business review issue 10 - 2009

CAPITAL MARKETSLast year’s losses on the local stock market havemade players more cautious, and long-term in-vestors have started to mark short-term profits

See pages 18-19

BUSINESS REVIEWROMANIA’S PREMIERE BUSINESS WEEKLY MARCH 23 - 29, 2009 / VOLUME 14, NUMBER 10

www.business-review.ro

INTERVIEWLiliana Solomon, CEO of Vodafone Romania, tellsBR the company plans to focus on developing net-work and broadband services this year

See page 14

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The lack of financing, lower number of active players andfalling investment sums have shrunk the local propertymarket, with modest buildings rather than behemoths like theCharles de Gaulle Center now the norm. But real estate is notpoised to become a niche market, say industry insiders

See pages 12-13

The lack of financing, lower number of active players andfalling investment sums have shrunk the local propertymarket, with modest buildings rather than behemoths like theCharles de Gaulle Center now the norm. But real estate is notpoised to become a niche market, say industry insiders

See pages 12-13

RETAILThe electronic product and home appliancemarket is reeling, with shoppers tightening theirbelts since the consumer loan freeze

See pages 8-9

SMALL, THE NEW BIGSMALL, THE NEW BIG

OPCOM SEES FEWER ENERGY CONTRACTS AMID FINANCIAL CRISIS; SEE PAGES 20-21

BUSINESS REVIEW / March 23 - 29, 2009 3

PublishersBILL AVERY • RACHAD EL JISR

Audited 2H 2006

BMG is a founding member of the Romanian Audit Bureau

for Circulation (BRAT)

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BUSINESS MEDIA GROUPBd. Regina Maria 1, bl. P5B, sc. 1, ap. 10-11, Bucharest - Romania Phone: +4021 206-0680 (10 lines), Fax: +4021 335-3474 E-mails: [email protected] - [email protected] - [email protected] No. 1453 - 729XTiparit la: MASTER PRINT

ROMANIA’S PREMIERE BUSINESS WEEKLY MARCH 23 - 29, 2009 / VOLUME 14, NUMBER 10

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BILL AVERY

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SIMONA FODOR

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CORINA S~CEANU

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DANA CIURARU

OTILIA HARAGA

MAGDA PURICE

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V I E W P O I N T

In what has become a great tradition for the international business community, we areproud to organize the fourth edition of the Business Review Investment Awards Gala,which will be held at the JW Bucharest Marriott this Tuesday night, March 24. Some 250top members of the Bucharest business community will be in attendance, as we honor thebest companies across ten different categories.

These are challenging times for everyone, and those of us in media are no exception.Every publishing group on the market is feeling the pain right now. While at our event lastyear we were celebrating 10 years on the market and looking for a soft landing after a cou-ple of red-hot years fueled by the real estate bubble, what we got instead was a global fi-nancial meltdown beginning last September, that is still playing out in Romania. For us atBMG that meant a rapid restructuring and downsizing so that we were able to grapple withthe immediate challenges and hopefully weather the storm that’s coming. I am sure it isthe same for many of you reading this too.

Despite everyone’s concerns about the future of Romanian investment, the crisis, andtheir own personal financial security, we believe the Investment Awards are critical to helpbring the business community closer together and share our experiences. We’re all in thistogether and no one has to feel alone. True, we won’t be honoring deals on the scale of2007’s EUR 2.7 billion Rompetrol/KMG deal, but there was plenty of activity out thereacross different sectors. And the companies that we will be honoring are all strong sur-vivors – ones that would be great partners for you and examples to all of us.

We’ve been publishing Business Review continuously since 1998, so we’ve seen ourshare of ups and downs. In 1998, there was the Asian/Russian crisis. In 2000, the wholeRomanian market was frozen due to upcoming fall elections. Beginning in 2001, businessstarted to claw back and would eventually overheat with EU accession. But now we justhave to adjust our expectations and keep trying. As always, the ones with the long-termperspective will be the ones that survive and prosper.

Bill AveryFounder/Publisher

Honoring the survivors BMGBUSINESS MEDIA GROUP

Don’t miss your chance to joinRomania’s most dynamic mediagroup!We are looking for experienceand passion.

Please send your CV together with a letter of intent to fax:(021) 335.34.74 or e-mail: [email protected].

BUSINESS REPORTERRequirements:• At least one year of relevant experience in journalism (news reporting and editorial features)• Journalism or business degree, good knowledge of thebusiness/economic environment• Strong English-language skills (speaking and writing)• Strong ability to analyze and communicate• Personal integrity• Good PC use

Job description:• Prepares editorial coverage of foreign investments, coversevents and press conferences, conducts interviews.

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BUSINESS REVIEW / March 23 - 29, 20094

BRIEFSMEGA IMAGE BUYS FOURLOCAL SUPERMARKETS é Belgian retailer Delhaize hassigned an agreement to buy fourProdas Holding supermarkets inRomania through its subsidiary MegaImage. The value of the transactionwas not disclosed. The four storesposted EUR 12 million in revenue lastyear, and will re-brand as MegaImage. At the end of 2008, MegaImage’s network consisted of 40stores, 37 in Bucharest, two inConstanta and one in Ploiesti. Thenumber of employees at that timewas approximately 2 000.

FARMACEUTICA REMEDIADEVA PLANS MERGER WITHDORNAFARM SUCEAVA é Farmaceutica Remedia Deva hasannounced a potential merger withDornafarm, the pharmaceutical chainbased in Suceava, according to astatement forwarded to the BucharestStock Exchange (BSE). FarmaceuticaRemedia Deva posted losses of EUR823,000 in 2008. It runs 45 stand-alone pharmaceutical unitsconcentrated in the western part ofthe country. The company's plansinvolve opening two logistic centersand spreading countrywide.Farmaceutica Remedia has a marketvalue of EUR 3.9 million.

ECO POWER ENERGYPRODUCTION TO BUILD EUR 130 MLN WIND POWERPARK IN ROMANIAé Romanian privately-ownedcompany Eco Power EnergyProduction plans to build a windpower park costing EUR 130 millionin the region surrounding RamnicuSarat, following a partnership signedwith local company MA&D PowerEngineering. The park is estimated tobe completed by year-end and willcover 500 hectares, where thecompany will plant over 40 wind-powered turbines, based on acontract signed with Vestas companyin Denmark. So far, the park isawaiting authorizations, according tothe company’s general manager,

The local subsidiary of UniCreditBank posted EUR 97 million in prof-it last year, up 37 percent on 2007,while its assets reached EUR 4.3 bil-lion, a 36 percent growth. Togetherwith the other companies in which thebank holds stakes, UniCredit Tiriac'sassets on the market reached EUR 5billion. The bank decided to use itsentire profit for capitalization, with itsboard soon to approve no dividendsfor this year.

Its portfolio of loans reached EUR4.19 billion, and included those out-sourced to its mother bank, someEUR 1.1 billion. UniCredit is plan-ning to allot more financing to its lo-cal subsidiary, if needed, and is notplanning to cut back on its Romanianactivity, according to the bank's gen-eral manager Rasvan Radu. Radu saidthe Romanian Central Bank should

change the regulations on lendingprovisions, as well as decrease mini-mum reserves of foreign currency,which would allow banks to use theadditional resources for lending. Heexpects the imminent financing from

the IMF to prompt BNR to lower themandatory reserves level. Currently,BNR asks banks to keep 40 percentreserves of the foreign currency theyattract. Radu believes a 20 percentdrop would make a difference. “Weprefer to transfer assets and give loansfrom our mother banks to reduce thecapital requests. […] We will proba-bly see changes in big banks' balancesheets because many loans are exter-nalized,” Radu said.

While the Romanian subsidiaryposted a growth in profit, its motherbank saw a drop of 38 percent in itsnet profit last year, and is planning toask for financing from both the Aus-trian and Italian governments to re-capitalize. The bank's fourth quarterprofit dropped by 56 percent, to EUR505 million.

Corina Saceanu

The local subsidiary of Big Four au-dit firm KPMG has had lenders askingfor accurate and audited financials fromfirms, fueling demand for audit and ac-counting services.

“In the past days of easy credit, nei-ther companies nor lenders looked tooclosely at the financial statements. Nowlenders take care to require in manymore cases that companies prepare time-ly and correct financials, and have themaudited by an audit firm they know,” BillBowman, deputy senior partner withKPMG, told BR.

He expects the firm's core services

of audit, tax and advisory to continue tobe in healthy demand, as companies al-ways need them, whatever the econom-ic environment. “I encourage companiesto come forward with their problems assolutions may be straightforward. Donot pretend to yourselves that they willjust go away. The cost of doing nothingcould be the loss of your business,” saysBowman. For accounting, KPMG isseeing increased demand from compa-nies to give assistance to prepare ac-counts using International Financial Re-porting Standards (IFRS).

Corina Saceanu

Bank holding company MorganStanley has exited local brokeragecompany HTI Valori Mobiliare, byselling its 51 percent stake to the for-mer majority shareholder Daniel Te-pes. The National Securities Commis-sion (CNVM) has already approvedthe transaction, following which Tepeswill become the majority shareholderagain, with 99.89 percent of theshares. The value of the transactionswas not made public, nor how muchMorgan Stanley could have put intothe firm in the meantime.

Morgan Stanley has also put itsshare package in the Bucharest StockExchange up for sale, without a buyeryet. Currently, it owns 2.7 percent ofthe BSE and 0.031 of the Sibex stock

exchange. It also owns share packagesin several companies listed on the lo-cal stock market. According to the lat-est data, Morgan Stanley had a 20 per-cent package in Romcab Targu Mures,having acquired more shares in thecompany in February, over severaltrading sessions. It also owns underfive percent in Imotrust Arad.

The firm acquired shares in theBSE following two deals last year,from brokerage companies H&C Se-curities in Iasi and WBS Romania. Ithas put up for sale its share packagefor RON 40 per share, below what itpaid for the shares, RON 150 andRON 160 respectively. The former in-vestment bank's BSE exit would meana 60 percent loss on the entry price. It

paid around EUR 5.5 million for thestake, while the exit asking price isRON 8.28 million (EUR 2.1 million).

HTI Valori Mobiliare was ranking14th in the list of brokers active on theRomanian market, having intermedi-ated transactions worth EUR 105 mil-lion. The firms now ranks 29th for thetransactions it has intermediated sincethe beginning of the year.

Morgan Stanley, a former US in-vestment bank, became a bank hold-ing company in September, followingthe bankruptcy and near collapse ofLehman Brothers, Bear Stearns andMerrill Lynch investment banks. Itposted some USD 2.2 billion in lossesin the 2008 fiscal year.

Corina Saceanu

Morgan Stanley returns controlling stake in HTI ValoriMobiliare to initial seller

Rasvan Radu, GM of UniCredit Tiriac

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Bill Bowman, deputy senior partner at KPMG

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KPMG: Doing nothing could cost businesses

UniCredit Tiriac posts EUR 97 mln profit, no dividends in 09

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BRIEFSEUROMEDIC ROMANIAEXPANDS NETWORK WITH8TH IMAGING CENTER ATCOST OF EUR 2 MILLION é Medical company EuromedicRomania, part of Dutch chainEuromedic, has announced it willopen a new imaging center inFocsani, its eighth so far. Theinvestment in the center has beenestimated at EUR 2 million, accordingto the medical company’srepresentatives. So far, the firm runscenters in cities such as Arad,Constanta, Bucharest and Petrosani.The group’s total investments inRomania amount to USD 25 million.

CAPITAL & ALLIANCE DEALSEUR 2.7 MILLION PREMIUMSIN 2008, UP 10 PERCENT é Romanian broker Capital &Alliance posted managed premiumsof EUR 2.7 million in 2008, up 10percent over 2007, according tocompany representatives. In 2007,the broker increased its premiums by30 percent compared with theprevious year to EUR 2.45 million,according to its report.

