pumps, the association noted. The economy ministry told MTI that it sees no need to postpone the deadline. The ministry said the six electronic tills it had licensed to date include tills suitable for fuel stations.

KIRÁLY COMES DOWN ON CENTRAL BANK Former central bank governor Júlia Király thinks that the National Bank of Hungary’s (MNB) stimulus program is

a highly risky venture that could lead to disastrous consequences. As she told political weekly Magyar Narancs, the scheme is also highly costly since it involves giving out free money while the MNB is incurring the related costs. The central bank responded with a statement claiming that Király, up until her resignation in the spring, deliberately kept the base rate high with the goal of causing losses and keeping Hungary under the EU’s budget gap scrutiny.

Király responded by saying she is open to profession debate but won’t comment on “nonsense.”

POLITICS HUNGARY DROPS IN TI CORRUPTION PERCEPTION INDEX In what the organization’s local manag− ing director called “a step backward”, Transparency International dropped Hungary one place in the ranking of 175 nations to 47th, behind South Ko− rea but ahead of Seychelles, in its 2013 ‘Corruption Perceptions Index’. Hunga− ry scored 54 on the 0−100 scale, down one point from its 2012 mark. Hungary ranked ahead of Czech Republic (57th), Slovakia (61st) and Romania (69th), but behind Poland (38th). TI Hungary managing director József Péter Martin described the country’s results to MTI as “a step backward” and said that in the country “lawmaking often serves the in− terest of political powers at the moment rather than the public good”. Martin further stated that Hungarian citizens seemed to be growing insensitive to cor− ruption, citing TI figures from the local level showing that 70% of those polled would not contact authorities if they knew of corruption due to lack of trust in the authorities and/or fear of the consequences.

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News 05

Budapest Business Journal | Dec 13 – Jan 16

COMPANY NEWS

The Budapest Stock Exchange (BSE) started using the Xetra trading system on December 6. The Budapest bourse thereby joined the trading platform already used by the other three members of the Central European Stock Exchange Group (CEESEG). Xetra replaces the MMTS trading system, in use at the BSE for 15 years.

E&Y PRESENTS ‘ENTREPRENEUR OF THE YEAR 2013’ AWARD

BUDDHA-BAR HOTEL BUDAPEST WINS PRIZE FOR BEST INTERIOR The Buddha-Bar Hotel Budapest, located in the capital’s landmark Klotild Palace, has won the ‘Best International Hotel Interior’ prize from the International Hotel Awards. The Buddha-Bar win represents the first top prize awarded to a Hungarian property in the 18 years of the awards’ existence. The five-star hotel is operated by Mellow Mood Hotels, owned

by Jordanian investors Sameer Hamdan and Zuhair Awad. Mellow Mood Hotels was founded in Hungary in 1994 and today operates 13 hotels in Budapest and one in Vienna. Buddha-Bar Hotel opened in summer 2012.

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L-R: GÁBOR FAZEKAS, JÓZSEF BÉLA MAJOROS, PÉTER ÁRVAI, BALÁZS VINNAI

German electronics and engineering conglomerate Siemens AG and com− pany units Siemens Zrt and Siemens Schweiz AG have won a National Infrastructure Development tender to install a train−protection system along the railway line from Ferencváros, a district of Budapest, to the city of Székesfehérvár.

GySEV, a regional railway company owned by the states of Hungary and Austria, has called a tender to build a net HUF 6.2 bln central traffic control system in the latest issue of the Public Procurement Gazette. The deadline for bidding in the tender is January 16.

The consortium of Közgép and A−Híd has won the tender for the construc− tion of a new railway bridge and the connected road in Hatvan. The winning bid was net HUF 6.47 billion, compared to an earlier estimate of HUF 5 bln.

Auchan Magyarország, the Hungarian unit of French retail group Auchan, plans to further expand its network of fi lling stations in 2014, the company told state newswire MTI after opening its 11th fi lling station. Auchan said it has invested HUF 200 bln in Hungary in the past 15 years, including HUF 13 bln in 2012−13.

FHB Mortgage Bank has acquired a 50% stake through a subsidiary in Magyar Posta’s investment service provider Magyar Posta Befektetési

Balázs Vinnai, founder and managing director of IND Group, has been awarded the title ‘Entrepreneur of the Year 2013’

by Ernst & Young. The award, founded a decade ago by E&Y, goes to successful entrepreneurs and businesspeople. Winners of the other categories were József Béla Majoros, CEO of Csaba Metál Öntödei Zrt (Role model); Péter Árvai, co−founder and managing director of Prezi.com (Brave Innovator); and Gábor Fazekas, managing director of Mikropakk Kft (Future Promise). Look for our interview with the winner Balázs Vinnai in the first issue in 2014.

Szolgáltató. State−owned postal services company Magyar Posta said in July that it had agreed with FHB on acquisitions through share swaps.

After having garnered four local industry awards in Hungary, Skanska Property Hungary’s Green House was bestowed with a ‘Best Project’ award in Warsaw at the third annual Europa Property CEE Green Building Awards ceremony within the ‘Shell and Core’ category.

In its role as market regulator, the National Bank of Hungary (MNB) has reported the fining of Safebroker to the tune of HUF 120 mln for managing portfolio investments without a license, plus a further HUF 5 mln for failing to report activities as an agent for an investment company based in the UK. Upon inauguration of its new R&D center in Budapest, Egis signed a stra− tegic agreement with the central government, making the pharmaceutical producer the 34th enterprise to enter into such a partnership.

Hungary−based IT company Synergon had after−tax losses of HUF 1.04 bln in the third quarter of 2013, compared to losses of HUF 137.14 mln in Q3 of 2012, on rising operating and sales costs during the period, the company announced in a consolidated IFRS report. Synergon had revenue of HUF 3.36 bln in the third quarter of 2013, up threefold from revenue of HUF 1.12 bln in Q3 of 2012.

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06 News

Budapest Business Journal | Dec 13 – Jan 16

EXPERT OPINION

ASIA AND EMERGING EUROPE SENSITIVE TO FED MOVE Pé Péter SOMOGYI S CITIBANK CIT CE CENTRAL EUROPEAN CLUSTER, IN INVESTMENT HEAD

JAPAN AND ASIA PACIFIC ASIA-PACIFIC EQUITIES SELECTIVE WITH TAPER-SENSITIVE COUNTRIES

NOTE: ALL ARTICLES MARKED E XPERT OPINIONS ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILIT Y

C

iti analysts observe that the U.S. Fed’s unexpected prolonged accommodation eased emerging markets pressures somewhat.

While this reduces near-term risks for the more tapersensitive countries, primarily Indonesia, India, Sri Lanka, Malaysia and Thailand, they think it is important to assess countries making real adjustments to better insulate themselves from future Fed-related volatility and those that don’t, especially as Fed tapering is just a matter of time. In this respect, the looming election calendar in India will probably be a key hurdle for major fiscal progresses.

Citi analysts also think that the developed markets’ trend to broader economic recovery could be more supportive of broader domestic demand growth going forward, and could ease economic adjustment via exports and a more constructive environment for equity flows. However, Asia’s export bounce has been relatively subdued so far, and within Asia, the north Asian countries saw a much bigger bounce than some in southeast Asia. From an external liquidity standpoint, the latter need it far more than the former.

On the other hand, they think that a Chinese growth slowdown remains a risk for the region. While the nearterm growth outlook has improved, prompting them to slightly upgrade their growth forecast, Citi analyst are cautious over the longer-term sustainability of China’s recent bounce on the basis of risks from financial imbalances and tighter financial conditions.

With less favorable macro developments including slower growth and tighter liquidity, which may lead to softer earnings growth, the valuation premiums that the crowded southeast Asian markets have enjoyed compared to north Asian markets, do not appear to be sustainable.

With the better growth outlook for north Asia and relatively reasonable valuations, Citi analysts remain overweight on China and South Korea and Taiwan, given that the global economy should bode well for globally cyclical markets.

JAPAN EQUITIES TIME FOR BIG DECISIONS After the sharp correction in May, the Japanese stock market started to recover and gained almost 10% in just three months, which has been accompanied by a weakening of the JPY. However, the Japanese market remains very volatile and still trades range bound with no clear direction.

One of the most important market movers in the last weeks was the decision of PM Abe to go ahead with a consumption tax hike next April. Although it certainly will not impact consumers and businesses in a positive way, it does show leadership and a willingness to make difficult choices, and provides some relief for the budget as well. At the same time, the PM announced that he would implement a new economic package to mitigate the impact of the above-mentioned hike. However, it is just a prelude to a much greater challenge, i.e. to present and implement a reliable and well-rounded growth strategy, the third pillar of Abe’s plan.

Recent data suggest that the impact of Abenomics on the Japanese economy is becoming ever more evident. After strong GDP growth and a surprisingly positive earnings season in Q2, the latest leading indicators such as PMIs and the BoJ Tankan Corporate survey have revealed a continued improvement in business confidence and profit outlook.

According to Citi analysts, Japanese market stocks offer a noteworthy upside. With a target of 1375 for the TOPIX index, they estimate the total return to mid-2014 to be double-digit. Improving economic data, a more favorable global environment and forecasted further weakening of the JPY should support the Japanese market. Valuations are not stretched at the moment – although Japan is generally traded with a premium to other developed markets, it is still below its long-term average on both P/E and P/ BV multiples.

EMERGING EUROPE EQUITIES BE CAREFUL CHASING THE Q3 RALLY . . .

After a period of poor performance in H1 of 2013 during which emerging European equities lost 11.6% 1, Q3 was a period of a rebound reflecting overall improvement in market sentiment towards emerging markets. Diminishing risk of a ‘hard landing’ in the biggest emerging economy — China seen during Q3 and September’s decision by the Fed to postpone QE3 tapering contributed most to this market trend reversal.

Citi analysts are neutral on emerging European equities. While the Fed’s decision clearly benefited the region in the short-term, Citi economists believe that the decision could be a source of extra volatility in the region going forward. The outlook for a stronger export-led recovery remains uncertain and a number of countries in the region (Russia, Turkey) have uncomfortably high inflation.

According to Citi analysts, the brightest spot in emerging Europe continues to be Central Europe, where the benefits of the Eurozone’s stabilization are felt most directly. The main story for the biggest market in the region — Poland — has been the reform of the private pension system. As the market is digesting the pension fund changes, the focus has shifted to the rebound of the domestic economy. (Recent economic data releases confirm that Poland is in recovery mode; Citi economists look for a GDP acceleration of 3.1% next year. Interest rates, which are at record low of 2.5%, are likely to stay there for a while, as inflation pressure is low.) While the euro could remain supported against the dollar and Japanese yen after the Fed’s no taper in September, the direction against other G10 currencies seems less clear. As risk recovers, however, they think that euro strength could fade somewhat, especially if seen alongside less supportive data. In regard to policy, European Central Bank President Mario Draghi reiterated his cautious assessment of the eurozone’s growth outlook and potentially signaled growing concerns about the liquidity situation. However, in the absence of significant dovish surprises from the ECB, the single currency need not come under sustained selling pressure across the board. In an environment of persistent market uncertainty, the ‘safe haven’ EUR could remain resilient, especially against less liquid G10 currencies. Citi analysts forecast EUR/USD at 1.30 in a six to 12 months horizon.

