Budapest Business Journal 2718

HUNGARY’S PRACTICAL BUSINESS BI-WEEKLY SINCE 1992 | WWW.BBJ.HU

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BUSINESS JOURNAL BUDAPEST

VOL. 27. NUMBER 18

OCTOBER 8 – OCTOBER 17, 2019

SPECIAL REPORT Energy

SPECIAL REPORT

Hungary Looking for a Renewable Spot in the Sun Hungary is rich in renewable energy potential as solar, wind, biomass and thermal energy are all easily accessible for the CEE country. Combined with the creation of smart cities, these factors could contribute to a greener, more pleasant future.  11 SPECIAL REPORT

Accelerating the Gradual Embrace of E-mobility The share of electric vehicles and hybrids in Hungary is on the rise, with many Hungarians thinking of buying a new car saying they would opt for an electric vehicle, if their circumstances allowed.  14

In it for the Long Haul

SOCIALITE

Hungarian Master Art Forger Elmyr de Hory Born Elemér Albert Hoffmann in Budapest in 1906, and supposed to have died 70 years later on the Spanish Balearic island of Ibiza, forger Elmyr de Hory led quite the most extraordinary life. 21

NEWS

Resilient Hungary Swimming Against the Tide, Thus Far The OECD has released its latest interim global economic outlook report, and it looks more pessimistic than ever, but Hungary, thus far, has proved able to swim against the tide.  3

BUSI

N E SS

Wizz Air Hungary CEO Stephen Jones hints at long-haul destinations, talks about combatting “flight shame” and planning for Brexit, as well as life as Budapest’s “hometown BUSINESS airline”. 6

Cybersecurity: Not all Attacks are Equal A new survey by RSM Global summarizes how prepared businesses are to meet cybersecurity threats (spoiler alert: not very). The BBJ talks to a local expert who explains what companies need to do to protect themselves.  7

News

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Budapest Business Journal | October 8 – October 17, 2019

THE EDITOR SAYS

EDITOR-IN-CHIEF: Robin Marshall EDITORIAL STAFF: Zsófia Czifra, Kester

Eddy, Bence Gaál, David Holzer, Éva Kaszap, Christian Keszthelyi, Gary J. Morrell, Robert Smyth, Zsófia Végh.

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

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BBJ-PARTNERS

Hungary dusted off its glad rags, slapped on some make up and sashayed its way down a catwalk made for one on Tuesday as the country sought to show off its seductive economic curves to international business.

In recent years, this country has proved highly adept at attracting foreign direct investment, with each year’s total succeeding that of the previous 12 months for the past five years. The country’s investment promotion agency, HIPA, has won several titles, most recently the Annual Investment Meeting Award for the Central, Eastern Europe & Turkey Region in Dubai in April.

Despite that, there has been frustration in government circles that Hungary isn’t getting sufficient credit for its economic success. Too often, the feeling goes, all that people abroad hear about Hungary is the political noise surrounding the country’s policies. The good news about its figures – record low unemployment, the second highest GDP growth in the EU for the first two quarters of 2019 – fails to cut through.

So it decided, for one day at least, not to fight fire with fire, to push the politics to one side and simply talk about the economics directly to an invited audience of those already investing in Hungary and those considering doing so, as well as a number of international journalists.

Called “Inspiring Hungary”, it was a day of keynote speeches (from Minister of Finance Mihály Varga and Governor of the National Bank of Hungary György Matolcsy), discussions (including one with Minister of Foreign Affairs and Trade Péter Szijjártó), round tables and TED Talk-type presentations. Both the German and American chambers of commerce were involved in organizing break out “cluster” sessions. The Budapest Business Journal was involved, because I was asked to be the moderator of the day, while the FT’s regional reporter, Valerie Hopkins, chaired one of the round tables.

Politics did not disappear completely. Szijjártó complained about what he called the hypocrisy of those who attack Hungary, citing the example of the EU’s Russia sanctions, during the imposition of which the V4 countries have lost millions of dollars, while bigger states like Germany and France have seen their exports to Russia grow, he said.

In a later roundtable Levente Magyar, Deputy Minister at the Ministry of Foreign Affairs and Trade, said Hungarians had not historically been good at selling their successes, and need to learn that skill, but he also blamed what he called the “liberal media” for constant attacks on the country.

Talking to delegates at the event, there seemed to be broad agreement that the information provided had been informative and interesting, and HIPA officials I spoke to afterwards were certainly happy that the conference had achieved what it set out to do.

For my money, the highlight was the very last session, which saw former French President Nicholas Sarkozy and former Spanish PM José María Aznar engage in a wide-ranging on-stage interview with Alexander Marguier, publisher and editor-in-chief of the German political magazine Cicero.

The two former leaders, friends who shared clear chemistry, spoke passionately in defense of a European Union that respected the separate cultures and traditions of its member states, and of a “crisis of leadership” in politics. Without naming names, Aznar bemoaned what he saw as a lack of quality in those drawn to public service nowadays. Sarkozy was more to the point, saying Boris Johnson is worse than Donald Trump, because the U.S. President has no ideology and is all about “the deal”, which means you can at least negotiate with him, while the U.K. Prime Minister is an ideologue.

Robin Marshall Editor-in-chief

Photo: MTI/Tamás Sóki

Photo: Fortepan.hu/Tamás Urbán

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HUNGARY HOPING TO SELL ECONOMIC GOOD NEWS

THEN & NOW

To the right, hot air balloons take to the skies during the 30th International Professional Air Balloon Meeting at the airfield at Őcsény (153 km south of Budapest) on September 29. The faded photo to the left shows an air balloon meeting in 1980, from the Fortepan public archive. The large orange balloon carries the name of MALÉV Hungarian Airlines, the national flag carrier that collapsed under its debts in 2012.

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Budapest Business Journal | October 8 – October 17, 2019

News///macroscope

Resilient Hungary Swimming Against the Tide, Thus Far Foreign Trade in Hungary (January-July 2019) 2019

18,046

20,569

2018

19,510

Thousand million HUF

19,439

The OECD has released its latest interim global economic outlook report, and it looks more pessimistic than ever, cutting back on global growth prospects. Rating agency Fitch also published a gloomy outlook recently.

Hungary, thus far, has able to swim against the tide.

1,448 Export

Import

1,060

Balance

In its Interim Economic Outlook September 2019 report, the OECD says it expects a deteriorating global environment, significantly lowering its global growth projection for this year and the next.

The organization projects that the global economy will grow by 2.9% in 2019 and 3% in 2020; the weakest annual growth rates since the financial crisis, with downside risks continuing to mount.

In its previous report, the OECD said the global economy would grow

by

3.2%

this year.

Economic prospects are weakening for both advanced and emerging economies, and global growth could get stuck at persistently low levels without firm policy action from governments, the document warns.

According to the report, trade conflicts are the principal factor undermining confidence, growth and job creation across the world economy. It emphasizes that the continuation of trade restrictions and political uncertainty could bring additional adverse effects.

The authors of the report worry that consumer demand, which has supported service sector output up until now, could decrease if weakness persists in the manufacturing sector.

If paired with continuing trade

tensions, this will negatively affect employment growth, household income and spending.

In detail, the OECD report forecasts that the economies of the G20 countries will produce growth of

just

Brexit Uncertainty

The OECD also warns about the possible effects of the withdrawal of the United Kingdom from the European Union, stating that substantial uncertainty persists about the timing and nature of Brexit, particularly as concerns a possible no-deal exit which could push the United Kingdom into recession in 2020 and lead to sectoral disruptions in Europe.

But there are other risks as well that threaten the global economy. The overall slowdown in the Chinese economy and significant financial market vulnerabilities from the tension between slowing growth, high debt and deteriorating credit quality are also weighing on future growth, the report says.

“The global economy is facing increasingly serious headwinds and slow growth is becoming worryingly entrenched,” the report cites OECD Chief Economist Laurence Boone as saying.

“The uncertainty provoked by the continuing trade tensions has been long-lasting, reducing activity worldwide and jeopardizing our economic future. Governments need to seize the opportunity afforded by today’s low interest rates to renew investment in infrastructure and to promote the economy of the future,” Boone said.

3.1%

this year, down from a 3.8% expansion in 2018. As for the eurozone, the report foresees a mere 1.1% growth rate for 2019, down from 1.9% in 2018. The GDP growth of the United States is expected to fall back to 2.4% this year.

As to the possible effects of a no-deal Brexit, the OECD report says that in ADVERTISEMENT

Trade Disruption

The new Global Economy Outlook of Fitch Ratings has also lowered growth projections for the global economy.

Published at the end of September, the report states that world growth next year will fall to the lowest rate since 2012.

“There can be few precedents since the 1930s of global growth prospects being affected so significantly by trade policy disruptions,” said Fitch chief economist Brian Coulton.

Fitch’s world GDP growth forecasts for both 2019 and 2020 have been lowered by 0.2 percentage points since the June forecast in response to the sharp escalation in the U.S.-China trade war over the summer. Global growth is projected to fall to 2.6% this year and to 2.5% next year from 3.2% in 2018.

As for the Hungarian economy, it thus far seems to be resilient: several major organizations have raised their growth projections. The European Commission said in the summer that this year’s economic growth might be as high as 4.4%, up from its previous projection of 3.7%. In its latest inflation report, the National Bank of Hungary also raised its forecast for economic growth for this year by 0.2 of a percentage point to 4.5%.

Indeed, the Hungarian economy keeps producing outstanding figures: the volume of gross domestic product was

4.9% higher

Source:

ZSÓFIA CZIFRA

2020, the U.K. economy could slow by 2%. However, a no-deal Brexit would also negatively affect all EU member states.

According to the report, there would be a 0.5 percentage point setback in the short-term.

in Hungary in the 2nd quarter of 2019 than in the corresponding period of the previous year.

That puts Hungary firmly among the leading nations of EU countries sorted by GDP growth. However, as Minister of Finance Mihály Varga noted in a speech at a professional conference a few weeks ago, the “golden age” of the Hungarian economy is coming to an end due to the external slow down.

He added, however, that the effects of the slowdown of the German economy have not yet been felt, which shows that Hungary’s vulnerability to external risks has lessened.

4|1

News

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Budapest Business Journal | October 8 – October 17, 2019

Latest Atenor Project due to Complete Next Year Belgium-based Atenor has launched its latest Budapest office development, the Aréna Business Campus, with the opening of a showroom at the 20,000 sqm Aréna Business Campus A, which is due to be delivered in Q2 2020 and is the first phase of a 85,000 sqm project.

GARY J. MORRELL

The development of such a large-scale speculative project reflects both the positive indicators in the Budapest office market and the long-term confidence of Atenor in its ability to let and sell a project onto investors.

“We do not define ourselves as a player who only invested during good times; we were here during the crisis that started in 2008 and we are staying in the future,” comments Nikolett Püschl, leasing and development director at Atenor Hungary.

“We are confident that our ongoing projects represent value which meet the demand. Our successful leasing and sale results verify this strategy on the one hand, and on the other hand Hungary is undoubtedly the main focus of Atenor, as it is well ahead of the regional average in terms of economic growth.

Our development model has remained unchanged: we purchase, develop, lease

and sell and then start over again with new projects,” she adds.

Total supply in the Budapest office market has reached

around

3.6 million sqm

according to the Budapest Research Forum (BRF), consisting of CBRE, Colliers International, Cushman & Wakefield, Eston International, JLL and Robertson Hungary.

From a demand perspective, vacancy has fallen to an all-time low of 6.3% as of this summer. There is a high volume of space in the pipeline, although construction costs are putting pressure on development.

Excellent

The BREEAM “Excellent” accredited Aréna Business Campus A, designed by Vikár

Zoltán Borbély, country manager Atenor Hungary, speaking at the launch of Aréna Business Campus. & Lukács Architects Studio, is located on a plot of about 10 hectares on Hungária Körút in District VIII. In Budapest, office development sites with public direct transportation links are becoming more difficult to source.

