Activity Report Overview of selected activities
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Dear business partners and friends, We consider incineration of communal waste to be very promising as landfilling of combustible waste is going You are reading an activity report of the DRFG to be banned as of 2024 under the Act on Waste. Investment Group for 2015 and the first half of 2016, a period which confirmed our belief that pursuing In the past, we have had multiple opportunities to enter an investment strategy based on four pillars – real the health care industry but lacked the necessary estate, finance, telecommunication, and utilities – expertise. This changed when we met Mr. Rudolf Matěj- is the right direction. We have grown our portfolio ka, who used to work for the second largest pharmacy with major acquisitions that have strengthened our chain in the Czech Republic for many years. We have position on the market, and expanded the scope reached an agreement and he joined our team of our activities to include the health care sector. as an expert in this field. Our aim now is to consolidate the Czech pharmacy market. More than a half of phar- On the real estate market, we have had success with macies in this country are operated by individuals while investments into yield-driven real estate, which is why there are only two really large pharmacy chains. we have decided to continue expanding our portfolio We believe there is room for two or three additional in this direction. We newly acquired a major commercial major chains. Our new pharmacy chain is called asset at 20 Náměstí Svobody in the city of Brno, whose “Na zdraví” and includes eight stores at the moment. tenants include fashion retailer New Yorker and advi- Our plan is for our company DRFG Medical to acquire sory company PricewaterhouseCoopers, among others. existing, functional and profitable pharmacies and Another major acquisition is Nový Tuzex, a multi-sto- create a network of approximately 50 stores over the rey retail building located in a strategically important next three years, achieving No. 3 position on the Czech area with a potential for future development in close market. proximity to the Brno Exhibition Grounds. The building hosts about 30 commercial tenants. The third asset that Since its establishment, our investment group has sup- we have acquired in Brno is a minor retail centre ported other successful projects and individuals and has in the Královo Pole district. We have also expanded our continued to do so over the past months. We supported activities beyond the largest Moravian city. We have a unique sports event, Hockey Games Brno, in which added the Retail Park in the town of Vyškov, JYSK retail Kometa ice hockey club returned to the Za Lužánkami chain outlets in in the towns of Písek and Jindřichův stadium. We believe that the record number of visitors Hradec, and a retail centre in the town of Aš to our that Kometa achieved in the open-air match will foster portfolio. further activities around the construction of a new stadium located in the Za Lužánkami area. We suppor- Our key focus in the financial sector is investment ted the 15th JazzFestBrno international music festival funds. Until now, two investment funds have been as the general partner. The event attracted the world’s approved for distribution in the Czech Republic: DRFG top jazz musicians including 10-time Grammy winner Foreword UCITS Bond Fund and DRFG AIF Real Estate Fund. Wayne Shorter. We have also associated DRFG’s name As of March, we have partnered with EFEKTA CON- with a grand Czech and Slovak tour of Paľo Habera SULTING, a securities broker with a licence from the and the band TEAM. We continue to support explorer Czech National Bank. The company now offers all DRFG Jiří Kolbaba and ski-alpinists Jiří and Ondřej Šviháleks. investment products. EFEKTA CONSULTING’s more We have also been active in the field of charitable pro- than 20 years of experience represent an additional gua- jects, supporting the social services provider Diakonie rantee for our investors. Českobratrské církve evangelické and social facility Domov Horizont in the town of Kyjov. We would like Suntel Group, our player in the telecommunications to create a professional organisation in this area, too, sector, has had an exceptionally successful year which is why we established the DRFG Foundation and continues to expand its key activities in Central to manage such activities for our company. Europe and expand its portfolio of mobile and fixed network clients. Suntel Group has launched an acquisi- Over the past period, we have stabilised our positions David Rusňák tion program on the domestic market. A consolidation in key areas, considerably grew all key indicators as re- of several local data services providers will result in the gards assets, equity, revenues and profit, and therefore Board Chairman creation of a single Suntel Net network. we can declare this period the most successful yet and majority shareholder in the history of DRFG Investment Group. New challen- In the utility industry, the Teplárny Šternberk heat ge- ges and opportunities keep emerging, though. Our aim neration plant is about to be put in operation. We have is to leverage them and continue evolving our group dy- been negotiating heat supplies for a 1600-apartment namically. Let me express my gratitude to our employe- housing estate and are close to reaching an agreement es for their contribution to the positive development on heat supplies for an industrial facility, the second as well as to our business partners, investors, and cli- largest manufacturing company in the town in Šternberk. ents for their trust.
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DRFG Investment Group
The DRFG Investment Group creates value through investments in promising companies and projects.
We prefer investments into real estate, health care, utilities, financial services and telecommunications.
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Audited results as of 31 December 2015
in thousand EUR Key 81 185 23 192 financial Assets Equity indicators 30 559 4 510 of companies Revenues EBITDA controlled by DRFG Group
8 9 Our People
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David Rusňák Board Chairman and majority shareholder, DRFG a. s.
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Board of Directors Supervisory Board
David Rusňák Ondřej Záruba Petra Rusňáková Martin Toncar Board Chairman Board Member, DRFG a.s. Chairwoman of the Supervisory Board, DRFG a.s. Member of the Supervisory Board, DRFG a.s. and majority shareholder, DRFG a. s. Ondřej joined DRFG Investment Group at the end of 2013. Petra is a member of the statutory bodies of Teplárny Brno, Martin is a co-founder of the DRFG group, Compass Com- His first task was to build a shared analytical centre a.s., Technologický Park Brno, a.s., Hotel Royal Ricc a.s., munication, Compass Consulting Service, Cloud Technolo- Founder of DRFG Investment Group. for the whole group DRFG a.s., and UNIFER o.p.s gies, and UNIFER, where he is active also as a mentor. In 2011, DRFG a.s. became the parent company of all compa- Ondřej has extensive experience with business planning and Petra Rusňáková has devoted her career to the travel industry Martin has been active in the field of information technology nies in which David held majority stakes. Today he leads financial modelling from dozens of business projects. and lecturing. She is the director of a luxury hotel in down- for more than 10 years. Prior to that, he worked in telecommu- further development of the group and identifies new invest- He is also known among the financial advisory community town Brno and an external lecturer at Mendel University nication infrastructure construction. Martin studied bio-cy- ment opportunities. for his financial product analyses. Ondřej graduated in Brno. At the same time, she sits on the assessment commit- bernetics and artificial intelligence. He devotes his spare time from University of Economics in Prague. He is a partner tee for bachelor’s degree final exams at the Faculty of Business to rafting of which he is an instructor. He organises in Comsense Capital s.r.o. and Management of the Brno University of Technology. expeditions to South America and the Wave international Petr Kuběna She also lectured in a doctoral program at the Law Faculty water sports festival, among other activities. of Masaryk University in Brno for several years. Petra received Board Member, DRFG a.s. the title of a doctor of law and a Ph.D. title at the same faculty. Since 2014 she has been a member of Brno City Assembly Petr is responsible for minority projects in the group and Marian Vařečka Břetislav Hrabě and a member of Brno City Council for the ANO party. Member of the Supervisory Board, DRFG a.s. communication with clients and business partners, She is responsible for Brno’s tourism and marketing agenda. leveraging more than 25 years of experience in the field Board Member, DRFG a.s. Moreover, she chairs the Pre-school Education Commission. of engineering and trade. Marian is an attorney-at-law, cooperating with the DRFG As the director of DRFG Finance, Břetislav is fully respon- Investment Group since its founding. Petr previously worked at Morávka Centrum, a.s., a company sible for the Group’s activities in the financial sector. of the ŽS Brno, a.s. group (now OHL ŽS Brno, a.s.) where Marian provides legal counsel services to companies within he was involved in planning, construction and day-to-day Břetislav has a degree in Commercial Law from the European the group including representation in proceedings before operations of the multi-functional building M-Palác in Brno. Polytechnic Institute. He used to work as a corporate banker administrative authorities and courts. He graduated from He played a pivotal role in the construction of the highest at GE Money Bank and at now defunct eBank. Later, he held the Law Faculty of Palacký University in Olomouc. As an attor- Czech building, AZ Tower, and significantly contributed managerial and directorial positions at AWD Česká republika ney-at-law he specialises in corporate law and capital markets law. to the development of popular Brno-based radio Petrov. (now Swiss Life Select) and Broker Consulting. Since 2014 he served as the CEO of FinFin and in January 2016 took up the post of CEO of DRFG Finance, which controls the entire financial distribution for DRFG.
