SEE LANDSCAPE 81 SEE LANDSCAPE 82 Companies 04-15 Banks 16-21 Insurers 22-31 Revenue per Capita 32 Most Dynamic 33 Listed Companies 34-36 Industries 37-59 Innovations 60-67 Colours 68-70 Landscape 71-80

Editor-in-chief: Nevena Krasteva Plamena Todorova Contact us: 64 Kiril i Metodii Str, 1202 Sofia, Editors: Siana Mishkova, Design & prepress: Madlen tel: +359 2 8012 645 Valentina Gerasimova, Nacheva, Krustyo Burski email: [email protected] Branimir Kondov Print: Alliance Print top100.seenews.com

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Strong growth potential, low production costs, obsolete infrastructure and widespread corruption – these phrases appear repeatedly on the pages of our SEE TOP 100 publication over the past ten years to describe a region that businesses find exciting and yet often frustrating.

When SeeNews first published its ranking of the top companies in Southeast Europe in 2008 the region was enjoying robust growth and foreign investors were rushing to grab a slice of its lucrative markets.

“Very diverse and very dynamic with a strong upward trend...Big room for growth and consolidation...luring foreign investors with high yields, a skilled labour force, flexible labour policy and low production costs...a new frontier for investment within Europe,” we said back then.

“While there are still stumbling blocks in these markets in terms of infrastructure and governance issues, legislative framework and the level of political stability, Southeast Europe deserves serious attention as a region with considerable potential,” we concluded at the time.

Ten years later and following a painful economic downturn which wiped out profits and much of the euphoria, economic growth in Southeast Europe is once again picking up, businesses are reaping the benefits of rising consumption, and foreign investors are returning - despite the same old problems.

All these years, in our analyses, rankings, interviews and feature stories, we have been trying to answer the question what is it that makes a company in our region successful. The answers varied through the years – large-scale investments in production, fiscal prudence, energy efficiency and sustainability have been coming into sharper focus at different points in time.

Looking at the top performers today, we can point to three essential features of the profile of a successful SEE-based company: access to big foreign markets - often the result of foreign ownership, integration of the full range of business-specific activities, and willingness to embrace innovations.

Southeast Europe's top company in terms of total revenue this year, car maker Automobile Dacia, has them all.

We pick up this thread from our flagship ranking of the biggest non-financial companies in the region and take it through the list of the leading banks and insurers, interviews with the chart toppers and analyses of the most profitable industries, weaving different success stories into the picture of facts and figures.

For those of you who want the brief tour, Vazil Hudak, vice-president of the European Investment Bank, the biggest international lender to the region, sums it up: “The countries in the region are small, so they need to broaden their market, and that means they need to be able to work across borders […] To be competitive you need to invest in R&D and technology.”

Nevena Krasteva Editor-in-chief

TOP 100 COMPANIES 34 33 32 31 30 29 28 27 26 25 24 23 22 21 19 18 50 20 49 17 48 16 47 46 15 14 13 12 45 43 11 10 44 42 9 8 41 7 40 6 5 4 39 3 38 37 2 36 35 1 2016 38 42 35 29 34 30 27 31 22 26 21 36 23 28 20 18 37 25 51 24 49 17 55 56 13 14 12 7 53 44 15 11 69 41 8 6 32 19 54 9 5 2 39 3 43 40 4 50 33 1 2015 Petrotel - Lukoil SA LukoilPetrotel - SA - CNAIR - SA Rutiere Infrastructurii a de Nationala Administrare Compania MOL Petroleum Products SRL PetroleumProducts Romania MOL Engie Romania SA Romania Engie SA Romania Auchan Revoz d.d. Revoz E.ON Energie Romania SA Romania Energie E.ON Orange Romania SA Romania Orange FCA Srbija DOO Srbija FCA Krka d.d. Krka d.d. Elektroprivreda Hrvatska Dedeman SRL Dedeman Lukoil Romania SRL Romania Lukoil Lidl Discount SRL Discount Lidl d.o.o. SlovenskeElektrarne Holding d.d.PoslovniMercator Sistem Complexul Energetic Oltenia SA Oltenia Energetic Complexul Carrefour Romania SA Romania Carrefour Hrvatski Hrvatski Telekomd.d. Johnson Matthey DOOEL Matthey Johnson VodafoneSA Romania Lukoil-Bulgaria EOOD Lukoil-Bulgaria Selgros Cash & Carry SRL Carry & Cash Selgros SA RDS & RCS Naftna Industrija Srbije AD Industrija Naftna EAD Kompania Elektricheska Natsionalna d.o.o.GEN-I Bulgaria AD Aurubis Kaufland Bulgaria EOOD & Co KD Co & EOOD Bulgaria Kaufland SA Romania Ford British British American Tobacco(Romania) TradingSRL SRL Downstream Rompetrol Profi Rom Food SRL Food Rom Profi d.o.o.Sustava Distribucijskog HEP-Operator Rompetrol Rafinare SA Rafinare Rompetrol d.d. INA Romgaz SA Romgaz JP Elektroprivreda Srbije (JP EPS) (JP Srbije Elektroprivreda JP Mediplus Exim SRL Exim Mediplus Kaufland Romania SCS Romania Kaufland Burgas AD Neftochim Lukoil PetromSA OMV Mercator-SDOO OMV Petrom Marketing SRL PetromMarketing OMV Lek d.d. Lek Electrica Furnizare SA Furnizare Electrica Petrold.d. Mega Image SRL Image Mega Metro Cash & Carry Romania SRL Romania Carry & Cash Metro Automobile-Dacia SA Automobile-Dacia Company name Company Romania Romania Romania Romania Romania Romania Romania Slovenia Romania Romania Romania Slovenia Slovenia Romania Romania Croatia Macedonia Romania Bulgaria Romania Romania Serbia Bulgaria Slovenia Bulgaria Bulgaria Romania Romania Romania Romania Croatia Romania Croatia Romania Serbia Romania Romania Bulgaria Romania Serbia Romania Slovenia Romania Slovenia Romania Romania Romania Country 4 Petroleum/Natural Gas Petroleum/Natural Petroleum/Natural Gas Petroleum/Natural Petroleum/Natural Gas Petroleum/Natural Petroleum/Natural Gas Petroleum/Natural Petroleum/Natural Gas Petroleum/Natural Petroleum/Natural Gas Petroleum/Natural Petroleum/Natural Gas Petroleum/Natural Petroleum/Natural Gas Petroleum/Natural Petroleum/Natural Gas Petroleum/Natural Gas Petroleum/Natural Petroleum/Natural Gas Petroleum/Natural Petroleum/Natural Gas Petroleum/Natural Gas Petroleum/Natural Petroleum/Natural Gas Petroleum/Natural Petroleum/Natural Gas Petroleum/Natural Food/Drinks/Tobacco Telecommunications Telecommunications Telecommunications Telecommunications Wholesale/Retail Wholesale/Retail Wholesale/Retail Wholesale/Retail Wholesale/Retail Wholesale/Retail Wholesale/Retail Wholesale/Retail Wholesale/Retail Wholesale/Retail Wholesale/Retail Wholesale/Retail Wholesale/Retail Pharmaceuticals Pharmaceuticals Construction Automobiles Automobiles Automobiles Automobiles Chemicals Industry Electricity Electricity Electricity Electricity Electricity Electricity Electricity Electricity Metals revenue Total 1 011 1 1 054 1 1 075 1 1 082 1 1 089 1 1 103 1 1 106 1 1 107 1 1 153 1 172 1 1 182 1 1 172 1 2016 1 294 1 1 243 1 342 1 1 277 1 1 346 1 1 404 1 1 546 1 1 576 1 656 1 682 1 820 1 1 985 1 998 1 1 811 1 2 089 2 300 2 100 3 3 211 3 2 143 2 3 214 3 4 619 4 996.3 810.0 812.2 821.9 841.1 829.1 851.3 875.8 861.2 867.2 880.3 884.0 897.4 901.1 927.0 955.7 967.3 revenue Total 1 054 1 1 035 1 1 107 1 1 034 1 1 215 1 1 147 1 246 1 1 206 1 2015 1 325 1 1 061 1 408 1 1 155 1 1 200 1 1 536 1 1 763 1 1 659 1 791 1 204 2 845 1 2 167 2 328 2 1 632 1 1 001 1 1 381 1 614 2 554 3 3 322 3 2 038 2 3 114 3 1 000 1 4 290 4 955.0 897.1 983.6 986.6 975.6 966.5 787.8 812.9 739.6 746.5 762.6 919.2 654.3 881.0 752.4 945.1 894.7 929.5 790.5 change in change revenue -15.89% -10.94% -23.67% -15.05% -11.76% -12.01% -12.46% 13.07% 10.05% 20.57% 17.53% 10.99% 11.95% 14.15% 11.46% 11.63% 11.37% 32.11% 53.57% 17.92% 21.34% -7.55% -6.94% -1.57% -2.35% -4.67% -8.60% -5.04% -7.53% -0.95% -5.69% -1.20% -8.06% -3.60% -2.97% -2.93% 4.71% 7.51% 2.35% 5.14% 0.05% 7.34% 0.57% 2.05% 1.48% 5.53% 0.71% 3.20% 0.09% 8.07% Y/Y profit/ 2016 102.9 175.2 157.0 121.3 120.2 130.6 100.6 148.1 225.6 199.9 143.9 100.5 -30.8 -77.4 -13.1 -65.8 -14.6 Net loss 65.9 59.9 33.7 81.4 15.9 38.2 84.5 17.2 47.9 44.4 36.1 41.7 45.0 13.7 88.3 27.9 15.4 21.2 71.2 22.6 60.9 84.9 74.8 43.7 38.7 29.7 22.8 -5.3 -3.6 -2.0 5.6 8.6 6.4 in millions of euro of millions in profit/ -212.4 -323.1 -157.4 -139.4 2015 146.3 212.7 124.4 117.0 132.8 112.0 264.0 143.4 115.9 -45.6 -30.7 -18.0 -62.4 Net loss 81.5 15.9 82.2 11.7 11.6 24.7 57.9 19.7 38.0 28.2 91.3 39.9 41.8 96.3 95.0 11.6 18.6 98.6 19.5 73.2 30.1 29.0 22.7 99.0 -3.8 -3.2 -5.1 3.3 7.7 9.6 8.1 3.1 7.8 by net by profit/ Rank loss 28 43 20 89 62 37 19 60 14 87 29 95 99 38 11 12 31 34 85 78 92 30 98 73 15 17 46 66 63 77 23 53 52 93 18 26 21 32 36 45 16 51 24 4 6 9 7 2 8 3 5