“Sustainability accreditations have a determinative influence on the whole

interior and exterior design of our projects. That is one key factor why Atenor is focusing on large scale campus style developments, as our mission goes beyond creating office areas, but we would like to play a significant role in establishing new green environments among our buildings as well,” says Püschl.

“Therefore, we pay attention to the green area ratio inside (terraces, green gardens, atriums) and outside (parks and green passages).

Accessibility is crucial; therefore, we are prefer locations with metro and/ or tram connections. On the other hand spaciousness is another very important factor for us, as our mission is to enrich the urban landscape with word-class, sustainable buildings in a pleasant green and livable environment.

Of course, the ideal is a direct metro connection, but other transportation links are also important: trams and buses as well accessibility of the airport and highways,” she adds.

The developer has already leased around 20% of Aréna Business Campus A, according to Zoltán Borbély, country manager of Atenor Hungary. Ground work has already stated on a

second

14,000 sqm

phase of the project.

Meanwhile, at its phased, speculative 130,000 sqm Váci Greens project, Atenor is due to complete the 21,000 sqm building E this year and the 23,000 sqm building F next year.

In parallel with development of the final phases the developer Atenor has undertaken of two projects in Buda.

OTP Real Estate Fund Buys Corvin Technology Park Futureal Group has sold the Corvin Technology Park, the fifth office block at the Corvin Promenade complex, to the OTP Prime Real Estate Investment Fund. Following the latest deal between the two groups, funds managed by OTP now own almost 100,000 sqm of office space in the area.

GARY J. MORRELL

The 27,300 sqm Corvin Technology Park consists of two phases: 14,000 sqm and 13,000 sqm (the latter due to be completed by the end of the year).

“The acquisition of the state-of-theart Corvin Technology Park is further proof that Futureal’s outstanding office developments on the Corvin Promenade represent a valuable long-term investment for our partners. This transaction further strengthens our solid partnership with OTP Prime Real Estate Investment Fund,” said Tibor Tatár, CEO of Futureal.

OTP Real Estate Investment Fund Management launched the OTP Prime Real Estate Investment Fund

in

2017

with the aim of investing in class “A” developments.

Last November, the fund purchased all of the operating office buildings at the Corvin Promenade urban regeneration project plus two offices centers that were under construction at the time. The eight buildings have a total gross leasable area of circa 80,000 sqm. At the time, OTP Prime Real Estate Investment Fund

also entered a preliminary agreement to purchase Corvin Technology Park.

Leading domestic funds and developers have established long-term business relationships at the top end of the market in recent years.

Domestic Capital

“One of the most interesting aspects of the CEE markets has been the growth of domestic capital in Hungary and the Czech Republic with more than 50% of investment volumes coming from domestic capital sources,” commented Mike Atwell, head of capital markets for CEE at JLL. The acquisition represents a valuable investment opportunity due to the high occupancy rate, stable income-generating ability and the location and accessibility of a wide range of services for tenants in the Corvin Quarter, according to Alexa Schlosser, director of acquisitions and asset management at OTP Real Estate Investment Fund Management.

The BREEAM “Very Good” accredited and WELL pre-certified Corvin Technology Park includes an inner garden on the ground floor and a rooftop terrace.

It will also be equipped with a mechanical heat recovery system, bike storage, showers and electric car chargers.

Features that are crucial for tech companies, such as higher electrical capacity and a power supply providing continuous, uninterrupted operation have been implemented in the planning of the development, according to Futureal.

Corvin Promenade includes half a million sqm of above ground office, retail, leisure and residential space on a

22

hectare

site that provides direct access to metro, bus and road links. Futureal is looking to extend the urban rehabilitation project south towards the area around the Semmelweis Klinikák metro station on the M3 (north-south) line.

Corvin 5, sold by Futureal to OTP Real Estate

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Budapest Business Journal | October 8 – October 17, 2019

Hungary Must Invest to Demonstrate its Innovative Nature to the World Better cooperation between industry and universities, cleaner and safer forms of energy, and waste management issues are some of the areas high on the state’s agenda László Palkovics, Minister for Innovation and Technology, told company representatives at an AmCham Business Forum.

ZSÓFIA VÉGH

Palkovics made his now regular annual visit to the American Chamber of Commerce in Hungary on September 16, and spoke about the issues and plans Hungary has in the area of innovation.

Having given an overview of the current macroeconomic situation, the minister moved on to the vision the ministry is focusing on right now: That Hungary will be one of the top five European countries in which to live and work in

by

2030.

To achieve that, the ministry defined four main focus areas: Creative Hungarians and innovative enterprises; transportation; clean, smart and affordable energy; and a clean country.

In the field of energy, for example, coalbased power plants should be modified and converted to become “green”, rather than shut down. By doing so, jobs could be spared and green targets better achieved.

“As far as carbon neutrality is concerned, as a conservative government we have been criticized for not signing the 2050 target figures,” Palkovics said. “As for the 2030 figures, we can do that but it would be irresponsible to define target for 2050 when neither the technological, nor legal or financial conditions are there.”

Energy and Waste

Currently, permissions for 2,700 MW of photovoltaic capacity has been given to companies. Of this, some 800 MW are

to cooperate with each other at a professional level – so this, too, has to be changed. Also, Hungarian universities are not visible in international rankings, and the state must increase its expenditure.”

Education generally remains a basic issue, he admitted. “We are continuing to modify the vocational educational structure”, he said. New types of training, including a five-year program called a “technicum” will be introduced, from which students can move onto university.

Digitalization

László Palkovics, Minister for Innovation and Technology. Photo by Hajnalka Hurta/AmCham. generated by solar energy, but its share will rise as of 2020. The minister also talked about nuclear energy, stressing that more research should be done on its waste management.

He also touched upon general waste and water waste management: the networks are old and large amounts of investments are need to, for example, deal with the upgrade of the sewer system.

Moving on to innovation, Palkovics underlined the importance of cooperation between industry and universities.

“We need to bring the different participants together,” he said. That was the reason why the government has restructured the basic research networks, not with controversy.

“We would like to provide the conditions for this basic research network to cooperate with others.”

Another crucial element will be science parks, which are to be built around universities; there will be such facilities in Zalaegerszeg, Debrecen, Pécs and Győr, etc., the minister said.

“We would like to have our universities cooperate with industry.” Participating in a technical trial is as good as writing a scientific paper and appearing in the citation indexes, he added. He said there was a need to increase financial support in the

2020 budget

and beyond as Hungarian research and innovation is not well financed. Local research and educational institutions also find it hard to cooperate with their European partners, the minister said.

As of 2021, the European Union’s Horizon Europe program will allocate EUR 100 billion, the largest amount yet, for R&D. If Hungary does not participate, the country will lose, the minister warned.

“That is why we need to force our universities to cooperate with their Western European peers. Despite what most would think, that the European

education system is harmonized by the Bologna process, the only element that is common is student mobility. Universities are unable ADVERTISEMENT

News | 5

On digitalization, Palkovics mentioned that Hungary is placed 11th in the world in terms of internet accessibility/coverage and 4G coverage.

“We would like to maintain this position for 5G; we have already made some steps,” he explained.

“The 5G tendering process is running, let us see what the applications will come.”

Many AmCham member companies are part of the Artificial Intelligence Coalition. “I have received a promise that, by the end of October, an action plan will be deployed and the strategy will be ready by January,” the minister said.

“Money will be there, the structures will be there, so now we need to work,” Palkovics said. “We believe that we are very innovative in Hungary, which is partially true,” he added. “We also need to show that to others.”

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Budapest Business Journal | October 8 – October 17, 2019

Business

Wizz Claims the Patriotic Flag in Hungary

Wizz Air to Nearly Triple Fleet, go Intercontinental by 2028 Wizz Air has 271 aircraft on “firm order”, meaning the budget carrier’s total fleet is set to grow to 300 by 2028 after allowing for withdrawal of older airplanes, Stephen Jones, chief executive of Wizz Air Hungary, tells the Budapest Business Journal.

KESTER EDDY

Having carried some 215 million passengers since its inaugural flight in 2004, including almost 34 million last year, Wizz Air, the Budapest-headquartered

Wizz Prepares for Brexit Turbulence The United Kingdom is Wizz Air’s single most important market: roughly one-third of all Wizz Air flights touch down on the island nation: the carrier flies five return flights daily just between Budapest and London Luton.

This makes Brexit, the expected departure of Britain from the European Union, “a really big deal for us”, Stephen Jones, CEO for Wizz Air Hungary, tells the Budapest Business Journal.

“Brexit affects us at three levels: it’s the right to fly [to and from the United Kingdom]: it’s demand impacts that might come from Brexit: also there’s ownership and control of the airlines,” he explains.

But if, or when, the United Kingdom leaves the Union, the key factor is the ability to fly to a

Stephen Jones (second right) announcing new destinations for 2020. budget carrier, now boasts 119 airplanes, making it “a really big size in terms of international aviation”, Jones said at a recent press conference. (Co-founder József Váradi, CEO of the parent company Wizz Air, had originally been scheduled to speak, but Jones stepped in for him.)

But with the order book totaling more than twice that number of modern, fuelefficient Airbus-family aircraft, including 20 “extra-long range” A320xlr planes,

country no longer automatically covered by the EU’s common legal and regulatory environment.

Seeking to plug this hole in advance, Wizz Air has set up a fully owned, separate U.K. airline, licensed under that country’s Civil Aviation Authority as a stand-alone carrier, “although it’s Wizz branded, and effectively under the same marque”, says Jones.

“Legally, it’s a separate airline, and gives us the right to fly [to and from the United Kingdom]” once Brexit occurs, he says.

While admitting that, given the legislative impasse in London the rupture ultimately, remains unknown territory, Jones emphasizes that establishing the U.K. subsidiary means that, for now, “We’ve done all we can to prepare ourselves from the machinations of the U.K. parliament and [its] relationship with the EU”.

Wizz Air is set for continued rapid expansion in the coming decade that will include flights well beyond Europe.

“Today, we are flying a number of 5-6 hour routes, while the XLR will extend our outstanding value and service proposition on routes of

7-8 hours

of flying. We are continuously negotiating with many potential partners across Europe and beyond,” Wizz Air stated in answer to follow-up questions from the BBJ. That appeared to be a thinly veiled confirmation of Hungarian press reports indicating the carrier was eyeing destinations in both India and North America.

For the more immediate future, Wizz Air expects a 15% increase in traffic this year, taking passenger numbers to the 40 million level for the first time.

Profitable Growth

“We fly to 150, and soon to be announced, 151 airports around Central and Eastern Europe, with bases in 25 cities. We now employ over 4,500 people,” Jones reports. “There are very few airlines in the world that could boast this successful, profitable growth the same way that Wizz Air has done.”

But in the new era of flygskam (Swedish for “flight shame”), Wizz is more than keen to stress its environmental credentials, emphasizing that the aircraft on order are chlorophyll green.

“There is no doubt in the industry that the A321neo is the best single-aisle

Wizz Air, founded in Hungary in 2004 according to the vision of chief executive József Váradi, proclaims itself to be the “hometown airline” of Budapest.

With a 51% share of the Budapest low cost market in 2018, this is a claim few could contest, especially since the demise of state carrier Malév Hungarian Airlines in 2012.

The budget airline expects passenger traffic to climb by 337,000 this year, a 6.5% rise, to almost 5.7 million, making, with the contribution from Debrecen Airport in eastern Hungary, some six million passengers in total for the country.

“When you contrast that 5.7 million against the population of Budapest, it really speaks to the economy and economic effort that Wizz Air is bringing to this city,” says Wizz Air Hungary CEO Stephen Jones.

Further Growth With an additional Airbus A321neo plane to be based in Budapest, bringing the total to 15 for next summer (plus two in Debrecen), and the launch of flights to Kiev, Kharkiv (in Ukraine) and Brussels airports next June, these statistics are set for further growth in 2020.