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Management
Pavel Iványi Josef Eim Patrik Tuza Ondřej Surka Executive director, DRFG a.s. Portfolio Manager of investment funds in the DRFG group Executive Director, DRFG Real Estate s.r.o. Acquisitions of new companies
Pavel has extensive experience in the corporate environment. Josef is responsible for administration of investment Patrik is responsible for the creation and administration In his role within DRFG, Ondřej is responsible for acqu- He previously worked for KLM and ABN AMRO in the Nether- funds within the DRFG group. of a portfolio of yield-driven real estate within DRFG Real isitions of new companies. Most recently, he has been lands and later as the CEO and Board Chairman for the Czech Estate. At the same time, he manages A PLUS, a renowned focusing on the telecommunications sector. Republic at Van Gansewinkel. He held the same position at G4S In his role, Josef leverages his legal expertise related to invest- Brno-based architecture, design and development company and AB Facility. He has a doctoral degree in law from Universi- ments as well as hands-on experience with active fund manage- as its the statutory director. Patrik studied engineering con- He studied at the University of Economics in Prague and Men- ty of Amsterdam and obtained an MBA title at the Rotterdam ment that he acquired while working for Lichtenstein-based fund struction in Brno and later economy and management del University in Brno, with a study visit to Sydney, Australia. School of Management. One of Pavel’s notable initiatives Vega FX. He is the CEO and partner of DRFG Invest II. s.r.o. at The Open University Business School in the UK. He has Ondřej specialises in corporate finance, the creation of finan- outside the main business activities was to establish the Inter- He is also responsible for proprietary trading activities worked in the construction and real estate industry for more cial models and deal structuring. national School Brno where he serves as the Board Chairman. of the DRFG group. Josef studied at the Law Faculty and Faculty than 11 years. Prior to that he was involved in design and con- of Economics and Administration of Masaryk University as well struction of marine yachts in the Netherlands and Finland. as at The London School of Economics and Political Science. David Macek Roman Řezníček Rudolf Matějka Executive Director, DRFG Foundation Partner, DRFG TELCO s.r.o. Executive Director, DRFG Medical s.r.o. David is a sociologist, therapist, member of the regional par- Pavel Svoreň liament, and a university lecturer. In his public initiatives, Roman is responsible for telecommunications business, Partner, DRFG ENERGY s.r.o. Rudolf develops the Na zdraví pharmacy chain as part he focuses on establishing and developing partnerships which is one of four core investment areas of the DRFG of DRFG Medical. between Czech, Italian, Lichtenstein and German entities. group. Pavel manages the group’s projects in the utility sector, He studied sociology and social work at Masaryk University primarily power generation from renewable sources and Rudolf Matějka has been active in the health care sector since in Brno, matrimonial studies at the Pontifical John Paul II Roman has been active in telecommunications for more than waste management. 1993. Leveraging his academic background, he established Institute at the Lateran University in Vatican where he also 16 years. He has built one of the most successful companies a software company that developed and supplied SW lectured as a guest professor. David is a co-organiser in the industry that operates on the Czech, Slovak, Swiss, Pavel is the CEO and partner in DRFG ENERGY s.r.o. and Board for the health care sector. His IT solutions were used by of the Meeting Brno festival and a member of the Social Issues German, and Austrian markets. The company provides full Chairman at Teplárna Šternberk heating plant. He gathered hundreds of pharmacies, more than 75% of Czech Republic’s Group at the Czech Bishops’ Conference. The DRFG Founda- turnkey services in the area of construction, upgrade professional experience at gas company SPP, at the Ministry transfusion stations as well as medical material warehouses, tion has two key priorities for the next period: development and maintenance of telecommunication networks., recording of Industry and Trade and the Czech embassy in Tallinn, among others. After ten years of running the business he sold of financial literacy among youth, in particular in orphanages, double-digit annual growth. Roman Řezníček is a shareholder Estonia. He has a degree in Energy Security from Masaryk his activities to Phoenix, a multinational group, which he and support for the next multi-genre Meeting Brno festival. and executive director at DRFG TELCO s.r.o. Currently, University and studied at Tallinn University in Estonia. joined as the head of the IT division. Since 2008 he served he focuses on further international expansion. as board chairman of the Pharmaland pharmacy network, which was later rebranded to Benu. He managed to consolidate the company completely within two years and turn it into a strong brand. He always strives to drive the game, achieve a competitive advantage and leverage it to create a sustainable revenue stream.
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Ondřej Záruba Petr Kuběna Board Member, DRFG a.s. Board Member, DRFG a.s.
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Břetislav Hrabě Petra Rusňáková Board Member, DRFG a.s. Chairwoman of the Supervisory Board, DRFG a.s.
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Martin Toncar Marian Vařečka Pavel Iványi Member of the Supervisory Board, Member of the Supervisory Board, Executive director, DRFG a.s. DRFG a.s. DRFG a.s.
Josef Eim Roman Řezníček Portfolio Manager of investment Partner, DRFG TELCO s.r.o. funds in the DRFG group
Pavel Svoreň Patrik Tuza Ondřej Surka Partner, DRFG ENERGY s.r.o. Executive Director, Acquisitions of new companies DRFG Real Estate s.r.o.