in millions of euro TOP 100 COMPANIES Net Net Rank Total Total Y/Y profit/ profit/ by net 2016 2015 Company name Country Industry revenue revenue change in loss loss profit/ 2016 2015 revenue 2016 2015 loss

51 New Continental Automotive Romania SRL Romania Automobiles 808.4 599.6 35.32% 35.6 -11.2 39

52 57 Samsung Electronics Romania SRL Romania Electronics 805.9 736.2 9.86% 12.0 13.3 69

53 62 J.T. International (Romania) SRL Romania Food/Drinks/Tobacco 795.7 712.9 12.03% 35.3 15.9 40

54 64 Autoliv Romania SRL Romania Automobiles 793.3 694.6 14.64% 25.1 20.8 47

55 46 Arcelormittal Galati SA Romania Metals 767.0 849.4 -9.37% -59.8 -65.8 97

56 78 ADM Romania Trading SRL Romania 762.5 547.8 39.69% -7.1 -2.6 91

57 48 Telekom Srbija AD Serbia Telecommunications 760.9 820.5 -5.86% 123.2 134.6 10

58 58 Hidroelectrica SA Romania Electricity 747.9 735.9 2.01% 270.3 198.8 1

59 96 EPS Distribucija DOO Serbia Electricity 742.1 460.2 63.68% -3.0 50.7 86

60 60 Gorenje d.d. Slovenia Electronics 732.4 714.8 2.46% 3.7 -4.0 80

61 52 OMV Petrom Gas SRL Romania Petroleum/Natural Gas 703.5 786.5 -10.22% 16.3 6.1 61

62 45 CFR SA Romania Transportation 701.1 876.6 -19.73% 110.4 24.3 13

63 68 Delhaize Serbia DOO Serbia Wholesale/Retail 698.8 660.1 7.48% 10.3 18.3 70

64 65 Telekom Slovenije d.d. Slovenia Telecommunications 677.1 685.1 -1.17% 40.5 48.3 35

65 70 Continental Automotive Products SRL Romania Rubber/Rubber Products 658.1 638.8 3.41% 166.4 156.9 5

66 61 CEZ Elektro Bulgaria AD Bulgaria Electricity 650.4 716.7 -9.24% 0.342 4.4 84

67 72 Farmexpert D.C.I. SRL Romania Wholesale/Retail 637.7 627.5 2.01% 19.9 16.6 57

68 76 REWE (Romania) SRL Romania Wholesale/Retail 634.7 589.8 8.01% 5.2 2.8 79

69 New Nelt Co DOO Serbia Transportation 622.5 422.0 49.75% 7.9 9.2 74

70 New Altex Romania SRL Romania Wholesale/Retail 614.5 436.2 41.38% 8.8 3.6 72

71 47 JP Srbijagas Serbia Petroleum/Natural Gas 613.3 830.3 -25.01% 17.6 24.4 59

72 67 Transelectrica SA Romania Electricity 606.1 670.6 -9.28% 60.0 79.6 27

73 75 IMPOL d.o.o. Slovenia Metals 589.2 596.2 -1.17% 15.4 6.4 64

74 79 Ameropa Grains SA Romania Agriculture 587.0 538.6 9.38% 3.2 3.1 82

75 81 Takata Romania SRL Romania Automobiles 577.7 520.3 11.44% 24.8 -0.021 48

76 87 Renault Commercial Roumanie SRL Romania Automobiles 565.0 495.1 14.54% 6.7 7.6 75

77 71 Petrol d.o.o. Croatia Petroleum/Natural Gas 564.9 638.2 -12.38% 13.1 9.1 68

78 82 Pliva Hrvatska d.o.o. Croatia Pharmaceuticals 561.1 519.9 6.83% 73.4 22.3 22

79 97 Porsche Romania SRL Romania Automobiles 551.8 454.8 21.78% 23.2 18.1 49

80 New Dante International SA Romania Wholesale/Retail 551.4 381.6 45.05% -18.8 -26.4 94

81 New Tinmar Energy SA Romania Electricity 548.3 44.3 1141.5% 3.2 -0.911 81

82 84 Express Logistic And Distribution EOOD Bulgaria Wholesale/Retail 546.7 507.1 7.80% 1.9 -0.260 83

83 77 Daewoo-Mangalia Heavy Industries SA Romania Transportation 544.1 581.8 -6.15% -106.6 -113.9 100

84 74 OMV Slovenija d.o.o. Slovenia Petroleum/Natural Gas 543.0 600.6 -9.58% 21.0 18.0 54

85 New Fildas Trading SRL Romania Wholesale/Retail 539.6 375.2 44.34% 20.7 13.9 56

86 73 Alro SA Romania Metals 532.1 602.5 -11.36% 14.8 -5.3 65

87 89 Lidl Hrvatska d.o.o. k.d. Croatia Wholesale/Retail 529.3 486.3 7.75% 32.1 24.3 44

88 85 JP Elektroprivreda BiH d.d. Electricity 528.8 503.0 5.12% 6.6 1.9 76

89 New Hella Romania SRL Romania Automobiles 518.7 387.3 34.40% 34.7 26.1 41

90 59 Bulgargaz EAD Bulgaria Petroleum/Natural Gas 518.2 721.1 -28.15% 18.8 10.4 58

91 83 Plodine d.d. Croatia Wholesale/Retail 511.9 508.1 -0.27% 10.1 4.6 71

92 91 Coca-Cola HBC Romania SRL Romania Food/Drinks/Tobacco 503.2 482.7 4.63% 61.4 53.6 25

93 93 Michelin Romania SA Romania Rubber/Rubber Products 502.2 478.8 5.28% 22.8 16.4 50

94 86 Philip Morris Trading SRL Romania Food/Drinks/Tobacco 493.2 498.4 -0.69% 20.9 5.6 55

95 95 Holzindustrie Schweighofer SRL Romania Furniture/ Decoration 484.9 462.2 5.28% 41.8 45.6 33

96 New Engrotus d.o.o. Slovenia Wholesale/Retail 481.7 489.2 -1.54% -4.3 3.0 88

97 92 Cargill Agricultura SRL Romania Agriculture 474.7 481.0 -0.95% -6.4 -18.3 90

98 100 Telekom Romania Mobile Communications SA Romania Telecommunications 474.0 440.1 8.10% -47.7 -52.5 96