But along with the pure aviation statistics, Jones is keen to talk up the less glamorous aspects of the carrier’s activities in the Hungarian capital.

“We have our headquarters here, and employ directly more than 900 people, and indirectly around 5,000. In addition to the core airline, we have a big accounting back office, a brand new training center, we’ve got the Wizz Air Pilots’ Academy where we train pilots, and also a large IT support staff here.”

Asked by a journalist for the limits, considering the intense competition from rivals such as Ryanair, Jones retorted calmly, if determinedly: “We are competing with airlines all over Europe. In Budapest, we won’t come second to anyone. There is no second place for us. Other competitors can do what they like, but we’ll continue to grow and be the hometown airline here in Budapest.”

aircraft available today. And when we, as Wizz Air, in our business model, fill it with

239 seats,

the statistics that fall out of that operation are really game changing,” he says.

In reporting “only 57.7 grams of CO2 emissions” per passenger-kilometer in August this year, the carrier lays claims to be the “greenest airline in Europe”.

“This is something we’re very proud of, and intend to maintain,” says Jones.

2

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Budapest Business Journal | October 8 – October 17, 2019

Business | 7

Cybersecurity: Not all Attacks are Equal Cyberattacks are more common that one might think and are targeting more businesses. A new survey by RSM Global summarizes how prepared businesses are to meet these threats. The Budapest Business Journal talked to a local expert who explained the workings of security breaches and what companies need to do.

ZSÓFIA VÉGH

By moving a growing part or their entire business online, companies’ vulnerability increases exponentially. Still, only a fraction are prepared to fend off potential cyberattacks. To be precise, 64% of leading European businesses think it is possible that their company has been hacked without them knowing, according to the latest study by RSM, prepared for the European Business Awards.

The research surveyed 597 business decision makers across 33 European countries. Considering that 80% of them say digital transformation is a current strategic priority, the ratio is worrying, to say the least. Worse, a fifth of them don’t have a cybersecurity strategy in place and of those who do,

only

48%

believe that it will be able to protect them from a breach.

It may provide reassurance that not all breaches end in a successful attack. “In fact, breach itself is a vague expression”, says security specialist Boldizsár Bencsáth, CEO at Ukatemi Advanced Threat Mitigation Technologies Hungary, and assistant professor of the Budapest University of Technology and Economics.

“Breaking into a front-end system, such as a webpage, which shows the data of a

Most Vulnerable company, is not in the same category as client data or credit card theft,” he explains. “Attackers usually look for the most vulnerable point in a system which are Blind Attacks under-trained employees,” Bencsáth “A hacker attack happens every 39 seconds agrees. Therefore, companies should hold – that is true. But the fact that a computer security awareness training for all their is attacked doesn’t necessarily mean it is employees, he adds. This may not provide a targeted attack,” he goes on. And even 100% security but it is still useful; following if an attempt is successful (for example, such training, employees are better able hackers manage to gain access to a to spot an attack and thus become more secretary’s computer by sending a fake conscious of what they are doing. conference invite, that contains malware, What also works in favor of companies to her boss), there is no certainty they can is time, as the lateral movement phase proceed if the rest of the system is isolated. usually takes much longer than is depicted Targeted attacks usually follow a pattern: in movies, where hackers enter a system in a hacker enters the system by spearphishing, just a few minutes. In real life, hackers run also known as watering hole attacks. After several attacks. their foot is in the door, comes the lateral Another little-known aspect of cyberattacks is that most remain unknown.

The European General Data Protection Regulation (GDPR) requires firms to report “A hacker attack happens certain types of data breach within the first 72 hours of detection, yet every 39 seconds – that is true. But the fact that a computer is attacked doesn’t necessarily mean it is a targeted attack.” movement phase, where they try to get from, say, the secretary’s computer, which may be the least protected, to the developers who have access to servers. These phases are more or less the same everywhere, though the tools used may be different.

“The reason why we are explaining the entire circle is because an attack can be stopped at each phase,” Bencsáth says.

According to the study, almost half (46%) of successful attacks target under-trained employees via emails,

with

22%

of businesses still providing no cybersecurity training to their staff, the survey finds.

75% of hacks

never become public knowledge and only 23% of businesses informs the regulator following a breach.

“Many don’t even recognize they have been attacked. And when they do, they still consider it a risk to their reputation, and financial risks may also be involved,” Bencsáth notes.

Reputation

Reputational damage is a key concern for respondents, although genuine confusion appears to be driving the lack of transparency, according to the study. A third of businesses admit that they do not understand the circumstances in which they would need to report a breach.

Despite all the risks, middle market businesses remain resilient in the face of cyber risk. Of those surveyed,

86% say

that the increased risk of cyberattacks has not dissuaded them from

investing in digital transformation, the study says.

Some 29% of businesses expect their revenue to grow as a result of digital investments, with cloud technology the biggest area of focus.

Boldizsár Bencsáth “Exposure is a complex question,” Bencsáth says. “If the question is: ‘Is there is a chance of getting involved in a more or less successful attack?’ then the answers is yes. But do companies feel cyberattacks pose a significant risk on their business?: They don’t.”

If companies were to spend roughly 2% of their revenue on security – both cyber and physical – that would be a reasonable rule-of-thumb figure, the cybersecurity expert says. What they chose to spend it on can varies: they may choose to hold training, buy software, or even hire external services.

It is unrealistic to expect a company to be fully resilient and up to date in most cases. There are exceptions, the bank sector being an obvious point in case, but most businesses still have a lot to do to improve cybersecurity.

8|2

Business

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Budapest Business Journal | October 8 – October 17, 2019

Text Analytics: From Working in Cafés to International Success Neticle is a Hungarian text analytics startup, now offering its services in multiple countries and aiming to become a major regional player in the near future. The Budapest Business Journal talks with CEO Péter Szekeres about the company’s journey.

BENCE GAÁL

BBJ: How did the core idea of Neticle come about, how did your business journey begin?

Péter Szekeres: The idea of Neticle was born in 2011 in my thesis inspired by an article about how Twitter mood predicts the stock market. I wondered: what would be the benefit of monitoring the whole Hungarian web? To answer the question, I began to develop an algorithm with university friends Róbert Horváth and Zoltán Csikós. The result was our first product: Neticle Media Intelligence, delivering media monitoring, media analysis and social listening with perfect coverage, now already available in several languages.

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BBJ: What does Neticle have to offer that separates it from its competitors?

PSz: Neticle went through the stages of a startup company: we worked from coffee shops, our family invested into our goals, there were even a few times when we thought there was a chance we could not continue. But today, Neticle is marketleader in Hungary and already has a prominent role in other European countries.

Our service is not just online monitoring: Neticle provides an enterprise text analytics toolkit. The company’s strength is our outstanding human-level sentiment and semantic analysis that supports decisionmaking with valuable, real-time insights.

BBJ: How many people make up Neticle’s team?

PSz: Even the conference room is bigger now than our first office. We have more than 140 clients in nine countries, we are working on opening new markets and this needs resources. Neticle’s headcount is more than 40 and our scalable flat organization is based on empowerment, clear responsibilities and direct communication. If we have chemistry with someone who has the same values, we definitely find them a spot in our system.

BBJ: What successes has Neticle achieve thus far?

PSz: I would say one of our biggest successes was the first payment from a client. Though it was just HUF 32,000, it was the validation

S TA R T U P S P O T L I G H T

gaining our first clients in Poland, Germany and Austria. With the next milestone, Neticle’s enterprise toolkit was born: Zurvey. io broadened our portfolio for better customer and employee experience with automated text insights. This software, a survey maker and feedback analysis tool, will analyze any kind of text data like verbatim NPS [net promoter score], open-ended survey responses or product reviews in minutes.

Péter Szekeres of our idea and proved we are on the right path. Since then we have collected some prizes (Sales/Marketing Startup of the Year, 2014) but as a real milestone in 2016, Neticle entered five markets: Russia, Georgia, Ukraine, Bulgaria and Romania. This growth was the result of an investment by Hiventures (the Hungarian state-owned venture capital company). Another impressive step was

BBJ: What are the business’ plans for the future?

PSz: Neticle started as a university project, and now I have to admit that we are undoubtedly leaving behind the startup label. The plan is to continue our growth rate: besides our international expansion to become a major player in the region, we are developing new modules for Media Intelligence and Zurvey.io as well, but one of the first steps will be the expansion of the team to ensure we have the professional resources for future projects.

2

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Budapest Business Journal | October 8 – October 17, 2019

Minority Discount Explained In their regular corporate finance column, Les Nemethy and Sergey Glekov look at the flipside of control premium, the subject of their last article.

Our last article was on control premiums.

Minority discount is basically the flipside of control premium: in the same way that a premium applies when you purchase 51% of shares that make 100% of the decisions, so too a discount applies when you purchase 49% of shares that make few or no decisions as related to the corporate governance of a company.

The fewer the rights associated with the minority stake, the higher the discount.

Here we will examine some of the factors that might affect the extent of the discount.

Firstly, statutes, articles of incorporation, shareholders’ agreements or bylaws may require a supermajority to approve certain actions. For instance, in some jurisdictions, an approval of specific corporate actions such as sale of assets or liquidation of the company may require a two-thirds majority instead of a simple majority.

As a result, a shareholder with a one-third ownership interest in the company may block such actions (and hence have more value than without blocking rights, the discount depending on extent of blocking rights).

Secondly, the distribution of equity ownership has an important bearing on the relative rights of shareholders. For example, if a company is owned by three shareholders holding equity interest of

33.33% each,

no one has absolute control, and no one is in a relatively inferior position to the other two.

(Neither of the three shareholders may have a control premium in such a case;

Business | 9

The Corporate Finance Column

Relationships between Levels of Ownership Interest and Applicability of Valuation Discounts Level of Ownership Interest

Example of Ownership Interest Type

Type of Applicable Valuation Adjustment

Illustrative Impact of Value Decrement

Illustrative Percentage Discount*

Marketable, controlling ownership interest

100% ownership of a business that is offered for sale

No discount applicable

USD 10 per share

N/A

Non-marketable, controlling ownership interest

Less than 100% (but controlling) owners

Discount for illiquidity at the business enterprise level

USD 9 per share

10%

Marketable, non-controlling ownership interest

Shares of registered stock in a publicly traded corporation

Discount for lack of control (also called a minority interest discount)

USD 6.30 per share

30%

Non-marketable, non-controlling ownership interest

Shares of stock in a closely held o family owned business

Discount for lack of marketability at the share level

USD 3.78 per share*

40%

* The magnitude of the valuation discounts is selected for illustrative purposes only and not to indicate recommended levels (or even orders of magnitude) of specific valuation adjustments.

if there is a pattern of two shareholders voting together, the shares of the third shareholder may, nevertheless, have a discount.)

Differently Disadvantaged

Thirdly, variation in minority discounts may result from “differences in the extent to which the minority stockholders are economically disadvantaged”, as Philip Saunders Jr. says in “Control Premiums, Minority Discounts, and Marketability Discounts”. Basically, if a company is well run, and all shareholders receive the same pro rata returns to capital, then the minority discount will be less.

The concept of minority discount is consistent with the concepts of marketability and lack of marketability.

However, it is important to distinguish

** The cumulative impact of a 10%, a 30% and a 40% discount is a total 62.2% (and not an 80% discount).

This is because the application of valuation discounts is multiplicative and not additive. Also, the order of the

between a discount for lack of ownership control (minority discount) and a discount for lack of marketability.

The concept of marketability deals with liquidity of the subject ownership interest; that is, how quickly and certainly it can be converted to cash at the owner’s discretion, as outlined by Shannon Pratt, Robert Reilly and Robert Schweihs in “Value a Business”.

A discount for a lack of marketability may be even applied to a

application of the valuation discounts will not affect the cumulative amount of the valuation adjustment.