Rudolf Matějka David Macek Executive Director, Executive Director, DRFG Medical s.r.o. DRFG Foundation
22 23 Recent Investments
24 25 isitions based on a set of parameters that we established What is the journey of a real estate property from for 2016 as the limits. We apply tools that we have crea- purchase to inclusion in the real estate fund? ted on our own to acquire yield-driven real estates for We usually buy real estates that already generate some our portfolio and subsequently for the portfolio of the results. Where a project ends for the developer, we start real estate fund. A key factor is the minimum required off. After we assume a real estate into our portfolio, yield but exact figures are our know-how. In addition, we keep and groom it for at least a year – refurbish it, we always consider the socio-economic context in the invest into it, consolidate lease contracts – all that In the real estate region concerned. to generate clearly predictable results. Subsequently, the asset enters the next stage – inclusion in our real What other parameters does real estate that you estate fund portfolio. In order to reach that stage, business, we prefer have acquired or are interested in acquiring have to the asset must meet strict criteria as regards meet? an absolutely sound legal situation and a proof of We have expanded our geographical scope from South a future revenue stream. Moravia to all of the Czech Republic but the focus has yield to prestigious not changed. We aim for a certain type of assets. We see When expanding the portfolio, do you work in any the greatest opportunities in retail and light industry, way with architecture company A PLUS, which is specifically warehouses, manufacturing and services also part of DRFG Real Estate? address, although on the outskirts of medium-sized and small towns. A PLUS has extensive experience with construction However, we primarily acquire small and medium-sized and with the real estate market as such. This enables commercial centres valued at CZK 150 to 250 million us to verify if the asset is really in the declared conditi- we can afford to and we prefer yield to prestigious address. We need to on and we do not need to hire third parties for the task. offer yield to the bondholders and stockholders, Besides, we have been exploring investment opportuni- not a good feeling of owning a high-street property. ties in the area of real estate development where we rely make one or two on A PLUS’ professional team and their expertise. What acquisitions have been added to the portfolio over the first few months of 2016? Who makes up the team that takes care of the We managed to acquire a well-established and perfor- real estate? exceptions. ming commercial centre in the town of Vyškov where To take proper care of a real estate is equally important we already own a real estate property, so we can tap as to make a good deal when purchasing it. That is why into our knowledge of the local situation and suppliers. we have been not only expanding the real estate port- We are happy that our tenants include such recognised folio but also the responsible team. In no case would brands as Mountfield, JYSK, Rostex, Oresi, and OKAY we want to underestimate personal matters. The team Elektro, among others. Recently, we have added another comprises acquisition managers and brokers whose task two outlets of JYSK, a Danish interior design company, is to identify suitable assets. These are subsequently to our portfolio – one in the town of Písek and one subjected to a two-round assessment by an acquisition in Jindřichův Hradec. At the moment, we are commission, which is a complex, sophisticated algo- in the process of taking over a mid-sized commercial rithm. The first round is a coarse sieve to filter out junk. centre in a nice setting of Ivančice, South Moravia, In the second round, we assess the real estate from the and since we need to grasp good opportunities as they business perspective. Critical is a competitive analysis, come, we are also purchasing a smaller retail project an analysis of external factors in the location etc. After in the town of Aš, West Bohemia. As the proverbial that we perform legal and economic analyses as well as cherry on the cake, we acquired a historic neo-renai- a comprehensive technical assessment of the real estate. ssance house with beautiful functionalist parterre Upon purchase, a crucial component of the process co- in the very centre of Brno for DRFG’s real estate port- mes to the fore – our own facility management. Our aim Patrik Tuza | DRFG Real Estate What investment strategy has DRFG Real Estate folio. Moreover, we are preparing a number of other is not to keep lease contracts in effect by the force chosen for 2016? acquisitions around the country. of the law. The task of the facility management is to Patrik is responsible for the creation and admini- Here in the Real Estate division, we plan investments create such comfortable conditions for the tenants stration of a portfolio of yield-driven real estates at least a year ahead. This is due to the fact that the real Why does 21 Pekařská Street no longer feature so that they have no desire to leave. The facility man- within DRFG Real Estate. “To take proper care estate market is stable and changes do not occur as fast in the portfolio? agement draws up investment plans, creates a repairs of a real estate is equally important as to make as on the capital or commodity markets, for instance. We have taken necessary measures to stabilise the buil- fund and is in regular contact with the tenants to cater a good deal when purchasing it,” says the executive In 2016, we have been working on acquisitions of high ding, implemented root piles and reinforced the foun- to their needs. Having satisfied tenants in our real esta- director of DRFG Real Estate who also manages -quality yield-driven real estates with a combined value dation bed. A Brno-based investor indicated interest in te properties is a key to success. A PLUS, a renowned Brno-based architecture, in excess of one billion Czech crowns. We definitely acquiring the unfinished building. We responded flexibly design and development company. do not haste any purchase decisions.We carry out acqu- to the demand and sold the property before completion.
26 27 stadium in Bohunice which eventually did not materia- Czechoslovak premier league. “It took us four months lise, despite an effective zoning decision. “Back then, we to erect an ice hockey rink for the record number of visi- learned a lot about construction, operating context tors basically in a wasteland - a brownfield covered with and technologies and leveraged the expertise in desig- wildly growing shrubs and littered with eight thousand ning a new ice hockey stadium at Za Lužánkami,” says cubic metres of rubble,” recalls Tuza and highlights Tuza. Discussions about a new ice hockey stadium in the fact that there was no inspiration available as eve- Brno have been going on since late 1990s when rything was accomplished in an extremely short time. the legendary winter stadium Za Lužánkami was “It was a first – a first in Brno, a first for all of us – decommissioned. Since then there have been debates and without any time allowance. As soon as we comple- about three suitable locations for a new multi-purpose ted the construction, the premier league kicked in. arena, including an area near the university campus A record was achieved and then again. There was not in Bohunice, the Brno Exhibition Grounds and the even time for any trial runs,” he adds. legendary location Za Lužánkami which most Brno veterans and patriots prefer. “In our opinion, We would like to open the Brno Exhibi- the location in Bohunice should be dedicated to athle- tics in association with the Faculty of Sport Studies tion Grounds to the public of Masaryk University. An ice hockey stadium in the ex- hibition grounds is unsuitable from an urbanistic point A PLUS has also been actively engaged in discussions of view. The exhibition grounds should serve a comple- about the future of the Brno Exhibition Grounds. “After tely different purpose, so we did not think about this more than ninety years of existence, the exhibition option for a second,” explains the statutory director. grounds need to be elevated to a new level and the area The Za Lužánkami location seems ideal also because needs to open to the public,” say A PLUS founders Karel of the new situation in Brno. It is not only sports fans Tuza and Petr Uhlíř. The exhibition area spans appro- who have been calling for the construction of a new sta- ximately 130 thousand square metres, accounting for dium in the Ponava sporting area but city leaders have approximately three fifths of the whole area. And this, been active as well, creating more favourable conditions A PLUS believes, is something to think about – what A PLUS wants to continue at Za Lužánkami including preparations to do with the remaining two fifths. The University of a new transport infrastructure. And the ice hockey Campus in Bohunice could provide some inspiration. club made a return to Lužánky one of its top priorities. The approximately 30-hectare area needs no fences improving the architectural face “In addition, there is a city transport stop called ‘Winter and guarded entrance. “Our project envisages Pavilion Stadium’ there but no stadium is nearby, which is more Z, which is an area difficult to leverage for contempo- than a sufficient reason to erect one right there,” says rary trade fairs, becoming a hub with streets running of the city of Brno Tuza with a smile. Architecture company A PLUS drew out like spokes, lined with buildings with significant inspiration for the new multi-purpose arena from new municipal functions, institutions, offices and services, stadiums both in the Czech Republic and abroad. Patrik and the rim blending into the surrounding city,” Patrik Tuza found the stadium in Malmö, Sweden, particularly Tuza explains the concept. The legendary “Zed” could A stadium that broke the historic record in the in Zábrdovice district and has been preparing a design inspiring. “It’s not so much the design but the cir- become a modern social and cultural centre that would number of visitors to an ice hockey premier lea- of a large administrative building on the outskirts of the cumstances under which the new stadium was built. become a building within a building, resembling Gale- gue match and the construction of a new modern Bohunice campus for US investors. It is a privately funded stadium supported by in- ries Lafayette in Paris. Masaryk University campus in Brno are some of the “Joining DRFG energised us immensely. After more vestments from the city and the regional administrati- In early 2016, A PLUS presented also a zoning study projects that A PLUS can boast of. The company has than 20 successful years in the industry, this came as on. The biggest investment contributor was a successful of an area in the vicinity of the exhibition grounds been active in the field of architecture, design, and a positive reboot. We also benefit from multiple syner- ice hockey club. The stadium serves other purposes, – a sports and recreation area Pisárky behind Anthro- construction of the most technically demanding gies,” says Patrik Tuza who has been with the company such as conferences and concerts, also very well,” he pos. The plot of land is currently abandoned, largely buildings, such as installation of scientific facilities for thirteen years, having started at a technical positi- says, adding that the Malmö arena boasts excellent unkempt. The City of Brno, which commissioned for electron microscopy or extremely precise mag- on, moving on to construction, then project manage- connection to the city transport infrastructure, which the study, intends to create an area with multiple sports netic resonance scanners, since early 1990s. One ment and reaching the post of non-statutory executive represents a challenge for the new stadium in Brno. grounds but with its natural character preserved. of the latest completed projects is a new Biology director before being appointed the statutory director. The first joint project of A PLUS, DRFG Investment “We hope that in a foreseeable future, the 13.5-hectare Park which has received the “2016 South Moravian A PLUS currently has twenty employees. Group and Kometa Brno made history when more than area will serve our fellow citizens for sports and leisure Building of the Year” award, complete with a de- 21,500 visitors watched a match between the Brno club activities,” Patrik Tuza believes. manding project of a reproduction medicine clinic. A record reached at the Za Lužánkami and Sparta Prague under the open sky on the 8th Janua- ry, which represents a record in both Czech and former In 2015, A PLUS a.s. became a member of DRFG stadium is just the beginning of the Investment Group with Patrik Tuza appointed as the journey to a new arena statutory director. A PLUS, which had been previously perceived primarily as a public sector contractor, is go- One of the aforementioned synergies takes effect ing to shift focus more on the commercial sphere under in a project of a new multi-purpose arena where ice the new leadership. At present, it is working on designs hockey club Kometa Brno should play its premier-league for revitalisation of the Zbrojovka Brno industrial plant matches. A PLUS prepared the design of an ice hockey
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A PLUS
A PLUS is an internationally recognised architecture company founded in 1991. Its projects received eight Building of the Year awards and other international recognitions. Its founders’ mission is to design cuttin- g-edge contemporary architecture for the city of Brno, a goal A PLUS has been successful at achieving. They authored CEITEC, Masaryk University campus, the Moravian Land Archive, to mention but a few. To date, nearly 20 billion crowns have been invested in projects designed by A PLUS. The company is known for its high- tech signature style.
