389-08 odvetvia aj/z - pwc · real estate our team of real estate specialists includes experienced...

PricewaterhouseCoopers in Slovakia

October 2008

Industry Focus

*connectedthinking

3PricewaterhouseCoopers in Slovakia Industry Focus

Main Industry Issues

• Real estate development in Slovakiahas boomed over the last few years,but the current economic crisis hassignificantly reduced the volume of realestate projects and deals.

• International Financial ReportingStandards (IFRS) are now compulsoryfor some companies.

• Careful planning can optimize the taxposition for real estate projects.

• Cost control and strong projectmanagement are essential to maximize potential returns on realestate projects.

• Measures to optimise cash flow canreduce the impact of the globaleconomic downturn.

• A strong focus on quality andcompliance maximises financing and sale opportunities.

We can assist with

• buy-side due diligence (pre- and post-acquisition) and sell-side due diligenceon real estate companies;

• pre- and post-acquisition projectstructuring for a cost-effective and tax-efficient structure;

• tax and related advice on real estateinvestments in Slovakia;

• advice on designing exit strategies –optimizing the commercial and taxposition;

• cost reduction advice;• advice on cash flow and working

capital management;• VAT advice, including maximising VAT

reclaim opportunities;• financing advice to borrowers

and lenders;• managing tax, accounting, and legal

aspects of international real estateprojects;

• advice on inward investments,including establishing companies in Slovakia;

• financial and tax forecasts;• dispute resolution with contractors,

suppliers, and buyers and sellers or real estate;

• reviewing investment prospectuses,share purchase agreements, and otherdocuments from a financial, tax and legal perspective;

• audit services; and• tax and accounting compliance

services.

Real Estate

Our team of real estate specialistsincludes experienced professionalsfrom our Tax, Advisory, and Assurancebusiness lines. We advise large and mid-sized real estate clients,investors, developers and financeproviders about a range of financialand tax matters.

Clare MogerTeam Leadertel.: +421 2 59350 [email protected]

Radoslav Krátkytel.: +421 2 59350 [email protected]

Peter Vážantel.: +421 2 59350 [email protected]

Eduard Vaculatel.: +421 2 59350 [email protected]

Our Team

PricewaterhouseCoopers in Slovakia4 Industry Focus


• Do you need advice on accounting or consolidation?

• Can you increase the income of yourorganization?

• Do you manage the risks of yourorganization?

• Is the turnover of your staff attributed to low salaries?

• Are you engaged in preparing a long-term, customer-oriented strategy?

• Do you want to know how yourorganization is performing compared to others?

• Do you want to streamline the management of your office and reduce bureaucracy?

• Are you interested in a BalanceScorecard and performancemanagement?

• Are you preparing some large publicprocurement, such as IT or PPP?

• Can you do something related to sustainable development?

• Do you want to make changes or haveto make them, for example as a resultof new legislation?

• Do you want to manage and implementstructural funds better and in a morecost-effective way?

• Do your projects always lead to theexpected results within the givendeadline and at the budgeted cost?

• Is your Euro conversion smooth?• Do you think that your IT systems could

be more helpful to you? Are they safe?• Are you engaged in e-government?• Do you want to improve the

management of your assets?

• Do you want to check the activities of individual departments or subordinate organizations?

We can assist with

• audit services, accounting advice,including IPSAS and IFRS;

• Cash Finder;• advice on funding;• making management more effective,

including finance and HRmanagement;

• implementing incentive systems andperformance-oriented remuneration;

• strategic management;• a Balance Scorecard;• programme budgeting;• managing, monitoring, and evaluating

performance;• innovative solutions for providing public

services;• benchmarking;• public procurement;• managing, reporting, and verifying

data on greenhouse gases;• project management;• advice on government funds and state

aid;• outsourcing services;• public-private partnerships (PPP);• Euro conversion;• information technology (IT);• e-government;• feasibility studies;• advice on asset management;• evaluation and quantification of fraud

risk;• investigating fraud and corruption; and• preparing lawsuits and arbitration.

Public Sector

The Slovak public sector, including the healthcare system, is facingincreasing pressure, due to the effortsto work more efficiently whileembracing new or broadenedresponsibilities, such as EU fundsadministration, Euro conversion,sustainability, or innovative methods of supplying services. In the publicsector, the demand for efficiency is constant, be it in regard tomanagement, infrastructure, or healthcare. Furthermore, the publicsector is the scrutiny not only by Slovak citizens, but by the European Union as well.

Our consultants can contribute to thesuccess of governmental, regional, or municipal projects by offering:

• an independent view andperspective; • technical expertise; • public and private sector experience; • proven, effective methodologies; and• project management skills.