MARRIOTT CHAIN TO EXPANDWITH UNITS IN BUCHAREST,CLUJ AND TIMISOARA é JW Marriott Bucharest GrandHotel chain plans to open three newlocal units in Cluj, Timisoara and asecond unit in Bucharest, accordingto general manager Kurt Strohmayer.The size of the investment is not yetknown since the potential markets arestill being researched. He thinks thatRomanian lacks a hotel portfolio oftwo- and three-star facilities, whilethe luxury segment is oversupplied.Recently, the Dutch Golden Tuliphotel operator announced plans toopen three hotels in Bucharest, Clujand Moieciu de Sus and anotherthree affiliations are scheduled during2010, according to Paul Marasoiu,regional manager of Golden Tulip inEastern Europe.

ArcelorMittal Galati, Romania’sbiggest steel producer, has announcedthat it will end its voluntary redundancyprogram in the coming months. “At theend of last year we had 13,500 workers.As a result of the voluntary redundacyprogram, which started at the beginningof this year, we now have 12,500. Theprogram finishes at the end of this monthso at the beginning of April we will havea clear idea of how much we haveshrunk in terms of personnel,” Arcelor-Mittal Galati representatives told Busi-ness Review.

According to company information,each worker receives compensatorysalaries. The poor market conditionsdrove the plant’s Indian management toimplement its rolling restructuring plan.

The company, owned by Indianmagnate Laksmi Mittal, reported for last

year a net profit of more than USD 200million, a 50 percent increase on the yearbefore, when it stood at USD 133.6 mil-lion, according to the Economy Min-istry.

The price of steel on the LondonMetal Exchange has reached USD 300per ton over the last few months, threetimes lower than in the middle of lastyear. The demand for steel has also de-creased, as a result of low sales of carsand homes, both on the domestic and in-ternational markets. Due to the econom-ic conditions, market representatives saythat ArcelorMittal Galati will report a2.5-3 million ton steel production thisyear, half of the average over the lastthree years.

Dana Ciuraru

ArcelorMittal Galati sheds 1,000 personnel so far

1,000 ArcelorMittal employees have left the firm

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French retailer Carrefour has signedan agreement with shopping center op-erator Winmarkt to open supermarketsin three Winmarkt centers, in Cluj,Bistrita and Turda. Carrefour introducedits supermarket format in Romania afteracquiring the Artima supermarket chainand rebranding its stores as CarrefourExpress. The three new units, whichwill be opened in spaces leased fromWinmarkt, will cover between 925 and1,200 sqm. Carrefour will take over thespace in the Turda unit in July this year,but those in Cluj-Napoca and Bistritaare still being leased to other tenants,with the existing contracts poised fortermination or tenant redistribution else-where in the same building.

Carrefour now operates 21 super-markets in western Romania. Win-markt, which runs 15 commercial cen-

ters, want to partner supermarket opera-tors throughout its entire chain in Ro-mania. The shopping centers, owned byImmobiliare Grande Distribuzione(IGD), were acquired last year for EUR182 million from Ivington Interprises

Limited and Broadhurst InvestmentsLimited.

The buyers were planning to make aEUR 23 million investment in the re-cently bought properties, so as to in-crease the value of yearly rents.

Carrefour sales exceeded the EUR 1billion threshold in Romania last year,growing 37.4 percent on the previousyear to EUR 1.19 billion, the companyhas announced. In 2007, the firm postedEUR 866 million. It was the biggestsales increase among all Carrefour'scountries of operations.

The French retailer runs 18 hyper-markets in Romania, six of them in thecapital city Bucharest. Carrefour boughtRomanian retailer Artima in 2007, pay-ing EUR 55 million for the 21 super-markets in the chain.

Corina Saceanu

Carrefour expands supermarket chain to Winmarkt locations

Xerox Romania and the Republicof Moldova, the local branch of theUS-based corporation, has reportedrevenues exceeding USD 72 millionin 2008, an 18 percent growth com-pared to the previous year, eventhough profit in the fourth quarter waslower due to the economic and finan-cial decline. The main generators ofgrowth were document managementservices, which the firm said hadyielded very good results since 2007,and large capacity multifunctionallaser equipment.

“We were right to count onadded-value products and we concen-trated our efforts to expand the range

of document administration servicesby opening up new locations ofarchiving and processing,” said Mar-ius Persinaru, country general manag-er of Xerox for Romania and the Re-public of Moldova.

According to Persinaru, the com-pany obtained its expected results onthe local market last year. “Thus, fol-lowing the EUR 500,000 investmentwe made in Pipera Imaging Center in2007, we expanded our documentproduction and communication serv-ices in our Faur unit,” said Persinaru.

Revenues from the department ofdocument management services in-creased by approximately 28 percent

over the average growth of the com-pany in 2008.

Revenues from office equipmentsales increased by 51 percent, helpedmainly by sales of multifunctionalsand laser devices.

According to IDC data, Xerox isleader on the market of multifunction-al devices with a 34 percent share.The company’s market share on thesegment of laser devices also in-creased by 3 percent in 2008 to 29.4percent. On the segment of wide for-mat printing, the company posted 58percent higher revenues compared to2007.

Otilia Haraga

Xerox posts 18 percent growth to USD 72 million in 2008

Carrefour will open three new supermarkets

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Supermarket operator Billa Roma-nia, part of German group Rewe, plansto open at least 10 more units in Roma-nia this year, and is also interested inacquiring shops and networks that areput up for sale.

In 2007, the retailer opened six su-permarkets, adding ten more country-wide in 2008. Last year, the companyannounced a EUR 20 million invest-ment in a warehouse in Brazi, nearPloiesti. The site delivers 17,500 sqm.Besides this investment, Billa has 5,000sqm of storage space in Targu Mures.

The retailer reported a turnover ofEUR 74.6 million (calculated at thecurrent RON/EUR exchange rate) in2008, a boost of 10 percent comparedwith the previous year. Its number ofcustomers grew by the same percentagethroughout the year.

German retail group Rewe postedan increased turnover of 27 percent in2007 in Romania, totaling EUR 1.34

billion, according to the company's rep-resentatives. The retailer was estab-lished in Romania 10 years ago and has34 units so far countrywide.

“We were one of the first compa-nies to start modern retail operations inRomania,” said Wolfgang Janisch,CEO of Billa Romania. As a group,Rewe posted increased turnover ofmore than EUR 45 billion in 2007, a3.7 percent improvement over the pre-vious year. Its EBT result increased by22.2 percent to EUR 735.4 million in2007, according to the group’s annualfinancial report published in May 2008.

In Romania, Rewe Group operatesSelgros Cash & Carry, Billa Romania,and Rewe Romania, which manages anetwork of 55 Penny Market and Pen-ny Market XXL discount shops.

Magda Purice

Billa Romania to expand by 10 units in 2009

Verbund, the Austrian electricitycompany, is in negotiations withWinstar Trading International to ac-quire a wind power plant project of100 MW in the Tulcea region.

“Verbund is exploring the in-vestment opportunities in Romania.With regards to the specifics of atransaction, the company doesn’tcomment on projects during the ne-gotiation phase. If and when atransaction occurs we will be able tosay more on this,” Florian Seidl,communications manager at Ver-bund, told Business Review.

This would be the first concrete

step towards investing in the localrenewable energy market. Accord-ing to market estimates, the sum could reach up to EUR 150million.

According to local energy trans-porter information, Winstar TradingInternational, together with threeother companies, has received ap-proval to connect to the grid 600MW in the Tulcea area. Austrian en-ergy company Verbund registeredEUR 3.7 billion of sales last year, anincrease of 23 percent comparedwith previous year’s results.

Dana Ciuraru

Verbund in negotiations over wind energy project in Romania

Cosmote Group, which operates lo-cally through Cosmote Romania, is indiscussions to take over Telemobil(owner of the Zapp brand), accordingto local media reports. This acquisitionwould be an opportunity for Cosmoteto acquire a 3G license, the firm beingthe only operator on the local marketthat has not entered into the possessionof such a license.

The acquisition would also allowthe company to become a more seriouscompetitor for the top two operators onthe telecom market, Orange and Voda-fone. By taking over Telemobil Roma-nia, Cosmote would compete more vig-oriously on the mobile internet segmentwhich is expected to have the highestgrowth this year.

Chris Bataillard, Telemobil Roma-

nia CEO, told Business Review in aprevious interview he expected thecompany to become profitable in atmost 18 months. The company has notmade public its number of customersbut it is thought to be fewer than500,000.

“Right now the coverage of theUMTS network is 23 cities and we arefocusing on improving the quality inthose cities. On the CDMA network,we have doubled our broadband cover-age in one year and we continue to im-prove. Our broadband data coverage is11 million right now, and we will in-crease it to probably around 15-16 mil-lion,” said Bataillard.

Stefanos Theocharopoulos, whowas appointed the head of CosmoteRomania in January 2008, said upon

taking office that one of his main prior-ities would be to find solutions throughwhich the operator could supply mobiledata services. He added that first thecompany would wait to see whetherone of the two operators that weregranted the license – Telemobil andRCS&RDS – would lose it throughnon-fulfillment of the coverage com-mitments they had made.

Cosmote Romania representativestold Business Review they did not wishto comment on the matter of the acqui-sition, while representatives of Telemo-bil Romania could not be contacted be-fore press time.

Cosmote Romania is the thirdlargest operator on the market withover 5.2 million customers.

Otilia Haraga

The retailer is also looking at acquisitions

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The firm registered EUR 3.7 bln in sales last year

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Roman Foeckl

How many employees doesCoSoSys have in its Cluj R&D centerand what are your strategic plans forthis year?

CoSoSys has over 30 employees inthe Romanian HQ in Cluj. The teamcovers all business operations, from re-search, development, testing and sup-port to business development, market-ing and sales. We aim to expand theteam to 40+ people and are looking tohire developers, marketing staff andsales representatives. In 2009 we’llhave three major product releases, de-velopment-wise. We also plan to ex-pand our business in CEE throughsales offices. We’ve already startedwith Poland and either the Czech Re-public or Slovenia will follow. We alsowant to expand our partner and distri-bution network throughout the world.

What sales do you expect by theend of the year for the Endpoint Pro-tector 2009?

The estimates for 2009 are forabout USD 2 million and we expect thebusiness segment (endpoint securitysoftware, comprising Endpoint Protec-tor and Secure it Easy) to bring in 50percent of that amount, the rest beinggenerated by the consumer productsegment (the portable device software).

What turnover and profit did thefirm post in Romania in 2008 andwhat are the estimates for 2009?

The 2008 turnover was about USD1 million, with a 20 percent EBIT. Oth-er than reaching our 100 percentgrowth estimate, we’re also focusingon increasing profitability. Romaniagenerates a little under 10 percent ofour revenue. Of this figure, about 2-3percent represents the consumer seg-ment, and the rest the business sector.

We have international and Roman-ian customers from fields such as bankand finance, IT&C, health (hospitals)and pharmaceutical, educational andgovernmental institutions etc.

Otilia Haraga

3Q

GM of CoSoSys

Cosmote rumored to be in talks to take over Telemobil

WHO’SEVENTS, BUSINESS AND POLITICAL AGENDA NEWSEUGEN STOENESCU is the new head of

commercial proper-ty management forBuilding SupportServices. He has ex-tensive national andinternational prop-

erty management expertise. Priorto this, he was head of commercialproperty management for KingSturge Bucharest. Stoenescu has aBSc degree in engineering andProperty Management diplomasfrom the Sauder School of Busi-ness, University of British Colum-bia, Canada. He is a member of theInternational Council of ShoppingCenters and BC Real Estate Coun-cil.

ROH PAN OCK was appointed presidentof LG ElectronicsRomania. He joinedthe LG Electronicsteam in 1990 andhas worked for thepast 20 years in

global strategy and regional mar-keting. Between 1995 and 2000, hewas in charge of the firm’s market-ing activities in Austria, and be-tween 2000 and 2008 he coordinat-ed the marketing department of themedia division. He graduated fromthe Faculty of International Rela-tions at the Hancock University,specializing in Economics andFrench, and obtained an MBA inglobal management from theThunderbird university.