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Retail Park Vyškov
Retail Park Vyškov is a popular shopping destination for inhabitants of the town of Vyškov. It forms an ideal symbiosis with grocery stores in the neighbourhood, complementing their offer. The retail park offers an area of 3500 square metres for lease. Key tenants include Okay elektro, Mountfield, and Oresi, among others. The size of the facility and tenant structure match typi- cal DRFG portfolio projects.
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Retail Arena Chodov
The facility is strategically located in close proximity to the D1 motorway near Prague’s border. It is leased by Deca Sport for a retail outlet of the largest European sports equipment brand – Decathlon. Other tenants include Baumax – offices, sanitary ware retailer Wärme, and GOLF-HOUSE, the largest German golf equipment retailer.
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ProStorage
The facility with a total area of 15,693 sq. m is located in V Chotejně Street close to Průmyslová Street which connects Prague’s major traffic routes. The asset, which has been through the first stage of refurbishment, offers a balanced combination of production, warehouse and admi- nistrative facilities suitable for smaller manufacturing as well as trading companies. A greatly diversified structure of smaller tenants reduces the risks associated with the investment and make the project an investment with an interesting level of yield.
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Nový Tuzex
A multi-storey retail facility located in immediate proxi- mity to the Brno Exhibition Grounds. The total area of 4,621 sq. m is shared between 30 tenants consisting of construction, interior design and furniture retailers, for example Phase, a couch retailer, and sports retailers such as Golfprof or Scott Sport. The building dates back to the end of 1980s and its original purpose was to sell the then the newest Czech car model – Škoda Favorit. However, it did not serve this purpose for very long, until the Velvet Revolution, after which the building retained only the name. At present, Nový Tuzex represents the nucleus for further development of the Brno Exhibition Grounds area.
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Náměstí Svobody 20
The building in the very centre of the city of Brno offers a combination of administrative and retail space with a total floor area of 2,330 sq. m. Currently, it is occupied by strong market players such as fashion retailer New Yor- ker, advisory company PricewaterhouseCoopers and BreadWay bakery. Freedom Square (Náměstí Svobody), formerly known as the Lower Square, is the largest and oldest square in the historic part of Brno, dating back to the 13th cen- tury. The current state of the square dates mostly to the era of a major redevelopment of Brno in the 19th and 20th century. At that time, probably around 1860, the building at number 20 was erected, then as an apartment house with a hardware store run by Eduard Till. The house was owned by the family until confiscation in 1950. After that, a car parts store was created on the ground floor for natio- nal company Mototechna. The building has undergone multiple overhauls, the most notable ones being that from 1930s by architect Norbert Troller and a major renovation in 1998.
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Eden Královo Pole
This minor retail centre is located in immediate proxi- mity to Eden, a multi-purpose apartment house in Pur- kyňova Street, just a few minutes from the Technology Park. All of the 894 sq. m of floor space is leased. The retail centre houses seven stores and two restau- rants. Brno’s Královo Pole district with a high populati- on density acts virtually as another city centre.
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JYSK Jindřichův Hradec
The building with an area of 1,551 sq. m houses furniture retailer JYSK and fashion, toys and home accessories retailer PEPCO. The building is located near a major road leading to South Bohemian town of Jindřichův Hradec. The town has 22,000 inhabitants and serves as the district administrative centre with thousands of people from the surrounding area coming every day to deal with official matters.
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JYSK Písek
The 1,110-sq. m facility houses a retail store of the JYSK chain. It is located in a lively area near one of the main roads leading to the town of Písek. Písek, with a population of 30,000, is one of the most attractive South Bohemian tourist destinations in the summer season. Písek is also recognised for business activity – for instance, it placed first among South Bohemian towns in a 2013 ranking by prestigious EKONOM weekly.
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JYSK Vyškov
The 1,075-sq. m facility is occupied by furniture retailer JYSK. The single-storey building is located by the main road to the town. The South Moravian town of Vyškov with more than 21,000 inhabitants serves as the administrative centre of the district.
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JYSK Mělník
The facility with furniture and household accessory retailer JYSK as the only tenant offers a floor space of 1,100 sq. m. The building is located near other retail centres. The town of Mělník with nearly 20,000 inhabitants serves as the district administrative centre. The Mělník district with 104,000 inhabitants is one of six districts in the Central Bohemia region with a population larger than 100,000.
50 51 AR 30/6/2016 real estate
Retail Centre Aš
The facility in West Bohemian town of Aš with floor space of 2,667 sq. m is currently occupied by six tenants. Its main advantages include a neighbouring hypermarket, proximity to the Czech-German border and the structure of tenants who include stable retail chains such as KiK, PEPCO, Elektro Expert and TETA Drugstores. A large parking lot is located in the central part of the area, with retail units of the shopping centre surrounding it in an L-shape. The varied structure of the tenants makes the centre one of the most popular shopping destinations in the region.
52 53 AR 30/6/2016 real estate
Podchřibí Farm
The company’s strategy is to acquire, cultivate and keep quality agricultural soil long-term which is expected to appreciate over the time. We increase the value of the investment also by our own environmentally sustainable agricultural activity focusing on the “organic” quality and by renting the soil to other private entities.