Source: Value a Business by Shannon Pratt, Robert Reilly and Robert Schweihs

marketability and lack of marketability.

The types and amounts of appropriate discounts often cause significant disputes and controversies during valuations. It would be an error to apply the above discounts too rigidly: every situation requires careful analysis of facts and considerable judgment.

100% ownership

interest in a closely held enterprise, as it may take months and require significant expenses and efforts to prepare and sell a 100% ownership interest.

The following chart illustrates the relationship between controlling and noncontrolling ownership interest value, and

Les Nemethy is CEO of EuroPhoenix (www.europhoenix. com), a Central European corporate finance firm, author of Business Exit Planning (www. businessexitplanningbook.com) and a former president of the American Chamber of Commerce in Hungary.

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Budapest Business Journal | October 8 – October 17, 2019

Building Digital Success Through Cooperation Japanese ICT giant Fujitsu, which is in the process of fine tuning its business model in Hungary, says it has decided to concentrate on one area.

ROBIN MARSHALL

“Business in Hungary is growing,” Juan Maria Porcar, head of sales for EMEIA focus portfolio countries, tells the Budapest Business Journal. He says the company has decided to put its products on the market “fully through channel”, in other words to sell them through partners, rather than directly.

“We have two main business areas, one is products, the other is services; both are core business areas for Fujitsu in the region. In Hungary we have decided to focus on products, as the majority of our business here is product-based.”

and also a member of the board for Fujitsu Central Europe. Molzen explained the future plans for Hungary.

“We have two main business areas, one is products, the other is services; both are core business areas for Fujitsu in the region. In Hungary we have decided to focus on products, as the majority of our business here is product-based,” he tells the BBJ.

By Q1 of next year, Hungary will be “100% a product country, with product related services of course” he adds.

Best Sellers

He says it is a question on focusing on what is already working very well in the local market, and where growth can be driven most effectively. So, what are the top sellers in Hungary?

“Our data center solutions,” Molzen says.

“We have the most reliable servers, that use less power, and, of course, our mainframes are the quickest. […] Security is also getting more important, and Fujitsu is focusing quite massively in this area. We build the most secure products.”

He gives the example of the company’s PalmSecure system, which scans a person’s palm vein to retrieve biometric “It turned out to be a very clever decision, information and is, he says, because of the type of partners we have in Hungary.” times It is this kind of success Fujitsu is more secure than face recognition. looking to build on in the future. Porcar He says the company is also working was in Hungary in for its annual Select hard to make its supporting infrastructure Partner conference and awards party with Tier “more customer centric, so they can work where they want, when they want, without limitations.” partners. Other members of the leadership That means office equipment as much were also there, including Knuth Molzen, as personal computers. With labor head of EMEIA focus portfolio countries, markets getting ever tighter, employers

1,000

1

are realizing they have to make offices attractive places to be in to help to attract and retain staff in the longer-term.

That means more flexible arrangements, quite rooms, brainstorming areas, conference rooms, all equipped with large screens and software systems that allow people to cooperate and share documents and video.

“We are working with global office furniture manufactures, to put our technology in their equipment to enable this human centric approach,” Molzen explains.

That the Japanese firm’s products sell well in Hungary is not a surprise to Porcar.

He cites the leading global technology market analyst Canalys, which describes itself as having a “distinct channel focus”.

Shared Success

“Fujitsu is ranked at the top in terms of profitability for partners,” Porcar says.

That, in turn, reflects an open business philosophy. “It [success] does not come from nowhere. It comes from sharing.”

Sharing is something of a common theme. Porcar talks about “co-creation” by putting together development teams that include both technical staff and business experts, but he also talks of “leveraging our partners and customers.”

Research and development is something the company takes seriously, though, as Porcar confirms. “We spend a large amount of our revenue,

about

“Our data-centers solutions are in high demand in Hungary. We have the most reliable servers, that use less power, and, of course, our mainframes are the quickest. […] Security is also getting more important, and Fujitsu is focusing quite massively in this area.”

Success is also based on having the right people, and there, again, Porcar has no complaints when it comes to Hungary.

“The technical university education is excellent, although we are going through a phase where there are not enough [people].

We are facing with some challenges to recruit new technical people, but the quality of those we have is excellent. It seems to me that new technologies are well represented in universities in Hungary.

Quantity, not quality, is a problem for us, as it must be for the rest of the IT market.

But this is an EMEIA-wide effect; it is not unique to Hungary.”

Research and Development

Knuth Molzen, head of EMEIA focus portfolio countries

Juan Maria Porcar, head of sales for EMEIA focus portfolio countries

This country has seen a spate of recent R&D centers opening here, in part attracted by Hungary’s engineering reputation, but also in no small measure by favorable government subsidies and incentives. Does Fujitsu plan to move any R&D roles to Budapest?, I ask Molzen.

“We concentrate it in one point, to get the best results; we are not going to bring any R&D [roles] from Japan to Hungary or the region,” he says.

6%,

on R&D. And a considerable amount of that is going into new tech.”

That includes the company’s Deep Learning Unit, and investigating so-called “explainable AI”, which takes artificial intelligence beyond the mute running of clever algorithms in a “black box”, to producing solutions that can be explained to human experts. It is like when your math teacher didn’t want you to simply give the answer to a sum, but to explain your workings, how you got there. Only these are far, far more complex sums.

So much so that Fujitsu has been working on creating what it calls its Digital Annealer, a computer architecture that, as Porcar says, “uses the principals of quantum computing”. It looks like the future might be just around the corner...

Fujitsu Fact Box Japanese multinational ICT equipment and services company Fujitsu is headquartered in Tokyo.

Last year, it was the world’s fourth-largest IT services provider, measured by global IT services revenue, according to statista.com The company has approximately 132,000 employees worldwide, and its products and services are available in more than 100 countries, according to the company’s global website.

The company has been present in Hungary since 1999.

3

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Budapest Business Journal | October 8 – October 17, 2019

Special Report Energy

Hungary Looking for a Renewable Spot in the Sun

Although Hungary is a small country, all moves toward greater energy efficiency should be encouraged, especially with scientists warning the clock is ticking towards midnight, and unless urgent action is taken humanity will face devastating challenges due to climate change.

He underscores, however, that international examples clearly show that the use of renewable energy solutions boost the economy and make settlements more sustainable, especially as such an environment can further foster electromobility; the spread of electric vehicles.

Such a change is as much essential as it is welcome,

as

70%

energy consumption. The CO2 emission of a 60-80 year old building can be reduced to 15-20% with state of the art technologies.

“There is a huge capacity in the renovation of buildings built before 1970.

Hungary’s CO2 emission can only change significantly by renovating the old building stock,” she adds.

CHRISTIAN KESZTHELYI

Hungary is rich in renewable energy potential as solar, wind, biomass and thermal energy are all easily accessible for the CEE country. Combined with the creation of smart cities, these factors can contribute to a greener and more pleasant future.

“There is an energy age change in Hungary right now,” Regina Kurucz, architect, building energy expert, building energy assessor and member of the Hungary Green Building Council (HuGBC) tells the Budapest Business Journal.

“The change has been divided in five phases between 2006 and 2021. From 2019 to 2021 we are living in the fourth phase, where new public buildings already have to be nearly net zero energy buildings with 25% renewable energy, while other new buildings have to fulfill the requirement to be cost-effective,” she explains.

After 2021 only nearly net zero energy buildings (known as NZEB) can be built.

While new buildings fulfill the requirement of NZEB and 25% renewable energy, Kurucz points to the country’s existing building stock, much of it built

before

1970.

This, she says, plays an important role in climate change, producing around 36% of CO2 emissions and around 40% of primary

Regina Kurucz

Third-phase Implementation

Solar energy in the form of photovoltaic (PV) systems is not just popular in Hungary but has chiefly become mainstream. Kurucz believes Hungary is in the third phase of implementation in terms of solar energy.

The first phase is when pioneers add new solutions despite high installation and maintenance costs. The second phase is when priority projects like public buildings or local businesses commit to delivering technical refinement and better service networks.

“The third phase is becoming mainstream, when it is unimaginable to refrain from new technology and local service networks are prepared for the demand. This is the case with PV panels in Hungary right now, it is an implicit part of new buildings and there are incentives in case of renovations in the form of

0% loans

for households,” Kurucz adds.

Despite Hungary being rich in geothermal energy, using geothermal hot water can only be sustainable if the cool water could be securely and economically returned to the cycle in an adequate injection well.

Today, this is an obstacle that makes energy from geothermal water sources expensive, according to Kurucz.

“However, ground source heat pumps and air source heat pumps are also popular in case of low-energy demand buildings.

Biomass CHP (combined heat and power) plants can provide both heat and power in one single, highly efficient process as an energy source for fourth generation district heating,” she adds.

The emergence of smart cities is also becoming highly timely; such settlements can significantly boost economic growth, can operate sustainably and can offer the best possible living standards to residents.

Nevertheless, no smart city can operate without the extensive use of renewable energy, such as solar or wind, the most recent study by Deloitte has found.

It is a big challenge for utility companies to harmonize their legacy infrastructure with the most modern methods, says Csaba Mező, partner and head of Deloitte Hungary’s Energy Sector, in answer to a BBJ inquiry.

of the world’s energy consumption is taken up by cities, which are in tight symbiosis with utility providers, the Deloitte study says. These companies play a crucial role in making a city smart, as they are directly connected to endusers. Therefore, by helping spread smart solutions, utility companies are not only the drivers of such a change, but also the educators shaping the mindset of societies.

Deloitte suggests that the first step utility companies should make is installing sensors of all kinds for collecting, storing, analyzing and using data. According to Deloitte, a utility company can only build a smart city responsively if it can understand and utilize the collected data.

Come Together

Mező also notes, however, that utilities firms are not capable of creating smart cities alone. What is required is an ecosystem where national, regional and city authorities and utility companies, researchers, investors and tech solutions providers all come together with residents, collaborating on mutually changing their way of living.

Kurucz accepts that, but has a slightly different take. “Our main goal should not be to use more renewable energy but to use less fossil-based energy,” she says. “We can cut our energy demand by improving energy efficiency, for example insulating the old building stock and renovating their outdated heating and cooling systems.

Around 90% of today’s building stock will still be in use in 2050; therefore, we cannot reduce CO2 emissions without focusing on buildings already in use,” she says.

“Renewable energy should be our last remedy. First, we should reduce the energy consumption e.g. with the help of insulating the building envelope in case of existing buildings or reducing summer heat load with the use of shading systems. Secondly, we should use passive energy, e.g. passive solar energy in the wintertime and natural night vent cooling in the summertime. Only the third step should be thinking how to cover the reduced energy demand,” Kurucz concludes.

12 | 3

Special Report

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Budapest Business Journal | October 8 – October 17, 2019

Energy Company Rewarding Green Initiatives Recycled Instruments

The Budapest Business Journal takes a look at the 2019 Energy Globe awards for Hungary.

ZSÓFIA VÉGH

If being sustainable is a must today, it is even more so for companies in the energy industry. Beyond financial considerations – just think about carbon price increase – or offsetting the emissions companies create, customers increasingly demand their service providers are as green as possible.

A large part of CSR today is focused on green efforts or, in E.ON’s case, rewarding such efforts. For 20 years, the German energy utility has been acknowledging the green initiatives of both individuals and companies through its Energy Globe award in 182 countries, including Hungary.

This year’s ceremony, held at the recently renovated Museum of Fine Arts, was all about sustainability. The event ADVERTISEMENT

Zsolt Jamniczky, of E.ON Hungaria Zrt. presenting the award to the overall winner, Hernádszentandrás Municipality. (and elements around it including the invitations to the ceremony) was carbon neutral and paperless; no plastic was used either.

The dinner tables were decorated with leaves and some of the finger foods were held in baskets filled with straw.

Food came from local suppliers no farther away than 80 km.

In between the announcements of the various winners of the different categories, the audience was entertained with performances by sustainable artists and bands.