Important Disclosure ‘Citi analysts’ refers to investment professionals within Citi Investment Research and Analysis, Citigroup Global Markets and voting members of the Global Investment Committee and Global Portfolio Committee of Citi Private Bank.

This document is based on information provided by Citigroup Investment Research and Analysis, Citigroup Global Markets, Citi Private Bank and Citigroup Alternative Investments. It is provided for your information only. It is not intended as an offer or solicitation for the purchase or sale of any security.

Information in this document has been prepared without taking account the objectives, financial situation or needs of any particular investor. Accordingly, investors should, before acting on the information, consider its appropriateness, having regard to their objectives, financial situation and needs. Any decision to purchase securities mentioned herein should be made based on a review of your particular circumstances with your financial adviser. Investments referred to in this document are not recommendations of Citibank or its affiliates.

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U.S. STOCKS SEEN NEARING END OF PRE-TAPER RALLY Global equity markets have been enjoying a strong period with the approach of 2013’s end, boosted by the United States and Europe. Stock investors are now wondering the extent to which the upcoming end to the Federal Reserve’s stimulus campaign will affect markets and the new options they should be exploring.

GERGŐ RÁCZ

As evidenced by Russell Investment Group’s indices, returns on stocks were 2.7% in November and up 26% year−to− date as of November 29. Small caps helped lead U.S. equity market performance for this same period, with a 3.8% return in November relative to a 2.7% return for the U.S. large cap Russell Index.

STORY HIGHLIGHTS ■

Investors expect downscale of Federal Reserve stimulus ■ European equity picks seem more appealing for 2014

RIDING HIGH The S&P 500 is up more than 25% so far this year and leading companies are show− ing strong gains. On December 10, tech− nology companies like Apple, Google, Facebook, Yahoo and Microsoft all made solid advances, while Twitter soared nearly 10% after announcing a new, tar− geted advertising strategy. U.S. markets may also count on household involvement, given that households have accumulated a record $77 billion in savings.

Nonetheless, the events of the coming few months could have an adverse effect on over− all sentiment. According to K&H Alapkezelő’s expectations, besides the Fed’s next move, investors may also grow worried by upcoming budget talks, not to mention the seemingly

INCOMING FED CHAIRWOMAN JANET YELLEN

“Global markets continued to climb in November amid generally encouraging signs of economic growth across regions and mar− kets. The European equity markets, in par− ticular, appear to have benefitted from an increasing sense of global investor opti− mism, even despite less than encouraging economic signs across Europe,” said Wouter Sturkenboom, investment strategist for Rus− sell Investments Europe. “A closer look at index returns shows the wide range of returns across regions, markets, sectors and capital− ization, which reinforces the importance of maintaining a globally diversified multi−asset portfolio approach,” he added.

The figures show heightened activity among market participants involved in the United States, which has recovered its strength after losing out to Eurozone stocks during the fall government shutdown in Washington. The newly released economic indicators also have investors in a favorable mood, consider− ing economic growth and the falling jobless number. These factors are also contributing to dulling the edge of concerns linked to the Federal Reserve’s taper of its ongoing stimu− lus campaign, which board members hinted could start in December

endless prolongation of the political struggle surrounding the debt ceiling. The fund man− ager says that the circumstances may cause an increase in government bond yields, luring capital away from equity. As such, it is possi− ble that 2014 will produce returns close to 0% on the stock market, K&H said.

While the United States is almost certain to put an end to its stimulus campaign, the European Central Bank has no such inten− tions, one of the main reasons investment banks are looking at Europe for high− return equity picks.

“The combination of tapering by March and a rise in U.S. short−end rates later in the year will remove an important source of support for U.S. equities, during a time when the ECB and Bank of Japan are likely to remain committed to strongly expan− sionary monetary policy,” Barclays ana− lysts said in a report.

The researchers pointed out that the U.S. economic situation is by no means cause for alarm, and they too predict growth of 2.4% next year following 1.7% in 2013. But the report says Europe has “the strongest case for upside surprises” in earnings growth.

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Budapest Business Journal | Dec 13 – Jan 16

TAX POLICY 2014: NO NEW TAXES The 2014 package aims to support families and businesses, fight against the black economy and simplify the tax system.

make it more attractive, lawmakers have decided to experiment with the itemized tax for small taxpayers (kata), said Pakuncsi. The tax accounted for a monthly HUF 50,000 for taxpayers whose business is their main source

of income and HUF 25,000 for those for whom it is not. According to the new rules, taxpayers may opt to pay a monthly HUF 75,000. In exchange, their social security benefit base will be higher, thus making a direct link

between the amount of taxes paid and the services received for it.

Sole proprietorships and micro businesses with an annual revenue of up to HUF 6 million can opt to pay kata. Revenue over HUF 6 million is taxed at a rate of 40%.

GABRIELLA LOVAS

Tax consultants agree that the 2014 package, which was approved by parliament on November 18, contains no dramatic changes unlike those of the previous few years.

As long as Hungary’s economic policy remains unchanged, its tax policy will not change either, said deputy state secretary for tax affairs Zoltán Pankucsi at a tax conference organized by KPMG in December. In 2014 the tax system will be stabilized: there will be no room for tax cuts, but tax increases are not necessary either said Pakuncsi, promising that taxpayers will not see new taxes or increased rates. The government’s main goal is to operate the current tax system in a more effective way.

The state secretary added that he sees improving tax morale in Hungary.

The 2014 package aims to support families and small− and medium−sized enterprises as well as to whiten the economy and simplify the tax system to streamline administrative processes. According to Pakuncsi, the government expects the measures to save 260,000 households approximately HUF 53−54 billion.

Pankucsi stressed that the fight against the black economy and tax evasion is also intensifying at an international level. Switzerland and Hungary signed a double taxation agreement in September, replacing the previous outdated one concluded in 1981. The new agreement contains provisions on the exchange of information in accordance with current international standards.

EXPERIMENTING WITH KATA The government overestimated the number of companies that would switch over to two new taxes for smaller businesses, known by their Hungarian acronyms ‘kiva’ and ‘kata’. In order to ADVERTISEMENT

SUPPORTING BUSINESSES • • • •

extension of the social contribution tax allowance for companies operating in free enterprise zones to encourage investments in less developed regions the tax allowance available to SMEs related to the interest paid on investment loans received after 1 January 2014 will be up to 60% extended R&D-related allowances to encourage foreign firms to transfer R&D activities to Hungary full-time small taxpayers may choose to pay a higher itemized tax (kata) of HUF 75,000 per month instead of the standard HUF 50,000 per month.

SUPPORTING FAMILIES • •

extended family tax allowances through making deductions possible against the 7% health and the 10% pension contribution rather than just against the 16% personal income tax more favorable rules on duties new exemptions from social security charges release the interest on any kind of loans provided tax free without tax liability on the financial institution’s side a 20% tax allowance on pension insurance.

SIMPLIFICATIONS TO THE TAX LAW • • • •

costs backed-up by a receipt for restaurant services covered by a debit or credit card would be acknowledged for corporate income tax purposes simpler rules related to self-revision simpler vehicle registration the difference deriving from exchange rate fluctuations between the day of the top-up payment and the last day of the company’s financial year would not be included in the base of the default penalty calculation

MEASURES AGAINST THE BLACK ECONOMY • • • • •

extended period of reverse taxation introduced for agricultural products 5% VAT on live, whole and half hogs during a tax investigation, the tax authority has the right to audit any software and IT system used for bookkeeping or processing receipts or documents the sale of condensed hydrocarbon and lubricant oils in quantities above 5 kilograms and sold in bottles will be bound to an excise permit possibility of issuing receipts electronically

BBJ

2Business insight

DEALS OF THE YEAR 2013 The Budapest Business Journal presents the most significant deals of 2013 in private equity, M&A and the capital market. And the winners are...

MARKET TRANSACTIONS

REGIONAL DEALS Germany’s largest construction company Hochtief completed the sale of its airport business, including its 49.6% stake in Budapest Airport, to a subsidiary of the Public Sector Pension Investment Board of Canada in September 2013 for approximately €1.1 bln. The transaction involves the deconsolidation of assets totaling around €1.5 bln, including minority interests of around €0.4 bln.

Hochtief acquired a majority stake in Budapest Airport for €1.9 bln in 2007.

CITI ACQUIRES ING’S CUSTODY AND SECURITIES SERVICES BUSINESS IN CEE Citi Securities and Fund Services has acquired ING’s custody and securities services business in seven CEE markets, currently adding €110 bln to Citi’s $13.5 trillion assets under custody.

The transaction, which includes ING’s local custody and securities services businesses in Bulgaria, Czech Republic, Hungary, Romania, Russia, Slovakia and Ukraine, extends Citi’s custody network coverage to more than 95 markets and its proprietary custody network to 62 markets. The price of the deal wasn’t disclosed.

AMC NETWORKS ACQUIRES CHELLOMEDIA Liberty Global sold its international

Photo: Budapest Airport

HOCHTIEF SELLS AIRPORT BUSINESS

THE LAUNCH OF THE XETRA TRADING SYSTEM AT THE BUDAPEST STOCK EXCHANGE

content division Chellomedia including Chello Central Europe to AMC Networks. Chellomedia is one of the largest international channel groups with distribution to more than 390 million households in 138 countries. The transaction is expected to close in the first quarter of 2014.

Liberty Global said that it “expects to realize cash proceeds for the assets that are approximately equal to the agreed upon enterprise value of €750 mln”. The consolidated assets to be sold generated approximately €350 mln in revenues during the 12−months ended in June 2013.

DEUTSCHE TELEKOM ACQUIRES GTS CENTRAL EUROPE Deutsche Telekom announced in November that it had acquired GTS Central Europe for a price of €546 mln from a consortium of international private equity firms. With GTS, DT enhances its ability to offer pan− European telecommunication services as

well as integrated products in countries where it currently maintains limited fixed− line access network infrastructure.

GTS Central Europe is the biggest alternative data, internet and telephone service provider of the CEE region, with subsidiaries in Hungary, Czech Republic, Poland, Romania and Slovakia. The company reported revenues of €347 mln excluding the Slovak assets, which will be retained by the sellers as part of the transaction. The company has been present in the Hungarian market since 1993.

TRANSACTIONS INVOLVING A HUNGARIAN PARTNER ENERGY: ENI ACQUIRES RWE’S STAKE IN TIGÁZ

Italian oil and gas company ENI purchased German electric utility company RWE’s 44.2% stake in Hungarian regional gas company Tigáz in February 2013, raising its stake in the company to around 97%. Tigáz is believed to be one of the energy utilities that are considering selling its retail division to the state, as it says it cannot accept any further reduction in energy prices.