54 55 Roman Řezníček | DRFG Telco and limited options for modernisation of the small companies. It is favourable that Wi-Fi-based ISPs that A rapid evolution of telecommunication technolo- have delivered connectivity to small communities exist, gies and the market as a whole creates attractive but their capabilities lag behind current trends, such as opportunities. However, grasping such opportuni- IPTV, Netflix, etc. If we look at markets like Switzerland ties requires expertise and experience as well or Germany, we witness efforts to build IP networks as an ability to make an investment decision in the based primarily on high-quality optical or metallic right time. Roman Řezníček, who has built Suntel infrastructure supplemented with an effective wireless Group from scratch, decided to sell a 50% stake solution. Customers should always have a choice from in the successful company to DRFG Investment multiple options and be able to select a solution that Group in mid-2015. This bond creates a great poten- meets their needs and requirements optimally. tial to carry out promising strategic plans. In what stage is the development of the single You have been successful in the telecommunications network and what will it offer to end customers? business for 16 years. Which countries does Suntel We have been assessing ISPs and started negotiations Group operate in and what services does it provide with first companies, primarily in Northern to its customers? and Southern Moravia. We are focusing mainly We have clients in the Czech Republic, Slovakia, Swit- on municipalities of up to 10,000 inhabitants. zerland, Germany and Austria. They include telecom- The network should be homogenous, with a long range, munication and technology companies that operate offering connectivity to customers in a wider area. I mobile or fixed-line networks or develop technologies believe we can use the internet connectivity to provide for such networks. Some of our most prominent clients a whole range of new services. include Vodafone, Ericsson, Salt, CETIN, O2 Slovakia, How are you going to service the whole network and Huawei, T-Mobile and Alcatel, to name but a few. communicate with users? These are contracts we have won thanks to our consi- Our aim is to keep a network of local technicians stently outstanding services as well as to our strength and sales representatives, which will differentiate and ability to deliver turnkey network projects. This us from large corporate providers. We have our own includes planning, acquisition, design, construction, in- technicians in the target geographies who will be invol- tegration, service, maintenance and optimisation. Over ved in both development and servicing of the network. Suntel Net network the past few years, we have focused primarily on upgrades of mobile networks with the LTE (4G) tech- Where is Suntel Net going to evolve from the tech- nology. We also extend and modernise optical networks, nology perspective? mainly FTTC and FTTH. In some locations, we are planning to switch over from will enable customers Wi-Fi to optical links which is the preferred technology DRFG Telco aims to expand on telecommunication these days. We would like to make maximum possible markets, focusing primarily on the Czech Republic use of the optical infrastructure owned by CETIN, to manage their in the first stage. What are your short-term plans? the largest telecommunication infrastructure owner We have three strategic objectives whose accom- in the Czech Republic. Wherever this is not feasible, plishment will require a team of technology and finance we would invest in new optical infrastructure that we smart homes experts. Besides our plan to continue developing our key would like to offer to third parties as well. I see a great activities in Central Europe and expanding the portfolio potential also in the Smart Home market. The Smart of mobile and fixed-line clients, we have launched platform, which is being developed by our own IT team, a project to acquire local data services providers will allow Suntel Net customers to modernise manage- effectively on the domestic market. We would like to consolidate ment of their households, not only by enabling remote several local data services providers to create a single control of appliances and devices but also by facilitating network, Suntel Net. The third area on which we have their mutual communication. Our great advantage been focusing and where we have started developing is a network of technicians who can demonstrate such business activities is Smart Home, which is a high Smart Home products to potential customers, install growth market. them and provide initial instruction.
How many internet service providers are there on the Czech market and how are you going to go about their consolidation? The Czech market is very specific in this respect, with nearly 1,500 ISPs. This means great fragmentation
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Suntel
Suntel Group is an international telecommunication services provider in the DACH countries, Czech Repub- lic, and Slovakia. The company provides comprehensive turnkey services necessary for construction and operati- on of networks, primarily construction and service of 2G, 3G, LTE and fixed-line networks, installation of microwave links for data and voice transmissions (PDH, SDH), optical routes, acquisitions, engineering, design, and technology testing.
58 59 Rudolf Matějka | DRFG Medical is able to discriminate between them only by the price, number of tablets and perhaps attractiveness of the Rudolf Matějka has been active in the health care packaging. This is no added value. Small pharmacists sector for more than twenty years. From 2008 he often believe that a wide offer represents added value managed the BENU pharmacy chain, the second for the customer but they cannot explain the differences largest on the Czech market, as its Board Chairman. between the products. On the other hand, large retailers In spring 2016 he joined DRFG where his task know that a narrower offer helps the customer choose, is to develop pharmacy chain Na zdraví. “We aim while enabling the seller to concentrate the business to become No. 3 on the market and generate reve- on a smaller number of vendors and achieve more nues of approximately one billion CZK per year,” favourable prices and a greater market share, and con- says the executive director of DRFG Medical s.r.o. sequently translate this into better prices for the customer. Smaller pharmacists often complain that large chains are killing them by lower prices but With what goals are you joining DRFG? it is not exactly the case. The reason is that chains know There is an opportunity to develop the third pharmacy how to procure and choose between vendors. chain, alongside Benu and Dr. Max. More than a half of the Czech pharmacy market awaits consolidation. What changes take place in pharmacies that you Legislation allowing for the creation of pharmacy acquire for the Na zdraví chain, besides rebranding? chains, it is logical they are going to emerge one day. As I have suggested earlier, we categorise the David Rusňák has had the DRFG Medical division ready assortment. We select products so that customers are for some time and waited for an opportunity to enter able to choose what they believe is the best option the market. After the first four months of developing for them, or that the staff can provide meaningful the network we own eight pharmacies. We would like to advice. We also rearrange the shop floor. People often have around fifty Na zdraví-branded pharmacies within look up information on the internet and self-medication three years, with total sales of approximately one billion is a growing trend. That is why we aim to introduce CZK per year. We are going to grow solely by acquisiti- self-service zones. Today, you have to be served at ons, we are not planning to build pharmacies the counter in the vast majority of pharmacies, which in the green field. pharmacists consider an advantage but customers – paradoxically – perceive as a certain pressure. I think What criteria does a pharmacy need to meet for you to this is something against the nature of Czech customers Market consider acquiring it for the chain you are developing? who do not like being advised but prefer choosing We focus on large-floor pharmacies with annual revenue on their own and possibly consulting their choice. over 15 million CZK. We are not limited by geography. We would like to cover the Czech Republic but avoid The pharmacies you are acquiring already have consolidation cannibalising ourselves, as it already happens to some their loyal customers. I suppose you would like of the large chains. to grow their numbers. How are you planning to attract new customers? benefits both Will the population of the town play a role in selec- The product structure in large chains is virtually identi- ting pharmacies to acquire? cal and differs only in price. We would like to extend the It is not a major factor. My experience shows that phar- offer to include products that pharmacies usually do not pharmacists macies in smaller municipalities often perform better as sell, such as special diet programs. We are also going there is less competition and customers are more loyal. to introduce our private brand Na zdraví, offering new products that you typically do not find in a pharmacy What does market consolidation with formation that will be strongly focused on prevention. and customers of chains mean for pharmacies and for customers? Consolidation results in standardisation of services and Are you planning to go online? the offer. Retailers often make the mistake to offer an Yes, we are. We would like to link it with the introducti- excessively varied range of products. Let me compare on of comprehensive ranges of diet programs. There are the situation to restaurants – if you have a ten-page currently approximately sixty e-shops selling pharma- menu, it usually takes customers very long ceutical products. It does not make sense to create to choose and the result is quite uncertain. However, a sixty-first one offering common painkillers a few if the restaurant offers only a selection of the best, let’s halers cheaper than the competitors. That is why we are say on two pages, the guest will choose quickly and can going to rely on our own products. We are aiming for be almost 100% sure that the chef is able to prepare an autumn launch so that the products are available for a top-notch meal. Likewise, you do not need to offer the pre-Christmas shopping season. fifty kinds of multi-vitamin products if the customer
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Pharmacies Na zdraví
A subsidiary of DRFG Medical is developing a pharmacy chain under the Na zdraví brand, focusing on prevention, healthy lifestyle and wellbeing. All that while also providing the best care possible to urgent and chronical patients. We aim to be the pharmacy of choice for everyone who is aware of the real value of one’s health and takes an active approach to preserve it. Our mission is to offer higher-level services that put the interests of our customers to the fore. We have carved caring for their health into our shop sign and all our steps are motivated by an effort to meet this demanding goal. We do not strive to be the lar- gest but we definitely aim to be the best.