DANIEL MITEL was appointed chief op-erating officer of LG ElectronicsRomania. He has vast experiencein sales and business developmentstrategies. From 1992 to 2003, heworked for Coca-Cola (Romaniaand Russia), Interbrands (theGillette division) and Brau Union.For the next six years he coordi-nated Servisair/GlobegroundCanada. He graduated from theFaculty of Economic Sciences andInformatics Engineering and in2000 obtained an MBA from theOpen University Business School.

CATALIN SCARLAT was appointed com-mercial manager of Euroweb Ro-mania, in charge of coordinating

the company’s commercial andmarketing activities. Scarlat joinedthe management team of EurowebRomania in 2004 as marketing &development manager. He will al-so be in charge of coordinating thefirm’s sales department. He has 10years of experience in telecom.

DENISA POPESCU will be in charge ofcoordinating the support opera-tions of Euroweb Romania. Shewill also maintain her current posi-tion of financial manager, incharge of financial-auditing andacquisitions. As of now, her area ofresponsibility also includes thefirm’s HR department. Popescujoined the managerial team of Eu-roweb Romania in 2006, witheight years of experience at an im-portant financial auditing compa-ny.

GABRIEL IONITA was appointed techni-cal director of Euroweb Romaniaand will coordinate the company’stechnical and development opera-tions. He has vast experience intelecommunications and over thelast 40 years has coordinated thetechnical department of anotherimportant player on the telecommarket as technical director.

OANA FARCASANU, 35, has re-joinedDanone Romania as HR manager.She first joined the company inthis position in 2001 and was alsoHR coordinator for SE countriessuch as Bulgaria, Serbia, Croatiaand Bosnia. In 2007 she was relo-cated by the Danone group to Parisas resources development managerand in 2008 she was promoted toHR manager for Western Europe.

OVIDIU GHIMAN, 31, was appointedmanager for strategy and businessdevelopment at Romtelecom Ro-mania where he will be in chargeof drafting the development strate-gy, identifying new business op-portunities and integrating them inthe company’s business model.Previously, he was commercialmanager of RCS&RDS Romania.Ghiman graduated from the Babes-Bolyai University in Cluj-Napoca,the Faculty of Economic Sciences.

Business Review welcomes information for Who’s News from readers.Feel free to contact us on 206 0680 (10 lines), by fax at 335 3474 or e-mail: [email protected]


C A L E N D A R / W H O ’ S N E W S

MARCH 23é 12.00 – Press conference of the B’EST IFF festival takes place at Met-

ropolitan Cultural Center of Sector 1 City Hall.

MARCH 24é Business Review organizes BR Awards at JW Marriott Hotel.é 11.00 – Re-launch of the brand Somaco, acquired by the investment

fund Oresa Ventures, at Crowne Plaza Hotel, Crowne A room. é 11.00 – Launch of new Carrefour hypermarket. Press conference takes

place at Grand Arena Mall.é 18.00 – IEDC-Bled School of Management Slovenia organizes IEDC

MasterClass in Bucharest, entitled "How Managers Create and DestroyValue in Times of Crisis” at JW Mariott Grand Hotel in Bucharest, inFoyer Braila Ploiest.

MARCH 24-26é Call Center& Customer Care Conference and Expo.

MARCH 26é 09.30 – Capital Market Conference organized by the Brokers’ Associa-

tion and Bucharest Stock Exchange takes place at IBC Modern. é The American Chamber of Commerce in Romania is organizing its

2009 Annual General Meeting (AGM), including the elections for theBoard of Directors and Auditing Committee at Athenee Palace HiltonHotel, Regina Maria Meeting Room.

MARCH 27é Mazars organizes seminar on Transfer Prices.

Law firm Tuca, Zbarcea & Asociatiihas reported a EUR 23.5 millionturnover for last year, while revenuesstood at EUR 21.5 million. Representa-tives said the figures did not include therevenues from the secondary office inCluj-Napoca, which operates in associa-tion with the local firm Nistorescu, Som-lea & Asociatii.

“We had a 45 per cent hike in billingcompared to 2007, largely fuelled by therise in new clients won, plus growth inexisting clients’ advisory work,” saidGabriel Zbarcea, managing partner ofTuca, Zbarcea & Asociatii. Most of thefirm’s revenue comes from M&A, cor-porate, litigation and international arbi-

tration, as well as real estate work. Thisyear, the official said the firm planned tostrengthen several practice groups suchas insolvency and banking and finance.

“Our growth target is being set at zero for this year. We do howeverexpect our breadth of areas of practice toact as a hedge against the areas that areslower. We believe that litigation, con-cessions and infrastructure, employ-ment, energy and international arbitra-tion practice groups will perform strong-ly this year”, said Florentin Tuca, man-aging partner with the firm. TucamZbarcea & Asociatii has 83 lawyers, in-cluding 16 partners, and 42 support staff.

Dana Ciuraru˚

Tuca, Zbarcea & Asociatii reports EUR 23.5 mln turnover for 2008

Slovenian book retailer Mladinskawill open a store in Bucharest on April2 following an investment of EUR350,000. The 400-sqm shop will belocated in Militari Shopping Center.The opening is part of a wider pro-gram to expand on the Romanian mar-ket, which will also include othercities outside Bucharest.

Mladinska knjiga Group is one ofthe leading companies in publishingand book sales in Slovenia and is thebiggest publisher in Croatia.

The firm first entered on the Ro-

manian market as a publishing housein 2005 and has released 40 titles. Ithas now decided to expand on the re-tail side. Its retail activity on the localmarket will be coordinated by VesnaVirant, general manager of the com-pany in Romania.

Last year the Slovenian retailer,which comprises a chain of 80 bookstores, posted a turnover of EUR 160million. Mladinska was founded in1945 in Ljubljana, initially as a pub-lishing house.

Otilia Haraga

Slovenian book retailer opens outlet in Bucharest


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Due to a nosedive in demand and harsher conditions for consumer loans, theelectronic products and home appliances market is reeling – especially aslocal consumers are heavily dependant on consumer loans, which accountedfor a large portion of sales. Business Review talked to producer Arctic andretailers Altex and Flamingo International to see how much they have beenaffected and what plans they have for the future.

Electronic and home appliance players hitby low demand and consumer loan freeze

By Otilia Haraga

“As early as last year retailers be-gan to be confronted with cash-flowproblems, and were compelled todrastically reduce costs and even closedown some smaller, unprofitablestores,” Jiri Rizek, CEO of FlamingoInternational, tells BR. He says themarket is unstable, as the currency ex-change rate changes from one day tothe next, and purchasing power willdecrease as a result. Naturally, this willmake consumers less eager to spend,which will also affect the revenues thatthe industry is grossing.

According to data from producerArctic, over the last two months of2008, the home appliance market inRomania shrank by 20 percent. Bro-ken down by segment, refrigeratorsales dropped by 26 percent, washingmachine sales 11 percent and cookersales 12 percent.

“We were able to notice a slow-down in consumer demand as early asthe last quarter of last year, when weposted an 18 percent drop in the totalsales of electronics, home appliancesand IT&C products, compared to thesame period of 2007,” says Rizek.

LCD and plasma TVs have beenthe best sold products in the Flancoand Flamingo stores, a trend that hasbeen going strong since last year. “Un-fortunately, we cannot say the sameabout home appliances, where therehas been a sharper drop in demand,”added Rizek.

Apart from a fall in demand forelectronic products and home appli-ances, there has been a shift in thesales balance, explains Iuliana Marcu,PR manager at Altex Romania. In theAltex stores, for instance, there wasgrowth on the segment of entertain-ment products and home appliances,but on the other hand a reduction forelectronic products.

Retailers and producers alike hopeaccess to consumer credit will beeased over the course of this year.“Prohibitive loan conditions havegreatly slowed down the developmentrate of the consumer goods sector andhave influenced consumer behavior,generating a pronounced drop in de-mand,” Monica Iavorschi, generalmanager of Arctic Romania, tells BR.“Restrictive lending conditions are,from our point of view, the main causefor the decrease in demand for homeappliances, especially since 70 percentof these acquisitions were madethrough loans,” she says.

Romanians are definitely more de-

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Consumers are less eager to spend on IT&C and electronic products due to FX rate volatility and more expensive loans


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Aiming for your event success dependson a few critical issues and one of the mostimportant si obviously the Venue. Find outhow one of the leading four starts hotels inBucharest can offer superior service standards with cost flexibility, for your questease...

Golden Tulip hotels are among themost modern properties in Bucharest andthe Golden Tulip Times Hotel is a prime example. Designed with the business travellers’s needs in mind , the hotel canhappily accommodate groups and leisureguests alike, impressing them by excellentstandard of services, complemented by apersonal touch provided by a careful, pro-active and professional staff.

The hotel is located in the heart of thenewest and financial center of the city andhas open sky views across the Decebal

Bulevard, National Park and the city skyline.Golden Tulip Times is conveniently close tothe city centre, which makes it a perfect basefor both business visitors and tourists enjoying Bucharest short breaks.

Costina Gandac, General Manager ofGolden Tulip Times hotel launches a warmand suggestive welcome message for theguests:

„Wherever you are in the hotel – shesays: in your comfortable room, using oneof our conference facilities, sipping a coffeein the coffee shop or indulge yourself withdelightful food served by attentive staff inour panoramic view restaurant, you are always surrounded by friends. Our team isfocused on our guests providing them ahigh level of services and a nice hotel experience, whether is a Housekeeper, aWaitperson, a Front Desk staff or an Engineer.”

All the hotel's bedrooms are designedto offer a fully equipped and spacious retreat, sparkling bathrooms, have comfortable beds and free wireless high-speed Internet access. Superior anddeluxe rooms up to 55 square meters are also available for long stayers who need thecomfort of both : a nice bedroom and an efficient office space. For those who seek relaxation or need to turn their business dayinto a more friendly and casual environment, each Superior and Deluxeroom benefit of a „cozy corner”, featuring asectional sofa, wide screen TV and a generous minibar.

Taking advantage of one of the best 4stars conference venue in Bucharest withnatural daylight, the Golden Tulip Times Hotel is ideal for business meetings andseminars. The 9th floor is entirely dedicatedto the meeting rooms, which can

accommodate up to 100 delegates forbusiness meetings or social events. Freewireless high-speed Internet access is

available throughout all the hotel’s publicareas.

Having a beautiful view to the Parliament House and a modern architectural style combined with a loftlikeindustrial design , Panorama is fit for anytype of event: cocktails, product launches,press conferences, symposiums, presentations, trainings, work-shops, cultural exhibitions, TV programs.

The modern semicircled constructionmakes Ronda a perfect place for photoshoots, cultural exhibitions, TV programs,press conferences, cocktails, productlaunches, symposiums, presentations, trainings, work-shops.

If you have in mind a presentation,press conference, a board meeting or atraining, work-shop or a limited spaceevent, Belvedere is the right choice. Thisspace with natural day-light offers, in awarm atmosphere, the privacy of the idealworking environment.

Last but not least, the top floor CupolaClub offers an unconventional and versatilespace, designed for any kind of event. The

Club glitters a glamorous warmth duringevening events through its spectacular glassdome and a cozy atmophere due to its builtin fireplace.

The Golden Tulip Times hotel is also anideal venue for weddings and special occasions such as an anniversary or a birthday party. For lovers of food and finedining, the hotel also boasts one of the mostfashionable city restaurants - Times and acozy coffee shop. Times Restaurant hasbeen reffered as one of the best hotelrestaurants in the city, due to its carefullycreated menu and professional team, led bymerited Master in Culinary Art RoxanaAnghel.

„Because we are dedicated to ourguests, we do everything in a professionalmanner. We want you to enhance youropportunities and have a wonderful time.We are the perfect hosts with a positive attitude and guest service oriented”, concludes Mrs. Gandac.

Glittering the path in MICE business

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pendent on consumer loans than theircounterparts in countries such as Ger-many, but in fact you don’t even haveto go that far: shoppers in Poland, theCzech Republic and Hungary alsotend to rely less on consumer credit.“The main reasons for this are strictlyrelated to regulation norms and alsothe proportion of loans in EUR that areconfronted with the high risk of cur-rency exchange fluctuation,” saysRizek.