IT: ACCENTURE ACQUIRES EVOPRO BUSINESSES Management consulting firm Accenture agreed to acquire the industrial and embedded software development and services business of evopro group in November. The group, which has operations in Germany, Hungary, Romania and Turkey, provides services for embedded software used in industrial and medical equipment, automotive, building, logistics and transportation industries. Founded in 2001, evopro group is a privately held company with more than 1,000 employees.

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PRIVATE EQUITY TOP-UP: DOCLER ACQUIRES NETLOCK Docler Investments Kft, the private equity arm of the Docler group established in 2011, has taken over Hungary’s market leading authentication provider, NetLock Kft. Docler acquired a 51.05% share in NetLock in February 2012 and a purchase call option for the remaining quota, which was exercised in July 2013. NetLock Kft is the first qualified authentication, timestamp and archiving provider in Hungary.

Photo: Lajos Sós / MTI

BUDAPEST BOURSE: THREE EXITS AND A NEW LISTING

THE LAUNCH OF THE XETRA TRADING SYSTEM AT THE BUDAPEST STOCK EXCHANGE

FINANCIAL SERVICES: EVOPRO ACQUIRES HANWHA BANK Evopro Holding acquired a 98.33% stake in Hanwha Bank Magyarország in September, but reshuffled its stake in November, when evopro Finance purchased an 80.26% stake in the newly acquired bank. The bank’s new name is evoBank Co. Ltd and it’s subscribed capital is HUF 4.934 bln.

At the time of the transaction, Hanwha Bank had only one small branch in Budapest, an internet bank and approximately 400−500 clients. Korea’s Hanwha group acquired its Hungarian unit through buying the shares of Bank Indosuez Magyarország in 1996. The bank was founded in 1990 under the name of Kulturbank.

AGRICULTURE: A BATTLE OF BILLIONAIRES As Hungary’s second richest billionaire, the owner of péti Nitrogénművek Zrt László Bige was just about to acquire a majority share in agricultural firm KITE, one of the company’s employees, Sándor Guba, made a last minute offer of more than HUF 23 bln for the 81% stake. This was almost twice as much as Bige’s original offer. OTP Bank chairman and CEO Sándor Csányi, who is Hungary’s richest mogul, is believed to be behind Guba. Tellingly, KITE recently concluded its first strategic agreement with OTP. KITE, which reported HUF 200 bln revenues in 2012, was established in 1972. Its main activities are trade in agricultural materials and tools, and trade of agricultural products and agricultural machinery and parts. The company is the Hungarian distributor of John Deere agricultural equipments.

LOGISTICS: MERGER OF WABERER’S LOGISTICS AND SZEMEREY TRANSPORT The merger of Waberer’s Logistics Ltd and Szemerey Transport was carried out

through an exchange of shares and stocks at the beginning of 2013. Waberer’s acquired 60% of Szemerey’s stocks, while Szemerey gained control over 40% of Waberer’s Logistics. The merger of Hungary’s leading logistics enterprise and the market leader of domestic refrigerated freight and distribution has created Hungary’s largest, domestic freight power.

The two firms, which have a total headcount of 1,200 and a fleet of 700 vehicles, plan to increase their sales revenues by an annual 10% from HUF 22 bln in 2012 in five years.

HEALTHCARE: UPS ACQUIRES CEMELOG Atlanta−based logistics company United Parcel Service (UPS) purchased pharmaceutical logistics company CEMELOG Zrt in July 2013. The acquisition added three additional facilities of approximately 24,000 square meters of healthcare distribution space to UPS’s current European network.

UPS is a global leader in logistics serving more than 220 countries and territories worldwide. Its healthcare network offers services such as temperature−sensitive handling, geographic−specific regulatory compliance, monitoring and security and kitting and labeling. CEMELOG has offered customers across the CEE region tailor−made healthcare logistics solutions since a Hungarian businessman set it up in 1996.

PRIVATE EQUITY: ENTERPRISE INVESTORS ACQUIRES SCITEC PEF VII, a private equity fund managed

by Enterprise Investors, together with its minority co–investor, Morgan Stanley Alternative Investment Partners, has acquired a majority stake in international sports nutrition company Scitec Holding BV. The value of the transaction reportedly reached €100 mln. Scitec’s founder Zsolt Bengyel remains a minority shareholder following the transaction.

Originally founded in the United States,

Scitec has a significant market presence in Europe and extensive international sales reach, with its products available in more than 70 countries.

In 2013, the Budapest Stock exchange (BSE) saw one new listing and three exits through acquiring the free float.

Asset manager Altera sold 204,000 ordinary shares raising HUF 429 mln in fresh capital in an IPO in March 2013. The company’ shares were listed in the ‘Standard’ category of the BSE in June.

French pharmaceutical company Servier increased its stake in Egis from 50.91% to 96.43% after offering to buy all outstanding shares at HUF 107 bln, or HUF 28,000 per share. Following the transaction Arts et Techniques du Progrès, a wholly owned unit of Servier, exercised its right to squeeze out the remaining Egis shareholders.

In 2013, the shares of Prague−based used car seller AAA Auto and Questor Securities were also delisted from the BSE.

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Budapest Business Journal | Dec 13 – Jan 16

have resulted in the withdrawal of its operating license under the new law. The cooperatives received a single preference share apiece for their stake in the bank.

The MFB bought a 38.46% stake in Takarékbank from Deutsche Zentral Genossenschaftsbank AG (DZ Bank) in November 2012.

BOND ISSUE WITH A TWIST

Photo: Tamás Kovács / MTI

State−owned Magyar Export−Import Bank (Eximbank) issued bonds worth €400 mln in September 2013. The bonds, which will expire in February 2019, carried a coupon of 2.125%, and were issued with a guarantee from the World Bank’s Multilateral Investment Guarantee Agency (MIGA). Thanks to the guarantee, buyers of the bond included investors from Japan, Norway, Switzerland, the Benelux countries and Germany which would not usually buy Hungarian or plain Eximbank bonds. The bond was the second issue under Eximbank’s €2 bln medium−term issuance program, through which the bank also issued €500 mln five−year bonds in December 2012

2014 OUTLOOK MOL CHAIRMAN ZSOLT HERNÁDI

STATE TRANSACTIONS

part of a government plan to strengthen the state’s hold on strategic assets and cut utility prices. The agreement was signed in March 2013. MVM paid HUF 260 billion for the business and an additional HUF 21 bln for the company’s cash stocks and tax refunds.

The acquisition included 100% of the shares in E.ON Földgáz Storage Zrt and E.ON Földgáz Trade Zrt. This was a perfect example of the government using non−market and regulatory pressure to improve its negotiation position and ultimately nationalize a strategic industry.

MOL SELLS MAJORITY STAKE IN STRATEGIC GAS RESERVES

STATE-OWNED MVM ACQUIRES E.ON’S HUNGARIAN GAS BUSINESS The state−owned Hungarian Electricity Works (MVM) acquired German utility E.ON SE’s natural−gas businesses in Hungary as

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Hungarian oil and gas company MOL signed an agreement in October 2013 to sell its 72% stake in MMBF Földgáztároló, which operates the country’s strategic gas reserves. The state acquired 51% of the operator through the Hungarian Development Bank (MFB), while the Hungarian Hydrocarbon Stockpiling Association acquired 21.46%, raising its stake in MMBF to 49%. MOL did not

reveal the price of the transaction but said it was fully cash−based. According to press reports, the stake cost about HUF 140 bln.

ACQUISITION OF BITS AND PIECES IN THE FINANCIAL SECTOR The state was quite active in other areas of the financial services sector, too. It acquired 49% stakes in Gránit Bank and Széchenyi Bank. The state raised capital in Gránit Bank, which aims to operate as a direct bank without a branch network, by HUF 2.58 bln. The bank’s majority owner is Magyar Tőketársaság, a holding of the construction industry tycoon Sándor Demján. Széchenyi Bank’s majority owner is T&T Ingatlanforgalmazó es Vagyonkezelő, a company tied to Government Debt Management Agency (ÁKK) head István Törőcskei.

State−owned Magyar Posta signed a strategic agreement with FHB Mortgage Bank to acquire utility billing management company Díjbeszedő Holding (DBH) in July. FHB also acquired a 50% indirect stake in Magyar Posta Investment Zrt, which aims to sell investment products and services in post offices. The transaction was closed in November.

TAKEOVER OF SAVINGS COOPERATIVES Shareholders of TakarékBank, an umbrella bank for Hungary’s savings cooperatives, approved the acquisition of a majority stake in the bank through a HUF 655 million forint capital increase by state−owned postal service provider Magyar Posta in August. The vote was taken under serious pressure, as a no−vote would have excluded the savings cooperative from among TakarekBank shareholders and would

In 2014, state backed transactions are expected to continue to dominate the market, primarily in the energy and utility sector. In an attempt to reverse earlier privatizations to boost its role in industries considered strategically important, the government plans to nationalize further companies including six to seven utility firms in the near future.

In the private sector, start−up IT and software firms are primarily expected to be acquisition targets. Due to narrowing operating margins, regulatory changes and economies of scale, consolidation may accelerate in several industries especially in financial services.

The BBJ presents some of the most significant deals in the pipeline.

MOL BOARD AUTHORIZES PREPARATIONS FOR SALE OF INA STAKE The board of directors of Hungarian oil and gas company MOL has authorized the company’s executive board to start preparations for the sale of MOL’s stake in Croatian refiner INA. The government of Croatia owns a 44.84% stake in INA and MOL holds about 49.1%. OTP chairman/ MOL board deputy chairman Sándor Csányi told Forbes Hungary that it is not in MOL’s interest to sell its stake in INA, but the company has nevertheless offered the Croatian government the opportunity to purchase the shares. If Zagreb would not or cannot buy them, MOL aims to sell them to a third party.

In November, MOL filed a request for arbitration with the International Center for Settlement of Investment Disputes (ICSID) to start arbitration proceedings against the government of Croatia for

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GOVERNMENT OFFER TO BUY DUNAFERR The government announced in August that it would make a buyout offer for ISD Dunaferr steelworks after the company said it would lay off 1500 of its 5000 workers. The company’s CEO, Evgeny Tankhilevich, later said Dunaferr appreciated the government’s aim to assist, but not through a buyout.

EXPERT OPINION

WHAT MAKES A SUCCESSFUL M&A DEAL?

The secret for success: The common issues that affect a ANTENNA HUNGÁRIA UP FOR successful conclusion for M&A activity.

SALE

BIG BANKS TO EXIT HUNGARY Several European banking groups have been quietly trying to sell their Hungarian subsidiaries for years, but are now becoming more open about their plans. Raiffeisen Bank International said in an official statement that markets such as Hungary and Slovenia are currently under special review, and that a withdrawal from these markets cannot be excluded.