62 63 How is the situation on the utility market evolving? What other investment in the utility sector are you Over the past decades, there used to be a monopoly planning? Where do you see other potential oppor- player in each segment of the utility market. Howe- tunities? ver, liberalisation and introduction of environmental To operate on the energy market requires either buil- policies have brought about a major transformation ding new sources or seeking acquisition opportunities. that is at odds with the traditional model based solely When devising our strategy, we clearly decided to focus on large utility corporations. Local biomass, solar, wind on existing facilities. However, there is a limited number and water plants have been taking over an increasing of operational facilities on the Czech market whose share of power generation. Opportunities have emerged owners are willing to sell. Besides, in nearly all tende- for new players due to lower cost intensiveness of entry rs, we encounter the same competitors that are willing to the sector. These days, capital amounting to tens or to buy under terms I would describe as irrational. We hundreds of millions will suffice for investments would not invest in an entity that would not meet our in the utility sector, which is significantly less than criteria as regards yield, technology standard, and busi- billion-crown investments that used to be the norm. ness potential, even if it were at the expense of growing We see a range of new opportunities as compared our portfolio. That is why the number of acquisitions to the previous period and I dare say we have a fairly in the utility sector can never match that of my collea- good idea of where the utility sector is heading gues’ in the other divisions whose scope is much broa- in the short term. der. I have an offer for an acquisition or a project under development on my desk nearly every week. Generally, Recently, we have heard about issues with licences we are interested in small and medium-sized facilities, being suspended for some power utilities. Have your ideally with 1 to 10 MW of installed output, based investments been affected in any way? on wind or water power. We find heat production Over the past year, some of the operators have started as an attractive opportunity as well, as this energy seg- to feel the impact of the non-standard subsidy system ment remains regulated and is therefore largely that was effective between 2009 and 2012 and has not impervious to market fluctuations. As far as geography been dealt with for a long time. What we are now seeing is concerned, we are talking about the Czech Republic are legitimate efforts to rectify the system. As a result, and Slovakia, if we cross the border at all. Transformation skeletons are falling out of the closet in the form of licences that are found to have been granted unlaw- What are the key factors you take into consideration fully. This concerns primarily support for solar plants. when devising your strategy? Resolution of the issues has been complicated Our analysts and I have long followed the fundamental of the utility sector by conflicts between the Ministry of Industry and Trade trends that are shaped by the EU policy, its strategic ob- and the Energy Regulatory Authority regarding inter- jectives for 2020, 2030 and 2050 and the derived Czech pretation of key regulations. The ultimate goal should legislation, in particular the National Energy Strategy. has opened the market be to calm the situation and restore public trust. This was updated last year and although I consider We had envisaged such a situation and therefore it rather vague, we can at least see the main direction remain unaffected. in which the Czech energy sector is heading for the next to new players 40 years. Primarily, we take into consideration regu- Your initial project is Teplárna Šternberk heating lations set by the European Commission that stipulate plant which is about to be launched. How many mandatory objectives of national environmental poli- entities will it supply with heat? cies. If the Czech Republic is to hit the targets, We have been negotiating supply for a housing estate it will need to continue supporting renewable energy. with 1,600 apartments and multiple manufacturing The only thing that is going to change is the form Pavel Svoreň | DRFG ENERGY companies and are in a final stage of concluding of the support. In my opinion, guaranteed purchase DRFG ENERGY was established in mid-2014. What a contract for supplies to an industrial facility which prices for operators will be replaced with one-time in- „We continue to see a potential in small-scale are its objectives? is the second largest production plant in the town vestment subsidies. When devising a strategy, however, power generation. We would like to leverage DRFG ENERGY’s task is to handle projects and in- of Šternberk. Electricity generation naturally accompa- we cannot limit ourselves to official documents. That the market transformation that has opened vestments in the utility sector within the group’s nies heat production. Our maximum output will power is why we rely also on our own experience and consul- the door for new smaller players,” says investment portfolio, identify new opportunities and up to 3,000 households. One of the reasons we entered tations with public administration and trade organisa- Pavel Svoreň. He is DRFG Investment Group’s key actively manage already-held assets. We want to take into this project is the option to burn communal waste. tions. After an assessment of all aspects, we predict the person for the utility sector, a partner in its subsi- full control of projects that we enter. That means either Under the Act on Waste, landfilling of combustible was- development, risks, and potential for each facility. diary DRFG ENERGY and board chairman acquiring complete ownership or a majority stake with te is going to be prohibited as of 2024. We see at Teplárny Šternberk heating plant. managerial control of the board of directors and su- a great potential in this. The input cost for the heating pervisory board level and key influence to affect perfor- plant could be much lower. However, the primary goal mance. Since July 2016, DRFG ENERGY has had a bond is to build a biomass-fired heating plant and develop issue prospectus approved by the Czech National Bank. the other plan in the coming years.
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Teplárna Šternberk heating plant
This modern co-generation unit with a total installed output of 5 MW produces heat and electricity by gasifi- cation of biomass. Power generation is sufficient to satisfy consumption of roughly 3,000 households. The aim of the project is to supply heat from renewable and sustainable sources at favourable prices to in- dustrial facilities and households in the town of Štern- berk. The project was launched in 2014 and is currently in the final stage before completion.
TEPLÁRNA
66 67 Does that mean that the capital market is now more 110 million crowns. We can definitely confirm that favourable for retail investors? the first 100 million are most difficult to put together. I would not say it is more favourable. After the economic I believe that as the volume of assets grows and the fund crisis between 2007 and 2009, in particular in the US, is able to demonstrate a credible history, things will an economic recession hit the Czech Republic, too. work even smoother. The real estate fund was launched However, a recession is an inevitable and natural part in February 2016 and it has been through the first regu- of the economic cycle. Czech households and companies lar quarterly valuation as of 31 March 2016 when took an austere approach and now, when the econo- it recorded a 0.51% growth. Net yield of this fund should my rebounded, companies renewed their investment be higher than that of the bond fund, specifically 4.5% activity and citizens are considering options where to p.a. The fund focuses on acquisitions of commercial deposit their savings for appraisal and investment. Eve- and industrial assets with 6–7% yield, in very good ryone must have noticed the turbulence on the market technical shape and with reputable tenants and good over the past year. Commodities have probably hit rock lease contracts. We believe that this fund represents bottom and oil prices have jumped 50% since February. a significantly better product for the structure of our Although some prices may seem attractive these days, clients than stock market funds that may experience the market is volatile and prices fluctuate in short cyc- significant fluctuations. We are unwilling to accept such les. This has to do with normalisation on the market a risk and transfer it to our clients. We launched and the expected beginning of a new interest rate the fund with initial assets comprising real estate worth growth cycle in the economy, for now led by FED. Howe- 210 million crowns. Investors perceive a real estate fund ver, after the recent UK referendum on “Brexit”, many as rather conservative and more comprehensible, so I new unknowns have emerged in the world of finance. expect In general, retail investors, i.e. individuals, should opt the volume of deposits in the real estate fund to exceed for regular investments into conservative products who- 500 million crowns this year and deposits in the bond Czechs are se yield exceeds inflation by a few percent. fund to surpass the 250-million mark. What types of funds do you manage at DRFG and What real estates do you acquire for the real estate what is their investor structure? fund? conservative, When we were deciding on the types of funds for DRFG We seek real estate projects occupied by reliable tenants back in 2014, we were clear that we do not want to with long-term lease contracts. One