In 2008, Altex sales via loansgranted through Credex representedapproximately 25 percent of totalsales, but this figure is going to changefor the worse this year. Altex Romaniacontrols the Altex retail network of ap-proximately 60 stores and the MediaGalaxy network, which consists of 14large shops. “Our development planswill continue in 2009 but they will de-pend on the evolution of our partners’projects,” says Marcu. The next storeto be opened by the firm is a MediaGalaxy store of approximately 3,000sqm in Militari Shopping Center.

Meanwhile, at Flamingo Interna-tional 20 percent of sales on the localmarket were generated by consumerloans through Cetelem. Flamingodrafted a plan to minimize the effects

of the crisis, which includes a strict fi-nancial control program for cost effi-ciency and preventing unforeseen andcounter-productive expenses, with anequally strict stock management.“Moreover, we have taken measuresas far as the acquisition policy is con-cerned, aiming to reduce operationalcosts. We have cut them by 25 per-cent,” says Rizek.

Flamingo International will slowdown the rhythm of expansion that ithad set initially for its chains of stores.“Expansion plans will probably be de-layed by a year or two depending on towhat extent the market and consump-tion are affected by the crisis.” Cur-rently, Flamingo International has 114Flanco, Flanco World and FlamingoComputers stores. “Given the currenteconomic situation, we estimate thiswill be a more difficult financial yearthan 2008, but we still wish to main-tain our retail performance and end theyear with positive results,” says Rizek.

Meanwhile, Arctic is contemplat-ing two different scenarios for 2009:under the pessimistic one the businesswould post 10 percent falls; the opti-mistic one sees growth of up to 5 per-cent. The company’s investmentbudget amounts to EUR 5 million, the

same as last year. “However, we de-cided to postpone the investments thatwere not absolutely necessary until thesecond half of the year in order to havea clearer view of the evolution of themarket this year. We will continue toinvest in product launches and in anycase we will strive to reach cost effi-ciency,” says Iavorschi.

One important measure that thecompany has taken to safeguard itselfagainst the crisis was to re-negotiatecontracts with suppliers in RON, toensure the firm is protected from fluc-tuations in the currency exchange rate.Secondly, the producer is paying muchmore attention to enhancing partner-ships with distributors and retailers.“We’re monitoring the evolution ofsales and orders attentively so as toavoid stock blockages.”

Moreover, for the sake of efficien-cy and lower costs, Arctic has restruc-tured some processes, such as logis-tics. “We have proposed to evaluateproduction periodically and adjust itbased on the volume and structure ofthe orders we receive,” says Iavorschi.The target is to continue to export 70percent of the local production in2009, not on new markets which couldbe “more difficult in these conditions”

but to consolidate on the marketswhere the company has already estab-lished a presence by focusing mainlyon the countries that will be least af-fected by the crisis.

Arctic increased its market sharein Romania by 3 percent, to 31.5 per-cent in 2008. Sales of the Beko brandrepresented 25 percent of the firm’s to-tal sales on the local market, and Bekodoubled its market share last year to4.8 percent.

Still, Arctic sales fell over the lasttwo months of 2008 by 16 percentcompared to the same period last year.The company managed to sell734,000 units last year, 3,000 morethan in 2007. “2008 was the first yearthat Arctic posted a slight decrease inits turnover, amounting to 5 percent,since it was taken over by the Turkishgroup Arcelik,” says Iavorschi.

In 2008, Arctic produced 1.2 mil-lion refrigerators, almost a third ofwhich were sold on the local market.In total, it sold 1.5 million units lastyear. The firm has 2,200 employees inRomania. “Making staff redundant is ameasure that we do not wish to take,since it is the last resort. For now, wedo not need to make such a decision,”says Iavorschi. ■

For more information on Golden TulipTimes Hotel please visit the website at www.goldentuliptimes.com or telephone 021 316 6518. Also, stay tunedfor promotions and special offers atwww.timesevents.ro


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In the current economic situation, minority shareholders still have the chanceto recover their million-euro investments in the stock exchange. A CNVMdraft law could make all companies that have owned a 33 percent stake in afirm since January 2007 initiate compulsory public offerings at the share priceat the time of takeover. Affected companies include KazMunaiGaz, majorityshareholder at Rompetrol, Generali and Sanofi-Aventis.

Compulsory public offeringsoffer minority shareholderschance of consistent returns

By Dana Ciuraru

The falls on the local capital mar-ket have swept away stock marketplayers’ dreams of high returns ontheir investments. For minority share-holders in listed companies there isstill a chance for consistent revenuesthis year. Under the current capitalmarket legislation, when any individ-ual or group acquire 33 percent of acompany or exceeds a 50 percentstake, a compulsory public offering(OPP) on a two-month term becomesmandatory.

The sticking point between theminority and majority shareholderscomes when calculating the 33 per-cent share package. According to thelegislation, this calculation includesboth direct and indirect possessions.

Currently, the National SecuritiesCommission (CNVM) has put on thediscussion table a draft law that bringsa particular interpretation of the con-cept of direct holdings. Briefly, “Allcompanies that own more than 33percent of listed companies, even in-directly, after January 2007 come un-der the jurisdiction of this new proj-ect,” Victor Stanila, CNVMspokesperson, told Business Review.

To understand more clearly, let’stake the recent example of the Austri-an automotive company Porsche.Through the acquisition of Volkswa-gen’s majority package, Porsche be-came the indirect majority sharehold-er in Scania AB (whose majorityshareholder is Volkswagen) and isthus obliged to launch an OPP.

ROMPETROL REJECTS OPP FORMINORITY SHAREHOLDERS

One of the businesses that couldbe affected by the CNVM’s new stip-ulations is oil giant Rompetrol. Com-pany officials say that the currentform of the CNVM project will havea negative impact on the majority andminority stake holders, by changingthe functioning rules of the capitalmarket.

“The proposed changes will affectthe majority companies listed on theBucharest Stock Exchange (BSE), byforcing the shareholders that own a 33percent stake to initiate public offer-ings, according to the CNVMchanges, and not the ones that obtainthis percentage, according to the Eu-ropean directive adopted by Roman-ian legislation as well,” saidRompetrol officials.

They added that the transactionbetween Rompetrol Holding and

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Investors who have been burned by the stock market collapse are hoping to get their hands on some money via compulsory public offerings


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KazMunaiGaz for the takeover of a75 percent stake in Rompetrol GroupNV was done in 2007 and was ap-proved by all the necessary authori-ties.

“Taking this into consideration,the new majority shareholder ofRompetrol Group cannot be forced toinitiate public takeover offerings forRompetrol Rafinare and RompetrolWell Services, as this obligation isn’tstipulated in the Romanian legisla-tion,” said Rompetrol representatives.

The oil firm’s statement comes af-ter QVT Fund, minority shareholderin Rompetrol Rafinare, last year askedthe CNVM to apply the law to all mi-nority shareholders and force theRompetrol majority shareholder toinitiate the OPP.

“We haven’t yet had an answer tothe request we made to the CNVM.We will have to see what offer price isestablished, under this new project,and the CNVM will have to submit anindividual administrative act in theRompetrol case. Rompetrol was sup-posed to have made the public offer inJanuary of last year. If the firm nowmakes a public takeover offering, themajority shareholder will not pay theinterest for this period of time,” saidCristian Dutescu, the lawyer repre-senting QVT Fund.

INVESTOR REACTIONThe Capital Market Investors’ As-

sociation (AIPC) said that the CN-VM’s clarifications were just a late at-tempt to fix the legislation. “The pur-pose of the European directive is toenable minority shareholders to with-draw from a company at the sameprice at which the acquisition of the33 percent stake was made by anothershareholder,” Dumitru Beze, presi-dent of the AIPC, told BR.

According to him, the CNVM’sobligation is to fine any majorityshareholders who refuse to initiate theOPP with up to 5 percent of the sharecapital and to summon them to placethese offers.

But why have majority sharehold-ers not initiated OPPs by now, andwhy hasn’t the CNVM intervened?

“The stock exchange was ridingthe wave. Investors didn’t complainvery much because they could haveobtained a much better price from themarket than from the OPP and someof them would not have even sold.Despite this, the law hasn’t been ap-plied and this is a fact,” said Beze.

EFFECTS ON THE MARKETWith the March 26 deadline for

submitting observations on this proj-

ect rapidly nearing, relations be-tween minority and majority share-holders have become tenser. Capitalmarket specialists believe that thenegative long-term effects will beovershadowed by the financial ben-efits on the short term.

“If this project is approved in theform proposed by the CNVM, onthe short term it will confer advan-tages, because the mandatory publicofferings which should come fromthe majority stake holders wouldhave to be done at higher prices thanthose on the market. On the long-

run these new clarifications couldhave negative effects, because theymight lead to exits from the stockexchange,” Andreea Gheorghe,chief analyst with Intercapital In-vest, told BR.

Property Fund (FP) officials alsotold BR what the effects of thesechanges would be for them. “TheFP will outline all financial situa-tions, according to capital marketrules. We believe that changingrecording depreciation in the valueof assets on the balance sheet (andnot through the profit and loss ac-

count) leads to a real reflection ofthe assets situation and of the resultsobtained. These modification willreflect a net profit correlated withoperational profit and of course div-idend allocation,” said FP officials.

Some top companies in the mar-ket, like Generali Holding andSanofi-Aventis have already ex-pressed their intention to complywith the European directive and do-mestic regulations after the Ardafand Sicomed takeovers. It is a firststep on the road to a solution.

[email protected]


A N A L Y S I S

The shrinking investment volumes on the local realestate market, decreasing number of projects stillon track for delivery, and small volumes ofinvestments put forward by those who still want toinvest in Romanian properties, all point to a realestate market downsize. Is local real estatebecoming a niche business?

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Real estate shrinksbut still thinks big

By Corina Saceanu

The lack of new money and the loss-es posted by foreign investors on othermarkets have triggered a drop in thenumber of ongoing projects, slashed thenumber of active developers and willeventually lead to a forced flight to pro-fessionalism for the industry. “In otherwords, fewer people doing fewer thingsbut in a professional way. Basically, aniche market,” says Muler Onofrei,country manager at Goodman.

Return margins will drop on aver-age, and those who invest will have tothink long term, but the fact that the re-al estate market responds to a basic needmeans it does not risk becoming mar-ginal. “It is not the end of an era, it isjust the beginning of a new cycle,” saysFrancisc Peli, partner with PeliFilip lawfirm.

“Everybody is struggling not tomake a loss, and to keep feasible proj-ects running. It is definitely not a fabu-lous time to sell, so margins are more orless a remote subject,” says Peli.

Others take the same tone. “It isdoubtful that real estate will become aniche business in Romania. Romaniacontinues to be undersupplied in qualitymodern commercial and residentialstock. While demand has slowed, itshould improve when economic growthreturns,” agrees Charles Krick, manag-ing director with Jones Lang LaSalleRomania. “What will change is the pub-lic perception of real estate. In recentyears many market participants be-lieved real estate was a path to quickriches given the relative ease of successduring the real estate bubble period. Nolonger is this the case,” Krick explains.

Even if the real estate market doesnot become a niche, it will continue tosee some shrinkage, which will make ita smaller pond than the sectors in whichthe little money there is left is pouringinto nowadays, like renewable energy,for example.

Investments in Romanian real estatehave significantly dropped from theprevious years. “One could say that atthis moment, the level of investmentsbarely reaches 10 percent compared tothe previous years,” says Eran Kremer,shareholder in Anteea Estate.

Other players also foresee a contin-uing decline, but not to the extent of be-coming a niche market. “Real estatewill not become a niche business in Ro-mania. I would describe it as complicat-ed, not something for anyone who does-n't have anything else to do,” says IliasPapageorgiadis, CEO of More Interna-tional Invest real estate brokerage firm.

He believes the real estate market in Ro-mania will stay below EUR 10 billion,with the average price per transactiondropping by 30 to 50 percent comparedto last year. The volume of real estatetransactions in 2007 was four times thelevel in 2004, followed by 2008 at on-ly two times the 2004 level, while 2009will be the first year with transactions at50 to 70 percent of the 2004 threshold,according to Papageorgiadis.