UniCredit’s CEE head Gianni Franco Papa told reporters that the bank was making money in Hungary but that the financial burden the government is imposing on banks and other segments of the economy is getting close to unbearable. He added that while tax alone was no reason to exit a country, “hopefully they are not going to impose other taxes because this would really break the camel’s back”. The bank was quick to ask for correction, stating that it “clearly intends to stay in Hungary”, adding, “Nevertheless we are closely monitoring the local business environment in order to adapt our business model in time and to secure positive results.”

Having failed to sell it as one business, Germany’s BayernLB decided to break up its troubled Hungarian unit MKB to improve the chances of a sale.

BayernLB’s CFO Stephan Winkelmeier said that MKB’s retail and corporate banking activity would be bundled into one unit that should be easier to sell than the bank as a whole. A separate unit would be established to handle long−term loans with high refinancing needs. However, the break up process has unexpectedly been put on hold.

The European Commission ordered BayernLB in 2012 to restructure and sell some businesses as a precondition for approving state aid for the bank.

U.S. private equity fund TPG Capital is trying to break up French telecom towers operator TDF to help exit the company.

TDF has businesses in Spain, Germany, Poland and Estonia, in addition to France. If terrestrial broadcaster Antenna Hungária splits from its French parent, the state could reportedly be among the potential buyers. TDF purchased 100% of Antenna Hungária from Swisscom for HUF 80.7 primarily in 2007.

PRAKTIKER UP FOR SALE Machinery maker MPF Holding is in advanced talks to buy do−it−yourself chain Praktiker’s stores in Hungary. The group wants to invest almost €10 mln in the 21 Praktiker stores, keeping its suppliers as well as its nearly 1,200 employees. In 2010, MPF bought troubled Hungarian gas heater producer FEG and made an offer for the Hungarian units of DIY chain Bricostore in 2012, but it was rejected.

WIZZ AIR IPO Budget carrier Wizz Air has reportedly appointed three banks to manage a planned initial public offering in London.

Budapest−based Wizz Air, which has 16 operating bases in Eastern Europe, flies more than 250 routes across Europe and has a fleet of more than 40 Airbus planes.

We would like to thank the following experts for their contributions to this article:

• • • • • • • •

Allen&Overy managing partner Zoltán Lengyel Deloitte managing partner Béla Seres Equilor Corporate Finance Manager Ágnes Svoób Falkenburg Corporate Finance partner Gábor Kurutz Invescom Corporate Finance managing director Zoltán Siklósi Jalsovszky Law Firm senior associate Ágnes Bejó KPMG director Tamás Simonyi PwC director Ervin Apáthy

Every year, the Budapest Business Journal attempts to present the most significant deals of the past 12 months. Since only a fraction of these are made public, and of the few that are only a minority disclose a transaction value, the task is a real challenge. Due to the lack of transparency and reliable data on the transactions market, the results are based not only on publicly available facts, but also on expert opinions gained during our numerous consultations with some of the industry’s most well-known and respected specialists, as well as on subjective judgments.

We have separated private-to-private market transactions from deals where the state was the buyer. However, as increasing government activity has contributed to deal flow in several sectors, we think it is important to list the major state-related deals in order to get the full picture of the transaction landscape in Hungary. For the first time, we present some of the major transactions in the pipeline, too.

Dr. Ágnes Szent-Ivány MANAGING PARTNER Sándor Szegedi Szent−Ivány Komáromi Eversheds

businesses know they can do better and want to see best practice in action.

THE BLUEPRINT FOR SUCCESS Adopt a project management approach By putting in place a project management system that is clearly communicated and understood by all from the pre-deal phase, you will create a deal team that has clear objectives from the outset. It is also important that all parties are aware of the due diligence priorities, make sure that they agree and understand the materiality thresholds and key risk areas. In addition, it is critical that you identify which team members will continue from due diligence to the post-deal integration stage.

M&A is viewed by many businesses as an essential part of a strategy for growth.

However, it’s of vital importance that all parts of the deal process are aligned to realize the full potential of the transaction.

M&A needs to drive value for a business to be successful. Simply completing the deal is not enough to ensure this. In 2012, global law firm Eversheds undertook a study with 400 multinational companies involved in cross-border M&A deals over the past three years and isolated a series Consider integration during the transaction planning for post-deal of findings aimed at helping businesses to Continual integration is key; ensure that you are get the best value from their global M&A already working on integration during deals in its report ‘The M&A Blueprint: the deal phase.

It’s key that the deal from inception to integration’. team communicates with the senior These findings were used to draw out key areas of best-practice in the deal management team to ensure that all within making process to create a blueprint for the business understand what it is trying to success in cross-border deals. This is achieve and what needs to be done from a business report of interest to anyone an integration perspective. involved in M&A activity, whether crossTake due diligence through to integration border or local.

The research found that a failure to realize It is vital that the due diligence information value is often due to weaknesses in the obtained during the deal is applied in the deal process, rather than the target itself. integration stage, so start planning now Most commonly, this is due to the lack for how you can get the resources in the of strong linkage between the inception, right place to implement and complete planning, execution and integration integration. Establishing and following the M&A blueprint to link together all phases of the deal. deal phases from inception to integration KEY FINDINGS will significantly reduce the potential for The findings point to the need for a core deals not to come to fruition or drive value team at the center of the transaction to over the long-term. Adopting a project provide the ‘connective tissue’ between management approach for the life cycle all the phases of the process; a team of the deal will ensure that the inception, made up of legal, commercial and finance planning and due diligence stages perform professionals who take a deal from its as they should; it will also lay down solid inception stage right through to post- foundations to ensure that the deal completion integration. execution and integration stages help the Many respondents admitted that their deal to add value. failure to align legal and management team priorities led to unnecessary Copies of ‘The M&A Blueprint: from complexity. Additionally, many firms felt inception to integration’ are available from that that legal advice was brought into http://bit.ly/ScKnSX the deal arena too late.

Also, a frequently mentioned cause of the ‘worst deal’ was that due diligence The winner of ‘The was not being coordinated and integrated Hungarian law firm of effectively. Importantly, many felt these the year’ of Acquistion International Finance mistakes were avoidable.

In essence, businesses need to join the Awards dots between the different stages of the deal cycle more effectively and move the focus beyond completion to thinking about life for the business after the deal. www.eversheds.hu The research also showed that many

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

breaching certain of its obligations and undertakings in relation to MOL investments in the country. INA’s two shareholders have often been at odds over the way the company is managed, and tensions rose in October, after Croatian police issued an arrest warrant for MOL chairman−CEO Zsolt Hernádi, who it suspects of bribing former Croatian Prime Minister Ivo Sanader to give MOL management rights in INA.

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A GOOD PLACE TO WORK FROM Hugh Owen started Allen & Overy’s office in Slovakia in 2000 and managed its evolution in terms of growth and orientation to respond to the market. Owen also established Allen & Overy’s association with its office in Romania in 2008. This fall he relocated from the Bratislava office to Budapest to oversee regional M&A coverage from here. As well as being an M&A lawyer, he also has a strategic role. He will co−manage the Budapest office (which opened in 1993 and now has 21 experienced lawyers) jointly with managing partner Zoltán Lengyel.

Owen is optimistic about Hungary’s transaction market in the long−term. In the short run, he believes that the good tradition of Hungarian entrepreneurship and technological expertise will produce some exciting opportunities in the IT sector.

GABRIELLA LOVAS

Q

It is great news that Allen & Overy’s regional M&A practice will be managed from Budapest.

What are the reasons for the relocation?

I have been running our regional M&A practice out of Slovakia since 2000. Over the years, it became apparent to me that Hungary is a more logical location for a number of reasons. First, a lot of investment banks and corporate finance advisors involved in M&A also run their regional practices out of Hungary. We have regular meetings with all of them to discuss deals and pursue opportunities together.

Another reason is that Hungarian lawyers in this office are very enthusiastic and are willing to work on deals in other countries and not just in Hungary. They have good technical expertise on the sectors and on the local market and they are able to transfer those skills into working on deals in other countries.

I will be open with you. We have not chosen Hungary as the location of our practice because we think that it is going to be boom time here in the short-term. It isn’t.

But it is a good place to work from for the rest of the region. We do have, in the long-term, a positive outlook on Hungary.

Q

Do you plan to expand the practice?

Not right now. I don’t need a big team to run regional M&A. I need only three or four lawyers on a deal because I also have resources in our offices in Poland, Czech Republic, Slovakia and in Romania.

Q

The M&A market has been shrinking during the last few years in Hungary. Do you see more deals in the pipeline, now?

There has in fact been a little bit of an increase in M&A activity lately. This has been caused by, for example, the government’s new strategy in the energy sector, which is resulting in transactions. However, this

Hugh Owen (43) is a partner in Allen & Overy.

He has advised in connection with a variety of large-scale transactions in Central and South Eastern Europe, and specializes in transactions in the financial institutions, telecoms and media, energy, defense and aviation sectors, as well as in private equity. Owen is head of Allen & Overy’s South Eastern Europe desk.

particular phenomenon is a very short-term spike that does not indicate an increase in the long-term. Quite the opposite, in fact.

In the financial institutions sector, the banks are reorganizing themselves and are already working on transactions related to that. We expect that to continue in the shortterm. We have already helped banks in other offices sell, for example, their retail portfolios or their non-performing loans. Once the banks have got themselves to where they want to be, they are going to be stronger and better able to lend. Hopefully, that positive trend will increase M&A activity, because banks will be prepared to lend to finance acquisitions, too.

In the regulated areas of the TMT sector, it is more difficult to do transactions, because the government is very hands-on in its regulation of the sector. However, it is a very fast moving area with a lot of technological developments. The traditional boundaries between fixed-line, mobile, television and publishing are being broken down. Therefore, we see a lot of interest in the area, investors are still being very acquisitive. We are working on various deals in TMT even right now.

In the automotive sector, you generally get a certain strata of activities related to automotive suppliers. In Hungary, there is a whole subculture of suppliers and sometimes you see an increased M&A activity on the back of that.

In manufacturing, private equity is, from time to time, getting acquisitive in the region.

I understand that, whilst they are obviously looking for opportunities all over the region including Hungary, at the moment, Hungary is perceived as a less interesting market. I hope that will change, but for the shortterm, they might find it more difficult to put a Hungarian opportunity in front of their

CV

investment committees. It is not because the opportunity is not good, it is because people far away from Hungary are currently nervous about the country. They do not necessarily have the detail.

Q

Now, you are here, you have the detail. What do you think about the business environment?