Bélaműhely Sound Art played popular pieces of classical music, including parts of Carmina Burana, on instruments made from waste materials and various objects such as a watering tube, a bicycle and a sheet-iron barrel.

A sand graphic artist drew the history of industrialization live on a glass, with the changing drawings were projected on a large screen.

In the hall, sustainable works of art were put on display, all proving that sustainability serves as an infinite inspiration for artists.

And not only for them, evidently. More than 150 entries were submitted to the competition. The finalists were selected by a professional jury, while category winners were selected by public vote.

The problems they seek a solution for are endless. Among the winners were the creators of a community garden, tiles that serve as solar panels, and a pilot project that uses floating solar panels to generate energy.

The winner of the “Building” category, for example, was a climateneutral resort in Irota (218 km northeast of Budapest in Borsod-Abauj-Zemplén County), that is built entirely from used or recycled materials. It uses solar panels to generate electricity and even the water of the swimming pool is cleaned with plants.

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Budapest Business Journal | October 8 – October 17, 2019

Special Report | 13

INSIDE VIEW

Green Premiums in Action: 1st Tender for Renewable Energy Subsidy Launched

Attorney at law SCHOENHERR HETÉNYI ATTORNEYS AT LAW Professor Diana Ürge-Vorsatz, Director at Center for Climate Change and Sustainable Energy Policy, Central European University and member of the awards jury.

Community Garden

A community garden created on an abandoned lot in Pécs was the winner of the “Individual category”. The creators of the Zöld Folt Közösségi Kert (Green Patch Community Garden) believe that an apparently mundane task such as gardening can help bring a community together while helping sustainability goals as well.

The winner of “Company” category was Hungarian tile-manufacturer Terrán. The company integrates solar panels into its tiles almost seamlessly, so the finished product looks like a traditional tile.

The winners of the “Idea” category also worked with solar panels. Sol-Art uses a special coating on that enables it panels to be floated on the water. This way, they can be used to charge electric boats or saving lives; on open water, for example, it can be used to help convert seawater into potable water and will even send GPS-signals of its location to lifeboats.

The winner of the “Municipality” category and the overall winner was the Municipality of Hernádszentandrás (210 km northeast of Budapest, 37 km beyond Miskolc). The village, like the earlier resort in Borsod-Abaúj-Zemplén County, has developed an organic farming system, where locals grow vegetables, fruits and herbs, make syrups, jams, desserts, handicraft products, and build services based on them.

The economic model is run by a municipal nonprofit and a social

cooperative, and provides a livelihood for disadvantaged members of the local community as well.

“To succeed in business, sustainability is key,” said Zsolt Jamniczky, board member of E.ON Hungaria Zrt. “It is very important that, with the Energy Globe Award,

“To succeed in business, sustainability is key. It is very important that, with the Energy Globe Award, we joined an international platform that connects and inspires every one wishing to act for the sake of an energyand environmentallyconscious future.” we joined an international platform that connects and inspires every one wishing to act for the sake of an energy- and environmentallyconscious future,” he added.

The winners of the Energy Globe Award Hungary will qualify for the international finals.

CATEGORY

WINNER

Individual initiative

Gergő Hajba: Zöld Folt Közösségi Kert

Building

Klunen Magyarország Kft.: Irota EcoLodge climate-neutral resort

Future generation

Zöld-Híd Regionális Energiahatékonysági és Környezetvédelmi Alapítvány: Öko-Kuckó Educational room and environmental education program

Company

Terrán Tetőcserép Gyártó Kft.: Terrán GENERON solar panel roof tile

Idea

Solar Hero Zrt.: SOL-ART floating solar panel

Municipality & Overall winner

Hernádszentandrás Község Önkormányzata: BioSzentandrás ecological farming system

Many renewable energy investors have waited more than two years to see how green premium tenders would work in Hungary. The waiting was cut short by the Hungarian Energy and Public Utility Authority (MEKH) in September, when the first pilot tender was launched.

Auction-based subsidies in the renewable energy sector force energy generators to leave the safe world of guaranteed tariffs behind and take a more competitive approach when looking for state subsidies.

It is yet to be seen whether the auction-based subsidies will boost investment in the renewable energy sector, but the launch of the first tender is a promising development for investors who intend to take on new developments.

The generally applicable mandatory offtake regime that provided guaranteed tariffs for energy generators using renewable energy sources was replaced in 2017 by a new RES subsidy scheme called METÁR. After METÁR entered into force, the mandatory offtake regime providing guaranteed tariffs was limited to small-scale power plants under 0.5 MW capacity (save for wind) or power plants that serve for demonstration purposes.

In the case of RES power plants with a capacity of more than 1 MW, a subsidy is granted in the form of green premiums allocated within tenders initiated by MEKH. The amount of the green premium is the difference between the subsidized price of electricity and the market reference price calculated based on the monthly average day-ahead prices on the Hungarian Power Exchange.

In the course of the green premium tender initiated by the MEKH, RES generators bid for the lowest subsidized price of electricity.

Thus, to receive subsidies,

RES generators are incentivized to propose competitive subsidized electricity prices.

As of 2017, the operation of the auction-based green premium subsidy scheme remained theoretical until September 2, when MEKH published the documentation of the first pilot tender.

Any entity with a registered seat in an EU, EEA or Energy Community member state or with a registered seat or branch office in Hungary is eligible to submit a bid. However, green premiums may be granted solely to power plants that generate power from renewable sources within Hungary and that are either constructed as an entirely new investment or are renovated or developed to a value exceeding 50% of the original investment costs.

In the pilot tender, bidders may apply for subsidies in two categories: (i) power plants having a capacity between 0.3 MW and 1 MW and (ii) power plants having a capacity between 1 MW and 20 MW. In the first category, the total amount of financial support that may be allocated among successful bidders is HUF 333 million per year. Furthermore, the total volume of subsidized electricity in the first category is limited to 66 GW/year. In the second category, the overall limit of financial support is HUF 667 million per year, and the volume of subsidized electricity may not exceed 134 GWh/year.

Winning bidders will be subsidized for 15 years under both categories.

During the evaluation, brownfield investments will be preferred to greenfield investments. Bidders may submit proposals as of 8 a.m. on November 4 until noon on December 2, but only by electronic means.

Due to the pilot nature of the tender, the authority intends to hold a consultancy session for registered bidders at a later date. MEKH is expected to publish the results of the tender in early 2020. Bidders may access the tender documentation via its website.

Pursuant to the tender documentation, winning bidders will need to commission their subsidized power plants within three years of the finalization of the MEKH resolution on granting subsidy. If a bidder fails to meet this deadline, the right to receive the subsidy will lapse.

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

Dániel Varga

14 | 3

Special Report

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Budapest Business Journal | October 8 – October 17, 2019

Accelerating the Gradual Embrace of E-mobility As humanity increasingly finds itself facing serious challenges related to mobility and its very sustainability, the share of electric vehicles and hybrids in Hungary is on the rise, with many Hungarians thinking of buying a new auto saying they would opt for an electric vehicle, if their circumstances allowed.

CHRISTIAN KESZTHELYI

Considering that the air quality in downtown Budapest has been poor in recent times, as is true for many a

metropolis nowadays, hopes are high that more economically-friendly alternatives will catch on soon to help enhance the life city dwellers and commuters.

“The culture of driving electric cars has been around in Hungary for almost

10 years, but only after 2016 did its use become more widespread,” Balázs J. Borka, CEO of car dealership Magyar Autókereskedőház Zrt., and director of communications at Hungarian national vehicle

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Is Telecommuting the new Standard?

It seems that working outside the office is the new standard in the corporate world. More people work remotely than ever due to new technologies that let you take your office with you in your pocket.

The new multifaceted Samsung Galaxy Note10 could make you want to stay in the home office all the time.

Globally, 70% of people work remotely once a week according to IWG. This figure shows that telecommuting is not just a temporary phenomenon, but effects working conditions all around the world.

In Hungary, according to the latest Eurostat survey, 2.5% of the population works remote regularly, although this figure describes only those who are constantly out of office.

Even though home office is usually considered an extra employee benefit, it is not always comfortable. Remembering passwords, checking if devices are compatible, finding reliable connections can all be an effort. But not with the new Samsung Galaxy Note10 designed for creative productivity anywhere and anytime. This device can work as a personal computer with the upgraded DeX feature that lets you connect your phone to a PC or Mac with a single USB

cable. A recent survey on buffer.com with 2,500 participants who work remotely showed that the biggest advantages of telecommuting are flexible working hours for 40% and the ability to work from anywhere for 30%.

However, remote working is often linked with being alone, and there is a danger that people are unable to log out from work.

Although this is not entirely true in all the cases, having something that can distract you for a while can be relaxing sometimes.

The new Samsung Galaxy Note10 upgraded photo and video editing features can give the satisfaction of perfecting every single detail on users’ favorite photos, or on the footage they shot to present their idea at the next meeting.

But if handwriting is a thing that can put someone in a relaxed mood, Note10 can also offer a paperless alternative. The Note application’s latest feature can easily

transform handwriting into print letters, and users can also share their document in the format that best suits their needs.

The S Pen can express thoughts on the 6.3” or 6.8” screens when writing something down urgently is needed.

Whether travelling on a bus, sitting in a favorite thinking chair at home or working in a cozy café, Galaxy Note10 is a perfect complement to its users’ lifestyles.

As millennials and generation Z employees are slowly getting to

dominate the market, the flexibility of a workplace and openness to untraditional work organization will be more important than ever. Serving these demands can cause challenges, but versatile devices with multiplatform software environments are able to fulfill the expectations of the new working generation. Samsung Galaxy Note10 is in the center of the Samsung Ecosystem, hence information and data can be easily synchronized with other devices and platforms.

As, according to the 2019 “CCS Insight: Employee Workplace Technology Survey”, more than 51% of millennials work more than three hours daily on their phone, seamless connectedness is crucial for them. Due to close cooperation with Microsoft cloud storage services, emails, calendars and documents can be easily moved between Samsung Galaxy Note10, PCs, tablets and other devices to be able to user to work from anywhere, anytime.

3

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Budapest Business Journal | October 8 – October 17, 2019

association MGOE, tells the Budapest Business Journal.

Initially Hungarians would not consider the innovative technology of electric vehicles a viable alternative as charging times were long, and the range of an EV’s battery was short. Such inconvenience was topped by the low price-value ratio and an underdeveloped network of charging stations.

Today, however, EV technology is becoming markedly more popular in Hungary. “This has been greatly helped by the increasing availability and affordability of used vehicles on the market. In addition, the charging networks becoming more widespread, not for lightning charging, but fast charging is available in many places nowadays,” Borka adds.

Still, Hungarians just love owning private autos, and statistics suggest that the fad for older cars has not faded; the average age of cars on the roads in Hungary is still around

14 years,

among the highest in the European Union.

This is compounded by the number of cars in Budapest quickly rising. In 2018, the number of autos registered in Budapest grew to more than 660,000, up from 580,000 in 2010, according to Central Statistical Office figures. This leads to congestion, and poses a severe risk for the health of Budapest’s metropolitan population through air pollution, as reported by National Public Health and Medical Officer Service.

High Prices

“Electric [auto] prices are still quite high compared to ICEs [internal combustion engine vehicles] even in the case of more accessible categories,” Bálint Michaletzky, CEO of e-carsharing company GreenGo, tells the BBJ. “At the moment, electric cars are considered a luxury that can be best used only within bigger cities. While the number of fully-electric cars doubled compared to last year, there are still no more that 5,000-5,500 electric cars running in the country,” Michaletzky adds. His company recently won the Sustainable Innovation Award in San Francisco.

Surveys have shown that Hungarians are increasingly thinking about switching to EVs. “Twenty-nine percent of Hungarians considering buying a car would already buy an electric car, according to a recent joint survey by E.ON and KantarEMNID,” E.ON’s press office tells the BBJ. “Research also shows that diesel cars are in decline in Europe [….] Hungary and Germany are the least diesel-friendly countries on the continent;

only

13%

of respondents in Hungary and Germany would currently buy a diesel car,” E.ON adds.