As a member of the largest network of its kind, we have access to the bestglobal experts and to proven solutionsthat we can adapt to Slovak-specificconditions. Our work in this field issupported by a specialized institution –PwC’s Public Sector Research Centre(www.psrc-pwc.com).

Karol ZimmerTeam Leadertel.: +421 2 59350 [email protected]

Branislav Hunčíktel.: +421 2 59350 [email protected]

Ivan Kupkovičtel.: +421 2 59350 [email protected]

Christiana Serugovátel.: +421 2 59350 [email protected]

Our Team

Industry Focus


Technology, Information, Communication Entertainment & Media

Tomáš KučaTeam Leadertel.: +421 2 59350 [email protected]

Ivan Kupkovičtel.: +421 2 59350 [email protected]

Peter Poliaktel.: +421 2 59350 [email protected]

Christiana Serugovátel.: +421 2 59350 [email protected]

Our Team

These days, a number of companiesare emphasizing the word“communication” in their businessnames, and do not considerthemselves just a telco or cablecompany anymore. This brings a number of challenges and, of course, more intense competition, and pressure on margins andprofitability. Therefore, it is notsurprising that the most commonwords we hear every day are “costreduction” and “customer growth”.

We are witnessing the establishmentof a third mobile operator in the Slovak market, and observingthe first signs of the impact it has on “communication” companies in regard to innovative products,quality of service, and especially “time to market”.

Last, but not least, is the topic of regulation, which is still a majorissue. We continue to see strenuousefforts by Viviane Reding, the European Commission memberresponsible for Information Societyand Media, supported by the European ParliamentCommittee on the Internal Market and Consumer Protection, regardingthe influence on and reduction of customer prices.


• Successful market and productstrategy.

• Is there any space for further growththrough acquisitions in Slovakia?

• How should we adjust to a world of “convergence”?

• How should we internally managechange?

• How should we handle a large numberof internal projects at the same time?

• How should we reduce costs and optimize their structure?

• What can we do to serve ourcustomers better? Are we a customer-friendly organization?

• Is all the information on customers and product profitability that we needavailable to us?

• How should we make our offeringseven more attractive to our existingcustomers?

• What should our priorities regardingtechnology investments be?

• How should we improve our learningand educational programmes for staff?

• How should we recruit new high-qualitystaff and retain current staff?

• How should we motivate staff correctlyto meet corporate objectives?

• How should we ensure that ourcompany complies with the regulatoryframework?

We can assist with

• strategic consultancy on the directionof the company as a whole, a certaindivision of it, or a product;

• managing projects or providingqualified resources for a certain periodof time;

• reviewing and optimizing coststructures;

• assessing profitability and submittingproposals for increasing it;

• reviewing and optimizing workingcapital;

• testing and improving customerservice processes;

• advising you on various accountingand tax issues and solutions;

• advising you on regulatory issues;• resolving disputes;• forensic and investigation services;• audit services;• advising you on state aid and EU

funds;• tax services and consultancy;• advising you on mergers

and acquisitions, or valuation of the company;

• revenue assurance;• establishing an internal audit function

or an independent assessment of itsactivities compared to best practice;

• assessing the effective use of investments allocated for IT and infrastructure development; and

• Euro conversion projects.


Energy, Utilities & Mining


• Permanent sustainability of energysources.

• Compliance with legislative andreporting requirements of regulatoryauthorities.

• Supply security, price increases forutilities and services in the energysector.

• Climate change and environmentalprotection.

• Introduction of excise taxes on utilities.• EU Emissions Trading Scheme.

We can assist with

• enhancing the outcome and effectiveness of processes;

• transactions and consolidations withinthe energy and mining sector;

• managing financial and political risks;• recruiting and retaining qualified staff;• integrating steps for environmental

protection and decelerating climatechange into the overall businessstrategy;

• preparing and implementing a carbonemissions trading strategy – fromidentifying cost-effective emissionreduc-tion projects to carrying outtransactions with emissions;

• ensuring revenues from services in the energy sector and maximizingprofitability;

• managing the supply chain;• tax compliance reviews;• regulation and legal compliance; and• auditing financial statements prepared

under Slovak accounting

Globalization and the need for a secure, affordable energy supply gohand in hand. Economic developmentdepends on sufficient energy sources– oil, gas, electricity, coal, and others.The availability and security of theseresources are on the minds of many,from consumers and political leadersto company executives.

Slovakia has undergone a process of harmonization to bring its energysector standards in line with those of the EU. The country is also seeing a gradual decrease in its dependenceon solid fuels as the primary energysource.

PricewaterhouseCoopers has beenproviding professional services to energy, utilities, and miningcompanies all over the world for morethan 100 years. We help companiesconfront the industry's mostchallenging changes and issues.