To a certain extent, I do not see the business environment dramatically worse in Hungary than anywhere else at a general level. From an emotional level, there are foreign investors who are currently scared about Hungary. That is why it is important to go into the specifics. For instance, banks may be up for sale not only in Hungary, but also in many other countries, such as Croatia or Serbia. There have not been very many buyers for banks anywhere in Europe, because they have been scared about buying the whole entity, with any – possibly unquantified – liabilities. We have seen banks in the private sector going away from selling the whole bank and moving into selling parts of the bank. It is easier to ring-fence that, because it is less risky to buy only the assets, (e.g. loans, deposits or credit cards) than buying the whole bank. But more buyers are starting to emerge recently.

What you might see is that investors perceive the level of regulation, interference and taxation on banks as higher in Hungary than in other countries. But it is important

to know that there are similar developments across central Europe, so it is more to do with the intensity and the predictability of those measures. I see some signs that perhaps the government is now starting to recognize the downside of the unpredictability that has characterized some of the past measures.

Q

Do you detect any differences between Hungarian transactions and deals in other countries of the region?

Not really. The market and the deals are not significantly different from elsewhere in the region. Of course, the current energy deals are very different, indeed. The trend since 1989 has been to privatize and deregulate the sector.

What is going on now is a reversal of that.

The other sectors all are suffering similar issues. The assets have been through some stressful years, so there are more complicated problems within them when it comes to sales. There is much more regulation these days and regulators are tougher. People are often selling because they need the money, which means that the negotiations are very intense. As these businesses are losing money or static at best, there is no ‘fat’ in the deal, everything is taken down to the bone. So, at the negotiations, everybody is tough and fighting for everything. But at the same time as having much more complex deals, you are expected to be cheaper than before, when you had the easy deals.

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2 Business

Budapest Business Journal | Dec 13 – Jan 16

EXPERT OPINION

THERE IS A SHALE OIL REVOLUTION...

Péter Simon VARGHA

And it reshuffles the balance of power on oil markets. It implies rising output outside of OPEC, while OPEC will produce much less than previously expected.

T

HIGH ENERGY PRICES SET TO HOLD DOWN EUROPE The International Energy Agency expects the world’s energy demand to increase by a third by 2035. The IEA warns that without better policymaking and given the current high level of energy prices, Europe is set to be at a competitive disadvantage against other regions.

GERGŐ RÁCZ

According to the latest edition of the annually published ‘World Energy Outlook’, the global demand for energy will continue to increase throughout the outlook’s horizon, until 2035. Energy demand growth will come from developing economies, in particular from China.

Meanwhile, the demand of developed countries (EU, U.S. an Japan) will hardly grow at all.

During the period, the amount of retired generating capacity will far outweigh the little more than 200 gigawatts coming online in the EU. The United States and Japan are projected to take a similar approach.

STORY HIGHLIGHTS ■

IEA expects global energy use to grow by a third by 2035 ■ Sees high energy costs posting competitiveness hindrance for EU

Japanese or European industrial consumers pay more than twice as much for electricity as their counterparts in the United States, and even China’s industry pays almost double the American level, the IEA found.

“Lower energy prices in the United States mean that it is well−placed to reap an economic advantage, while higher costs for energy−intensive industries in Europe and Japan are set to be a heavy burden,” said Fatih Birol, IEA Chief Economist. “This is a structural issue for these countries. This sector is crucial, accounting for, on average, 25% of industrial employment,” he added.

The IEA estimates the EU’s annual spending on foreign oil and natural gas at more than $500 billion today, but expects that to grow by nearly 10%, draining 2.3% of gross domestic product by 2035.

The IEA finds that there are abundant political risks in the United States and Europe that also need to be

Revisions to IEA’s oil production forecasts: Non-OPEC up, OPEC down since 2011

60 55

45 40 35 30 2012 (fact) Non-OPEC (2013 WEO)

2020

2035 OPEC (2013 WEO)

Non-OPEC (2012 WEO)

OPEC (2013 WEO)

Non-OPEC (2011 WEO)

OPEC (2013 WEO)

But then came the shale oil boom: today, the IEA’s experts think (as the continuous lines show) that, led by the United States, oil output in non-OPEC countries could rise significantly until 2020.

This implies that OPEC output is likely to stagnate until 2020, despite growing energy demand from China and other emerging economies.

The IEA thinks this might change again from around 2020: tight oil production stalls, so non-OPEC production starts to decline. This gap is filled by a boost in OPEC’s output, as it still has vast and relatively low-cost reserves.

But the chart makes clear that if last year’s Outlook could be labeled ‘optimistic’ then the current one is even more so (overall global oil production is higher and OPEC’s power declines).

For the OPEC members, of course, this is rather bad news: if I were an OPEC-producer, I would also take a ‘wait and see’ approach and not be investing heavily. The more so as the political changes in Iran might also lead to more oil supply, narrowing the playing field for the rest of OPEC. So the balance of power in the oil market is changing. A more general lesson is that the more catchy the title of a news story, the more suspicious it is.

MARIA VAN DER HOEVEN AND FATIH BIROL OF THE INTERNATIONAL ENERGY AGENCY

In contrast, Asian counties and the Middle East are seen multiplying their standing capacities. China alone is set to create nearly 1,400 gigawatts, retiring only a fraction of its already operating capacities, with India and Middle Eastern countries expected to do the same.

The trend is also expected to reflect on the individual region’s position in terms of exporting. The European Union’s share of the global export market for energy intensive goods is expected to drop by a resounding 36%, while the United States is among the nations that are likely to increase their share, mostly on the back of non−conventional exploration.

“Major changes are emerging in the energy world in response to shifts in economic growth, efforts at decarbonization and technological breakthroughs,” said IEA Executive Director Maria van der Hoeven, commenting on the study’s release.

PAINFUL PRICING The IEA notes that there are great differences in the costs at which various fuel types are traded in different parts of the world, which naturally affects the efficiency and output of their respective industries. Average

considered. The EU has been (and still is) struggling with an economic recessionary environment since the start of the global economic crisis in 2008, which is to blame for the low level of investments and developments.

Disparities in pricing are all the more important since the IEA doesn’t expect a drastic change in the overall energy mix in the next 20 years, meaning fossil fuels will continue to dominate. Today’s share of fossil fuels in the global mix, at 82%, is the same as it was 25 years ago; the strong rise of renewables only reduces this to around 75% in 2035, the report said.

Combined with the massive overall demand growth, this will of course lead to a continued increase in carbon dioxide emissions, which are expected to jump 20% by 2035.

The IEA believes that countries and governments still have the opportunity to tackle the challenges that have been brought into the open through the ‘World Energy Outlook 2013’.

“We have the tools to deal with such profound market change. Those that anticipate global energy developments successfully can derive an advantage, while those that do not risk taking poor policy and investment decisions,” van der Hoeven said.

Photo: IEA

50 Source: http://barrelperday.com

Oil production, mb/d

NOTE: ALL ARTICLES MARKED E XPERT OPINIONS ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILIT Y

he International Energy Agency (IEA) has recently published its annual ‘World Energy Outlook’ (WEO), an authoritative account of where the global energy markets might be heading in the next decades.

Last year, their big story was the U.S. shale oil revolution: thanks to a few technological breakthroughs, the United States had suddenly become able to produce much ore gas and oil than previously. This will probably make North America an oil exporter by 2030.

So it came as a surprise that many reports covering the new WEO claimed that the IEA had changed last year’s ‘optimistic’ take to a more ‘pessimistic’ one: if Middle Eastern countries postpone their investments because of the shale boom, their hesitation may result in an oil-supply squeeze. In other words, prices could be high, because sufficient oil supply would be delayed.

Sure, this is catchy; but it’s not what the IEA’s forecast numbers reflect.

The chart below compares the IEA’s most recent oil production forecasts with its predictions published last year and in 2011. Two years ago (as the dotted line shows), it believed only OPEC countries could substantially increase their output, while non-OPEC production would almost stagnate until 2020, and then decline.

13

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14 2Business

Budapest Business Journal | Dec 13 – Jan 16

FROM RED MEAT TO WHITE MARKET Sándor Fazekas, Minister of Agriculture announced at the end of November that the government is going to lower the VAT on live pigs and half carcasses from 27% to 5% as of January 1, 2014. According to the minister, the aim is a partial whitening of the meat market. To any layman unfamiliar with the meat industry, this would probably be a hard piece of news to interpret, so the Budapest Business Journal asked Tamás Éder, Director of Corporate Relations at Sándor Csányi’s Bonafarm Holding (which includes meat manufacturers Herz and Pick), to comment on the news.

same way. Their stores open early in the morning and when tax authorities arrive after 10 am, all the meat that can be seen in the store is documented as legally purchased produce.

Those who commit this type of abuse run the risk of being caught by the authorities. But the gain they make on sparing the 27% VAT is so big that it is worth that risk. From an economical point of view, this means that a legal company will be completely unable to sell their meat profitably.

Q

But if I understand it well, this is not a problem specific to pork alone.

It is not even a problem specific solely to various types of meat, but also several other agricultural and food products, from vegetables to fresh pastry.

Q

Why is the current govern− ment proposal concerned exclusively with pork then?

Recently, several notable meat proces− sors have come close to bankruptcy in Hungary. It was crucially important for municipal governments to save work− places in those cities and towns, so the meat processing companies in ques− tion have essentially been nationalized.

This is what happened in Pápa, Gyula, and Kaposvár, the latter town being the headquarters of the well−known Kométa brand. Now the government is faced with the problem that it is impossible to run these companies profitably in the exist− ing conditions.

ANDRÁS ZSÁMBOKI

Q

Is pork going to cost less in retail stores as a result of this new measure?

Not really. The 22% VAT decrease has no effect on the final product, namely meat and processed meat, as the VAT of those products will stay at the very high 27% level.

Q Q

rriicch he h eerr?? richer?

This is not really likely, either. The tax cut would only have a broader impact if consumption habits went through a change. If, for example, meat consumers living in the countryside – people who also possess freezers – purchased many more half pigs from this time on. This target group of customers, however, is rather narrow, so we are not expecting any serious effect on the state budget.

Q

Q

So the loss of revenue suf− fered by the central budget y will make the meat industry

Then what is the purpose?

As Minister Fazekas says, the purpose of the VAT reduction is the whitening of the meat industry, or at least of the segment which produces unprocessed or half−processed goods. In the case of fast−moving, unbranded con− sumer goods like unprocessed meat, it is very hard for the authorities to follow the route of the goods. In addition, saving 27% on VAT is a significant gain indeed.

These two factors expressly attract those greedy wranglers who wish cheat on VAT.

Q

Could you be a bit more spe− cific?

There are two forms of VAT abuse commonly used in the unpro− cessed food industry. One of them requires a chain of similar−profile com− panies; among these companies a plausi− ble amount of goods is traded, and every company that furthers these goods on paper claims VAT repayment from the national tax authorities. The ultimate company which markets the goods will not pay any VAT to the national budget; and when this company accumulates two much tax debt it announces bankruptcy or vanishes in some other way (for exam− ple, the original owners sell the firm to a homeless person).