As much as the idea of driving an electric car might sound good (actually EVs do not “sound” at all as they are virtually silent, which demands increased caution from pedestrians crossing roads),

Special Report | 15

currently it appears that most Hungarians cannot yet afford electric cars.

“Hungarians are at the forefront of choosing not to buy an electric car because of the high purchase price of vehicles: 48% of Hungarians say this is the decisive reason for rejection,” E.ON adds.

The Ányos Jedlik Plan was launched by the Hungarian government to popularize electromobility in Hungary, promoting electric cars through equipping the country with a charging station network, streamlining taxation and setting a legal framework for e-mobility.

More Incentives

Spreading E-mobility

If affordability is the main issue, that could be alleviated through incentivization.

“Usually subsidization, creating infrastructure and legislative efforts that make buying and maintenance easier, give a good and practical way to grow the number of EVs,” Michaletzky of GreenGo says.

“There are a couple of great initiatives like the subsidy for buying new BEVs [battery electric vehicles] or PHEVs [plug-in hybrid vehicle], and free parking for such vehicles. But the perks that come with EVs could also be extended to help uptake locally, such as making public service fleets all electric, allowing the use of bus lanes, free highway use, or temporarily diminishing some of the taxes,” the GreenGo CEO adds.

Nevertheless, the infrastructure has been improving in Hungary lately. “In recent years, several publicly supported filling stations have been developed under the Ányos Jedlik Plan, so more and more refueling facilities are available nationwide,” Borka says.

“At this time, ELMŰ took the first steps in the expansion of charging stations, but today several companies are engaged in the operation of chargers.”

E.ON says it not only aims to build a charging infrastructure, but it also supports the spread of e-mobility among its business and municipal customers with its e-fleet product. This reduces the ecological footprint not only of E.ON, but also of its partners, the company adds.

And reducing one’s carbon footprint is not just beneficial, but essential. Especially when air pollution is hitting never seen highs, and climate change has become a serious and pressing threat.

“Increasing the percentage of renewable sources of electric energy has little to do with being a rich country. Latvia, Albania, and Portugal already have

50-80% share

of renewable sources in their electricity production,” says Michaletzky.

“Maximizing renewable sources in energy is the way forward not only because it relies on sustainable sources and it makes e-mobility more eco-friendly, but because it reduces lot of additional risks that are creating huge healthcare costs. So moving towards sustainable sources of energy would be a very logical next step in the fight against climate change,” he concludes.

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16 | 3

Special Report

www.bbj.hu

Budapest Business Journal | October 8 – October 17, 2019

Energy Imports Likely to Remain Part of Hungary’s Future The latest REKK study, which looked at electricity demand and supply in Hungary

The Budapest Business Journal talks to the researcher behind a major new study into the future of Hungary’s energy markets.

until

2030,

ZSÓFIA VÉGH

The share of net electricity imports in Hungary is very high, averaging 32% in the past six years. The country also has a strong network of interconnectors; the import capacity corresponds to 55% of the total domestic installed power plant capacity.

A recent analysis by the Regional Center for Energy Policy Research (REKK), which also served as a background study for the new National Energy Strategy set to come out this fall, looks at whether high net import rates could lead to issues in the future security of supply.

Another central element of the study assessed the impact of the expected closure of domestic power plant capacities on the wholesale electricity market in the next decade.

When it comes to setting a future path, or defining an ideal energy mix, where you start from is crucial. To generate electricity, beyond nuclear energy, Hungary still relies on natural gas and coal. And yet unlike Poland, Hungary does not have a lot of coal, nor can it rely on hydropower plants as Austria or some countries in the Balkans do. It is often cheaper to import gas and electricity than generate it here.

On a brighter note, the country is very open and well connected: pipelines and

András Mezősi powerlines from nearly every direction make importing energy reasonable.

No wonder that the share of import in electricity generation has been

around

30-32%

in the past few years.

Meeting Demand

What lies behind the high ratio is often price considerations rather than actual demand; studies looking at this question found that even when consumption peaks there is sufficient electricity to cover demand. All this makes it hard to decrease the country’s exposure to imports, and it is not even sure that it should.

posed six different scenarios to answer above questions. It also analyzed the evolution of wholesale electricity prices, the need for renewables support, the evolution of natural gas use, and quantified various security of supply indicators.

“The major takeaway is that there will be no security of supply issues by 2030, and there will always be enough electricity to cover needs,” András Mezősi, head of the research told the BBJ. With the imports, there is sufficient energy to meet demand. What may be of concern, though, is whether there will be enough flexibility in the system to balance out fluctuations.

As the ratio of weather-dependent renewable energy sources increases, there is a growing need for flexible capacities able to balance changing production.

Currently, gas-fired plants are used for such balancing purposes in Hungary, and most of those are quite old.

“In the mid-2020s, we see some gaps”, Mezősi says adding that in the next twoto-four years there is no need to renovate these gas plants, but across a longer time horizon that will become the case.

Capacity Mechanism

The capacity mechanism, a system where the construction of capacities is subsidized, could provide a solution to this issue of building new capacities, and not only in Hungary, but also elsewhere in Europe.

The European Union, however, doesn’t back the implementation of such mechanisms, being a supporter of energyonly markets. Still, there are several examples for capacity mechanisms (present in some form or other in 12 EU member states), including the United Kingdom.

In the various power plant scenarios, the modeled net import ratio in 2030 initially shows large variations. In two

scenarios where both of the additional Paks nuclear power blocks have been built by 2030, Hungary will become a net exporter, while in the other four scenarios, net imports will be around 20%.

However, that net exporter position in the first two scenarios is only temporary; by the

mid-

2030s,

the net import ratio will be similar to that in the other scenarios.

Domestic wholesale electricity prices will continue to rise, mainly due to rising carbon and natural gas prices, reaching around EUR 70/MWh by 2030, the study says. However, there is no significant difference in wholesale electricity prices between the scenarios, even in 2030, as the price-setting marginal power plant will be gas-fired units for all scenarios.

“The major takeaway is that there will be no security of supply issues by 2030, and there will always be enough electricity to cover needs.”

In order to provide consumers with electricity at competitive prices in the long-term, new cross-border interconnections will need to be built, in particular towards Slovakia and Austria, the study finds.

These two countries are also important because both the analysis of past data and modeling results looking forwards show that they have sufficient production capacity, even in the long run. Thus, the extension of these lines can greatly increase the security of supply.

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Budapest Business Journal | October 8 – October 17, 2019

Special Report | 17

Electricity Traders Ranked by total net revenue in 2018

gas

oil

Coal

emission CeRtiFiCates

1

mvm paRtneR eneRgiakeReskedelmi ZRt.

606,448

✓

✓

–

–

✓

2002

MVM Zrt. (100) –

kornél Czinege – –

1031 Budapest, Szentendrei út 207–209.

(1) 304-2000 info@mvmp.hu

2

e.on eneRgiakeReskedelmi kFt.

376,803

✓

–

–

–

–

2013

E.ON Hungária Zrt. (100) –

balázs lehoczki – –

1134 Budapest, Váci út 17.

(20) 459-9600 ertesites.eker@eon-hungaria.com

3

ELMŰ-ÉMÁSZ EnErgiaSZoLgÁLtató nyrt.

182,361

✓

–

–

–

–

1991

Budapesti Elektromos Művek Nyrt. (100) –

marie-theres thiell – –

1132 Budapest, Váci út 72–74.

(1) 238-1000 elmu@elmu.hu

4

BC-EnErgiakErESkEdő kft.

60,178

✓

✓

–

–

–

2004

BorsodChem Zrt. (100) –

sándor varga – –

3700 Kazincbarcika, Bolyai tér 1.

(48) 511-816 energiaker@borsodchem.eu

5

isd poWeR kFt.

45,869

✓

✓

–

–

–

1996

ISD DUNAFERR Zrt. (100) –

norbert siládi – –

2400 Dunaújváros, Vasmű tér 1–3.

(25) 581-186 isdpower1@isdpower.hu

6

Jas budapest ZRt.

28,819

✓

✓

–

–

–

2002

Ferenc Arató (50), Mónika Edit Arató (25), Thália Theoharidis (25) –

Ferenc arató – –

1141 Budapest, Mogyoródi út 168.

(1) 460-9300 jastitkar@jas.hu

7

BudapESti EnErgiakErESkEdő kFt.

1,320

✓

–

–

–

✓

2003

– B.E.K. GROUP s.r.o.

(100)

péter takács – –

1061 Budapest, Liszt Ferenc tér 5.

(1) 240-7504 ptakacs@energiakereskedo.hu

Rank

eleCtRiCity

types oF eneRgy tRaded

Company Website

www.mvmp.hu

www.eon.hu

https://elmuemasz.hu

www.bcenergia.com

www.isdpower.hu

www.jas.hu

www.energiakereskedo.hu

total net Revenue in 2018 (HuF mln)

yeaR establisHed

oWneRsHip (%) HungaRian non-HungaRian

top loCal exeCutive CFo maRketing diReCtoR

addRess pHone email

NR

aLpiq EnErgy SE MagyarorSZÁgi fióktELEpE

Ÿ

✓

✓

✓

✓

✓

2009

– Invidivuals (100)

georgios peponis – –

1085 Budapest, Kálvin tér 12.

(1) 886-3400 admin.hun@alpiq.com

NR

nkm eneRgia ZRt.

NA

✓

–

–

–

–

2019

(100) –

gábor Hiezl – –

1081 Budapest, II. János Pál pápa tér 20.

(1) 474-9999 ugyfelszolgalat@nkm.energy

www.alpiq.ch

www.nkmenergia.hu

18 | 3

Special Report

www.bbj.hu

Budapest Business Journal | October 8 – October 17, 2019

Fuel Retail Companies Rank

Ranked by total net revenue in 2018

Company Website

total net Revenue in 2018 (HuF mln)

no. oF Full-time employees in 2019

2,129,059

5,372

yeaR establisHed

oWneRsHip (%) HungaRian no-HungaRian

top loCal exeCutive CFo maRketing diReCtoR

addRess pHone email

1991

Hungarian State (25.20), other (24.50) Foreign investors (34.80), other (15.50)

zsolt Hernádi – –

1117 Budapest, Október huszonharmadika utca 18.

(1) 464-1395 mol@mol.hu

1989

SPAR Magyarország Kft. (Ÿ) Tesco Europe B.V., TESCO Overseas Investments Ltd. (Ÿ)

zsolt pálinkás – –

2040 Budaörs, Kinizsi út 1–3.

(20) 827-0000 tescoglobalzrt@ hu.tesco-europe.com

tibor balogh – –

1117 Budapest, Október huszonharmadika utca 6–10.

(1) 381-9700 info.hungary@omv.com

1

mol magyaR olajés gázipaRi nyRt.

2

tesCo-global áRuHázak zRt.

3

omv HungáRia ásványolaj kFt.

397,678

56

1990

– OMV Refining & Marketing GmbH (100)

4

sHell HungaRy keReskedelmi zRt.

313,406

94

1989

– Shell Petroleum N.V. (100)

erika andrea istenesné solti – –

1113 Budapest, Bocskai út 134–146.

(1) 436-3200 shell-hungary-legal-mailbox@shell.com

gergely polgár, dominique andré Henry ducoux – –

2040 Budaörs, Sport utca 2–4.

(23) 886-200 info@auchan.hu

5

www.mol.hu

www.tesco.hu

www.omv.hu

www.shell.hu

auCHan magyaRoRszág keReskedelmi és szolgáltató kFt.

622,123

15,426

257,383

6,596

2004

– AUCHAN Retail International S.A. (Ÿ), Valhungary International SCA (Ÿ)

www.auchan.hu

6

mabanaFt HungaRy keReskedelmi kFt.