of them expose investors to any risk of substantial downfalls. is an industrial facility in Prague, with a leased area By that I mean a more than 10% drop in value of the in- of 16,000 sq. m managed by ProStorage s.r.o. Another which is good vestment. Considering the fact that we were on the top company in the fund is Retail projekt V-M s.r.o. that of the share price cycle, it was obvious not to establish owns two retail parks occupied by JYSK in the towns funds exposed to this kind of assets. In May 2015 we of Mělník and Vyškov. The yield for clients depends launched DRFG UCITS Bond Fund and in February 2016 primarily on proper payment of the rent by the tenants DRFG AIF Real Estate Fund. I am happy that the bond with whom we have very lucrative long-term contracts, fund attracts not only retail clients but also institutio- with multiple covenants for our fund. Likewise, our nal clients with deposits in excess of ten million crowns. buildings are insured properly for all types of risks. For the time being, the real estate fund is intended for In 2016 we are planning to acquire further assets for so-called qualified investors who meet certain require- the fund valued at no less than half a billion crowns. ments and invest no less than one million crowns. We finance the assets with the help of bank loans that never exceed 50% of the value, in many cases less than What is the volume of assets under management that. This is a limit stipulated by Czech laws. Although Josef Eim | DRFG Funds How intensively have Czech been investing in recent in the funds and what yield can be expected? the fund is incorporated in Lichtenstein, we adopted all years? The bond fund has been operational for over a year. For limitations set forth by Czech legislation, if stricter than “Collective investing plays an indispensable role in Czechs are quite active investors. As of 31 March 2016, 2016, it has achieved a very nice appreciation of 2.14%. Lichtenstein law, into the fund’s statutes, i.e. the Czech Republic. Czechs are very thrifty, cre- households and institutions kept 388 billion crowns in With respect to the situation on the global financial the fundamental legal document of the fund. ating large reserves and savings,” says Josef Eim, collective investment funds offered in the Czech Repub- markets, we can be happy about such performance. For who is responsible for administration of DRFG’s lic. Their approach is very conservative, which is good. us, protecting the client’s investment has priority over investment funds and serves as the CEO and partner Data show that since stabilisation of such investments profit associated with disproportionate risk. The majo- of DRFG Invest II. s.r.o., leveraging his experience between 2009 and 2012 the volume of savings has rity of clients who invest regularly achieve a mild profit from working for Lichtenstein-based Vega FX Cash increased substantially. This is best witnessed by the with respect to the fund’s growth in 2016 and this trend Fund. development in 2015, when savings grew by 65 billion is expected to continue. Over the year that the fund has crowns year on year, i.e. by 20%. been in existence, we attracted investors with
68 69 AR 30/6/2016 INVESTMENT FUNDS
DRFG AIF Real Estate Fund
DRFG AIF Real Estate Fund is an investment fund es- tablished in cooperation with Lichtenstein-based fund administrator CAIAC Fund Management. The acronym AIF refers to the AIFMD European directive and means that the fund is focused on alternative investments. It invests primarily into commercial real estate with a target net client yield of 4.5% p.a. As a rule, the fund will acquire well -established and performing assets on the Czech territory. The fund’s auditor is Deloitte and the depositary is NEUE BANK Liechtenstein. The fund is approved by the Czech National Bank for public offer in the Czech Republic.
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DRFG UCITS Bond Fund
DRFG UCITS Bond Fund is an investment bond fund established by the DRFG a.s. investment group in coo- peration with Lichtenstein-based fund administrator CAIAC Fund Management. The fund’s auditor is Deloitte and the depositary is Volksbank Liechtenstein. The fund is approved by the Czech National Bank for offer to the general public in the Czech Republic. Its investment strategy envisages a net annual yield of 3.5%. The fund pays particular attention to consis- tency and predictability of the yield, investing prima- rily to government bonds, high-rating, highly credible corporate bonds, and to bonds issued by banks within EU. The fund is denominated in Czech crowns. The fund is suitable for conservative investors who tole- rate a low level of risk and require consistent yields. The recommended minimal investment horizon is three years. The fund offers one-time as well as regu- lar investments starting at 100 CZK.
72 73 Břetislav Hrabě | DRFG Finance
“We provide financial and investment advisory In 2015, we established the first open common fund, services. That’s how we meet interesting clients DRFG UCITS Bond Fund, and prepared it for subscripti- and investors, obtaining part of the capital used on. In the course of the second half of 2015 we managed by the DRFG group in the process,” says Břetislav to gather more than 100 million crowns in the fund. Hrabě who took over the lead at DRFG Finance The fund focuses on corporate, municipal and gover- in the second half of 2015. nment bonds and accepts investments starting at 100 crowns. It represents a very interesting investment What changes have been brought about by the con- opportunity, ideal for the general public. The launch solidation of financial distribution under a single of the fund on the market proved to be more than a suc- company and single management? cess – in his respect, I would like to highlight the effort First and foremost, I should stress that our concept for of portfolio manager Josef Eim who manages all DRFG the financial segment envisaged all activities under funds. At the beginning of 2016 we prepared the launch a single brand, as is the case with real estate, utility, te- of our second fund, DRFG AIF Real Estate Fund, which lecommunication and health care segments. We divided focuses solely on investments into real estate. There financial activities into internal and external and clearly is not much competition among real estate funds defined the direction and plans of both segments for in the Czech Republic, so I believe we have taken up the 2016-2017 period, if not longer. Obviously, we inc- a relatively free space on the market. In comparison luded companies in which DRFG holds an equity stake with Western Europe, there is a great potential for into internal distribution. These companies include investments into real estate funds in the Czech Repub- FinFin, ROYAL VISION, Comsense Capital and a new lic. What is interesting about the fund is its focus on addition to our group, DRFG Investment Services. Ex- investments into commercial and industrial assets, po- ternal partners include all entities in which DRFG does tentially bringing a net yield of 4.5% which is our goal. not hold a stake, i.e. financial, advisory, and commercial This is quite attractive, in particular with respect companies on the market that included our funds to the stability of the real estate market as such. So, we in their offer. are offering two open common funds that are not mutu- ally competitive. How has DRFG Investment Services been established and what does it focus on? What are your visions and plans for the next period? The company was established by establishing a partner- In the long-run, our consultants will focus primarily ship with a very interesting team led by Pavel Pastorek on investments, which is why we consider insurance who became a partner in DRFG Investment Services and mortgages as supplementary products. We would and manages the company. I am glad it took place like to offer attractive investment opportunities to In comparison with and we now work together as Pavel Pastorek has many retail clients, affluent clients as well as to large direct years of valuable experience on financial markets. DRFG investors. Our strategy is based on a simple principle: Investment Services provides comprehensive financial it is key that we profit together with our clients, not Western Europe, there advisory services to lucrative clients, so the company from our clients. We strive for long-term relationships can be included in the internal distribution alongside and good reputation, which takes a long and hard effort FinFin, ROYAL VISION and Comsense Capital. I believe to build but can be lost very quickly and very easily. is a great potential that the aforementioned companies that have extensive Our aim is to keep clients satisfied and to achieve such experience with such clients, can only accelerate appreciation of investments that meets their as well as the process of blending in. our expectations. We would also like our consultants to be satisfied, finding interesting clients to work with and for investments into Any other interesting personal acquisitions? achieving pay-outs from advisory services and not from I should definitely mention Pavel Rydzyk who joined us resale of financial products. Our major added value is a from the insurance business where he has been acti- strong analytical team in Comsense Capital comprising real estate funds ve for the past few years. He is bringing in extremely highly skilled and experienced analysts who provide valuable experience from a large multinational financial the highest level of expertise which is indispensable for institution. making investments these days. All that under Ondřej in the Czech Republic Záruba’s leadership. What type of clients are your common funds inten- ded for and how were they launched?