In the case of these chains, besides the fictitious movement of goods, most often a real movement of goods is going on as well. The goods, however, are not treated in the way that honest compa−

nies regard their stock. For VAT abus− ers, goods serve only as pretext for their transactions, and the sales are in fact almost irrelevant. The participants of the VAT abuse chain have already struck a good deal with their false VAT repay− ment claims; the profit from sold goods comes only as additional benefit. And this is exactly how they treat it: as the profit from sales is not really important, they market the meat at dumping prices.

This way, they cause damage to both the national budget and to all those honest actors in the meat trade who cannot com− pete with those depressed prices.

Q

And how about the other type of abuse?

Minor actors, i.e. those who sell the half−processed meat to end− users, commit the other type as a rule.

These minor actors buy up the pork from small slaughterhouses without a bill and sell it on to the customers the

This seems to be a clear enough solution. If it is in someone’s interest to make profit by abusing VAT repayment claims, they will switch to processed pork products.

They may in fact switch to anything from poultry through beef to vegetables. The food processing industry has been bat− tling for ten years to get the VAT on food lowered to 10%; at that level, according to a survey conducted by Ernst & Young, the risk of abuse exceeds the extent of the achievable profit. All that happened, however, was that the slogan of reduc− tion of VAT on food products has been fixed on the banner of parliamentary opposition, whichever party may have been in that position throughout the past decade. In 2008, it was FIDESZ that sub− mitted such a proposal to the budgetary committee of the Hungarian Parliament, and it was the governing Socialists that killed the proposal. In 2011, it happened the other way round. The actors on the two sides were exactly the same politi− cians. Minister Fazekas suggested that the present measure may be the first step of a process to be applied to other food− stuffs as well. We are all looking forward to the next episode.

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2 Business

Budapest Business Journal | Dec 13 – Jan 16

15

GIFT-WRAPPED FLIGHT MODE: ON ECONOMY BOOSTERS This year’s Christmas gifts don’t have to come from China.

ZSÓFIA VÉGH

For reasons not entirely of their own making, some people still find it hard to pick the right Christmas gift. Not only does finding a gift weigh on them, they are hard−pressed to buy something that is not off−the−shelf. Those who don’t want to settle with goods produced

by Chinese industry but rather wish to support the local economy, should head to the Ajándék Terminál (Gift Terminal). Run by Design Terminal, an NGO founded to promote the Hungarian creative industry, Ajándék Terminál has combined a Christmas fair with an exhibition for the third time since 2011. Visitors can wander around and shop (though under no pressure to do so) among products by Hungarian designers, architects, and furniture makers at Erzsébet tér.

This solution to Christmas chores seems to be catching on. Of the 4,200 visitors last year, some 800 bought

something. The combined sales of 50 designers reached HUF 7 million.

This year, 120 designers have offered products for sale. Household Hungarian names such as Ivanka Beton (cement dishes and everyday objects) or Urban Legend design (functional bike apparel

by Zsófia Geréby) are displayed with newcomers like bow−tie maker Badger&Fox. Should you need a lamp, there is Starry Light by Anna Farkas and Miklós Batisz. The internal source of the lamp provides local lighting for dinner, while its shade projects the celestial constellations of the Northern Hemisphere’s two equinoxes and solstices on the wall for wine drinking afterwards. Out for something classier?

Lavish pieces by Sarolt Jewelry or JUJJ are a far better bet than a common or garden chain gold necklace.

Some design products are also put up for auction (on December 13), the proceeds of which will benefit Magyar Ökumenikus Segélyszervezet (Hungarian Interchurch Aid), a charity organization.

Not only do these support a cause.

Buying anything from the designers will boost their businesses and the local creative industry.

Gift−wrapping is included.

As of this December, air travelers within the EU can leave their mobile devices switched on throughout the whole flight. Connection to the Internet remains forbidden though – for now.

ZSÓFIA VÉGH

Time flies swiftly when working – especially when on a deadline. However, it passes slowly when traveling on business.

Depending on your destination, you probably have three to 12 hours to kill, which you can hardly spend working.

Nearly all flights forbid the use of electric devices in the air, meaning passengers may use them offline only: no emails, no phone calls, and no net. While this may not change for a while, from now on, travelers at least need not switch off their phones during take−off and landing anymore. In its updated safety guidance published on December 9, the EU’s Aviation Safety Agency allows for the use of portable electronic devices (PED) in

non−transmitting mode from gate to gate.

This easing will lessen the hassle of having to turn phones off, though it hardly makes flight time more efficient in working terms; for that, a connection to the Internet is essential. Today, few airplanes are equipped to cater to such needs: transmission on these aircrafts takes place via a safety certified on−board system, not via the ground network. Connection to such a network is currently only permitted when cruising, although this is expected to expand in the coming years with improved safety measures and lobbying.

Although authorities and experts group who participated in updating the guidelines have cleared earlier safety concerns, new problems can arise. If one is not obliged to switch devices off, some people may decide not to disconnect at all. Flight attendants can’t physically check every phone, so lawmakers may only appeal to passengers’ sense of safety and judgment.

The new policy is not mandatory: airlines may choose not to follow it. However, the need to be able to work on the road will continue to grow, reducing the likelihood of airlines opting for a more restrictive policy on the use of PEDs. Connectivity also creates a new income source, which airlines are likely to tap, once it becomes possible.

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SBERBANK HUNGARY WISHES YOU SEASON’S GREETINGS AND A HAPPY NEW YEAR!

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16 2Business

Budapest Business Journal | Dec 13 – Jan 16

A LOT LESS DIRTY GAME AHEAD?

LEVENTE HÖRÖMPÖLI-TÓTH

Q

Has the joint Transparency Register of the European Parliament and the Commission met the expectations of its stakeholders since its establishment in 2011?

Business circles are happy with the system because their profession needs credibility and it is in their best interest to decrease the scope of the unknown.

We are not naïve, though, to think that all illegal activities will be gone for good.

The large majority of businesses support a compulsory scheme instead of the current voluntary one. They want everybody to be bound by the same rules.

Q

Did it make sense to make registration non−compulsory in the first place?

The practice in the U.S. demonstrates that even if the system itself is obligatory, the rules never apply to the whole group of lobbyists. There are always thresholds that allow some to escape accountability.

And whenever some wrongdoing was revealed, the sanctions were not enforced in America. Under the European structure, if you communicate with the institutions it is a sign that you are ready to cooperate. It is a very constructive approach.

Q

Who else has problems with the current concept that not all lobbyists are required to sign up and that a ‘name and shame’− based sanction structure should be enough to deter corruption?

The NGOs are with us on the framework as it is now, but transparency campaigners would like to push it much further. They want to make it not only compulsory, but to see a lot more detailed reports submitted. We refrain from going into that direction. We don’t want to pose as Big Brother. On the other hand, it would increase bureaucracy. Getting the rights to investigate or checking all figures would require more staff.

Q

Hiring extra personnel for this purpose could work.

Not at all. We are going to decrease our administration. I’m not sure either whether more corruption would be detected that way. This instrument is to

create an environment for those who want STORY HIGHLIGHTS ■

The Transparency Register has received positive feedback and should increase the EU’s legitimacy ■ Results are being reviewed and the scheme may become compulsory

CURRICULUM VITAE Frenchman Gérard Legris coordinates the European Parliament/Commission joint Secretariat of the Transparency Register as Head of Unit. He joined the European institutional network in 1980 and first held budgetary and financial positions in the Council and the Commission. From 1990 to 1996 he was member of the EU Delegation to Japan in various senior positions.

Later he supervised the information campaign on the introduction of the euro, and assisted the intergovernmental conference leading up to the Treaty of Lisbon. Legris holds a degree in finance (ESCAE Business School, Reims) and in European policies (ULB, Institute of European Studies, Brussels).

He is a regular speaker on EU institutional affairs..

to act in good faith, it is not designed to crack down on corruption. For that the EU has special schemes such as the antifraud office OLAF.

Q

Feedback on the results of the register is being assessed in an ongoing review. Can you give us an inside look?

The political groups of European Parliament are exchanging views about the issues in question, but what aspect would get a majority cannot be foreseen at this stage. The results should arrive soon.

Q

The timing of the review is surely not an accident with European elections coming up next year, not to mention the fact that 2013 is the year of European citizens. Everything seems to be revolving around transparency.

We needed to set up the joint register at some point and it had to be early enough in the parliamentary term so that a balance could be drawn before the

CV

Photo: András Hajnal

In order to enhance the transparency of European institutions, a special register for lobbyists was set up two years ago. The man supervising the scheme is Gérard Legris, a senior official at the Commission.

He says that making the system compulsory would only cause more bureaucracy, and that EU−wide transparency trends are promising.

end of it. Yes, for calendar reasons the review is close to the termination of the mandate. But it is not meant to be used in the campaign, although there will surely be some political forces that will try to capitalize on the issue.

Q

Making it a campaign theme could even be an asset. This is a positive thing after all; strengthening the EU’s legitimacy could raise voter turnout.

It can be used that way, that is one of the reasons why I’m doing this information campaign. Many people distrust the institutions, but it’s normal political reality to be for or against something. In our case, the preliminary problem is often that citizens don’t know how the institutions function, which makes them suspicious.

Q

Is it wrong to cast doubts?

I’m not saying they should trust the institutions by definition, but they should be aware of how they work and how they can influence them, and thus exercise their democratic rights. It is alright

to be against something, yet you need to be able defend your argument.

Q

Are you planning to make more publicity about this transparency initiative?

We don’t have a strategy yet in this regard – we have been too busy setting the system up. Once we are finished with the review, we should come up with a communication campaign to let people know what has changed.

Q

Probably all member states could use a similar scheme.

Does the Commission have the power at least to make a recommendation on that?

We don’t have such a competence. It’s for every country to determine its own course.

Naturally, we are very happy if member states adapt solutions that function on a European level. In fact, Ireland, UK, Austria and France have just or are about to take initiative in this field at a national level. The trend is very promising.

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2 Business

Budapest Business Journal | Dec 13 – Jan 16

17

HOW NOT TO BECOME A HORRIBLE BOSS

LEVENTE HÖRÖMPÖLI-TÓTH

The startup scene has reached fever pitch in Budapest yet again. Two Hungarian comets of the IT industry, Prezi and USTREAM, organized a conference named Stretch on December 5−6. The aim was to bring together top experts who have gone through the pain of building teams in the digital era. The organizers picked the Hungarian capital as they see the inspirational power and the potential of such events in turning Budapest into a major knowledge hub in Europe.

The line−up for the speeches was impressive, and, in a unique fashion, each presentation was commemorated by the drawing a comic strip on a flip chart. Real world stories were told by the cream of the crop with hands−on experience of how modern companies should effectively manage fast growing staff, a typical challenge in the startup galaxy.