Most of the investments this yearwill be opportunistic, and the marketwill once again be dominated by foreigninvestors, believe market players. “Theforeign investors who will come will bethose who need to recover some of thelosses from neighboring countries,where the market has collapsed,” saysEran Kremer.

Opportunistic funds have alreadyexpressed interest in the Romanian mar-ket, looking for distressed sellers, orproperties whose prices have beenslashed after they previously failed tosell, explains Dan Ionascu, head of val-uations with Cushman & Wakefield inRomania.

But Romania as a real estate invest-ment target now faces competition frommore mature, Western markets. “The in-creasing globalisation and transparencyof real estate investment means thatmany investors can now easily comparethe fundamentals of a Bucharest officebuilding to an office building in Parisfor example. So until real estate in Ro-mania offers significantly better returnpotential or other significant advan-tages, many investors will focus on oth-er markets,” explains Charles Krick ofJLL.

The number of foreign investorschecking the market will be down by upto 80 percent on last year, as in 2008there were thousands of “window shop-pers” or serious investors who gotscared by the asking prices, says IliasPapageorgiadis. But he thinks that thenumber of foreign investors who finallyinvest in Romanian real estate this yearcould be even higher than in 2008,when the level of investments was lowanyway. Currently investors are lookingat income properties, agricultural landand land suited to energy projects, un-finished projects with potential andapartments, he says. There are severalretailers investing as well, that now en-joy lower pricing.

Foreign investments in real estatehave made up the majority of invest-ment volumes in recent years. “Giventhe pullback in foreign capital, there is apossibility that some local investorsmay step forward and fill some of thisgap in 2009. However there is limited

Although the real estate market is downsizing, players expect it to become the economy engine again


A N A L Y S I S

financial capacity from local investorsso I don't see a huge change in the ra-tio,” says Charles Krick.

Foreign investments will remainimportant, but the way Romanian capi-tal works will change. “Locals wereusually involved in development, andended up selling projects to foreigners.This will change. Local investors whichused to build average quality buildingsand get top prices will have to think ofbuilding top quality and think longterm, keep the buildings for a while.The idea of an exit will be a rarity forsome time,” says Muler Onofrei. The

local-to-foreign investment ratio willnot change much, but in absolute terms,there will be less money invested in re-al estate, he says.

The Romanian market, which hasgrown more in the last three years thanWestern markets in the last ten, says DanIonascu, has been fueled by foreign in-vestments, either equity or debt fromforeign banks. “Those who lead the mar-ket are foreign investors, and local onesusually follow suit timidly,” he believes.

Profit margins on real estate invest-ments in general are also expected to godown, although opportunistic deals may

enjoy higher margins than in the previ-ous years. “On the residential segment,where margins could reach 75 percent inprevious years, we will see 10 to 30 per-cent maximum,” says Eran Kremer.

On a shrinking market, with stalledor frozen projects, any profit, howeversmall, is still good news.

“Profit margins could even exceedthose of the previous years in some cas-es, based on opportunities,” saysIonascu of Cushman & Wakefield. Pa-pageorgiadis agrees. “What I can tellyou for sure is that those who invest in2009 will probably have double the

profit margin of the ones who investedin 2008, as it is not so easy anymore forsomeone to invest all around the worldnowadays,” he says.

Final investors asking for doubledigit yields will prompt developers tosettle for lower profits, and in some cas-es even make a loss, says Muler Onofrei.But in the post-crisis world, real estatewill again become the steam engine ofthe Romanian economy, as the demandexists and it has great potential, whenmany major mistakes are corrected, Pa-pageorgiadis concludes.

[email protected]

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Muler Onofrei, country manager at Goodman

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Eran Kremer, shareholder in Anteea Estate

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Ilias Papageorgiadis, More International Invest


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Vodafone Romania has decided to ride the wave of mobile data servicegrowth this year, as have most market players. The firm has no plans tolay off personnel locally, at least not yet, says CEO LILIANA SOLOMON.In Q4 of 2008, Vodafone posted a 1 percent growth in service revenues,compared to a 19 percent growth for the same period in 2007. It addedalmost 730,000 new customers in 2008 to surpass 9.6 million by the endof December, making it the second largest operator on the market.

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Vodafone plans to develop networkand mobile broadband services

By Otilia Haraga

What investment plans doesVodafone Romania have for 2009?

We will continue to invest in net-work development and mobilebroadband service enhancement, thisyear, too, in order to ensure our fu-ture growth.

What will be the main directions

of investment this year for the com-pany?

In 2009, we will focus on prod-ucts and services that still have sig-nificant growth potential, such asmobile data services. We are alreadyvery strong on mobile broadbandthrough the quality of our servicesand the network capabilities, havingthe most extensive network coverageat 7.2 Mbps, in Romania.

Our focus is to bring additional

value to our customers, as we all passthrough a difficult period economi-cally speaking. By value, we meanproviding our customers with best-in-class services at very affordableprices. Moreover, the communitysupport provided through the Voda-fone Romania Foundation is one ofour constant priorities, this year too.

Vodafone has announced it willmake layoffs. Will the company doso in Romania as well?

For the time being, we do notplan to restructure personnel at Voda-fone Romania. We currently havearound 3,000 employees.

You previously said you mayhave to bring under the company’sumbrella some activities that yououtsourced in the past. What arethese activities?

Our priority has always been op-erational efficiency across the com-pany and the intelligent use of re-sources. These are areas that a com-pany should focus on anytime, notonly in a crisis period. Now, it is cru-cial, more than ever, for any compa-ny to generate a cash-flow enablingfurther financing of the investmentsand future growth.

The strategy we've followed overthe last few years offered us an im-portant competitive advantage, espe-cially in the current economic con-text. As I previously said, we areworking with several scenarios andwe are continuously adapting ourstrategy to market conditions. If weare convinced that we can increaseefficiency, given the economic situa-tion, we might actually bring backwithin the company some of the ac-tivities outsourced in the past.

How many customers do you ex-pect to have at the end of 2009?What do you estimate will be theevolution of your ARPU in 2009?

We usually do not make any for-ward looking statements regardingthe number of customers or other keyperformance indicators. The Roman-ian telecommunications market ishighly competitive and if the tariffscontinue to erode it is very likely wecould see a lower ARPU across theindustry.

How much do revenues fromdata amount to and how much dothey represent in the total revenuesof Vodafone Romania? How muchdo you expect this ratio to grow thisyear?

An important part of our revenues

comes from mobile data services andwe expect this percentage to grow aswe see a constant increase in mobilebroadband usage and penetration.

How many stores does VodafoneRomania have at the moment andhow many retail partners? Do youplan to open new stores this year orexpand your partner network?

We currently have 226 stores allover the country, plus a few hundredstores of our dealers who sell Voda-fone products and services, as well ashundreds of selling points for prepaidcards. This year, we will continue todevelop our distribution network, de-pending on the market opportunitiesand our expansion needs in certain re-gions of the country.

Vodafone Romania registeredonly 1 percent growth in revenuefrom services in the third fiscalquarter of 2008. Why this smallgrowth?

We believe that any growth levelis satisfying during an economicglobal crisis, the more so as we are ina mature and highly competitive mar-ket when organic growth becomeshard to get anyway. Therefore, the 1percent growth in our service rev-enues reflects a good performance byour company.

Moreover, if you relate thisgrowth level to our total revenues,which exceed EUR 1 billion, the re-sult is very good. It is simple mathe-matics, that's why small operatorsmight report higher growth levels,which certainly sound great, butthey have a smaller year-on-year ba-sis.

Have you been affected by the financial crisis in any way? Howmuch did you lose from the volatili-ty of the currency exchange?

There is no industry immune tothe crisis, that’s for sure. The mostimportant thing is how one can man-age and/or reduce the impact of thecrisis upon the business. We are in thefortunate position of having focusedon operational efficiency for years sothat our strategy is better adapted tothe current situation.

What is your position regardingthe ANC’s decision to start the pub-lic bidding for the WiMax licenses atEUR 1 million?

This is just a proposal by theANC. To become a decision, it has tobe approved by the government,along with a new bid methodologyand a new price for the license. ■

MARCH 23 - 29, 2009 / VOLUME 14, NUMBER 10

S+P Gruppe continues EUR 200 mln of localprojects without Immoeast, may delay retail

BUSINESS REVIEW FORUM Manage your business environment !

Estates&ConstructionMARKET

The Austrian developer is working on revamping an office and retail building on Magheru Boulevard in Bucharest

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Austrian real estate developer S+PGruppe, which recently bought Im-moeast's share in their regional joint proj-ects, wants to develop all projects plannedfor Romania within the coming years, al-though it may delay the retail projects forone year. “We believe that the time is rightto invest because construction costs aredecreasing and we follow the strategy ofanti-cycle investments,” ReinhardSchertler, managing director of S+BGruppe and one of the shareholders in thecompany, told Business Review.

“All of our Romanian projects are 100percent in our private ownership. No fundor stock exchange-listed companies areshareholders. We will develop all of theseprojects, with Pipera Business Tower andMagheru Boulevard currently under con-

struction, within the coming years,” hesaid. The firm has so far invested EUR 60million in Romania, and plans to up thefigure to EUR 200 million in the next fouryears. “We believe in the Romanian econ-omy and the comeback of the real estatemarkets in 2010,” added Schertler.

Pipera Business Tower, one of thefirm's local office projects, will deliver13,300 sqm of office space upon comple-tion, scheduled in Q2 of 2009, accordingto the company. Another office building,25,000-sqm Airport City Park, was sup-posed to start this year and be completedin 2011. Magheru Boulevard office andcommercial building, under construction,was supposed to be finished this year, de-livering 4,000 sqm of space.

As for retail, the developer was plan-

ning a shopping center in Sibiu, with of-fices, a hotel and some apartments too, allon 68,000 sqm. According to previous an-nouncements, the project should havestarted this year too. Four Stop Shop proj-ects in Oradea, Satu Mare, Targu Muresand Arad were also listed among S+BGruppe's projects in Romania.

Immoeast has started to sell off someof its assets across the region, and report-ed at end-2008 a portfolio of 80 projects inRomania worth some EUR 1 billion, com-pared to 135 properties of EUR 3.4 billionin total mid-last year. Regionally, it hascanceled 51 projects and delayed 29. Thefund, listed on the Vienna and Warsawstock exchanges, saw its share value dropby as much as 90 percent last year.

Corina Saceanu


E S T A T E S & C O N S T R U C T I O N M A R K E T

AFI Cotroceni Park Mega Mallin Bucharest has enlarged its tenantportfolio with two more internation-al brands, C&A, part of Swiss groupCofra, and the first entry on the localmarket of Bestseller Group, whichwill bring such names as Vero Moda,Jack & Jones, Name IT and Pieces,according to Cushman & Wakefield.C&A has rented a two-level flag-ship-type space of 3,200 sqm whileBestseller Group took 600 sqm.

C&A recently rented a 1,500-sqm space in Cometex’s AuroraShopping Mall Buzau. The retailerwill open its first Romanian store atthe beginning of April within Mili-tari Shopping Park.

In February, Mango and theSpanish group Inditex, the owner ofZara, also signed rental contractswithin AFI Cotroceni Park MegaMall, which is set to open in the lastsemester of 2009, according to thecompany.

AFI Cotroceni Park, an estimat-ed EUR 300 million investmentfrom AFI Europe, will deliver a builtarea of 210,000 sqm and a GLA of75,000 sqm according to the projectplan. The commercial gallery com-prises 250 retail units, a Real hyper-market and underground and deckparking space for 2,500 vehicles.

AFI Europe is part of Africa Is-rael Investments Group, owned byIsraeli Lev Leviev, which runs com-mercial real estate projects in East-ern Europe.

Magda Purice

C&A signs Cotroceni Park lease forsecond store in Bucharest

Cotroceni Park will host the third local C&A store

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The privately-held RomanianCastrum Grup is about to completea EUR 33 million investment in itsBucharest-based Castrum Complexproject, an A-type six-floor officebuilding and four-star aparthotelwith 11 levels, according to CBREEurisko.