99 New Bingo d.o.o. Tuzla Bosnia and Herzegovina Wholesale/Retail 468.2 412.7 13.46% 34.5 28.7 42

100 80 OMV Bulgaria OOD Bulgaria Petroleum/Natural Gas 464.7 525.2 -11.51% 13.3 17.1 67 TOP 100 COMPANIES Top Top -2016 the 3of 2007 100 companies E n oai, eba Cota Mac Croatia, Serbia, Romania, in held delaying were elections General reforms. and confidence investor ing dent Macedonia, in particularly drag, however, volatility, a Political remained way. the leading the Bulgaria and nia of terms Roma in with - value and deals of number both - activity M&A did so up, picked growth economic As well. as Bulgaria in ment invest public to boost additional an ed to benefit from EU funds, which provid continue to poised are countries these Croatia and rose to Serbia Romania, and inflow (FDI) investment direct Foreign demand. tax and cuts wage hikes public sector fuelled following prospects growth come in improved as expansion economic to strongly contributed services and retail growth, (GDP) product domestic gross 4.8% with frontrunner the Romania, In sentiment. proved economic im Falling to contributed also unemployment conditions. financing vourable fa and liquidity ample by underpinned 2016 3. OMV Petrom Marketing SRL Marketing Petrom OMV 3. d.d. Petrol 2. SA Automobile-Dacia 1. oae netet grew, investment porate Cor consumption. vate pri rising of back the on earlier year a 2.5% from 2016 in 3% to quickened SEE in growth Economic 2015 3.OMV Petrom Marketing SRL Marketing Petrom 3.OMV SA Petrom OMV 2. SA Automobile-Dacia 1. retailers, car makers retailers,car puts wind in the sails of 2016:consumption Rising various business-specific activities and economies of scale. of economies and activities business-specific various of integration efficiency, improvedof operational result a as largely entrants, prior-year the of profit the to compared as 39% hefty a by however, rose companies, biggest the 100 of profit the impacting aggregate losses, suffer revenue of the SEE TOP 100 The entrants. combined net to continued region, the in companies biggest the of ranking the dominate traditionally which 2016. in to changes in disposable income (SEE) and consumer sentiment. At the Europe same time oil and gas majors, Southeast in growth mostand retailers benefited car Economic tailwinds makers –thetwo most sensitive economic industries drive to continued employment and investment private in pick-up a and inflation low historically amid demand domestic Growing By Nevena Krasteva ------the notable exception of Romania. Romania. of with exception notable the business, on constraint another was region the in markets the of size small The underdeveloped. remained years, recent in upgrades in vestments infra and weak despitestructure, large scale public in were countries some in policies growth.nomicAnti-monopoly eco curb to continued law of rule and weak Corruption Balkans. in Western the slow remained reforms on structural Progress question. into discipline fiscal putting , and edonia registrations in 2016. in 415,010registrations record to brand 10.6% by Dacia rose 2015. sales in euro million 99 from euro million to 100.5 profit net its by 8% to 4.619 billion euro and increased revenue its raised It running. year third The car maker leads in for the ranking a Dacia. Automobile leader, the is as Romanian, are– Products Automotive Continental ranking The the in subrankings. - companies Hidroelectrica,profitable most three all dominated Romgazand and half of the seats – 59, up from 55 in 2015, over occupied again - economy growing fastest and Ro biggest region's the - from mania companies Unsurprisingly, Dacia leads the pack foothold, expand companies Romanian 2014 3.Lukoil Neftochim Burgas AD Burgas Neftochim 3.Lukoil SA Petrom OMV 2. SA Automobile-Dacia 1. 6

2013 3. Lukoil Neftochim Burgas AD Burgas Neftochim Lukoil 3. SA Automobile-Dacia 2. SA Petrom OMV 1. - - - - Romania and Michelin Romania - a with Products mak Automotive Continental - ers tyre Romanian two by resented rep is which products, rubber and ber rub is ranking the to according industry profitable most the that here noted be should It 2015. in euro billion 9.6 from euro billion 11.5 to rose 100 TOP SEE in sector automotive the of revenue tal to The schemes. support government from benefits also sector the Romania In industry. the in experience past sive exten on in draw also Serbia makers and Romania Car power. purchasing ing grow people's of markets, wave the riding EU while to access easy and costs production low workers, skilled - tages advan strategic its of most the been making has which region, the across tor re sec ofthe thegrowth automotive flects performance Dacia’s Automobile Caracat p.12). on zanis with interview full the (Read commented. he fields,” different in fers of job of range a and wide performance economic steady a generated has which something manufacturer, car a in for cific company only the is spe all integrating activities the country colleagues, employing 16,700 Romania, Renault Romania. “Groupe Renault Groupe of director managing Caracatzanis, Yves to cording ac resources, of use efficient and tions opera improved of performance back the on robust came company's The 2012 3. INA d.d. INA 3. AD Burgas Neftochim Lukoil 2. SA Petrom OMV 1. ------7 TOP 100 COMPANIES TOP 100 COMPANIES COMBINED FINANCIAL RESULTS 2007-2016 (in millions of euro) Methodology 120 000 600 SEE TOP 100 ranks the biggest Total Revenue, Net Profit/Loss Threshold companies in Southeast Europe by 100 000 500 total revenue for the fiscal year ended December 31, 2016. Both 2016 figures

80 000 400 and 2015 comparative counterparts are sourced from 2016 annual non- consolidated reports. 60 000 300 The SEE TOP 100 ranking covers 40 000 200 non-financial companies registered in , Bosnia and Herzegovina, 20 000 100 Bulgaria, Croatia, Macedonia, Moldova, Montenegro, Romania, 0 0 Serbia and Slovenia. Banks, investment 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 intermediaries, insurers and real estate Total RevenueNet Profit/Loss investment trusts (REITs) are excluded Threshold for entry into SEE TOP 100 ranking from the ranking as total revenue Source: SeeNews is not an accurate indicator of their performance. We have compiled separate rankings of the largest 100 banks and 16.3% return on revenue. enue of oil and gas companies remains insurers. Holding companies, on the almost a third of the entrants’ total and other hand, are represented in the ranking Full pockets for nearly 50% higher than that of wholesal- by their subsidiaries. retailers ers and retailers. All data is sourced from national Wholesalers and retailers are also reap- Profit grows, commercial registers, stock exchanges, ing the benefits of rising private con- revenues flattish government and corporate websites, sumption. For the first time this sector industry regulators, local business has more representatives in the ranking, The combined revenue of the entrants in information providers and companies 24, than the oil and gas industry. The the ranking for 2016 fell 1.8% year-on-year themselves. aggregate revenue of wholesalers and to 101.2 billion euro. Excluding the results retailers in the ranking rose to 20.719 of the oil and gas heavyweights, however, The initial pool of companies exceeds billion euro from 18.647 billion euro. the entrants saw their combined revenue 2,700. The ranking does not include grow to 71 billion euro from 68 billion companies that declined or failed to The uptrend in the sector puts premium euro. At the same time, the aggregate provide financial results by the time SEE on retail chains that are better managed profit of the top 100 companies leapt by TOP 100’s content was finalised. and in a position to develop their own lo- 39%, suggesting that they have managed gistics. Romania, being the largest market to make the best of the difficult environ- To allow comparison, all local currencies and the first expansion target of interna- ment in which their operate to streamline in the rankings have been converted tional majors, leads the way here again. business processes, raise efficiency and into euro, using the respective central improve bottom lines. bank’s official exchange rate on the last Notably, five of the nine new entrants working day of 2016 and 2015. Year-on- in this year's edition are wholesalers and The most profitable company among the year changes in the companies’ financial two are automobile manufacturers. SEE TOP 100 entrants was Romanian indicators have been calculated using the power producer Hidroelectrica with a figures in the original currency. Oil and gas companies return on revenue of 36.2%. After go- struggle ing insolvent twice, the state-controlled Elsewhere, local currency figures company went through a radical restruc- referencing past periods have been Oil and gas companies continued to suf- turing process, generating a cumulative converted into euro using the respective fer heavy losses from unfavourable glo- profit of 1 billion euro for 2013-2016 central bank exchange rate as of the bal market conditions. Their combined and doubling its market value to 4 billion end of the relevant period while all revenue fell to 30.28 billion euro in 2016 euro. In April 2017, Hidroelectrica exit- other local currency figures have been from 34.1 billion euro a year earlier and ed insolvency, paving the way for an IPO converted using the exchange rate as of their number declined to 21 from 24. seen as the biggest in Romania's history. the date the relevant editorial content Despite the continuing fall in individual was finalised. revenues, however, the combined rev- In a sign of tight competition the thresh-