Alexander ŠrankTeam Leadertel: +421 2 59350 [email protected]

Katarína Somogyiovátel.: +421 2 59350 [email protected]

Peter Poliaktel.: +421 2 59350 [email protected]

Peter Havaldatel.: +421 2 59350 [email protected]

Ľudovít Sýkoratel.: +421 2 59350 [email protected]

Our Team


Nárast nákladov spojených s vysokýmstupňom regulácie, vstupom Slovenskado Európskych štruktúr, rovnako akovysoko konkurenčné prostrediea segmentácia podnikateľskéhoprostredia vytvárajú vo finančnomsektore tlak na efektivitu obchodua minimalizáciu nákladov. Naopak,pokročilá konsolidácia trhu, kladie dôrazna rast výnosov. Spoločnosti s vôľou stať sa lídrami natrhu musia venovať všetky sily narealizáciu potrebných zmien v stratégiia prevádzke tak, aby boli včaspripravené čeliť výzvam meniaceho saokolia a rastúcim požiadavkam klientov.

Banking

The way to achieve set targets in a period of global changes is to increase the performance of products, to focus on the mostattractive product areas, and to demonstrate readiness to takeadvantage of emerging opportunities.Key factors that enable banks to adoptnew strategies include a client-orientedmodel and a unified view of client data,the consolidation of distributionchannels, product benchmarking, the identification of leading products,client segmentation, and a focus on targeted campaigns.


• Pressure on revenue growth and costoptimization.

• Client orientation, unified view of clientdata through all systems and distribution channels.

• CRM transformation.• Focus on preventing fraud and money

laundering.• High degree of regulation.• Need to increase management

reporting performance, to support the decision-making process and management predictions.

We can assist with

• implementing strategic, client-orientedmodels that enable a single customerview, advanced client segmentation,client campaign planning, and effectivecross selling;

• benchmarking the performance of client staff, as well as the quality and intensity of services provided;

• advising you on consolidating internalsystems, making operations moreeffective, and optimizing processes;

• strategic decision-making;

• implementing advanced planningmethods, capital adequacymanagement, and providingconsultancy on developing an overallstrategy by using ROE (return on equity), RORC (return on regulatorycapital), RORAC (return on risk-adjusted capital), and other models;

• optimizing managerial and regulatoryreporting;

• advising you on financial regulationsand compliance, as well as providingadvisory and implementation servicesrelated to BASEL II and MIFiD;

• money laundering prevention, fraudinvestigation, and forensic accounting;

• auditing or reviewing financialstatements;

• accounting and IFRS consultancy;• efficient tax recapitalization

and balance sheet restructuring;• developing tax-effective retail and

commercial products (such as cashpooling and derivative financial instruments) and financialarrangements (such as leasing and factoring);

• optimizing valuation allowances andprovisions resulting from changes inaccounting and tax legislation;

• finance structuring – local andinternational group financing throughsubordinated debts, profit-share loans,hybrid financing, and analyzingtransactions with securities andshareholdings;

• advising you on financing and managing treasury operations;

• reviewing the tax implications of investments in hedging transactions,bonds, and other types of investments;

• tax and legal assessment of financialinstruments (such as derivatives,hedging, syndicated loans, securities,and life-insurance products);

• advising you on HR issues,remuneration, and know-howmanagement; and

• the PayWell Remuneration Study for the financial services sector.

Financial Services

The current course of events on the global markets has broughtgreat pressure to bear on monitoringcosts, evaluating risks, and optimizingoperations in all sectors of the economy. The financial sector is the most sensitive in responding to changes in trends. Advancedmarket consolidation meanslimitations on the organic growth of a number of customers.

Increased costs due to a high level of regulation and Slovakia’s accessionto the European Union, as well as the highly competitive market and the segmentation of the businessenvironment, create pressure on business effectiveness and revenue growth.

Companies that are willing to becomemarket leaders should exert all theirefforts to accomplish the requiredchanges in their strategies and operations, so as to be ready to promptly face the challengesresulting from the changing environment and clients’ growingdemands.


Insurance

Although still lagging behind EU averagelevels, insurance penetration has beenconstantly growing in Slovakia. From thestrategic perspective, insurancecompanies must adapt to global trendsin the sector, and focus their attention on clients. This trend brings the need to implement new, client-oriented modelsallowing a unified view of customers,segmentation, and cross selling.