73,034

10

2001

– MABANAFT GmbH & Co. KG (100)

nikolaus gehrs, lajos alács – –

1016 Budapest, Mészáros utca 58/B (1) 450-2960 mabanaft@mabanaft.hu

7

RÜK RepÜlőtéRi Üzemanyag kiszolgáló kFt.

38,057

39

2005

Budapest Airport Zrt. (100) –

timothy Christopher dinsdale, péter Huszka, tamás dékány – –

1185 Budapest, Liszt Ferenc Nemzetközi Repülőtér (1) 296-5107 companysecretary@bud.hu

8

mpH poWeR zRt.

19,170

8

2009

Individuals (100) –

anna papp lázárné – –

1095 Budapest, Ipar utca 2/A (20) 400-6373 info@mobilpetrol.hu

9

mo-to '95 kFt.

15,755

48

1995

Individuals (100) –

attila Hoffer – –

9028 Győr, Őrhely út 7.

(96) 437-029 mo-to95@freemail.hu

10

j und j kFt.

10,383

98

1996

Individuals (100) –

jános pajkos – –

4030 Debrecen, Galamb utca 2–4.

(52) 470-519 jundj@t-online.hu

11

Full-sopRon keReskedelmi és szolgáltató kFt.

8,723

4

2004

Individuals (100) –

béla andrás magyar – –

9400 Sopron, Ágfalvi út 2/B (96) 595-250 fullsopron@t-online.hu

12

gRovi kFt.

7,120

41

1994

(100) –

tibor vizler, andrea vámosi vizlerné – –

4300 Nyírbátor, Szentvér utca 41.

(42) 510-288 postmaster@grovi.t-online.hu

13

enviRoCHem kFt.

7,077

6

1995

Gábor Egri (65), Adrienne Bakos (35) –

gábor egri – –

1225 Budapest, Nagytétényi út 221–225.

(1) 391-0570 mail@envirochem-ltd.com

14

tabol kFt.

3,190

26

1996

Individuals (100) –

ákos kocsis, györgy kocsis – –

8600 Siófok, Vak Bottyán utca 34.

(84) 320-720 kocsisgyuri@tabol.hu

Ÿ

2

2003

– Oleg Tolochko (100)

tomas Ribanszky – –

1138 Budapest, Népfürdő utca 22.

(1) 465-7600 Oleg.Tolochko@lukoil.com

NR

www.mabanaft.hu

–

www.mobilpetrol.hu

–

www.maxiline.hu

www.full-sopron.hu

www.grovi.hu

www.envirochem.hu

www.tabol.hu

lukoil lubRiCants euRope gmbH magyaRoRszági Fióktelepe www.lukoil.hu

3

www.bbj.hu

Budapest Business Journal | October 8 – October 17, 2019

Special Report | 19

Gas Traders

Rank

Ranked by total net revenue in 2018

Company Website

total net Revenue in 2018 (HuF mln)

yeaR establisHed

no. oF Full-time employees in 2019

oWneRsHip (%) HungaRian no-HungaRian

top loCal exeCutive CFo maRketing diReCtoR

addRess pHone email

1

Magyar Földgázkereskedő ZRt.

744,188

2000

98

MVM Magyar Villamos Művek Zrt. (100) –

gábor lászló králik – –

1138 Budapest, Váci út 144–150.

(1) 354-7000 info@mfgk.hu

2

e.on eneRgiakeReskedelmi kFt.

376,803

2013

298

E.ON Hungária Zrt. (100) –

balázs lehoczki – –

1134 Budapest, Váci út 17.

(20) 459-9600 ertesites.eker@ eon-hungaria.com

3

met magyaRoRsZág energiakereskedő zrt.

175,255

2007

86

– MET Holding AG (100)

gergely szabó – –

1068 Budapest, Benczúr utca 13 B (1) 464-1111 info.methu@met.com

4

pRímaeneRgia ZRt.

20,580

1991

295

Cambria Befektetési Kft. (100) –

Zoltán szirmai – Árpád Molnár

1117 Budapest, Budafoki út 56.

(1) 209-9900 vevoszolgalat@ primaenergia.hu

5

Flaga HungaRia kFt.

17,024

1990

162

– Zentraleuropa LPG Holding GmbH (100)

bálint Ézsiás – –

2040 Budaörs, Puskás Tivadar utca 14.

(23) 507-600 balint.ezsias@flaga.hu

6

tigáZ ZRt.

489

1987

1,156

MS Energy Holding Zrt. (100) –

Balázs gábor lehőcz – –

4200 Hajdúszoboszló, Rákóczi utca 184.

(52) 558-100 titkarsag@tigaz.hu

nkm eneRgia ZRt.

NA

2019

NA

(100) –

gábor Hiezl – –

1081 Budapest, II. János Pál pápa tér 20.

(1) 474-9999 ugyfelszolgalat@ nkm.energy

NR

www.magyarfoldgazkereskedo.hu

www.eon.hu

www.met.com

www.primaenergia.hu

www.flaga.hu

www.tigaz.hu

www.nkmenergia.hu

20 | 3

Special Report

www.bbj.hu

Budapest Business Journal | October 8 – October 17, 2019

Universal Electricity Providers Rank

Ranked by total net revenue in 2018

total net Revenue in 2018 (HuF mln)

Company Website

yeaR establisHed

no. oF Full-time employees in 2019

oWneRsHip (%) HungaRian non-HungaRian

top loCal exeCutive CFo maRketing diReCtoR

addRess pHone email

balázs lehoczki – –

1134 Budapest, Váci út 17.

(20) 459-9600 ertesites.eker@ eon-hungaria.com

1

e.on eneRgiakeReskedelmi kFt.

376,803

2013

298

E.ON Hungária Zrt. (100) –

2

ELMŰ-ÉMÁSZ EnErgiaSZoLgÁLtató nyrt.

182,361

1991

Ÿ

Budapesti Elektromos Művek Nyrt. (100) –

marie-theres thiell – –

1132 Budapest, Váci út 72–74.

(1) 238-1000 elmu@elmu.hu

3

ELMŰ-ÉMÁSZ EnErgiakErESkEdő kft.

174,788

2002

227

ELMŰ Nyrt., ÉMÁSZ Nyrt. (100) –

lászló szabó, Csilla Jenei Fejesné, lászló koncz – –

1132 Budapest, Váci út 72–74.

(1) 238-1150 kapcsolat@elmu-emasz.hu

NA

2019

NA

(100) –

gábor Hiezl – –

1081 Budapest, II. János Pál pápa tér 20.

(1) 474-9999 ugyfelszolgalat@nkm.energy

NR

www.eon.hu

https://elmuemasz.hu

www.elmu-emasz.hu

nkM EnErgia Zrt. www.nkmenergia.hu

Universal Gas Providers Rank

Ranked by total net revenue in 2018

Company Website

1

isd poWeR kFt.

2

alpiq Csepel kFt.

3

tigÁZ ZRt.

4

www.isdpower.hu

www.csepel.alpiq.hu

www.tigaz.hu

oeRg ÓZdi eneRgiasZolgÁltatÓ és keReskedelmi kFt.

total net Revenue in 2018 (HuF mln)

yeaR establisHed

no. oF Full-time employees in 2019

oWneRsHip (%) HungaRian non-HungaRian

top loCal exeCutive CFo maRketing diReCtoR

addRess pHone email

45,869

1996

509

ISD DUNAFERR Zrt. (100) –

norbert siládi – –

2400 Dunaújváros, Vasmű tér 1–3.

(25) 581-186 isdpower1@isdpower.hu

gábor briglovics, Csaba varga, balázs bene – –

1085 Budapest, Kálvin tér 12.

(1) 429-1030 info.csepel@alpiq.com

30,504

2001

17

– Alpiq AG (100)

489

1987

1,156

MS Energy Holding Zrt. (100) –

Balázs Gábor Lehőcz – –

4200 Hajdúszoboszló, Rákóczi utca 184.

(52) 558-100 titkarsag@tigaz.hu

120

1993

17

Ózd Industrial Park Kft. (Ÿ), Fémiksz Kft. (Ÿ) –

imre kovács, péter miksztaj – –

3600 Ózd, Gyár út 1.

(48) 574-399 oerg@oerg.hu

NA

2019

NA

(100) –

gábor Hiezl – –

1081 Budapest, II. János Pál pápa tér 20.

(1) 474-9999 ugyfelszolgalat@nkm.energy

www.oerg.hu

NR

nkm eneRgia ZRt. www.nkmenergia.hu

4

www.bbj.hu

Budapest Business Journal | October 8 – October 17, 2019

Socialite Appreciating Hungarian Master Art Forger Elmyr de Hory Of course, Elmyr de Hory wasn’t his real name. Which explains why, when I asked my Hungarian partner if she’d ever heard of him, she said “that’s not Hungarian”.

She was right.

DAVID HOLZER

But de Hory was Hungarian. Born Elemér Albert Hoffmann in Budapest in 1906, and is supposed to have died 70 years later on the Spanish Balearic island of Ibiza.

Hungarians delight in listing the, admittedly startling, number of their countrymen and women who’ve soared to heights of excellence in the world outside the country. Quite rightly.

De Hory exemplifies another kind of Hungarian genius, one that mixes skill, cunning and the survival instinct to make life tap dance to the tune only you hear. This quality is best summed up in an expression taught to me by none other than Robin Marshall, editor of this newspaper.

“A Hungarian is the only person who can go into a revolving door behind you, and come out ahead of you,” he once told me, though he takes no credit for having come up with the idea.

For most of his life, Elmyr de Hory came out of that revolving door well ahead of those who thought they had got one up on him. Until, well, he didn’t. Maybe.

The faker’s faker

He claimed to be an aristocrat whose family had lost their fortune. But it’s most likely de Hory was born into Budapest’s Jewish middle class. He began his art training at Nagybánya, a Hungarian art colony now in Romania, before moving to Paris and studying under Fernand Léger, best known as a certain kind of Cubist.

De Hory’s training put him out of step with the hectic pace of trends in the French art world at that time. This, combined with the Great Depression, meant he struggled to make a living and began to fall foul of the police from the late 1920s onwards.

Returning to Hungary at the start of the Second World War – why, one has to ask – de Hory hooked up with a British

Elmyr de Hory led his entire life by the “Hungarian revolving door” principle. journalist suspected of being a spy. He was imprisoned in a Transylvanian prison but, after painting a portrait of the prison camp officer, he was released. Only to be sent to a German concentration camp for being a Jew and homosexual. (Interestingly, evidence suggests that, although de Hory was born Jewish, he was christened Calvinist.) Transferred to a Berlin prison hospital after a beating, de Hory escaped and made his way back to Hungary where, he said, his parents had been killed and their wealth confiscated.

Returning to Paris after the war, de Hory abandoned any attempts to make an honest living when he discovered he could copy the styles of other painters perfectly. After a British woman mistook a pen-and-ink drawing he sold her in 1946 for a Picasso original, de Hory took this as a sign and was off and forging.

One-way Ticket

In 1947, de Hory bought a one-way ticket to Rio de Janeiro. From there, he travelled to the United States where he stayed for 12 years. In the land of opportunity, de Hory began forging works by Matisse, Modigliani and Renoir using a dazzling array of made-up names.

He also supposedly struck up a friendship with the legendary Hungarianborn actress Zsa Zsa Gabor.

After he was rumbled by Chicago art dealer Joseph W. Faulkner,

de Hory briefly fled to Mexico. Here, he was arrested because of his connection to a suspected murderer.

Paying off his lawyer with a forged painting, de Hory returned to the States and discovered his forgeries were being sold for substantial amounts at art galleries that had paid him what he thought was peanuts.

It’s been claimed that de Hory’s forgeries made, in total, USD 50 million.

It’s been claimed that de Hory’s forgeries made, in total, USD 50 million.