1. OMV Petrom SA 1. OMV Petrom SA 1. OMV Petrom SA 1. OMV Petrom SA 1. OMV Petrom SA 2011 2. INA d.d. 2010 2. INA d.d. 2009 2. INA d.d. 2008 2. INA d.d. 2007 2. INA d.d. 3. Lukoil Neftochim Burgas AD 3. Lukoil Neftochim Burgas AD 3. Lukoil Neftochim Burgas AD 3. Lukoil Neftochim Burgas AD 3. Naftna Industrija Srbije AD TOP 100 COMPANIES Oil and gas companies had a much much the at a ranking the had over hold companies stronger gas and Oil highs. all-time to soaring indices were their profits, blue-chip yielding two-digit stocks Romanian and wars. Bulgarian recent the from recovering still and Yugoslavia were former of countries the 2007 in EU the to accession their of optimism the in up caught were garia Bul and Romania mode. upward strong a in were region the in economies SEE. The reached not still eco had global crisis nomic the ago years ten ranking this compiling started SeeNews When Ten after years increasingly competitive. becoming is SEE in landscape corporate the that sign another yet in years vious also pre in ranking than newcomers less The welcomed earlier. year a million euro 440.1 from euro million to 464.7 rose ranking the into entry for old of companies by number and by revenue B Pe Pe r Food/Drink tr Te Food/Drink e tr Te oleum/ lecommunications akd oleum/ Wh Pharmaceutical lecommunications Wh Pharmaceutical Tr olesal Tr Automobile Na olesal anspor ow El Automobile Na anspor El El s/ ectr tu El s/ ectricit ectr To tu e/ ra ectricit n o To Meta e/ Re ra ba onic Meta ta l Ga Re ba onic ta l Ga tion ta cc tion s ta cc ls f ind il s y o s s s ls il s y o s s 86 1 53 u 1 86 1 49 1 94 2 61 stri 1 2 24 3 57 3 60 8 7 5 5 9 9 5 49 e 0 3 5 91 2007 -2016 2007 s in 6 87 3 6 8 97 6 - - - 10 11 5 52 h goa cii rahd E some SEE were economies local the and late what reached crisis global The 10 top the in later. years ten same were the 2007 in entrants the of six Notably, generated.) income the of part sential an es whichand is income, often other from sales revenue it comprises financial of the size of any apart because business gauge accurate more a is that revenue total assumption our reflected change The instead. sales by total them ranking started and methodology the changed 31,cember we2007. year following The De ended year fiscal the for sales net TOP 100 the were companies ranked by SEE of edition first thе (In sales. net of terms in no.1 was INA Croatia's while Petrom, OMV Romania's was revenue total of terms in region the in company biggest The places. four leading taking the up top, the at settled were comfortably They companies. 100 top the of all revenue total of the of 35% quarter and entrants a for accounting time, 11 496 91 1 14 TOTAL REVENUE2016 0 22 TOTAL REVENUE2007 2 (in millionsofeuro 20 (in millionsofeuro 71 8 9 ) ) 29 30 Source: SeeNews Source: SeeNews 27 66 6 3 - - - Recovery was sluggish in the following following the in sluggish was Recovery euro. billion 1.699 to tumbled 77.99 profits as of euro billion low a hit revenues aggregate companies' 100 top the when 2009, by region the in swing full in was crisis The con Private shrank. too sumption economies. local the of of the engines behind the robust growth one be to the used that market estate dampening real policies, lending their tightened peers, European Western by in owned mostly the Banks region, 80%. - 2008 70 some collapsed in capitalisation as their evaporating value their of most saw region the in markets Stock consumption. in drop metals ensuing and the gas and oil, of prices global in rise sharp the by hit severely were ers, import energy countries, net are SEE which the of most Still, time. the at their to markets world with integration thanks weaker impact full its spared Te Automobiles Wholesale/Retail Electricity P etr lecommunication oleum/Natural Ga 14 18 21 24 NUMBER OF NUMBER OF COMPANIES COMPANIES Other Wholesale/Retail Electricity P Other Wholesale/Retail Electricity P etr etr s 2007 2016 15 oleum/Natural Ga oleum/Natural Ga 24 s Electro Tr Pharmaceuticals F Metals ood/Drinks/T anspor nics tation 41 s 43 s obacco - - 9 TOP 100 COMPANIES SEE TOP 100 in headlines through the years: “We are covering four accordant and synergic business areas – oil, 2008 Oil and gas companies lead Southeast Europe TOP 100 ranking gas, energy, ecology [...] Petrol Looking for growth... mobilising the strengths Group understands the specifics 2009 of the market and also has good 2010 Pushing off the bottom: Lowered costs, prudent spending key for the network of people, as well as a success of SEE companies good network of local companies. Our advantages on the market of 2011 On the path of recovery Southeastern Europe - familiar language, similar cultural circle 2012 Taking bitter with sweet and historical background, large Bottomlines under more pressure as competition intensifies network of friends - are actually a 2013  guarantee for our success. ” 2014 Tepid recovery in SEE stops short of recharging corporate batteries Marko Kryžanowski, Management Board Chairman of Petrol d.d. 2015 SEE corporate sector makes shy steps to growth, retailers lead the way 2008 years, the big companies weathering as crucial for a company's success, and better the adverse factors. Oil and gas an area in which countries in SEE have a “Our challenges come from four companies maintained their hegemony, lot to catch up on. directions. Firstly, the structural yet they started steadily losing ground changes of the global gas and as automobile makers picked up speed. Focusing on these could help the local energy market which will impact all A new milestone in this direction was business harness the potential of a mar- parts of our business. Secondly, the reached in 2013 when Dacia overtook ket that enjoys upbeat prospects and context in which we operate and I OMV Petrom as the top company in the seems set for expanding consumption would mention here the volatility region. on the back of economic growth and of the fiscal and regulatory rising disposable incomes. As businesses in SEE made unsteady environment in Romania. […] strides forward during the years, they Retailers and wholesalers and automo- Thirdly, there is the depressed also had to overcome other hurdles bile manufacturers have already taken market for gas, electricity and fuels such as obsolete infrastructure, cum- the lead in this race and will most likely in Romania, our main market. bersome regulations and unpredictable continue to pace the growth of the re- [...]. Furthermore, our portfolio is legislative changes, widespread corrup- gion's business. composed of mainly mature fields tion and political turmoil. that exceeded their production Other industries, however, such as IT, life.” are still conspicuously missing from the Innovate, integrate, Mariana Gheorghe, work across borders list of the top performers despite be- ing one of the most dynamic economy CEO Petrom Group In this complex environment, foreign branches, international in essence and 2014 ownership has emerged as a major fac- long present in the radar of foreign in- tor for the success of local companies, vestors. helping them avoid many of the pitfalls “Innefficient public sector, poor of the local scene, while giving them Another industry, traditionally strong in infrastructure, need for improved access to big markets. Unsurprisingly, SEE but weakly represented in the rank- connectivity curb growth in SEE.” seven of the top ten companies in this ing is agriculture. Its whose progress, Tomasz Telma, year's ranking are foreign-owned. The however, will depend very much on its IFC regional director for Europe winner, Automobile Dacia, exports ability to modernise. and Central Asia 93% of its output. For domestically- 2016 owned companies, capacity to work Looking at the M&A scene in Romania across borders is crucial to offset the - the region's leading market that of- limitations of the small size of the local ten serves as a testing ground for in- Only by looking beyond short-term markets. ternational majors planning to expand political objectives, confronting in the SEE and is thus very indicative vested interests and seeking the Integration of the full range of activities of future developments – health serv- longer-term good of the economy specific to a certain business is another ices are one industry whose growth key ingredient of success, and here again potential has not escaped the attention can this path to growth, jobs and we do not need to look further than the of foreign investors. Real estate too is prosperity be resumed. top of the ranking for proof. expected to rise strongly as growing Sir Suma Chakrabarti, regional businesses seek more office EBRD President, Capacity for innovation too has emerged and commercial space. 2012 10

Companies in SEE need

/interview to invest more in innovation, work across borders

By Nevena Krasteva The European Investment Bank (EIB) is the leading investor in Southeast Europe

TOP 100 COMPANIES 100 TOP (SEE). In 2016, it extended loans and guarantees of 467 million euro to Bulgaria and lent 1.1 billion euro to Romania. Since 2006, the bank has financed projects totalling 6.4 billion euro in the Western Balkans. In 2016, the EIB signed financing contracts amounting to 427 million euro in the Western Balkans.

