Aegis Group

1
(No Transcript)
2
Aegis Group
Aegis Group plc is the global media
communications and market research group
employing approximately 8,000 staff in over 60
countries. Headquartered in London and listed on
the London Stock Exchange (AGS.L) the Group is
structured around two core business areas Aegis
Media, which includes Carat, Vizeum, MMA, Isobar
and Posterscope and a range of communications
businesses and Synovate, which is a leading
global market research company
3
Global access to local insights
4
Synovate in Hungary

• A hub for Hungary, Czech Republic and Slovakia
• Office established in 1991
• Around 40 full-time staff, 15 researchers
• 58,140 interviews, 395 focus groups and in-depth
  interviews in 2005
• Regional coordinating centre for Central Europe

5
Business Climate BarometerJoint Survey of The
BCCH Synovate
6
Methodology

• Form
• online and self administered survey
• single interview lasted approx. 15-20 min.
• Respondents
• senior management of foreign companies investing
  in Hungary industries like agriculture, tobacco,
  construction, business services, education, food
  beverages, automotive, trade, real estate,
  communications, finance and hotels
• Timing
• Interviews were conducted between September 25
  October 16, 2006

7
Expectations towards business environment
Definitely more favourable
Q1
2006. Oct
Definitely less favourable
Investors are rather negative towards the
prevailing business environment in Hungary in the
near future.
Average score on the scale -100 ..100, where
-100 means definitely less favourable, 0 means
the same as today, and 100 means definitely more
favourable
8
Expectations towards business environment
Definitely more favourable
Q1
Total
Small Business
Mid-size Business
Large Business
Definitely less favourable
The negative sentiment is widespread, but
particularly strong amongst large enterprises.
Average score on the scale -100 ..100, where
-100 means definitely less favourable, 0 means
the same as today, and 100 means definitely more
favourable
9
Expectations towards business environment
Definitely more favourable
Q1
Manufacturing, Trade
Construction, Real Estate
Financial services
Professional Services
Total
Other
Definitely less favourable
The construction/real estate and
manufacturing/trade sectors were the most
pessimistic sectors in the economy.
Average score on the scale -100 ..100, where
-100 means definitely less favourable, 0 means
the same as today, and 100 means definitely more
favourable
10
Governments performance in supporting investors
Making things much better
Q2
2006. Oct
Making things much worse
The Government is not seen as taking positive
steps to improve the business environment. In
fact, opinion is that it is making things worse!
Average score on the scale -100 ..100, where
-100 means making things much worse, 0 means
neither better nor worse and 100 means making
things much better
11
Governments performance in supporting investors
Making things much better
Q2
Small Business
Mid-size Business
Large Business
Total
Making things much worse
Once again, large companies are the most negative
regarding the Governments recent performance for
improving the business environment.
Average score on the scale -100 ..100, where
-100 means making things much worse, 0 means
neither better nor worse and 100 means making
things much better
12
Governments performance in supporting investors
Making things much better
Q2
Manufacturing, Trade
Construction, Real Estate
Financial services
Professional Services
Total
Other
Making things much worse
Although the manufacturing/trade firms had shown
pessimism about the business environment, its
clear that they dont blame the Government for
it. However, the construction/real estate sectors
strongly believe that the Government is making
things worse.
Average score on the scale -100 ..100, where
-100 means making things much worse, 0 means
neither better nor worse and 100 means making
things much better
13
Impact of Gyurcsány restrictive package
Much more competitive
Q3
Small Business
Mid-size Business
Large Business
Average
Much less competitive
Investors formed the same opinion about Hungarys
competitiveness in terms of the Gyurcsány
restrictive package as for the government's
performance, with large companies being the most
negative.
Average score on the scale -100 ..100, where
-100 means much less competitive, 0 means
neither better nor worse and 100 means much more
competitive
14
Impact of Gyurcsány restrictive package
Much more competitive
Q3
Manufacturing, Trade
Construction, Real Estate
Financial services
Professional Services
Average
Other
Much less competitive
All sectors were rather pessimistic regarding the
Gyurcsány restrictive package.
Average score on the scale -100 ..100, where
-100 means much less competitive, 0 means
neither better nor worse and 100 means much more
competitive
15
Impact of Gyurcsány restrictive package
Plan any reduction in staff work force
Plan to revise staff benefit package
Q4
Q5
It is clear that the Gyurcsány restrictive
package will definitely have an impact on both
staff levels as well as on staff benefit
packages. In fact, 1 in 5 companies will reduce
their number of staff, whilst almost 2 in 5 will
revise staff benefits. There is also a sizeable
number of companies that have not yet made a
decision.
16
Operating sectors dynamism
Much more dynamic
Q7
Small Business
Mid-size Business
Large Business
Average
Much less dynamic
Over the next 2-3 years, most companies do not
see any change in the dynamism of the sector that
they are operating in. However, in line with
other perceptions, large companies are the most
pessimistic.
Average score on the scale -100 ..100, where
-100 means much less dynamic, 0 means neither
better nor worse and 100 means much more dynamic
17
Operating sectors dynamism
Much more dynamic
Q7
Manufacturing, Trade
Construction, Real Estate
Financial services
Professional Services
Average
Other
Much less dynamic
Companies both in the construction/real estate
and manufacturing/trade sectors are the most
pessimistic over their sectors dynamism over the
next 2-3 years.
Average score on the scale -100 ..100, where
-100 means much less dynamic, 0 means neither
better nor worse and 100 means much more dynamic
18
Barriers to business growth
May 2004
October 2006
Q8
Average
In relative scores 1 totally insignificant 3
significant 5 extremely significant
Over the past 2 years, bureaucracy and corruption
have become bigger threats to business activity
in Hungary. Interestingly, shortage of skilled
staff is less of an issue! However, the size of
the internal market has become a more decisive
point.
19
Most frequently mentioned points when making a
decision on new / further investments
Q12
Average