NO MORE BLAME GAMES PLEASE As Andrew Stellman, a bestselling author with O’Reilly Media (which publishes books and websites and produces conferences on computer technology topics), argued, making a team takes more than great people, goals and practices. “Teams can be messy when people act like people. Therefore, it is of key importance keeping team

STORY HIGHLIGHTS members aligned to the goal of delivering value,” Stellman ■

Top reps of the startup world gathered to reflect on cyber age management issues ■ A whole new attitude is required from managers to make real leaders

said. “Remove the atmosphere of blame. You should set people free to do their work,” he added.

Oren Ellenbogen, a newsletter editor at Software Lead Weekly, reminded attendees that people don’t quit their job, they quit their bosses. In order to keep talent, therefore, decision makers must realize that “leadership skills can and should be practiced. You need to start building trust on day one,” Ellenbogen said, and urged employers to “make sure people are passionate about what they do.”

Other speakers addressed the management issue from a scientific perspective. Dario Nardi, is a brain researcher and media specialist, and studies the brain activity of those involved in solo and group tasks. “Our brain has two CEOs. The left executive helps us focus, make decisions and filters distractions.

On the other hand, the right executive is rather innovative and can experience a lot of moods. Our aim is to get them to work together like an orchestra playing music,” Nardi said.

WHAT IS YOUR LEARNING CURVE? Oscon program chair Sarah Novotny spoke about fostering a learning culture at the workplace that applies to all levels of management. “Junior staff absorb everything like sponges due to their curiosity.

Their excitement should be harnessed,” Novotny said.

“Intermediate staff often have the burden of angst and dogma. They may feel stuck in the middle, which prevents them from sharing their knowledge. Senior staff members, in turn, are expected to teach and learn from

COMIC STRIP MADE ON THE SPOT

other levels of management. This is part of the learning culture too,” Novotny concluded.

Buzzword decentralization dominated Wrapp CTO Andrea Ehn’s presentation. “The crucial factor is pushing down as many decisions as possible to those with specific domain knowledge. You need to do the right thing and need to make sure everybody’s on board,” Ehn said.

If only it was that easy. But if you want to be a true leader, at least you should try.

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Graphic recorder Grafacity Ltd., Kata Máthé, Márta Frigyik, Levente Hegyi

Managing a company has become tougher than ever in the digital era. A conference in Budapest brought together the best minds to share their thoughts on leadership and management and how to avoid the transformation into becoming a horrible boss.

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3Socialite BOOK REVIEW

CARROT AND STICK Two leading behavioral economists explore how incentives can be used to change the way people act.

Uri Gneezy and John List are a little like anthropologists who spend months in the field studying people in their native envi− ronments. But rather than acting as impar− tial observers, these two intrepid econo− mists have set out to study the ways people act in order to try and solve some of our major problems. They share their find− ings in ‘The Why Axis’ – a colorful exami− nation of why people do what they do, and how effective incentives can spur them to change their behavior.

Gneezy and List have sought the answers to everything from life’s big−issue ques− tions – the problems of discrimination, gen− der inequality, and the gap between rich ADVERTISEMENT

and poor students – to everyday business issues such as low workplace productivity and price setting, all through the lenses of motivation and incentive.

In carrying out their research, they trav− elled from the foothills of Kilimanjaro to the wineries of California, from the hot streets of India to the chilly neighborhoods of Chi− cago, from the school playgrounds of Israel to the boardrooms of some of the world’s largest corporations. Their aim was to estab− lish causes for behavior in areas where cor− relations are often used to provide answers – sometimes misleading ones. By contrast, their ‘field experiments’ in factories, commu− nities and shops show how real people live, work, play, act and react, and they show how incentives can change outcomes.

The results are fascinating. Among their findings, Gneezy and List note that women are less willing to negotiate a salary because

of cultural norms that discourage them from competing. But when women are told that salary negotiations are welcome, they nego− tiate, and in an experiment where the job list− ing specifically stated this, the gender gap in applications shrank by 45%. The economists also found that invoking peer pressure is the most effective way to get people to live in an eco−friendly way, that people are much more likely to donate to charity if they can choose not to be contacted again, and that raising prices can lead to greater sales if the price signals a premium quality product.

THE WHY AXIS

by Uri Gneezy and John List Published by Random House Books ISBN 9781847946744 Available to order through www.hungaropress.hu

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Budapest Business Journal | Dec 13 – Jan 16

RESTAURANT REVIEW

LET’S EAT IN BUDA NOW! It has always been a tough question, where to eat out in the Buda side of the Capital. Maybe that’s why we were extra curious about a recently opened restaurant called ‘Bruno & Bruno’. The name of Zoltán Herczeg, the owner of the successful ‘67’ in Székesfehérvár was all the guarantee we needed that this, only his second restaurant but much closer in Hegyvidék Bevásárlóközpont in 12th district, would be worth the visit. We arrived on a chilly early winter evening, so in order to warm up quickly we started our dinner with a shot of pálinka as an aperitif. The sour cherry from Destillo and the quince from Agardi both proved to be great choices. Having got a bit warmer, we took in our bearings and started looking at the menu. The minimal style bistro could have been anywhere from Milan to Stockholm with its well− designed spaces, quality lightings and smart−chosen materials.

The menu did not neglect the favorites from ‘67’, but also included a few exciting new dishes and seasonal offers. We chose roasted goose liver in a salad wreath as an appetizer, which proved a treat even just to look at. The liver tasted fantastic; it was creamy and had kept all the moisture; the garnishing salad ADVERTISEMENT

– a bouquet ring of radish, pearl onion, cauliflower, lamb’s lettuce, goose skin crackling and marinated red bell peppers – was an amazing companion. Next we had goose consommé with matzo balls.

The soup was perfectly composed. It was a clear, strong and rich bouillon, and the matzo balls, goose meat and vegetables tasted just like a Hungarian homemade soup should. It was a great balance between professional cooking and traditional tastes.

For the main course we wanted to try the famous ‘Fliedermaus’, a pan−fried pork cutlet, breaded in panko crumbs.

It was garnished with salad leaves with fresh cucumber vinaigrette. The meat was perfect. It was delicious, not oily at all, soft in the inside, and crispy on the out. The salad was a great surprise as, to be honest, we had not expected anything special – yet the cucumber salsa reminded us of sunny summer days with its fresh and aromatic taste.

Our other main course was a mangalica pork goulash with homemade noodles and cucumber salad. It also was a great choice. The meat was tender and delicious, and the dumplings made a great match with it. It was nothing more than a perfect, old school goulash of the best quality, prepared with great care. In spite of the fact that we were quite full, after such a great dinner, we did not want to leave without trying some desserts.

When our floating island with pistachio flakes and crème brûlée with quince arrived, we knew, we had made the right choices. Fresh Madagascar vanilla, rich cream, and a few extra ideas made each special and perfect. This restaurant will not show extra tricks and hocus−pocus – but will serve you with top quality food, perfect tastes, and a well−composed menu. Their passion for food and hospitality can be seen at once. We keep our fingers crossed for them, because it is these kinds of restaurants that will be able to bring Hungarian cuisine back into the game. RATATOUILLE

BRUNO & BRUNO Dist. 12, Apor Vilmos tér 11−12 +36 20 243 1565

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ARISE KÉKFRANKOS, THE KING OF LOCALS REDS

EXPERT OPINION

ALL FOR THE EARS‌ Attila JANCSA

ROBERT SMYTH

HIFI

HOME THEATER

HIGH END

Approaching year’s end, spending on electronic equipment increases in Hungary too, however, alongside the bestselling, multifunctional smart products there is a segment of electronics which is unworthily overshadowed: quality music listening.

SUSANN HANAUER OF THE WASSMAN WINERY

continuing to cast off its mass production stigma, which is a lingering hangover from the previous system, and getting down to producing unique, sophisticated reds. Ironically, it’s really not the kind of grape that’s good for making cheap plonk, according to Sopron and Burgenland biodynamic winemaker Franz Weninger, who values the grape immensely for its ability to capture the character of different soils and terroirs. The Austrian’s 2011 KĂŠkfrankos from Sopron is remarkable value at not much over Ft 2,000 a bottle. It has varietally pure sour cherry, spice and herb notes, and ideal balance with a lively acid backbone that gives this medium−bodied wine a precise, clear structure. There’s also some earthy beetroot and black pepper there to ramp up the complexity.

Nevertheless, it might be a bit edgy, sharp and hardcore for some, as I discovered at a recent tasting.

ADVERTISEMENT Guests at that event absolutely lapped up JĂĄnos MĂĄrkvĂĄrt’s even cheaper 2011 KĂŠkfrankos, from the BaranyavĂślgy vineyard in SzekszĂĄrd, which is light− bodied but deliciously fruity, oozing sour cherries. My choice for a Christmas house wine.

Back at Terra Hungarica, which promotes natural winemaking, Posta’s KĂŠkfrankos 2009 had tangy red fruit and good structure. From Eger, TamĂĄs PĂłk’s NagygalagonyĂĄs KĂŠk− frankos 2011 exuded juicy blueberries, dark chocolate, Celebrate New Year’s Eve with the hottest jazz in green herbs, fine−grained town, enjoy our warm buffet at the favourite jazz tannins and was very long. spot of Budapest! www.jazzszilveszter.hu PĂŠter Wetzer from Sopron %XGDSHVW +ROOÂĄQ (UQÄ‘ X _ ZZZ EMF KX looks an exciting newcomer

with his beetrooty, sun−dried tomato KĂŠkfrankos effort.

Known in neighboring Austria as Blaufrankisch, where it is making medium−bodied wines that are grabbing serious international attention from the likes of the Jancis Robinson MW, there is every reason for Hungarian KĂŠkfrankos to follow suit. Soaring alcohol levels can be a problem in Hungary, compared to the supremely balanced Burgenland benchmarks from Austria. Naturally, it is generally a couple of degrees warmer in Hungary. Picking a bit earlier or better use of canopy management techniques, such as leaf shading, could be the way forward, although the higher alcohol may just be another part of the local terroir.

From Eger, Bukolyi’s KÊkfrankos Selection 2011 is very impressive with a stunning purple color, eucalyptus and raspberry notes, but the alcohol is a tad warming, although it does give the wine cojones and also reflects the hot vintage.

Incidentally, the most exciting Takler wines I’ve tasted in years are the single−vineyard KĂŠkfrankos: Szenta−vĂślgyi KĂŠkfrankos 2009, a top red at this year’s Pannon National Wine Contest, and GĂśrĂśgszĂłi KĂŠkfrankos 2009. The alcohol is hardly light at over the 14% mark, but it is well integrated and body building.