Vazil Hudák EIB vice president

The EIB has said that in Bulgar- will be financing in the short tions, SMEs, and energy efficiency. ia it will look to diversify into and the medium term? sectors such as agriculture and The specific situation in each country re- pharmaceuticals. What about I would not say that there will be a major quires a different approach. In Bulgaria the rest of Southeast Europe, change because our priorities are basically until now we were mostly focused on will there be a change in the the general priorities of the bank, as we supporting SMEs by working with local priority sectors that the bank will continue to support cohesion, innova- banks. Now, we want to focus more on 11 TOP 100 COMPANIES doing some projects directly with larger One new area they need to broaden their market and companies in sectors like agriculture, that means they need to be able to work pharmaceuticals and tourism. where we want across borders. Businesses in this region need to get together much more. What This means that these projects have to to do more is we have now is more a mentality of com- be bigger. Basically, we finance projects crossborder petition rather than cooperation. directly if they are more than 40 mil- lion euro in total amount, as we usually projects. We at the EIB are financing many projects finance 50%, i.e. the minimum budget in the Western Balkans, some of them for our part of the funding is around 20 quite large, where the suppliers or million euro. In countries like Bulgaria, Ensuring a stable construction companies could be from /interview , , the Bulgaria or Romania, for example, but or Romania, this is a problem as you do and corruption- they are usually not big enough. If they not find too many projects worth more come together maybe they would have than 40 million euro which are managed free environment a better opportunity to compete against by private companies. is crucial for German or French or Italian companies. But I think that the businesses are still In Romania, the government wants us to investors. not ready to team up. do much more in the area of healthcare, so we have agreed to a programme to In which sectors in the region help finance and develop regional hos- IT, energy, do you see the biggest growth pitals. In other countries we have other potential? priorities. automotive sectors hold Given the fact that this region has a One new area where we want to do strong history of good technical educa- more is crossborder projects. For ex- strong potential. tion and also computer science in Bulgar- ample, the gas interconnection between ia, I think there is a good potential for IT Bulgaria and is one such project and the so called big tech startups - spe- that we are ready to support. cialised startups based on some specific To be competitive technical solutions. I think that if these Earlier this year the countries you need to invest countries create a good environment to of the Western Balkans agreed support such innovative companies in- to enhance economic coopera- in R&D and cluding financial framework in terms of tion in the region as a step to- technology. venture capital funds and growth equity wards their EU accession. How funds, then there is a good potential to will the EIB support their ef- develop a strong sector of IT and tech- forts? nological innovations. We do a lot in private sector develop- gion. The other issue is corruption – to I think that the region has a good po- ment, in support of SMEs in the region. make sure that you can invest without tential to be a strong energy market for We are also working on supporting in- having to bribe officials, and also the rule Europe but again it has to cooperate frastructure projects, in particular the of law – making sure that if you have any through interconnections between the so called trans-European corridors, problems you can go to the local court east and west, north and south. Wheth- which go through the Western Balkans, of law and protect your rights. er it is gas corridors or electricity cor- and we are participating in some other ridors, they have to be coordinated and projects to build railway or highway net- So I think these issues continue to be im- the region itself should develop its own works. For example, one such project is portant for the investors in the region, strategy for energy, energy cooperation, in Slovenia, the Koper – Divaca railway and we are investors as well, so for us and energy competitiveness. link, connecting the port of Koper with this is important as well. Divaca, which is a transport and logistics I think the car industry is already in a top centre in Slovenia. Looking at the local business- and very strong position here. es, what are the main issues Which are the biggest risks, that they need to address to The different countries have their own both external and domestic, to become more competitive? areas in which they can be strong, In Bul- Southeast Europe's economic garia, I think tourism can become a very development? To be competitive you need to invest competitive high-added value industry in R&D and innovation. You cannot just for the country, pharmaceuticals are One issue is stability and this is a tradi- stay a traditional local business. And very strong, agriculture too, if it could tional issue for the Western Balkans - to this is one area in which businesses in be modernized. It is very difficult to gen- make sure that the area is stable, that Southeast Europe are lagging behind. eralise for the whole region as different there are no conflicts and that investors countries can become competitive in can feel comfortable investing in this re- The countries in the region are small so different sectors. TOP 100 COMPANIES/interview We export 93% of our production. 93% production. our of We export use of efficient the company’s resources. andimproved operations with business, ating profithas been indicating a healthy of the oper dynamic The excellent rate. exchange the of impact negative the by mostly, triggered, lei million -27 of result financial negative a and 2015, 15% versus by up lei, million 532 of result operating positive a by generated was It 2015. in million euro (506 million lei), higher than 111 was tax before Dacia of Automobile billion while euro turnover. In 2016, euro, the result 5.1 a billion reached Romania Renault Groupe 4.6 of turnover a had Dacia Automobile year last Indeed, Southeast in ny compa top the been has Dacia Romania Groupe Renault Managing Director Yves Caracatzanis, o rcr-ih 415,010 record-high registrations. a 10.8% by to rose sales billion brand 4.6 Dacia 2016 In 2016. in of euro turnover a posted 1999, Groupe since 'sRenault of unit a Dacia, maker car Romanian performance? your impacting keythe factors years. three past the over revenue total of terms in E rp (S urope W hat are are hat Automobile Dacia's results specific activities boosts Bundlingall carmaker- by Nicoleta Banila EE - ) ) - increased in Europe, with a positive im positive a with Europe, in increased sales Duster the sales, of terms in Well, 1000 strong network. suppliers a Romania in developed We have coverage. country good very a with network dealer strong a Romania in have We modernity. and fordability af reliability, expectations: customer meet models Our a success. is worldwide Mioveni, in manufactured models Dacia includes which range, Access bal Glo The financing. and services ness busi after-sales, and sales chain, supply and centre, technical ing, different fields:market in studies, design,engineer offers job and of range wide performance a economic steady a generated has which something turer, manufac car a for specific activities all integrating in only company country the the is colleagues, 16,700 employing nia, Roma Groupe Renault factors? Success 12 ------ even doubled. Algeria more specifically forthe kits deliveredto and increased, these all for volumes the year, Last there. up built be to Algeria, in plant Oran the to disassembled sent are that cars full well as but Mioveni in tured manufac parts spare other and chassis Iels. am referring gearboxes, to engines, mod Access Global assemble that nault Re Groupe in plants other to parts sell man units ufactured in Duster Romania. of In addition, we number also the on pact or hr ad medium-term and short your W 2018.of months first the in announced be year shall current the for results financial The 2017?ver for turno and profit net of terms W hat are the highlights of of highlights the are hat in your are expectations hat - - - - - 13 TOP 100 COMPANIES investment plans? Groupe Renault Romania encourages any form of mobility. In the medium Since 2000, the total investments 93% term, I do not think there is a threat Groupe Renault has made in Romania coming from this type of trends. In Ro- amount to 2.5 billion euro. They were mania, the car fleet is extremely old. channeled into new products - vehicles, Share of Automobile Dacia's engines, gearboxes, mechanical parts - production which is exported. How do you expect anti-diesel and into increased competitiveness of regulations in Western Europe the manufacturing processes - working to affect your performance in conditions, capacity increase, automa-