The turnkey delivery is expectedto happen in H2 of 2009 for the of-fice building, while the aparthotelwill be ready to open in Q4 of 2009in the Victoriei Square area.

Of the investment, the developersecured EUR 16.8 million from theRomanian Commercial Bank(BCR) according to its representa-tives. Castrum Complex covers

21,431 sqm, of which the aparthoteloccupies 10,300 sqm and the officeconstruction 3,555 sqm, accordingto the project draft. There are 170parking spaces on a built area of7,580 sqm.

Victoriei Square and its adjacentlocations host several office build-ings, of which the best known areAmerica House and Europe House,both developed and subsequentlysold by developer Globe Trade Cen-ter (GTC). The area hosts HQs oftop companies such as BRD, Orange, Microsoft, Oracle, HP,CBRE, Cosmote, Rompetrol andEdipresse.

Magda Purice

Castrum Grup to complete EUR 33 mln complex

Bank Austria Creditanstalt has no-tified Equest Balkan Properties (EBP)of a breach of conditions in the loancontract for the Iasi-based commercialcenter Moldova Mall. The loan wascontracted by the firm in 2006.

According to the investment fund,the breach is not expected to impactEBP's other assets or borrowing. Fol-lowing the notification, Rivium Gale-ria Mall, the vehicle through whichEquest owns the shopping center, andthe bank engaged in discussions. EBPsays it is not aware of any other pend-ing breaches of financial conditionsby EBP or any other subsidiary.

According to EBP, Moldova Mallrepresents 4 percent of EBP’s net as-sets value. In 2006, EBP’s subsidiarytook out a refinance loan of EUR81.12 million and used warrantiessuch as Moldova Mall and City CenterSofia Mall, which was sold for EUR101.5 million to Heitman EuropeanProperty Partners III in 2008. In Ro-mania, Equest is involved in severalprojects such as Vitantis Retail Park,acquired in 2006 for EUR 31.2 mil-lion. A year later, the fund contractedfinancing of EUR 37.8 million fromthe Austrian bank Creditanstalt in or-der to complete the development. ■

Bank notifies Equest of loan contract breach for Moldova Mall

The Romanian arm of Swiss groupHolcim has said it will not assign anymore money to production station in-vestments in 2009, due to an estimatedmarket decrease of 10 percent this year.According to Holcim Romania’s gener-al manager, Markus Wirth, the firm willsee a drop of an average of 10 percent inturnover in 2009, after making EUR 372million in 2008, 25 percent more than in2007. From the total, EUR 273 millioncame from the cement division, EUR 70million from ready-mix concrete whilethe rest came from aggregates, accord-ing to company representatives.

“The worst possible scenario may bea drop of 20 percent in our turnover in2009, while the best results would meana steady turnover compared with 2008,”said Wirth. According to the GM, thecompany has not given up on operations

and results from real estate contracts but,if the market doesn’t unfreeze soon,Holcim thinks the infrastructure projectswill deliver contracts for the company.

“It is not that I’m relying on infra-structure contracts for this year, but thecountry greatly needs these projects andthere are available European and struc-tural funds for such projects,” Wirth toldBR. One of the largest involving Holcimis the Bechtel Transylvania highwayproject.

This year, the firms plans to assignonly the EUR 33 million already sched-uled to carrying on its Campulung Mus-cel project. Holcim has a network of 20concrete stations countrywide of whichseven in northern Romania produce atlow capacity while two in Bucharestbuilt in 2008 remain out of use.

Magda Purice

Holcim stops further investments, continueswith EUR 33 million Campulung project

Eggo Fashion Party, an event for promotingyoung artists sponsored by Be Igloo

Friday, March 20th, in Club Patthe PR&Advertising Diana Metiu In-ternational Agency, beside Eggo Cre-ative Shop and the main sponsor, BeIgloo, had organised a cultural,trendy, high life event: Eggo FashionParty.

The event belongs to an ampleconcept called Eggo Creative Collec-tion in which important names of theRomanian show-biz will guaranteefor the talent of young artists in afirst class show. Finally, the creationsof 150 artists will be published in aregister.

By the series of events rejoinedon this name, the main sponsor, Be

Igloo, the sales organisation of Nor-wegian fund of investments will sus-tain, long term, the promotion andthe development of the Romanianyoung artists.

The show contains a presenta-tion of photographic art by BogdanDinica, a jazz recital sustained byLadislau Mircea Horvath, a fashionshow by Denis Predescu on a livesoundtrack offered by Drum Upband, a stile show and a concert ofAlin Pascal band.

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A N A L Y S I S

Blue chips selling at low, but still decreasing, prices and certain

companies posting share price increases have attracted buyers to the

Bucharest Stock Exchange since the beginning of the year, but last year's

investors have become speculators marking short-term profits. The word

of the day is caution, but brokers believe the past falls on the stock

market have already absorbed the negative economic shocks. They also

see hope in companies with attractive dividend policies.

Most of the investors on the local stock market have become short-term speculators

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After the 2008 storm,investors mark short-termprofits on local stock market

By Corina Saceanu

After a low year culminatingwith the October drop on theBucharest Stock Exchange, the trad-ing on the BSE since the beginningof the year shows what investorshave learned from last year's losses.Buyers have become cautious and

gone from medium- and long-termpolicies to short-term speculation,not knowing what to expect from themarket from one day to another andmarking every profit.

Buyers have gone for SIFs, BRD,Banca Transilvania and Petrom,among others, which have beenamong the most traded shares since

the beginning of the year. The BSEcapitalization reached EUR 7.9 bil-lion as of March 19, from EUR 11.6billion throughout the entire 2008.More companies saw their shareprice grow during this period than inthe same period in 2008. Only fourcompanies were enjoying increasesthen, with the biggest increase postedby Zimtub Zimnicea, at 26 percent.But since the beginning of this year,12 companies have seen their shareprice growing, the highest increasecoming from Zentiva, up 60 percent.

The price increases for thesecompanies, including Rompetrol Ra-finare Constanta (up 46 percent),Alumil Rom Industry Bucuresti(47.8 percent) and VES SATimisoara (34.6 percent), were how-ever triggered by specific reasons,and did not reflect a market trend.

“With Rompetrol and Zentiva,the increases were to a large extentinfluenced by the possibility of atakeover offer. In the case of VESSA, the increases were sustained byinsiders, because the company ispriced very low and therefore be-comes attractive to those who have along-term interest in it. Alumil alsohad a huge drop and buyers were at-tracted by the low price, below halfof the nominal price,” Silviu Enache,general manager of KD Capital Man-agement, tells BR.

For example, VES SA Sighisoara,a company which produces cookingpots, stoves and fireplaces, has seen1.7 million shares traded on the BSEsince the beginning of the year, withthe company's economic directorCalin Stupariu buying 464,000 ofthem. In Rompetrol's case, the priceincrease was also caused by the ex-pectation of oil price increases,which would have positively impact-ed on the refinery business, explainsNicolae Pascu, president of STK Fi-nancial.

Claudiu Simulescu, the generalmanager of Fairwind brokeragecompany, believes the price increas-es for some of the companies weredue to the hope of a possible de-list-ing.

These companies saw the biggestshare increases, but the bulk of thetrading was somewhere else. Buyerswere more attracted by cheaperbluechips, like BRD, the SIFs andBanca Transilvania, but these com-panies have seen share price fallssince the beginning of the year.

For example, BRD Societe Gen-erale's trading on the BSE has madeup 12.7 percent of the total tradingsince the begging of the year, but its

share price dropped by 39.3 percent.Similarly, Petrom covered 10.6 per-cent of the market trading, with itsshare price dropping by almost 21percent.

“The current prices are very at-tractive, but nobody knows whetherthey will become more attractive,meaning continue dropping,” Raz-van Pasol, general manager of Inter-capital Invest, tells Business Review.The mentioned increases were deter-mined by specific issues which af-fected only certain issuers, like theRomanian National Securities Com-mission (CNVM) discussions on in-direct takeover or announcements ofvery good dividends, Pasol adds.

LONG-TERM INVESTORS BE-COME SHORT-TERM SPECULA-TORS, INSIDERS MAKE THEIRMOVES

After seeing all traded companieson the BSE dropping in price lastyear, even those which had postedencouraging financial results andwhich in other circumstances wouldhave triggered trading, investorshave switched to caution.

“Having lost a lot of money, orwitnessed big drops in price if theysold on time, investors are now morecautious. The market is dominatedby short-term speculators, whileeverybody is waiting for a clearersignal on economic development andfrom international markets to startmaking long-term investment deci-sions,” says Pasol of Intercapital In-vest.

Last year, the stock market en-joyed mass participation, and specu-

Biggest share price increases on

the Bucharest Stock Exchange

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These are the only currently traded companieswhich have seen their share price increasingsince the beginning of the year; the data reflectsthe situation as of March 19

Company Price increase

Zentiva SA 60.52%Alumil Rom 47.83%Industry BucurestiRompetrol 35.68%Rafinare ConstantaVES SA Sighisoara 34.69%Flamingo 25.00%International BucurestiSantierul Naval Orsova 22.67%Antibiotice Iasi 11.11%Rompetrol Well Services 5.67%Oltchim Rm. Valcea 4.29%Vae Apcarom Buzau 2.27%Electroputere Craiova 1.39%


A N A L Y S I S

lators sought to benefit from an in-creasing trend. “But now the stockmarket is exclusively the territory ofinsiders, meaning those who alwaysgain,” says Pascu of STK Financial.He believes that although there havebeen fewer buyers on the marketsince the beginning of the year com-pared to the same period of last year,they are trying to accumulate in orderto gain on the long term, consideringthe obvious undervaluation of sharesat the moment.

For example, nine insiders witheither management positions ormembers of the administrationcouncil have bought and sold smallshare packages in BRD SocieteGenerale, while Societe Generalehas bought bulks of shares in thebank since the beginning of thisyear. “Those buyers who weremedium- and long-term investorslast year have become speculators.Each short-term profit is markeddue to the market uncertainty,” saysEnache of KD Capital Management.“Those with cash, experience andpatience will definitely make prof-itable investments on the mediumand long term,” he goes on.

Claudiu Simulescu of FairwindSecurities also thinks the market ismade up of speculators, and he alsosees small residents as active buyerson the market. “But the market is al-most nonexistent, with a huge imbal-

ance between supply and demand,”Simulescu tells BR.

The local stock market is alreadya year and a half beyond the peak ofits indexes, and trading values arecomparable to those posted severalyears ago, according to Razvan Pa-sol.

The BET index, which reflectsthe trading of the most liquid shares,was down by 26 percent since the be-ginning of the year, after dropping by70 percent last year calculated inRON. In the March 18 trading ses-sion, Santierul Naval Constanta post-ed the biggest share price increase,of 58.2 percent, while Zentiva grewby 14.7 percent on the previous day,and Flamingo International furtherincreased by 7.14 percent.

In terms of the number of trans-actions, BRD was on top with 472,followed by SIF Moldova andPetrom, with 432 and 416 respec-tively. Judged by values, the sametrading session saw SIF Oltenia post-ing the biggest value of trading,RON 1.9 million, followed by BancaTransilvania and BRD, both withtrading values of around RON 1.5million.

After a promising January came adrop in liquidity in February, fol-lowed by another start of an increaseat the beginning of March on theBSE. “Now we are seeing a rallywhich still needs to reveal whether it

is sustainable, that's something as yetunclear. In any case, buyers are ex-cessively cautious, which is some-thing justified by the negative eventslast year, especially those from Octo-ber, which won't be forgotten veryeasily,” says Silviu Enache of KTD.

PAST DROP ABSORBS FU-TURE NEGATIVE IMPACT

The future macroeconomic evo-lution will most likely be negative,but “the stock market dropped by upto 90 percent, and this drop absorbedall the future negative evolutions,”explains Nicolae Pascu. “On the oth-er hand, the Western capital marketsare on the verge of switching trends,and their positive evolution is likelyto have a positive effect on the Ro-manian one too, which was similar tohow they negatively influenced thelocal market when the Romanianmacroeconomic situation was stillpositive,” Pascu goes on.