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EFEKTA Consulting
EFEKTA CONSULTING is a Czech securities broker in providing advisory services in the area of corporate licensed for investment services under the Capital finance and since 2001 has been licensed to organise Market Trading Act, with a long tradition on the Czech public auctions of securities. In this capacity, the com- capital market. pany has carried out securities auctions and provided Established in 1994, the company was granted a license advisory in relation to squeeze-outs to both Czech for provision of investment services by the Securities and large international clients. In 2007, it ranked Commission in 1995, including acceptance, transfer as the largest Czech securities auctioneer and the 25th and execution of trading instructions and provision largest auctioneer overall. EFEKTA CONSULTING is also of advisory services regarding investments into secu- licensed to provide safekeeping of investment instru- rities and collective investing instruments, as well as ments, offering the service to its clients. acceptance of funds and investment instruments from clients.
In 2009, in the context of implementation of EU’s Markets in Financial Instruments Directive (MiFID), EFEKTA obtained an extension of its licence from the Czech National Bank’s supervisory body to be able to provide credit to clients for the purpose of securities trading, which translated into a wider range of services for the clients including the so-called margin trading in securities. At that time, the company operated not only on the Czech market but also on European and US markets, serving both Czech and international clients. To allow further growth of the company and improve its services, the investment services licence was exten- ded again in early 2016 to allow for foreign exchange transactions in relation to investment services and the option to place investment instruments without committing to their subscription.Throughout its exi- stence, the securities broker has also been successful
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FinFin
FinFin is a financial consultancy offering private in- vestment advisory services and planning services for affluent clients. The services include drawing up of a long-term financial plan or an investment strategy ba- sed on a detailed understanding of the client’s situation and desires. To carry out the financial and investment plans, the company’s consulting team brokers contracts for recommended financial and investment products as well as other attractive investment opportunities. In order to achieve the most favourable conditions for its clients, FinFin s.r.o. works with a wide range of part- ners including banks, insurance companies, investment companies, and others.
The consultants observe the principles of a healthy financial style with focus on maximum transparency, the client’s awareness, insight into the client’s situation, meticulous care and building a long-term relationship. According to FinFin’s philosophy, a healthy financial style is part of a healthy overall lifestyle.
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Royal Vision
ROYAL VISION s.r.o. provides financial planning services for both individuals and businesses. Its consultants advise primarily on the creation of financial reserves, securing for unexpected adverse situations, and appropriate budge- ting to achieve financial independence. ROYAL VISION also specialises in private advisory for individuals, businesses, and municipalities.
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Comsense Capital
Comsense Capital s.r.o. is an analytical company specia- lising in investments. Originally an analysis and strate- gy unit of DRFG a.s., it was spun off to create a stan- dalone company. Besides providing analytical support to the whole investment group, the company provides analysis and data services for investment consulting and brokerage to third-party financial advisors and bro- kers from across the Czech Republic. Comsense Capital also holds an investment broker licence from the Czech National Bank and provides investment consulting and brokerage services.
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DRFG Investment Services
DRFG Investment Services focuses on a compre- hensive approach to the management of private, corporate and public finance.
The company takes a highly professional yet per- sonal approach to providing top-quality long-term capital and asset management services.
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Compass Consulting Service
Compass Consulting Service a.s. provides comprehen- sive consulting services in the area of EU and natio- nal-level subsidies, taking clients through the whole subsidy process from compiling project documentation and submitting an application to arranging for public tenders and supervising project delivery to successful drawing of the subsidy.
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E.L.Z.E.T. Olomouc
Established in 1998, E.L.Z.E.T. Olomouc s.r.o. is a producer of corrugated cardboard and packaging materials for manufacturing and other industries. The company produces double-layer corrugated cardboard in rolls and in various formats and imports formatted triple-wall to quintuple-wall corrugated board for cartons, supplying manufacturers as well as paper product and packaging wholesalers. It also offers products from local and foreign producers.
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Galard
GALARD tailoring builds on the first-republic tradition of hand-made gentlemen’s clothing. The company is a partner of events such as the Brno Ball, Opera Ball in Prague, JazzFest – Brno festival, CZECH TOP 100 and Ladislav Špaček’s book “Etiquette in Pictures”. GALARD makes top-quality bespoke and made-to-mea- sure suits and shirts exclusively for customers in the Czech Republic and Slovakia. Its offer includes also shoes and accessories. The GALARD brand has achieved a leading position in the luxury men’s tailoring segment.
92 93 AR 30/6/2016 it
Compass Communication
Compass Communication a.s. has been active on the market since 2002, offering consulting services in the area of process management and custom deve- lopment of enterprise information systems and mobile applications. The company designs and develops 3P and 4P logistics systems focusing on aviation and maritime industries. Compass Communication a.s. also delivers custom implementations of modern ERP/CRM systems.
94 95 AR 30/6/2016 it
Cloud Technologies
Cloud Technologies s.r.o. provides affordable online IT solutions including long-term service and support. The solutions are implemented in the form of Software as a Service (SaaS) running in a cloud environment. The company focuses primarily on small and medium-sized businesses, relieving them of the burden and cost of operation and maintenance of infrastructure and the cost of keeping an in-house IT team, providing an attractive added value.
96 97 AR 30/6/2016 education
UNIFER
UNIFER alfa a.s. is a place of innovative collaboration, linking academia with the world of business in teams comprising elite students from multiple fields of study and their expert mentors. The mutual cooperation is based on four fundamental values: inspiration, added value, accountability and effectiveness. Students and experienced professionals-mentors work together on real-life projects. Together they come up with inno- vations and apply them in marketing, human resources, and business analysis at small and medium businesses and large brands. UNIFER aims to provide the best solutions to companies while enabling students to im- prove their position on the job market thanks to newly acquired experience.
98 99 AR 30/6/2016 education
Opifer
OPIFER is an investment company focusing on start-up companies in early stages of development. It actively supports and invests in start-up projects that have a global market potential. OPIFER focuses primarily on IT, mobility and other modern technologies, working with universities and research institutions in Brno and in other countries. Before admission to the accele- rator, projects are scrutinised in multiple rounds of a selection procedure, with one of the key criteria being applicability of the idea and growth potential on the global market.
100 101 AR 30/6/2016
102 103 AR 30/6/2016 philanthropy and partnerships
Philanthropy and Partnership
DRFG Investment Group supports HC Kometa Brno ice hockey club, JazzFestBrno international music festival, explorer Jiří Kolbaba, extreme ski alpinists Jiří a Ondřej Šviháleks, DRFG Superliga, and biker Anna Šmídová. The group was also the general partner of “33 Tour 2016”, a successful concert series of singer Pavol Habera and his band Team. DRFG has also been active in the field of charitable projects, supporting social services provider Diakonie Českobratrské církve evangelické and social facility Domov Horizont in the town of Kyjov, among others.
A new addition to the investment group’s activities is DRFG Foundation. The foundation has two key priorities for the next period: development of financial literacy among youth, in particular in orphanages, and support for the next multi-genre Meeting Brno festival. In 2016, DRFG Foundation is aiming to become the official Czech representative in international business association Compagnia delle opera. Jiří and Ondřej Švihálek, extreme ski-alpinists
Pal’o Habera, singer DRFG Foundation DRFG Minifootball Premier League HC Kometa Brno, ice hockey club
Jiří Kolbaba, photographer and explorer JazzFestBrno, an international jazz festival
104 105 Contacts
DRFG a.s. headquarters Holandská 878/2 639 00 Brno +420778439262
Local offices:
Brno Vinařská 460/3 603 00 Brno [email protected]
Praha Koruna Palace Václavské náměstí 1 110 00 Prague 1 [email protected]
České Budějovice Lannova 16 370 01 České Budějovice [email protected]
Activity Report DRFG a.s. 30/6/2016
Production: TWENTYFOURSEVEN Promotions Design: Tobiáš Grolich Photo: Martin Zeman, Michal Odehnal drfg.eu