• Pressure on revenue growth and costoptimization

• Identification of profitable products,product benchmarking, benchmarkingand analysis of product costs

• Market potential identification and benchmarking of services

• Implementation of planning and effective capital managementbased on ROI and RORAC

• Implementation of IFRS standards(IFRS 4 and IFRS 7 have a fundamental impact on financialreporting of insurance companies)

• Solvency II concept• Further consolidation of the insurance

market

We can assist with

• implementing strategic, client-orientedmodels that enable a single customerview, advanced client segmentation,client campaign planning, and effectivecross selling;

• benchmarking the performance of client staff, as well as the quality and intensity of services provided;

• advising you on consolidating internalsystems, making operations moreeffective, and optimizing processes;

• implementing advanced planningmethods, capital adequacymanagement, and consultancy on developing the overall strategy;

• strategic decision-making;• optimizing managerial and regulatory

reporting;• advising you on financial regulation

and compliance;• advisory and implementation services

related to the Solvency II concept;• money laundering prevention, fraud

investigation, and forensic accounting;• investigating fraudulent claims;• advising you on money laundering

prevention;• auditing or reviewing financial

statements;• accounting and IFRS consultancy;• advising you on IFRS compliance;

• developing tax-effective structures for insurance companies;

• settling insurance claims, defining and implementing precautions for lossprevention and control;

• quantifying direct and indirect losses;• preparing specialized insurance

contracts;• technical audit of procedures that

the Insurance Claims SettlementDepartment uses;

• reviewing internal controls and preparing the corporate riskmanagement system;

• advising you on issues related to the ratio of costs and fees collected– profitability increase;

• outsourcing the internal audit function;• advising you on HR issues,

remuneration, and know-howmanagement; and

• the PayWell Remuneration Study for the financial services and insurancesector.

Juraj TučnýTeam Leadertel.: +421 2 59350 [email protected]

Michaela Gábikovátel.: +421 2 59350 [email protected]

Eva Hupkovátel.: +421 2 59350 [email protected]

Michal Kopaničtel.: +421 2 59350 [email protected]

Our Team



Decision-makers in the Slovakautomotive sector face high strategic riskand uncertainty in several areas:

• Lack of a qualified labour force.• Interdependence with neighbouring

economies.• Application of the Slovak tax

and labour legislation.• Overall Slovak competitiveness

in production costs.• Inventory management.• Changes in accounting regulations.

We can assist with

• inward investment advice, such as searching for a suitable site;

• market analysis, competitor analysis,and analysis of macro- and micro-economic relations;

• restructuring the dealer network;• recruitment and professional

development of executive staff;• procurement and supply chains,

and optimizing the just-in-time chain;• consolidation of legal entities;• tax optimization of cross-border

manufacturing, mainly VAT-relatedissues;

• the right to draw investment incentivesand the respective consultancy;

• HR advice, such as benchmarkingstudies on wages and salaries,optimization of remuneration systems,and employee benefit schemes;

• reviewing systems and processes; and• comprehensive advice and training

courses related to IFRS.

Automotive and Processing Industry

Matthew PottleTeam Leadertel.: +420 251 152 [email protected]

Jens Hörningtel.: +421 2 59350 [email protected]

Eva Fričovátel.: +421 2 59350 [email protected]

Todd Bradshawtel: +421 2 59350 [email protected]

Our Team

In 2007, three car makers in Slovakia– VOLKSWAGEN, PSA, and KIA –produced more than 570,000 cars,which is 106 cars for every 1,000inhabitants, more than anywhere elsein the world.

Due to the expected financial crisis,experts have identified key factors thatshould help mitigate its adverseimpact on Slovakia: the country’sstrategic position, its relativelyavailable and skilled labour force, as well as the product portfolio of the new market players – PSA and KIA. These two companies focusmore on medium-sized and smallcars, which might help positivelydiversify the Slovak car industry.

In the fairly long term, research and development must berepresented more widely, ensuringsustainable growth even after the advantage of an available labourforce disappears.

PricewaterhouseCoopers

Nám. 1. mája 18, 815 32 BratislavaTel.: +421-(0)2-59350 111, Fax: +421-(0)2-59350 222

Hlavná 108, 040 01 KošiceTel.: +421-(0)55-3215 311, Fax: +421-(0)55-3215 322

Email: [email protected]

www.pwc.com/sk

© 2008 PricewaterhouseCoopers. All rights reserved."PricewaterhouseCoopers" refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which isa separate and independent legal entity. *connectedthinking* is a trademark of PricewaterhouseCoopers LLP.

PricewaterhouseCoopers provides assurance,tax, and advisory services to both public and private organizations in various economicfields.

More than 155,000 people in 153 countriesacross our network share their knowledge,experience, and ideas to build public trust and enhance value for its clients and theirstakeholders.

We opened our office in Slovakia in 1991 and currently have more than 350 employees.

Country Managing PartnerTodd Bradshaw, Tax

PartnersMária Frühwaldová, AssuranceAlica Pavúková, AssuranceAlexander Šrank, AssuranceChristiana Serugová, TaxTomáš Kuča, Advisory

389-08 odvetvia aj/z - pwc · real estate our team of real estate specialists includes experienced...

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