Enache expects the capital mar-ket to mirror the first signs of eco-nomic improvement. “The decreaseswe have seen have anticipated theweak economic performances ex-pected in 2009 and even in 2010,” hesaid. As for what's in store for trad-ing, Enache believes the market willsee interesting evolutions for thecompanies which will run an attract-ing dividend policy. “It is possiblethat for certain companies, the valueof the dividend compared to theshare price will be higher than the in-terest offered by banks, which makesthe investment even more attractive,”the KD Management representativesays.

Razvan Pasol however thinks in-vestors need to follow a prudent pol-icy, limiting their exposure on sharesand placing their money into fixedrevenue instruments, “because theperiod of decreases could lastlonger.” This period could be fol-

lowed by one of an accumulation ofshares, which will be reflected in thelack of a clear pricing trend, or by aperiod of high volatility, according tohim. “In such periods, the only effi-cient option is in general the prudentone, possibly accompanied by smallspeculations,” he also says. Simules-cu of Fairwind sees solutions for theRomanian market in the possibilityof introducing trading group ac-counts and in the public listing ofstate-owned companies.

[email protected]

Company Price variation Liquidity Share of totaltrading

Banca Transilvania -74.62% 91.5 mln RON 18.67%BRD Societe Generale -39.39% 62.2 mln RON 12.70%Petrom -20.99% 52.4 mln RON 10.69%SIF Oltenia -31.62% 37.3 mln RON 7.62%SIF Moldova -35.66% 34 mln RON 6.95%

Most liquid shares on the Bucharest Stock Exchange

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All the top five traded shares saw their trading prices going down since the last trading session oflast year; data reflects the situation as of March 19

Claudiu Simulescu, general manager of Fair-wind Securities

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Nicolae Pascu, president of STK Financial

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Razvan Pasol, general manager of IntercapitalInvest

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Silviu Enache, general manager of KD CapitalManagement

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é IT&C retailer Flamingo Interna-tional has been subject to a seriesof accumulation purchases sincethe beginning of the year. Thecompany's shares, up 25 percentsince the start of 2009, wereamong the most liquid on the mar-ket, with a value of RON 7.4 mil-lion by March 18. Trading withFlamingo shares led to changes inthe structure of the firm's share-holders, with Romanian business-man Dan Adamescu reaching a17.45 percent stake in the firmthrough his companies Astra Asig-urari and Nova Trade. Recently,Ion Alexandru Tiriac bought a5.13 percent stake in the firm.

é The other shareholders in the firmare Dragos Cinca, QVR Fund andFlanco Holding.

é Flamingo, priced RON 0.03 pershare on March 18, saw its shareprice up 9.6 percent from the be-ginning of March. The firm posteda EUR 10 million loss last year,and a 16 percent increase inturnover, to EUR 203 million.

Trading with Flamingo

International shares


A N A L Y S I S

The current economic situation is leaving its mark on the bilateral contractsenergy market overseen by OPCOM, with none inked since the beginning of theyear. Up until now only Electrica and Rovinari Energy Complex have made offerson this market, but they were annulled due to warranties issues. OPCOM officialstold Business Review that the two main effects of the economic climate on themarket were an increase in short-term trading and lower energy prices.

Energy companies passon bilateral contracts

By Dana Ciuraru

The bilateral contracts market(PCCN) of the Romanian power mar-ket operator OPCOM hasn’t been asunattractive to energy companies sinceit was created. While in the first twomonths of last year 11 energy salescontracts were signed, sealed and de-livered, now the PCCB has not signeda single one. Just two energy sale of-fers have been registered, one fromRovinari Energy Complex and onebuying offer from Electrica. Accord-ing to OPCOM, these offers were an-nulled because the companies did notpresent any warranties.

In fact, all three OPCOM markets,the spot PCCB and forward contractsmarket PCCB-NC are reportingchanges in the current economic cli-mate.

“Participants’ behavior on all threemarkets is coherent. The watchword isshort-term energy trading. Dedicatedto large and long-term volumes, the bi-lateral contracts market reported inten-sive activity in the last quarter of theyear. On the forward contracts marketthere were offers even in February andMarch, while last year we didn’t haveany trading. The interest in this type ofcontract this year is because the partic-ipants have become interested inshort-term trading, as consumption di-minishes. On the spot market (PZU),the transaction volume is constant, butthe energy price is dropping, a trendalso registered by the European energymarket operators,” Lucian Palade, di-rector of the electricity market surveil-lance and development division withOPCOM, told Business Review.

In his opinion a series of trendshas been generated by the crisis. “Thecurrent economic situation is reflectedin OPCOM trading in an orientation ofmarket players towards short-termtrade: we have registered an increasein PZU trading and the companieshave expressed early (since February)their interest in forwards contracts. Ofcourse, the current economic situationalso lowers the energy price,” saidPalade.

The numbers confirm what is hap-pening on the PCCB. In February thisyear, 866 MW/h was traded at an av-erage price of EUR 48.19 per MW/h,with transactions carried out particu-larly in Q4 2008 (77 percent). Thesetransactions represent a 19.55 percentshare of the estimated consumption forthis month. Compared to the previousmonth of delivery, the number of con-tracts stood at 77. Up until now, the

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No deal: the number of bilateral contracts inked by energy firms is down to zero this year


A N A L Y S I S

share volume traded for delivery thisyear represents 20.48 percent of the to-tal consumption estimated for thisyear.

SPOT MARKET GENERATES THEMOST TRADING

With a traded volume of 454,405MW/h, February became the thirdconsecutive month in which spottransactions have exceeded 10 percentof the forecasted domestic energy con-sumption.

“The average volume traded re-mained constant in February this year,from 678 MW/h registered in the sameperiod of last year. This means that thespot market share reached 10.47 per-cent, compared with 9.75 percent inFebruary 2008. We forecast a 10 per-cent cut in energy consumption lastmonth compared with February2008,” said Palade. According to OP-COM information, the average pricedropped to EUR 32.02 per MW/h, a 40percent decrease from last year’s re-sults.

The OPCOM official believes thatthe market price has fluctuated con-vergently. “Unlike 2006, in 2007 andlast year the PZU regression was al-most identical to the trend reported bythe bilateral contracts market. In Janu-ary and February the levels were muchlower than those registered last year,”said Palade.

EUROPE’S BARGAIN ENERGYIn the past few years there have

been discussions on some significantdiscrepancies between the electricityprices from the energy market opera-tor and those from those signed direct-ly between certain partners. Energytraded on the local market is still atlow levels compared with other coun-tries in Europe.

“With an average price of EUR

32.02 per MW/h, the PZU is for thethird consecutive month close to thelowest average spot price among Eu-ropean energy market operators. InFebruary this year the average price onspot markets in Europe fluctuated be-tween EUR 32 per MW/h and EUR 77MW/h, with an average price of EUR46.32 per MW/h,” said Palade.

In his opinion, the current eco-nomic climate will continue to keepthe average energy prices traded atlow levels compared with other Euro-pean countries for a while.

REGIONAL GOALSIt is some years now since OP-

COM expressed its goal to become aregional player among the energy mar-ket operators. The first step has beentaken. “The contract with the Hungar-ian energy market operator has alreadybeen negotiated and will be signed af-ter the license is received, whichshould happen very soon. We estimatethat in Q1 2010, OPCOM will qualifyand will be able to unite the energymarkets,” said Palade.

According to him, both in Bulgar-ia and Serbia there are ongoing auc-tions for projects that include the op-portunity to set up energy market op-erators in these countries.

“If the outcome of this analysis ispositive, this will be an opportunity forOPCOM to offer our services as wedid in Hungary. Such an integration ofthe energy market operators would bedone through the OPCOM tradingplatform and by using common rules,”said the official.

It remains to be seen what the re-sults of the cooperation with the Hun-garian energy market operator will beand whether OPCOM will prove itselfa reliable partner in a market wherethere is tough competition.

[email protected]

OPCOM’s trading table is likely to have a few more empty seats this year as the deals dry up

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Caution seems to be the attitude of investors, especially real estate players.

River Invest, the company developing multifunctional Sema Parc in west

Bucharest, is no different, but its estimated completion by 2018 could buy

some more time, facilitating a clearer direction. Sorin Nistor, director of

strategy and business development at River Invest, clarifies for Business

Review the distinction between the industrial compound Sema Parc of the

former Semanatoarea plant and the real estate project of the same name.

Sema Parc proceedswith caution

By Magda Purice

Every statement by an investor or acompany developing anything nowa-days includes terms like crisis, waiting,caution, no further planning, and strate-gy conversion. The plans optimisticallydrafted no more than one year ago havebeen frozen or even canceled. SorinNistor likes the word “caution” when

describing his company’s plans for itslargest project, Sema Parc, and clarifiesthe general attitude to a project sched-uled piece by piece with segmentedbudgets for each development stage.

“The overall uncertainty of the eco-nomic environment calls for prudence,which is a very important condition forany company planning complex proj-ects on the long term, especially in realestate. All the entry data for a project,

both technical and commercial, haschanged and needs recalculation. More-over, this changing process is ongoingand everything related to costs and in-come has become volatile,” said Nistor.The manager also points to the moreand more unrealistic prognoses which,besides the general economic unsteadi-ness, results in caution.

ALMOST COMPLETED DEAL WITHEUROPOLIS, FURTHER PLANS FORSEMA PARC

Sema Parc, the current mixed-usedesigned project, represents an updateof the initial project drafted three yearsago, when the master plan was drawnup. Nistor says that the basic principlesof this project remain unaltered, butcomponents have changed in the mean-time, such as the redesign of space, de-velopments and commercial perform-ances.

In 2008, Ion Radulea, the business-man who owns River Invest, announcedhe had abandoned the idea of building amall in Sema Parc, saying thatBucharest already had too many malls.Instead, the mall was to be replaced bya commercial area as the main anchor ofthe entire park.

“Initially, the project considered atraditional mall built as a single con-struction. Now, the project targets ashopping village-type commercial areawhich will look like a group of urbanbuildings, to host commercial galleries,entertainment and green areas,” Nistorsays.

Currently, the company is rethink-ing the business pattern of the develop-ment to suit the new economic back-ground, according to representatives.This translates into a segmented budgetfor each component within the park –commercial, residential, office, four-starhotel – of which, Nistor stresses, bankfinancing plays the main role.

“The segment which has evolved sofar and is subject to a potential financingcontract comprises a group of four of-fice buildings similar to the already de-

livered two. We are still in talks withseveral banks,” Nistor said.

Plans for 2009 including revampingthe former industrial platform and aproject of another four office spaces andresidential compound. What has beennailed so far is the transaction betweenAustrian fund Europolis and River In-vest following the fund’s purchase ofthe two completed office buildings de-livering 43,000 sqm of the park’s firstdevelopment stage. The forward-pur-chasing contract was signed in 2006 andthe fund will soon pay the outstandingamount of a total deal estimated at morethan EUR 100 million for the A-type of-fice buildings totaling 80,000 sqm, ofwhich 80,000 sqm is rentable area. Thetwo-office building compound hoststenants such as Zapp/Telemobil, BritishAmerican Tobacco, Enel Romania, Tiri-ac Leasing, UPC and CMU.

The Sema Parc development, whichwas estimated to attract investments ofEUR 1.3 billion, has nothing to do withthe industrial compound Sema Parc,Nistor points out. “The industrial parkwas a temporary solution to use the ex-isting industrial spaces of Semanatoareabut the new real estate development isdifferent. According to the plans, thecurrent Sema Parc project on 42hectares will gradually replace the for-mer industrial constructions and shrinkthe existing park. At the start, the com-pany will play safe and build the officecomponent, which will join the later de-velopments of the retail and residentialsegments.