KÊkfrankos also forms the backbone of BikavÊr (Bulls Blood) blends. Not quite a BikavÊr, as it’s from Villåny – Sauska’s great value big wine, CuvÊe 11, is based on a KÊkfrankos backbone for the first time in 2011 and backed up by French varietals. This is spicy and concentrated with notes of dark chocolate, red fruit, caramel and basil.

hile we are proud of our unique music culture, our music education, which is itself a Hungaricum, our worldrenowned composers and performers, such demand for excellence often cannot be found in the homes of the middle and upper classes. Hungarian society ever more appreciates the quality joys of life in the fields of wine, cars and fashion. Even if we cannot ourselves afford to buy the most famous and expensive global brands, we desire them and know the criteria of high quality. By comparison, it is surprising that even the most sophisticated wealthy people cannot enumerate the real high-end brands of music. Very few would be able to mention the criteria by which such a high value investment decision can be made good or bad, and the equipment itself valuable or worthless.

There are, however, some pieces of good advice you can follow: heed these and big disappointments or unnecessary expenses may be avoided. One of the most important notes is not to buy such expensive equipment based on information taken from the Internet or consumer magazines. Many times general brand awareness is not a guarantee either. The personal experience, however, can be determinative: even two products in the same price category can create enormous differences in pleasure when heard.

That is why a shop where a variety of products can be tested and listened to should be chosen, so you can compare all price categories. Secondly, a professional who gives personalized advice should be found, something that is even more difficult to find than a really good shop. For the appropriate choice, much information is needed – for example about the size of the room, the types of music preferred, and of the other equipment already available in the home audio system.

Many people, for example, believe that they have to buy an outstanding amplifier to improve a set of poor quality speakers in order to get a better sound; however, it is actually vice versa, as ultimately the music is given voice by the speakers. The majority of the available budget, therefore, should be spent on the speakers.

If you can afford it, it is better to choose handmade, really valuable products, instead of mass produced goods. If you desire a real quality sound, do not pay for unnecessary services and applications, but instead invest on quality components. Although it is undoubtedly easy and trendy to send music from your phone to a player, the result is far from top quality; only less common media, and most especially analogue records, approaches actual sound reproduction. It is maybe more complicated, but it is worth the effort of standing up from the armchair and changing a CD or turning over an LP. And, finally – although design is very important for us, who distribute, amongst others, Sonus Faber evoking the world of classical musical instruments, – I would warn everyone against buying modern design sculptures or trendy decorating elements. Leave it to your ears to choose first, and only once you hear the difference let our eyes have a say in the purchase too!

NOTE: ALL ARTICLES MARKED E XPERT OPINIONS ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILIT Y

WÂ Photo: AndrĂĄs PolgĂĄr

Such is the stigma surrounding Portugieser and its associated lack of winemaking pedigree that I couldn’t convince a fellow imbiber to sip the 2012 offering from the upcoming organic VillĂĄny producer Wassmann at November’s Terra Hungarica tasting. She sure missed out on a treat. While it had a nice purple color and those lively, fresh Portugieser aromas of violets, red and black fruit, it also had much more serious structure, richness and depth than you’d expect from this journeyman red grape, with its firm acid backbone holding everything up nicely. Exciting newcomer Wassmann manages to keep the alcohol levels nicely in check in all its wines, without any loss of depth. Its grapes come from the more open, less hilled−in terrain of SiklĂłs, which doesn’t heat up to quite the same sweltering levels as VillĂĄny proper, while the limestone soils, rather than loess−clay soils, stay cooler and retain refreshing acidity in the grapes.

Over in Szekszård, Posta’s Kadarka 2011 impressed with its distinctive raspberry jam and rose hip notes. This was another example of a grape variety punching above its weight, with more substance than the average Kadarka.

This thin−skinned grape variety that usually produces light−colored, spicy, easy−drinking wine was brought to Hungary by Serbs fleeing Ottoman invaders in the 16th century and is often dubbed the ‘Hungarian Pinot Noir’. While it’s tricky to cultivate, indeed like Pinot, which led to most of it being grubbed up in the former system, the rewards of sticking to it make the hard work worthwhile.

Furthermore, its future looks secure, especially since Szekszård’s Heimann and Villåny’s Sauska are carrying out groundbreaking research into clones in tandem with the PÊcs Research Institute.

Which brings us to Hungary’s most widely planted grape: KÊkfrankos.

This thick−skinned, late−ripener is

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PREMIUM PASTRIES RESIST THE CRISIS Szamos Handmade Candy has evolved from a small, family− run marzipan workshop in the 1980s into an ever− growing chain present in all the major Budapest shopping malls today. What is the family’s secret? The Budapest Business Journal asked Ádám Kelényi, grandson of the founder and head of one of the four family−owned companies that make up the Szamos empire today.

confidence. That is why famous patisserie chains such as Auguszt have never opened shops in shopping centers. Our units still have a big advantage over standard shopping mall cafés importing pastries from outside production units: namely that the Szamos brand is an unquestionable quality warranty for customers.

ANDRÁS ZSÁMBOKI

Q

Had it always been obvious that some day you would be standing at the helm of the company?

For me, yes: Szamos has been a family enterpr ise since my grandfather Mátyás Szamos founded it. He ran it until the late 1970s, when my parents inherited the management. At the moment, a second generational shift is underway: my brother Kolos and I are taking over the business. My mother had been a mathematics teacher while my father had worked as a chief engineer in the Csepel Truck Factory. It took great courage for them to become private entrepreneurs

Q

So you have been preparing to take over the company?

According to a family story, once, when I was four years old, I arrived at our handmade confectionery factory at Pilisvörösvár after a long and winding car ride. Upon arrival, I broke into tears.

When people asked why I was crying, I replied: “When I will be the manager, I will never be able to find my way here.”

So the legend goes. In any case, I must have been pretty ambitious.

My father was consciously preparing me for the job. When I turned 18, I was made general manager of the limited company that was running the only pastry shop we had at the time. Meanwhile, I began to attend business college. What I learnt

my education here in Budapest was the most useful thing imaginable for what I am doing at the moment.

Q

What were the steps of the company’s expansion?

In the late ’80s, all we had was the family marzipan manufacturer, catering mostly to pastry chefs, and a fashionable downtown ice cream place in Párisi utca. Neither of these produced pastries per se. By the end of the ’90s, we began to shift toward traditional sweet cuisine, and opened a patisserie in an upscale inner Buda neighborhood in Böszörményi utca. From the point of view of the family enterprise, this proved to be a very useful experience: my parents understood that there was great demand for high−quality pastries in Budapest.

However, the shopping mall boom that began in Budapest in the late 1990s triggered our great period of expansion.

Q

Was that your idea or your father’s?

Neither, really. The Árkád shop− ping mall management explicitly invited us. They wanted a high−quality candy store among their assortment that would cater to a great variety of gourmet cus− tomers, and we seemed like a good choice. Eventually, our shop became more than that: it became a patisserie with tables that also sold boxes of chocolates and marzipan candies. Then several simi− lar stores of our own followed; at present, we run 14 such units in various shopping malls in Budapest.

– at that time/regime, this was hardly considered upward mobility.

Compared to their occupational shift, our takeover has been much smoother: my brother and I have grown up in a family of professionals, and for us to manage a mid−size company has always been among the natural options.

in college in the morning I could apply in practice right away in the afternoon.

I was the one who kept in touch with the accountant, went to our lawyer if necessary, and managed our firms’ affairs at the tax department of the municipal government.

Other families send their children to study in London. I, on the other hand, think that

Q

You do not seem to face serious competition in the shopping malls.

The concept behind our presence in shopping malls is based on separating the manufacturing from the commerce. Messy workshops do not belong in glamorous malls; it is better to have them in the outer districts. However, pastry professionals commonly think a candy shop without a workshop would never win the customers’

Q

How about the crisis?

The quality patisserie trade is a crisis−resistant business. True, the 2008 crisis brought about sweeping changes for confectioners, but Szamos has come out of the purification process fine. At the lower end of the scale, the mass producers are still trapped in bitter price competition. The mid− dle category patisseries have become mas− sively bankrupted, whereas the confec− tioners producing premium brands have strengthened their positions.

As a matter of fact, Szamos had a recession year as well. In 2009, our turnover decreased by 10%. Since 2010, however, we have grown continually. We decided to escape forwards; instead of putting on the breaks, we continued to expand. We have increased our pastry shop chain, which now has 21 units; we opened the Szamos Gourmet House (where the BBJ interview was conducted) in 2011; and we appeared in the SkyCourt at Ferihegy Airport too, opening a new candy shop. In our production units, we employ 350 people, while the Szamos patisseries have 200 employees.

However, in order to operate the shopping mall patisseries in a profitable way, we needed to create an optimal selection of products. In the end, we have managed to create the ideal mix for the Szamos patisseries operating in the shopping malls: one−third candies, one− third pastries and one−third ice cream, which brings the highest profits.

CONSOLIDATED FINANCIAL STATEMENT OF THE SZAMOS FIRMS (SOURCE: FAHÉJ KFT., VANILIA KFT., SZAMOS MARCIPÁN KFT.)

Turnover from exportation Number of employees Total revenue

2012

2013 (expected)

840 m

900 m

450

550

3.9 bln

4.2 bln

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WHO'S NEWS

Name SÁNDOR GÖNCZI Current company/position ELECTROLUX LEHEL KFT / MANAGING DIRECTOR

Gönczi has been appointed managing director of Electrolux Lehel Kft. Besides supervising the operation of Electrolux’s three Hungarian plants, he keeps his post as vice president at the Swedishowned company. He has more than two decades of domestic and international experience in the sector and has been with Electrolux since 1995.

Do you know someone on the move?

Send information to research@bbj.hu

Name RICHÁRD SZABADOS

Szabados was named as head of the CIB Lízing Csoport as of December 1, while maintaining his previous position as head of the CIB’s SME division. Szabados has 13 years’ experience in the banking sector, and has been with CIB Bank since April 2010. Earlier, he held various manager positions at Budapest Bank and K&H Bank.

He has a degree in economics.

Current company/position CIB BANK / HEAD OF CIB LÍZING

Csabay joined the sales team of the online sales house in November.

Previously, she worked at Uniomedia. She graduated from the media and communications faculty of Corvinus University.

Name ZSÓFIA LAKATOS

Lakatos has been elected the new president of the Hungarian Public Relations Association (MPRSz). Lakatos, managing director of Hill+Knowlton Strategies, has worked for the association for the past eight years. During the previous two terms, she was vice president.

Current company/position HUNGARIAN PUBLIC RELATIONS ASSOCIATION / PRESIDENT

Turkey-based logistics service provider Ekol Logistics has started operations in Hungary, the company announced at the end of November, with Kovács named head of the Hungarian unit.

Korsós joined the campaign management team of Adaptive Media in September. Previously, he was with DVD Mánia Kft. He graduated from the János Kodolányi College.

Name KLÁRA CSABAY

Name PATRIK KORSÓS

Name ÁKOS KOVÁCS

Current company/position ADAPTIVE MEDIA / MEMBER OF THE SALES TEAM

Current company/position ADAPTIVE MEDIA/ MEMBER OF THE CAMPAIGN MANAGEMENT TEAM

Current company/position EKOL HUNGARY / HEAD OF THE HUNGARIAN UNIT

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