the coming years? /interview tion processes, quality and cost reduc- mln tion. Although the biggest share was, of euro Car manufacturers, in a way or another, course, directed to the Mioveni indus- 200 will be expected to permanently inno- trial site, the Groupe also remarkably vate in order to offer new solutions to developed in Romania all business units Groupe Renault investments communities. The Renault-Nissan Alli- specific for a carmaker: from design and in Romania in 2016 ance innovates for the present, but also engineering, to testing and manufactur- for the future. We are talking about the ing, and as well sales and after sales. car of the future that shall be electric, connected and autonomous. The Re- Last year alone the Groupe invested in become from a local brand a European nault brand is no. 1 in Europe on the its Romanian operations some 200 mil- one, recognised worldwide. market of electric cars, and Zoe is the lion euro. bestselling model in Europe. Groupe In the first five months of this year, San- Renault is in tune with tendencies, and Groupe Renault Romania has proved its dero is the bestselling model to physical our clients can get cars equipped with high capacity to generate performance, persons in France and second in Europe. petrol, diesel or electric engines. having an essential contribution to the Duster comes on the third position in Romanian economy. We want to con- sales to physical persons on the C SUV With demand for electric vehi- tinue this success. And, let’s not forget segment in Europe. cles growing, do you have pro- that we operate in a competitive indus- duction plans in this area? try which evolves extremely rapidly and Although the last three years have seen that we are challenged both externally a revival on the new car market in Ro- Not for the moment. and internally. mania, the import of very old second hand cars reached alarming peaks, espe- What future do you see for That is why our current focus is on main- cially following the removal of the envi- self-driving vehicles in SEE? taining the competitiveness on a medium ronmental tax in February 2017. Some and long term, which implies continu- figures: strong increase of second hand Within an open- to- innovation ap- ous innovation for the development of cars - in the first four months of 2017 proach, the development of autono- the Global Access range; quality of pro- for each new car there were some 5.8 mous cars is managed by the Groupe duction; productivity and competitive second hand cars registered; the average Renault. with the support of best ex- manufacturing costs on the long term; age of the national car fleet is 14; the new perts. Companies work together to improved competencies in manufactur- car market remains at a three times low- craft the car of tomorrow, integrating ing, engineering, design and services in er level than in 2007; as much as 73.5% infrastructures, connecting cars among Groupe Renault. These directions con- of imported second hand cars are older them and with the infrastructure (V2X) cern both the activities from the Mioveni than ten years. What we are saying is that within the SCOOP European project. industrial site, and the ones conducted it is important to have a fair second hand This experiment, carried out in France, by our network of suppliers and dealers. car market in order to guarantee trans- with autonomous prototypes developed parency with respect to the car’s techni- by Renault represents a first phase that What are your expectations cal situation, and thus safety. Of course, shall be extended to other countries as regarding the development of this would also support the protection of well. With the emergence of adaptive the automotive market in Ro- the environment and tax collection. driving aids, and of the autonomous car, mania and in the region in the tests and simulation become strategic coming years? Groupe Renault will continue its product for the . Tests and offensive in order to meet the custom- simulation are embedded in the proc- In recent years, the automotive market ers’ demands in terms of performance ess of autonomous car development. In in Romania has seen important fluctua- and price, while respecting the safety order to reach the required reliability tions. In 2007, the new vehicle market and environmental standards. level, test cars have to run a significant was of 350,000, and at the end of 2016, number of kilometers which normally the total new car market was of 132,000 Do you think services such as represent years of driving. More than units. Nonetheless, Groupe Renault ride-hailing and ride-shar- tests in real situation and accelerated Romania managed to keep its market ing may curb demand for car testing methods, simulations allow for leader position with the Dacia brand. ownership in the region in the important time saving and ensure an ef- Moreover, in only ten years, Dacia has coming years? ficient planning. TOP 100 COMPANIES Т Among the ten biggest money losers, we we losers, money biggest ten the Among of players. units international major are four whereas controlled, state- are makers money ten top the of Looking at half the ownership structure, Southeast at no.5. ranking the railway in state-owned which joined CFR, operator makers infrastructure including profit the Europe, of 10 out six top for accounted Romania demand. domestic weaker and prices loweras such gas conditions market unfavourable reflected which profitability, climbed in a decrease slight despite one higher spot Romgaz state-owned Majority Romania's history. in gest big the as seen London, and Bucharest in cy, way paving the for listing a longawaited insolven exited 2017, April Hidroelectrica euro billion 4 some reaching doubled, has company the of value market the proceedings, insolvency of period year five- the During 2013-2016. for euro lion bil 1 of profit cumulative a generating ess, proc restructuring radical a through went GW, 6.4 some of capacity installed plants an with power hydro Hidroelectrica, 207 operates which state-controlled - 2014 and 2012 in – twice insolvent going After 25.3%. with Products Automotive nental Conti supplier parts auto and 25.6% with Romgaz producer gas natural - medallists bronze and silver the of ahead from well 2015, pps 9.1 impressive an by up of 36.2%, revenue on a return a as with leader clear emerged Hidroelectrica producer country’s largest power power The largest country’s positions. podium the all taking Romania, by dominated Profit again was 2016 Most for ranking companies able SEE The in 2016. In In 2016. in by Ivaylo Mihaylov DMHI paces losers paces DMHI money makers, shipbuilder producer Hidroelectrica leads Romania’s top power ------recognise additional impairments for its its for impairments additional recognise to had Mercator Agrokor. concern retail and food Croatian indebted owner, jority ma af its of problems were financial the by fected results company’s The earlier. year a euro million 3.8 77 from euro to million soaring loss net 2016 its with ond sec followed Mercator retailer Slovenian by euro end-2016. million 800 exceeded debt total its and euro million 660 of loss a accumulated 2015. has company in the 2012, Since than lower slightly 2016, euro in loss million 107 a with conglomerate, rean Ko South the of part (DMHI), Industries Heavy Daewoo-Mangalia shipyard manian Ro was money loser prominent The most 2015. from losses their cut however fiveRomania, of those companies Seven out of the telecoms. 10 top money losers are based in two and utilities power havefour wholesale/retail companies, two Mo Mo 10 10 No No 9 8 6 7 1 5 4 3 2 1 2 3 4 5 6 8 7 9 st pr n T SEE T SEE e 100 No 100 100 No 100 83 18 14 55 98 50 39 80 46 56 y L 92 78 23 24 49 58 62 57 65 41 OP OP o o fitab s ompany name Company Daewoo-Mangalia Heavy Industries SA Industries HeavyDaewoo-Mangalia Poslovni Sistem Mercator d.d.PoslovniMercator Sistem Natsionalna Elektricheska Kompania EAD Kompania Elektricheska Natsionalna Arcelormittal Galati SA Galati Arcelormittal TelekomSA Communications Mobile Romania Complexul Energetic Oltenia SA Oltenia Energetic Complexul Mercator-SDOO SA International Dante RCS & RDS SA RDS & RCS ADM Romania ADM TradingSRL Coca-Cola HBC Romania SRL Romania HBC Coca-Cola Pliva Hrvatska d.o.o. Hrvatska Pliva Dedeman SRL Dedeman Hrvatska Elektroprivreda d.d. Elektroprivreda Hrvatska Hrvatski Hrvatski Telekomd.d. Hidroelectrica SA Hidroelectrica name Company CFR SA CFR TelekomSrbija AD SRL Continental Products Automotive SA Romgaz e rs 14 le co mpani e s Country Romania Romania Romania Romania Romania Romania - - - - - Croatia Croatia Croatia Serbia Country shrank significantly, to 442 million euro, euro, year’s edition. last in euro 1.3from billion million 442 to significantly, shrank loss of total the entrants the in the note, disreputable positive ranking a on end To project. power plant nuclear Belene scrapped the Russian for company the by manufactured equipment the for compensation ’s as to Atomstroyexport euro million 601.6 paid year, NEK Last euro. million loss 66 to its 44% Electric saw widen which (NEK), National Company ity state-owned Bul was garian loser money biggest third The re result. previously positive cording from loss net a to turned ing under no.8 as the only company, which rank non-prestigious the in included also is Mercator of unit Serbian The indicators. performance key its on effect negative rial within mate a had which companies structure, owner's the the from receivables Romania Romania Romania Romania Romania Romania Romania Slovenia Bulgaria Serbia Rubber/RubberProducts Petroleum/Natural Gas Petroleum/Natural Food/Drinks/Tobacco Telecommunications Telecommunications Telecommunications Telecommunications Wholesale/Retail Wholesale/Retail Wholesale/Retail Wholesale/Retail Pharmaceuticals Transportation Transportation Agriculture Industry Industry Electricity Electricity Electricity Electricity Metals revenue2016 Return on Return Net loss Net 12.21% 13.08% 13.40% 14.81% 15.75% 14.95% 16.19% 36.15% 25.28% 25.63% -106.6 2016 -77.4 -65.8 -59.8 -47.7 -18.8 -30.8 -14.6 -13.1 in millions of euro of millions in -7.1

revenue2015 Net profit/Net Return on Return loss 2015 loss 11.11% 12.76% 14.86% 17.07% 16.40% 27.01% 24.57% 26.36% -113.9 -212.4 4.28% 2.77% -45.6 -65.8 -52.5 -26.4 -3.8 -5.1 -2.6 3.1 - - - - - 15 TOP 100 COMPANIES SEE banking sector profit hits 8-year high, Romania’s BCR returns to top