Suffering from depression, de Hory attempted suicide in 1959. Shortly after this, he met Fernand Legros, an enterprising but deeply unpleasant character. Realizing that de Hory had the potential to be the forger that laid the golden eggs, Legros struck a deal with him. Legros would take on all the risk of selling de Hory’s work in exchange for 40% of the profits.

In reality, Legros was making much more from de Hory’s work and the forger tried to escape him, but they met again in Paris. This time, Legros agreed to pay de Hory USD 400 a month no matter what. Now financially secure,

he thought, de Hory moved to Ibiza, then a sunny place for shady people.

Here, de Hory met American writer Clifford Irving who wrote “Fake! The Story of Elmyr de Hory the Greatest Art Forger of Our Time” about him. In a delicious twist, Irving became notorious for his part in forging letters purporting to be from reclusive American tycoon Howard Hughes, which he then used to legitimize his claim that Hughes had authorized him to ghostwrite his autobiography. Irving said he’d received the invitation after Hughs read “Fake!”

Imprisoned

Irving confessed to the deceit in 1972 and was imprisoned for 17 months.

The great filmmaker and actor Orson Welles also turned his beady eye on de Hory. His 1973 movie “F for Fake” featured de Hory in all his leaking sawdust glory.

It’s available in all its entirety on YouTube and well worth watching.

In 1976, de Hory was informed that the Spanish government had agreed to hand him over to the French to stand trial on fraud charges. According to his long-time companion Mark Forgy – his real name, allegedly – de Hory overdosed on sleeping tablets and died on the way to the hospital.

Probably unsurprisingly, Clifford Irving preferred to believe that de Hory faked his suicide to escape extradition and vanished. I hope he did. It would be the perfect illustration of our editor’s revolving door principle.

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Budapest Business Journal | October 8 – October 17, 2019

A Choice Between Olaszrizling or Juhfark This October October is already upon us, which in local tasting terms means Olaszrizling Október, a month in which emphasis is placed on this widely-planted local white-wine grape.

ROBERT SMYTH

Olaszrizling is one of the most significant grapes and can be found in almost all Hungarian wine regions (with the notable exception of Tokaj), according to Winelovers, the people behind the major tasting at the Corinthia Hotel in Budapest on October 12 that will be the highlight of Olaszrizling Október.

They say that one of the grape’s qualities is that its restrained aromas enable the qualities of the place of growth to express themselves (a trait also associated with the more coveted Furmint grape, of Tokaj fame), particularly on the northern side of Lake Balaton and Egerszólat. I would also add Somló to that list.

While an orgy of Olaszrizling (almost 70 winemakers/wineries and 200 wines at one event) may sound like an overdose of vin ordinaire, given that much of the wine made from the grape is still pretty average, when handled with care, Olaszrizling can occupy its place among the hierarchy of Hungarian grapes, and even occasionally outperform the likes of Furmint.

Olaszrizling is not at all related to Riesling (known as Rajnai rizling in Hungarian), some of the wines at the tasting will actually be made from the latter.

This hardly serves to clear up the confusion surrounding the two grapes.

Plain ‘Rizling’ on a Hungarian label usually indicates that the wine is made of Olaszrizling, but it is not always so, as I have found; it could even be a blend of the two .

My go-to Olaszrizling is probably Káli kövek’s Rezeda, from the Kálimedence (Basin) in the Balatonfelvidék wine region. The 2018 comes from Feketehegy (literally Black Hill, a reference to the black volcanic basalt soil), in Hegyestű.

Spontaneous

It was spontaneously fermented, and has a current of lemony acidity running through it, followed by a savory finish.

While you can hardly feel the oak, it is there nevertheless, giving the wine an extra dimension to the floral and fruit notes, particularly pear and green apple.

It is also very good value at HUF 2,790 from Bortársaság. Káli kövek will be one of the (many) producers present at the big Olaszrizling event.

The Olaszrizling grape most likely originated from northern Italy (Olasz

Hungarian grapes awaiting harvest. meaning Italian in Hungarian), where it can be found in regions such as Friuli, Collio and Trentino as Riesling Italico.

Central Europe has become the stronghold of the grape, hardly surprising when you recall that some those northern Italian regions have historically been part of Central Europe via the Habsburg Empire. Indeed, the grape sometimes keeps its Austrian moniker of Welschriesling in Alto Adige, also known as Südtirol or South Tyrol.

The signature grape of Somló, Hungary’s smallest region but a giant in terms of the expressive whites it produces and for its place in the upper echelons of Hungarian wine culture, is Juhfark.

This same grape makes some fine wines known as Graševina in Croatia; often dry but sometimes sweet and sumptuous. In Slovenia, it goes by the name Laški Rizling, while in the Czech Republic and Slovakia it’s Ryzlink vlašský. It also pops up in Romania as Riesling Italian.

Olaszrizling performs very well in a cool vintage, according to László Andrási, winemaker at Somló Kincse. Somló Kincse means “Somló treasure” and Andrási

has planted a veritable treasure chest of Hungarian varieties, some of which (such as Gohér and Piros Bakator) disappeared after the phylloxera louse devastated the bulk of vineyards in Hungary and Europe.

He has even brought Kéknyelű, the grape that these days is mainly found in Badacsony, back to Somló.

Wine Culture

The signature grape of Somló, Hungary’s smallest region but a giant in terms of the expressive whites it produces and for its place in the upper echelons of Hungarian wine culture, is Juhfark.

This ultra-high acidity grape is as about as indigenous as grapes get (it is rarely found outside of Somló), and can make very serious wines when full ripeness is achieved to temper the searing acidity.

Sixteen Somló wineries will be pouring 25 Juhfarks at Somlói Juhfark Ünnep 2019, a walkaround tasting, also on October 12, at the Tornai winery, on Somló Hill. The upcoming and impressive Kőfejtő Pince, as well as the classy Kolonics Pincészet, will be present at both events.

Kőfejtő pince’s Péter Tóth is one of a trio of very talented young producers, along with Bálint Barcza (Barcza Pincészet), and Tamás Kis (Somlói Vándor Pince), all of whom will be presenting their

individual wines at Somlói Juhfark Ünnep, who teamed up to form the Bazaltkör Egyesület, releasing Bazaltkör Juhfark 2017 last fall.

There are still a few bottles of that debut vintage left. The trio put together their finest Juhfark musts that came from grapes from their best plots. The wine is a blend of three different barrels of Juhfark, one from each winemaker, with each barrel possessing different characteristics.

The wines were fermented and aged in the barrels for seven months.

The wine is savory, long and complex with notes of ginger and eastern spices. It costs HUF 4,500 directly from the producers.

There will not be a 2018 Bazaltkör wine released.

However, Kis told the Budapest Business Journal this week that the 2019 vintage is, overall, looking stellar.

The 2019 Bazaltkör will be released next spring. Kis also said that Juhfark is the one variety on Somló Hill that needs to be vinified in oak, which serves to temper its sharp acidity.

Over in Tokaj, Erika Rácz from Tokaj Sanzon described the vintage there as challenging due to hailstones having damaged grapes and made them vulnerable to fungal diseases, which called for rigorous selection on the sorting table.

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Budapest Business Journal | October 8 – October 17, 2019

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Varga Winery Scoops Record 16 Gold Medals Varga Winery, the largest wine producer in Hungary, has won 16 gold medals at international competitions this year, setting both a personal and a Hungarian record. Continuous improvement of the wine-making technology and expertise have been the key, the owners say.

ZSÓFIA VÉGH

When it comes wines, labels do count. And not just the design, or the information on the year, variety, etc. but the award stickers that help orientate the not so-connoisseurs.

When people are unable to choose between two wines, an easy shortcut can be looking for a wine that someone else has already decided is good.

If a wine receives a gold at major international competition, such as the Vinalies Internationales in Paris or the Monde Selection in Brussels, where more than 5,000 samples are tasted by professionals, that bottle with the shiny sticker is sure to contain something good.

This year, Varga Winery collected 16 golds; a new record for the winery

and the country. Six wines of the premium “Aranymetszés” range and a Royal Egri Hárslevelű were entered in six international competitions , four of which they won.

The most successful competition was the Berliner Wine Trophy, where six out of the seven wines entered won a gold medal. Most recently, four Varga wines were awarded a gold at Mundus Vini Spring in Brussels.

The winery moved into the premium winemaking category more than

10 years

ago. What has led to this year’s success is continuous improvement and development and the work of some very good experts, the owners say.

Péter Varga, founder of the winery.

All Adds Up

“Everything has added up: we have a team of experts: our head of winery is one the most renowned professionals currently in Hungary; our chemist makes the most out of the state-of-the

art equipment,” Máté Varga, managing director and co-owner of Varga Winery told the Budapest Business Journal.

“We also keep testing, experimenting and improving; continuous development is the key,” he adds.

Another advantage according to Varga is the family-run aspect of the winery, which makes snap and effective decision making possible.

Sending wines to international competitions – provided they have first been successful at local level – makes business sense as well. If they win two or three competitions, it brings success not only to the winery but also the region and the country, Péter Sárkány, a member of the Hungarian Wine Academy and Par Excellence award-winning tutor of the Hungarian Sommelier Association, told the BBJ. The expert, who regularly judges at international competitions, says the state should acknowledge and support the best-performing wineries by, for example, paying the entry fee or sample delivery. A win at these competition helps boost the trade of wines, so the whole country could benefit from it.

“Tasting wines is a challenge but it is also very rewarding,” Sárkány says.

From this professional aspect, the Aranymetszés wines of the Varga Winery are exceptionally rich in flavors and aroma, he adds.

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Britannica: Quality, Development, Curriculum and Language With the school having reopened its doors and settled into the start of yet another academic year, the Budapest Business Journal spoke with Neil McGarry, principal at Britannica International School, Budapest, about the mix of students on the roll, how their English-language learning progresses, and why parents chose the establishment.

BBJ STAFF

BBJ: On average, how many of your students are either native English speakers or speak some English when they join the school?

Neil McGarry: Approximately 10% of our students are native speakers. However, this has increased significantly over the last five years from 3% in 2015. There are many European students who have lived in the United Kingdom recently and who are currently relocating to Hungary.

We are not sure whether this is down to Brexit. This has led to an interesting new group of students who, technically, are native speakers but who are classed as non-natives as both parents are

from outside the United Kingdom but returning to Hungary.

Most children have a minimum basic level of English but this varies greatly as the student’s progress through the school. When they are young and first entering education, between five and eight year’s old, we are able to support and develop students who do not speak any English on arrival. After this point, we are cautious and always look at the best interests of the child. Are they able to integrate effectively and pick up a sufficient amount of English to be able to access the curriculum and ultimately be successful? Every child is an individual and we always make decisions based on their needs and what is best for them.

BBJ: For those who have no English when they join, what is the process for learning the language?

NM: It is a mixture of immersion in class and specialist support from our EAL (English as an Additional Language) team to gradually build their vocabulary and knowledge.

BBJ: How quickly do most non-native speakers pick up the language?

NM: The children pick up the language very quickly and we find that in most cases they can be fully involved within the mainstream within 12 months. Every child is different though, so there is no hard and fast rule in this area.

BBJ: What exposure are the children given to native speakers?

Are there school trips to the United Kingdom?

NM: The children have the opportunity to mix with native speakers in most classes every day and the majority of staff are native speakers. We have occasional trips to the United Kingdom and even had one to the United States a few years back .

BBJ: What other foreign languages do you teach at Britannica?

NM: Spanish, German and French.

Students also study Hungarian between years one and nine.

Neil McGarry, principal at Britannica International School, Budapest.

BBJ: Why do you think parents choose Britannica?

NM: The parents choose Britannica for a number of reasons. The main ones are the high standard of teaching, the quality of our development of student’s English skills and the opportunity to study the British curriculum. We are also extremely proud of our familyfriendly atmosphere and personalized approach to learning. Every child is valued, appreciated and individually catered for. A final reason is, obviously, our wonderful location in District XII up in the Buda Hills.