20
Most important points when making a decision on
new / further investments
Q12
Average

21
Anticipation of any unexpected change
Q19
43 of those interviewed believe that there will
be some unexpected changes in the next 6 months
regarding the economy or its legal regulations.
22
Significance of source of information about
business environment
Neither significant nor insignificant
Extremely significant
Totally insignificant
Q20
The 2 most important sources of information about
the business environment appeared to be the
business organisations and other companies
investing in Hungary.
23
EU Effect on Hungarian economy
Much worse
Much better
Q21
Several issues have improved with Hungarys
accession to the European Union, particularly
infrastructure and financing options. However,
competition, taxation and prices have
deteriorated.
24
Analysis of Critical Business Drivers
25
Preferred Countries for Investment in Central/
Eastern European
Q16
26
Business Drivers
ECONOMIC ENVIRONMENT High internal
demand Transparent information on the business
environment High quality of management Well
developed infrastructure Well developed
financial sector Low costs of finance
LEGAL ENVIRONMENT Efficient administration Simple
procedures/ no bureaucracy Just/impartial
judicial system No corruption
27
Business Drivers in Order of Importance
Most important
Least important
28
Strategic Matrix Hungary
STANDARDISED PERFORMANCE
DISCRIMINATORS

29
Key findings (1)

• Expectations towards the business environment
  appear to be fairly pessimistic and there is
  quite a decrease versus sentiments expressed when
  the survey was first launched 2 years ago.
• Opinion on the government's policies toward
  improving the business environment has also
  become more pessimistic compared to the previous
  waves.
• Opinion on the Gyurcsány restrictive package is
  also negative.
• The most important barrier to business growth is
  Bureaucracy and red tape followed by
  Corruption. The third biggest factor is High
  cost of finance.
• Taxation rules, unpredictable political steps and
  lack of purchasing power are mentioned as other
  important factors hindering business growth.

30
Key findings (2)

• Political predictability, fair taxation rules and
  lower bureaucracy are mentioned as top priorities
  in improving the attractiveness of Hungary for
  investment.
• Participants agree that EU membership had
  positive effects on the Hungarian economy
  especially in terms of financing options,
  infrastructure and quality of public services.
• EU membership had less positive effect as
  expected in terms of EU regulations, higher
  prices/expenses and new competition.
• Hungary is perceived strong in terms of having a
  well developed financial sector but week in terms
  of offering benefits for foreign investors and
  having high internal demand. There is room for
  improvement in terms of transparency of the
  business environment and equal treatment of
  foreigners which are also important drivers for
  future investment.

31
Questions
32
Our curiousity is all yours.Thank you.
Contact Bán Csilla Research Manager 411-3030 csi
lla.ban_at_synovate.com
!