by Siana Mishkova

Surging profits, declin- TOP 100 BANKS COMBINED FINANCIAL RESULTS 2008-2016 ing non-performing loan (in millions of euro) 4 000 280 000 (NPL) ratios, and accel- Net profit/loss, Threshold Total assets erating assets growth amid improving macr- 3 000 270 000 S oeconomic environment and generally upbeat 2 000 260 000 sentiment – those were the key facets, depicting the performance of Southeast 1 000 250 000 Europe’s banking industry in 2016 and 0 240 000 still this year. At the same time, the tight regulations, the strict capital require- -1 000 230 000 ments and the low interest rate envi- ronment remained in place, forming the -2 000 220 000 “new normal” that sector players have to live with. -3 000 210 000 2016 2015 2014 2013 2012 2011 2010 2009 2008 The combined net profit of the Top 100 Net Profit/Loss Threshold for entry into SEE TOP 100 ranking Total Assets Source: SeeNews SEE banks more than doubled in 2016 to 3.03 billion euro, reaching its highest val- (BCR), majority-owned by 's it 15 positions down to the bottom of ue since 2008, the year before the glo- Erste Group, recorded a solid 7.8% rise the table. In May 2017, Bucharest-listed bal financial crisis hit the local industry. in assets, more than enough to regain Patria Bank, formerly known as Nex- Remarkably, all of the 10 biggest lenders the first place after ceding it to Croatia’s tebank, completed the acquisition of a made profits last year. leader Zagrebacka Banka (Zaba) for 55% stake in BCC. two years. Zaba, which is part of ’s Besides the upsurge in profitability, dem- UniCredit group, managed to return to In terms of profit, Banca Transilvania re- onstrated also by a smaller number of profit last year, but saw its assets shrink mained the leader with earnings of 270.5 loss-making banks and a higher number 0.8%. million euro in 2016, although halving it of lenders with better bottom-line re- from a record high of 534 million euro sults, the strengthening of the SEE bank- Looking at the wider top 100 ranking, in 2015. On the other pole, the Roma- ing sector is also evidenced by improve- Romania’s Libra Internet Bank, owned nian unit of bankrupt Italian bank Veneto ment of assets, both in terms of quality by closed-end American investment Banca (which was acquired by Italy's In- and quantity. Bad loans, which have been fund New Century Holdings, was the tesa Sanpaolo in mid-2017) posted the burdening the industry over the last sev- best performer, advancing by 18 spots biggest loss of 68 million euro. Out of eral years, are now falling across the to number 78 with a 39% increase in as- the total Top 100, only 12 banks made region, helped by both the stabilising sets. Last year, the small lender, which losses in 2016, amounting to a combined operating environment and regulatory focuses on the use of online applica- 304 million euro, while 88 made profits interference, as well as by sales of toxic tions and new technologies, entered of an aggregate 3.3 billion euro. As much assets portfolios by a large number of our list with an impressive 45% growth. as 14 lenders swung to profit last year, lenders that are cleaning up their balance Its continuous organic expansion – a while just four turned to loss. sheets in an effort to bolster lending. 22% rise in assets over the first half of 2017 and crossing the 1.0% market The region’s most populated country The total assets of SEE’s 100 biggest share threshold with only 50 physical Romania was best represented in the banks rose 3.7% in 2016 to 260.7 billion branches in a country of nearly 20 mil- Top 100 ranking with 21 banks. Romania euro, with the growth rate nearly lion - underlines the huge opportunities was also a leader in terms of assets with tripling from 1.3% in 2015. A total of 72 that digital banking offers to traditional an 83.2 billion euro aggregate balance lenders reported growth, significantly players. On the negative side, the as- sheet of its Top 100 SEE representatives, up from 62 last year. Romania’s big- sets of Romania’s Banca Comerciala up 4.0% on the year, equal to almost a gest lender, Banca Comerciala Romana Carpatica (BCC) shrank 15%, dragging third of the region’s total. 16

in millions of euro s Total assets Y/Y change Net profit/loss Net profit/ 2016 2015 Company name Country 2016 in assets 2016 loss 2015

1 2 Banca Comerciala Romana SA Romania 14 109 7.75% 195.1 212.9

2 1 Zagrebacka Banka d.d. Croatia 13 910 -0.82% 226.2 -68.0

3 4 Banca Transilvania SA Romania 11 400 9.35% 270.5 534.4

4 3 BRD – Groupe Societe Generale SA Romania 11 155 2.98% 160.4 98.4

5 5 Privredna Banka Zagreb d.d. Croatia 9 533 4.10% 212.4 25.3 k ban 100 TOP 6 6 UniCredit Bulbank AD Bulgaria 9 523 7.24% 149.0 148.3

7 7 Nova Ljubljanska Banka d.d. Slovenia 8 778 0.82% 63.8 43.9

8 8 Erste&Steiermarkische Bank d.d. Croatia 7 425 -4.87% 83.0 -132.5

9 9 Raiffeisen Bank SA Romania 7 359 6.29% 99.5 96.7

10 10 UniCredit Bank SA Romania 7 198 6.78% 58.7 49.1

11 11 CEC Bank SA Romania 6 209 2.50% 2.1 2.4

12 13 ING Bank N.V. Amsterdam Branch Bucharest Romania 6 137 19.25% 96.5 59.6

13 12 DSK Bank EAD Bulgaria 5 953 4.78% 144.3 156.4

14 18 Nova KBM d.d. Slovenia 4 832 35.60% 33.0 34.4

15 14 First Investment Bank AD Bulgaria 4 526 1.97% 46.1 6.4

16 16 Banca Intesa AD Serbia 4 479 13.04% 80.6 70.8

17 15 Raiffeisenbank Austria d.d. Croatia 4 157 0.75% 60.9 -31.6

18 17 Abanka d.d. Slovenia 3 612 -5.64% 76.7 42.8

19 19 Splitska Banka d.d. (formerly Societe Generale - Splitska Banka d.d.) Croatia 3 577 -0.05% 48.3 15.8

20 20 United Bulgarian Bank AD Bulgaria 3 493 4.39% 56.9 25.0

21 26 Eurobank Bulgaria AD Bulgaria 3 486 18.52% 61.1 43.0

22 24 Komercijalna Banka AD Serbia 3 249 1.67% -65.5 -50.0

23 22 Alpha Bank Romania SA Romania 3 244 -1.86% 25.2 -5.9

24 23 Raiffeisenbank (Bulgaria) EAD Bulgaria 3 233 -2.10% 67.8 31.5

25 27 Societe Generale Expressbank AD Bulgaria 3 038 12.28% 46.2 37.5

26 32 Banka Kombetare Tregtare Sh.a. (National Commercial Bank) Albania 2 861 12.67% 55.4 45.7

27 28 SKB Banka d.d. Slovenia 2 803 9.45% 61.4 34.2

28 21 Addiko Bank d.d. (formerly Hypo Alpe-Adria-Bank d.d.) Croatia 2 778 -17.64% 7.8 -332.6

29 30 Unicredit Bank Srbija AD Serbia 2 699 7.77% 50.6 52.5

30 29 UniCredit Banka Slovenija d.d. Slovenia 2 571 1.03% 13.9 9.7

31 31 Bancpost SA Romania 2 567 2.37% 5.7 7.8

32 34 Hrvatska Postanska Banka d.d. Croatia 2 559 9.31% 24.9 16.1

33 25 SID – Slovenska Izvozna in Razvojna Banka d.d. Slovenia 2 549 -20.33% 21.4 10.5

34 33 Central Cooperative Bank AD Bulgaria 2 541 7.03% 13.6 3.4

35 36 UniCredit Bank d.d. Mostar Bosnia and Herzegovina 2 410 7.73% 41.7 40.7

36 35 Banka Intesa Sanpaolo d.d. (formerly Banka Koper d.d.) Slovenia 2 326 2.34% 20.2 11.8

37 39 OTP Banka Hrvatska d.d. Croatia 2 084 -0.57% 16.3 -10.4

38 41 Raiffeisen Banka AD Serbia 2 064 8.36% 44.0 35.8

39 44 Raiffeisen Bank d.d. Sarajevo Bosnia and Herzegovina 2 006 5.92% 26.9 34.3

40 38 Raiffeisen Bank Sh.a. Albania 1 997 -6.81% -32.9 12.9

41 37 Garanti Bank SA Romania 1 973 -6.46% -8.5 9.7

42 43 Societe Generale Bank Srbija AD Serbia 1 915 2.28% 29.9 17.0

43 42 Sberbank Banka d.d. Slovenia 1 846 -2.92% 1.1 -3.5

44 45 OTP Bank Romania SA Romania 1 808 -4.07% 18.6 -24.3

45 46 Komercijalna Banka AD Macedonia 1 639 3.70% 12.7 8.5

46 53 CIBANK EAD Bulgaria 1 586 15.44% 16.8 13.8

47 51 Gorenjska Banka d.d. Slovenia 1 513 4.23% 6.3 3.2

48 40 Citibank Europe Plc Dublin - Romania Branch Romania 1 501 -22.83% 50.5 44.4

49 48 AIK Banka AD Serbia 1 493 2.60% 35.2 28.1

50 50 Piraeus Bank Bulgaria AD Bulgaria 1 488 2.14% -33.5 -78.4

51 47 Piraeus Bank Romania SA Romania 1 447 -7.34% -6.9 -55.8

52 52 Stopanska Banka AD - Skopje Macedonia 1 427 1.54% 40.7 36.4

53 54 Addiko Bank d.d. (formerly Hypo Alpe-Adria-Bank d.d.) Slovenia 1 414 5.15% 12.9 -52.2

54 49 Banca Romaneasca SA Romania 1 404 -3.76% 5.3 -1.0 17

in millions of euro TOP 100 BAN K Total assets Y/Y change Net profit/loss Net profit/ 2016 2015 Company name Country 2016 in assets 2016 loss 2015