By the time of completion, SemaParc is estimated to host around100,000 people living and workingwithin the developments. It is not a proj-ect to be sold, at least not for the timebeing, the company representativestresses with vehemence. “It won’t besold – of that there is no doubt. Any saledeal in this stormy economic weather,when all the things are unstable, wouldbe a mistake. There have been differentpurchasing demands coming from in-vestors for components of the park.” ■

Overall built area 964,826 sqm

Underground space area 400,000 sqm

Parking spaces 14,000

Residential area 305,200 sqm

Commercial and entertainment area 93,500 sqm

Business park 526,800 sqm

Four-star hotel 21,300 sqm

Services, infrastructure 18,000 sqm

Sema Parc in figures

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Sorin Nistor of River Invest is one of the many people now taking a prudent approach to investing


R E S T A U R A N T R E V I E W

PaparazziB D A V I A T O R I L O R 3 1 , T E L 0 2 1 2 2 2 6 4 2 2

It’s a strange name for a restau-rant. When you think about it,the paparazzi are a breed of in-

trusive spies who are loathed byright thinking members of society.So why on earth name your restau-rant after a bunch of mud sucking,bottom crawling, social pond life?

But in keeping with the theme ofthe name, they have adorned thewalls of the restaurant with oldblack and white photographs ofmovie people from the 1950s and60s. It has a pleasing effect, and it iscomforting to nostalgically browsethrough the pictures.

And in fairness, the restaurant it-self has a comfortable feel about it.It is small with low ceilings lendinga cozy feel to it. Ideal for lovers.

So we dived into the wine list,which was comprehensive, but ex-pensive. We chose two glasses ofhouse wine which was a little steepat RON 24. But we were there toeat, so let’s look the menu over!

I was there on the recommenda-tion of a friend, whose good taste Itrusted. But he omitted to tell mejust how small and limited the menuwas. It was slanted in a Mediter-ranean fashion with a leaning to-wards Italy.

There was a choice of four sal-ads and we chose a goat’s cheeseversion. It was an absolute delightwith generous helpings of warmcheese balanced by a dressed ruco-la. We were happy. But we were notso happy when our bread arrived forit was too dry and we had no ac-companying olive oil or butter.

The three soups on offer werenot inspiring so we passed and wenton to pasta. Again, there was notmuch choice, four in total. None ofthem were meat based, but we set-tled for a prawn tagliatelle. I forgotto ask the House for lashings of gar-lic, but no matter. It was perfectlywell seasoned, but a little on thesmall size.

We passed on a chicken tandoryat RON 35, and grilled swordfish atRON 45. But there was not reallymuch left to choose from. There wasa fillet mignon of pork with apricots(a perfect classic combination) withcarrots and cumin. Cumin is a hotIndian spice and I was curious to seehow this would match the dish. OK,

I shall try it next time.

There was lamb with mush-rooms and rosemary sauce, and en-trecote steak with salad and a choiceof either a Roquefort or black pep-per dressing.

So for RON 65, I chose a turne-do of beef with a Roquefort cheesysauce. Yes, the steak and the saucewere perfectly good. But there is notmuch more I can add, because Ihave just described almost the entiremenu.

Overall, the food and servicewere exceptionally good, but myonly reservation is that the selectionon the menu will not greatly chal-lenge the skills of a good chef. Andthis chef was good. I would like tohave seen something far more ad-venturous on offer.

But I will go back.

Michael [email protected]

Picture this: Paparazzi’s menu may be limited, but the food and service both make the cut

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Photo finish: in keeping with the name, celebrity photos adorn the walls of the restaurant

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F I L M R E V I E W / E V E N T S

The National EnvironmentalProtection Agency (NEPA) haslaunched Project EcoWeb, designedto promote environmental educationacross Romania and stimulategreater collaboration between pub-lic authorities, local schools andNGOs confronting environmentalissues.

The program was designed in

partnership with the US PeaceCorps to create a national resourcefor environmental education materi-als.

Project EcoWeb has three pri-mary objectives: to create a pub-licly-accessible national website forenvironmental education materials;to highlight the work and contribu-tions of different individuals and or-ganizations in the field of environ-mental education in Romania; andto help create a network of commu-nication and collaboration betweennon-governmental organizations,schools and public authorities. Or-ganizations that submit lesson planswill be recognized for their contri-butions on the site and those thatsubmit five or more lessons will befeatured as project partners.

The deadline for submitting les-sons for the first phase of ProjectEcoWeb is April 17 and the websiteis set to go live in May.

Otilia Haraga

Project EcoWeb launched to tackleenvironmental issues

Green issues are at the heart of the initiative

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Avant-garde Romanian label Rozalb de Mura

took its fall-winter 2009/2010 collection entitled

Powder Cadillac 1B-2410& Desert Twilight 6A-

3410 to the On/Off event that is part of London

Fashion Week. This is the second time the label

has appeared at this event, where the catwalk

hosted the creations of three other European de-

signers. The Rozalb de Mura fashion show con-

sisted of a selection of menswear. It concen-

trates on the “colors of the future” predicted in

an imaginary research study by famous German

psychologist Max Luscher. Pop group the Sug-

ababes (in pic) were among the celebrities at the

show.

In case of confusion with the Ro-manian translation, this is not Life isBeautiful, the popular Italian comedy.Nor is it uplifting Christmas classic It’s aWonderful Life. Go expecting either ofthem and you’ll be dreadfully disap-pointed. You’re liable to be pretty disap-pointed anyway. This indie flick is film-school level cinema-by-numbers – al-though at times it’s closer to a musicvideo than a film. Denise Richards wassupposed to appear but doesn’t. Wheneven Denise Richards’ services can’t beretained, it’s time to worry.

The main characters, and I use theword in its loosest sense, tick all thecliché boxes. Troubled teen, check.Stripper who dreams of something bet-ter, check. Dignified illegal immigrantwho just wants a decent life for himselfand his family, check. Maggie (AngelaSarafyan), a traumatised runaway, iswalking the mean streets of LA. We arenot told why, but seeing as she’s still intouch with her mom and doesn’t want tosee her dad, you can probably take awild guess. She pitches up in a seedystrip club, where she is befriended andimmediately offered a place to live bykitchen porter David (Jesse Garcia), anEl Salvadorian in the US illegally, andChinese stripper Esther (Ling Bai). Whoknew that strip clubs so readily doubledas drop-in centres? Times are hard, andDavid and Maggie soon turn to the crim-inal underworld to earn enough to sur-vive. Cue lots of scenes when nastycreditors (boo!) say menacingly, “Yougot one week to come up with the mon-ey.” Meanwhile, Maggie’s bedroom is-sues hint at the source of her trauma,David tries to find his mother and Esther

dreams of becoming a singer. They’re alldreaming of A Beautiful Life, geddit?

You probably will get it, because themovie has all the subtlety of a strip club.Instead of exploring the characters’ psy-chology, the film reverts to MTV stylesequences in which they walk alongpoverty-ridden streets, to a soundtrackof poignant pop music. That’s when itcan tear itself away from the copious andgraphic strip club scenes. Cheap thrillsare wrung from squalor – ooh! Prosti-tutes! Strippers! Homeless people!Through no fault of their own, the mainactors have little to get their teeth into,and go through the motions. The minorroles are even more one-dimensionalthan the leads. As for the message, “Allthings are possible for the ones who be-lieve” might seem profound if you’re 14,but older viewers may find it a bit banal.

It’s not unremittingly awful. A Beau-tiful Life often looks pretty, thanks to itsfashionable urban blight and attractivethree leads, who manage to make theviewer care a little bit about their char-acters, despite the film’s flaws. A few ofthe supporting cast are vaguely enter-taining. Romanian viewers may enjoythe blink-and-you’ll-miss-it cameosfrom local gossip rag regulars StefanBanica and Andreea Marin as amoralcriminals hating on our heroes. Boo!This would be an excusable effort if thedirector were about 22. He’s 40.

Debbie Stowe

Director: Alejandro ChomskiStarring: Angela Sarafyan, JesseGarcia, Ling BaiOn at: : Hollywood Multiplex

FILMREVIEW:A Beautiful Life


E V E N T S

The flood-stricken families in Dol-jesti, Neamt county, will move to newhomes after 110 dwellings were builtfollowing a public-private partnershipbetween Petrom, the NGO Habitat forHumanity Romania and the Romanian

government. The dwellings were partially built

by the government and the last facili-ties were added by Petrom and Habitatfor Humanity Romania. Over 150 vol-unteers worked on the project, includ-ing 60 Petrom employees and mem-bers of the Habitat for Humanity Asso-ciation, 20 journalists and opinionleaders, local and foreign volunteers.In total, Petrom allotted EUR 1 millionto the project.

Habitat for Humanity Romania hasbeen developing projects buildinghomes destroyed by floods for the pastfour years. Last year the associationcontributed to rehabilitating 100dwellings in Tecuci.

Otilia HaragaFollowing the pilot edition heldlast year for students in Bucharest, theeducational project Start InternshipRomania has been rolled out national-ly. The program offers students theopportunity to undertake internshipsduring their summer holiday withinRomanian and foreign companieswhich have local offices. The initia-tive is meant to align university edu-cation to the needs on the labor mar-ket and increase young graduates’chances of employment.

START Internship Romania of-fered over 800 internships in 60 Ro-manian and international companiesin 2008. According to a study con-ducted by GfK Romania, half of the

interns selected in 2008 said the pro-gram met their expectations while 38percent said their expectations hadbeen exceeded.

Sixty-two percent of the internswere happy that they were involved inseveral projects, 55 percent liked thatthey did practical activities and 37percent that they took part in trainingsessions. According to Jeri Guthrie-Corn, Charge d'Affaires in the US em-bassy in Romania, internships areused extensively in the US to ensurethat students obtain valuable work ex-perience and training, and their take-up here is proof of Romania’s signifi-cant progress over the past 20 years.

Otilia Haraga

Habitat for Humanity andPetrom complete 110 homes

The dwellings were built through a public-pri-vate partnership

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Start Internship goesnationwide

Works by Greek artists Kostas Tsoklis, Afrodite Liti, Michali Manoussaki and Venia Bexrakis will bedisplayed between March 26 and April 30 at the Melenia Art Gallery, which promotes Greek and oth-er international artists. The work of Kostas Tsoklis, considered “Greece’s complete artist” since the1950s, is dominated by constancy and experimentation while sculptor Afrodite Liti speaks throughhis works about birth and rebirth, growth and fertility. The main themes to be found in the work ofMichalis Manoussakis revolve around the idea of the individual and his or her relation to the realworld, relationships with others and with time. Finally, young artist Venia Bechrakis processes pic-tures digitally and combines images from the public and private space.

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A photograph exhibition aboutthe life of Roma people in Hun-gary, Slovenia, Romania, Polandand Ukraine was opened at the Ro-manian Peasant’s Museum inBucharest. The exhibition is enti-

tled Shukar, which means “some-thing beautiful” in the language ofthis minority group. It was openedby artist Marina Obradovic, whoconfesses to having always beenfascinated by the Roma and evenlived for a year with her son withina Roma community which gave herenough time to take pictures andget to know them.

“In 2000 I left Paris with myfive-year-old son. We bought andfurbished a truck and we traveledthrough Hungary, Slovenia, Roma-nia, Poland and Ukraine for a year.We met very many people andwere very well received in Romacommunities,” said Obradovic.

Otilia Haraga

The exhibition is entitled Shukar

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Bucharest photo exhibition documents thelife of the Roma people

The Oracle Innovate programhas already signed up 250 partici-pants who have followed an onlinetraining module and taken part in theOracle Innovate Days series of sem-inars. The program has also sparkedthe interest of another 7,000 studentswho have accessed the dedicatedprogram website www.innovatepro-gram.ro. It includes a series of steps,such as the partnership with JuniorAchievement, to offer an onlinetraining module to students interest-ed in this program, which covers

topics such as business ethics, man-agement procedures, financialmechanisms, business and develop-ment plans as well as legal and ad-ministrative requirements for found-ing a company.

“It is not that important to learnhow to found a company, what is im-portant is to bring on the market aproduct or service that is viable andfor which there is a market,” saysStefania Popp, CEO of JuniorAchievement.

Otilia Haraga

Oracle Innovate program signs up 250participants so far

business review issue 10 - 2009

Documents

bucharest business community

niche market

industry insiderssee

local propertymarket

bucharest romania phone

real estate bubble

consumer loan freezesee

redhot years