55 56 Allianz Bank Bulgaria AD Bulgaria 1 258 6.05% 15.5 5.2

56 62 Credins Bank Sh.a. Albania 1 234 15.37% 2.5 -0.3

57 55 Sberbank d.d. Croatia 1 226 -4.84% 5.7 -26.0

58 57 Eurobank AD Serbia 1 224 7.15% 16.7 24.0

59 59 Banka Sparkasse d.d. Slovenia 1 166 7.09% 9.3 6.5 S

60 58 NLB Banka AD Skopje (formerly NLB Tutunska Banka AD Skopje) Macedonia 1 165 3.38% 25.7 13.5

61 67 Erste Bank AD Serbia 1 161 21.64% 16.8 9.8

62 63 Intesa Sanpaolo Bank Albania Sh.a. Albania 1 106 5.73% 16.9 16.1

63 60 Banka Postanska Stedionica AD Serbia 1 081 2.49% -51.4 3.2

64 74 Nova Banka a.d. Banja Luka Bosnia and Herzegovina 1 033 3.58% 6.7 6.2

65 66 Vojvodjanska Banka AD Serbia 1 023 4.63% 2.4 0.3

66 65 Investbank AD Bulgaria 979.7 -2.03% 0.5 0.8

67 75 Bulgarian Development Bank AD Bulgaria 977.6 18.42% 21.9 19.3

68 77 ProCredit Bank Bulgaria AD Bulgaria 945.9 21.37% 19.2 14.6

69 71 Moldova Agroindbank SA Moldova 945.3 8.31% 19.5 17.6

70 64 Credit Europe Bank (Romania) SA Romania 945.3 -5.51% 6.8 11.2

71 72 Banca de Export-Import a Romaniei – Eximbank SA Romania 940.7 11.63% 1.2 9.2

72 76 Intesa Sanpaolo Banka d.d. Bosnia and Herzegovina 911.4 15.35% 13.9 13.3

73 61 Veneto Banca Scpa Italia Montebelluna Branch Bucharest Romania 905.3 -14.79% -68.4 -0.1

74 68 Intesa Sanpaolo Romania SA Romania 900.3 -3.94% 3.3 2.4

75 70 Sberbank Srbija AD Serbia 878.6 1.24% 3.5 -4.1

76 69 Dezelna Banka Slovenije d.d. Slovenia 845.9 -5.21% 2.5 2.0

77 73 Addiko Bank AD Beograd (formerly Hypo Alpe-Adria-Bank AD Beograd) Serbia 790.8 -4.10% -10.4 -65.4

78 96 Libra Internet Bank SA Romania 747.0 39.00% 7.2 5.3

79 80 ProCredit Bank AD Serbia 725.7 8.84% 13.0 15.1

80 85 UniCredit Banka a.d. Banja Luka Bosnia and Herzegovina 715.8 11.56% 11.4 10.9

81 78 Moldindconbank SA Moldova 687.9 -7.17% 7.7 6.7

82 79 BCR Banca Pentru Locuinte SA Romania 684.8 1.40% -2.0 3.3

83 87 Municipal Bank AD Bulgaria 675.2 9.95% 1.2 2.9

84 88 International Asset Bank AD Bulgaria 665.9 8.68% 5.3 2.2

85 86 NLB Banka a.d. Banja Luka Bosnia and Herzegovina 635.8 3.68% 14.7 9.7

86 92 Credit Agricole Banka Srbija AD Serbia 629.8 8.36% 1.6 1.1

87 89 Sparkasse Bank d.d. Sarajevo Bosnia and Herzegovina 606.2 1.83% 9.6 7.4

88 90 Crnogorska Komercijalna Banka A.D. Montenegro 606.0 1.87% 6.0 6.8

89 83 Alpha Bank Srbija AD Serbia 603.9 -8.41% 5.5 -7.9

90 94 Victoriabank SA Moldova 603.8 4.37% 10.6 5.2

91 91 Tirana Bank Sh.a. Albania 601.7 -0.12% -3.8 -24.2

92 98 Banka Societe Generale Albania Sh.a. Albania 600.6 10.84% 2.2 1.8

93 93 Sberbank BH d.d. Bosnia and Herzegovina 594.0 5.54% 4.2 3.2

94 97 Ohridska Banka AD Macedonia 582.6 8.82% 7.1 6.5

95 New Halk Banka AD Skopje (formerly Izvozna i Kreditna Banka AD) Macedonia 582.0 18.60% 7.7 6.0

96 81 Patria Bank SA (formerly Banca Comerciala Carpatica SA) Romania 573.3 -14.81% -9.9 -16.7

97 99 Bulgarian-American Credit Bank AD Bulgaria 547.6 5.26% 3.0 0.4

98 100 Alpha Bank Albania Sh.a. Albania 545.8 6.61% -10.3 -12.0

99 New NLB Banka d.d. Sarajevo Bosnia and Herzegovina 498.6 4.58% 5.4 3.9

100 New NLB Banka A.D. (formerly NLB Montenegrobanka A.D.) Montenegro 475.0 -2.38% 6.0 1.6

Methodology working day of 2016 and 2015, respectively. Local currency figures have been used when calculating year-on-year changes. SEE TOP 100 banks is a ranking of the largest banks in Southeast All data is sourced from central banks, national commercial registers, Europe in terms of total assets from non-consolidated balance sheets financial supervision commissions, bank associations, government as of December 31, 2016. and corporate websites, and companies themselves. To allow comparison, all local currencies have been converted into The initial pool of companies exceeds 260 banks registered in the euro, using the central banks’ official exchange rates on the last region including branches and representative offices of foreign banks. 18

Social corporate responsibility – a new aspect s /interview of banking activity

Moldova Agroindbank has k ban 100 TOP been recently conferred the title Best Social Impact Bank – Moldova 2017 by the London-based publication Capital Finance International (CFI). According to the CFI assessment committee, “Moldova Agroindbank conducts its business in line with corporate responsibility principles, making sure its impact on the community is managed with high r e s p o n s i b i l i t y ”. F r o m t h e v e r y outset, the bank committed to operate responsibly within society and produce long- term positive effects. After a quarter of century of activity, the bank fully meets these goals.

Serghei Cebotari, Chairman of the Management Board, Moldova Agroindbank

Large companies have become companies, in our case commercial is now considered to be a long-term increasingly involved in the banks, to change their business models, investment, which shall be planned and life of society over the past along with the way they interact with focused on quantifiable results. What years. How do you explain the customers and stakeholders. Social do we mean by SCR? There are several enhanced interest on the part corporate responsibility (SCR) is no ways to define this concept. I would of the business in this area? longer an abstract concept in Moldova, say that companies implement various it is an important element of healthy social responsibility projects in order Accelerated social and economic development strategies of companies to add to the state’s efforts to develop changes across the world compel and commercial banks. Moreover, SCR society and improve living standards. 19 TOP 100 BAN K To Moldova Agroindbank (MAIB), SCR One of our SMEs, organised by the Economics is a responsible business approach on Ministry and the Organisation for which relationships with stakeholders are social missions Small and Medium Enterprises Sector built. We organise our activity to ensure Development. MAIB also backs various that everyone interacting with the bank is to bring a local and regional contests, designed is able to reach their objectives: provide positive change to award the best entrepreneurs from

customers with access to high-quality various communities and encourage S banking services to help them achieve to Moldova’s the local business development. We /interview their plans; provide our company’s child and youth also provide SMEs with access to funds employees with opportunities to develop needed to ensure development in a their potential; offer stakeholders a education. highly-competitive environment. sustainable and profitable object for long-term investments; provide society Our corporate responsibility also aims with development and life improvement financial education. What is to ensure safe working conditions for opportunities. the contribution of MAIB in our employees and invest in environment this sector? protection. What are the most important SCR projects carried out by Moldova Agroindbank is an active Moldova Agroindbank has been MAIB? participant in events held during the recently conferred an award, Global Money Week, including the which is an international Nowadays, banks are assessed not only ones organised by the National Bank acknowledgment in the field of by their services and profit obtained, of Moldova. MAIB volunteers during SCR. Could you please provide but also by their ability to back society. youth financial education activities more details on this? MAIB actively backs a number of social in order to improve youth’s financial responsibility projects, contributing knowledge and provide them with the The British magazine Capital Finance to the cultural, education, sport and necessary tools to shape their future. International (CFI) has recently social development of the communities Thus, MAIB specialists have been conferred the title of “Best Social Impact in which it operates. I am proud to teaching financial education classes in Bank – Moldova 2017” on Moldova say that Moldova Agroindbank has various Moldovan universities and pre- Agroindbank as a sign of recognition of been providing financial support and university education institutions for the bank’s active involvement in social maintaining partnership ties for a long several years, sharing their professional responsibility projects. Of course, we time with the Charity Social-Medical experience with students and helping have always been aware of the impact Foundation Angelus Moldova, Clipa them to achieve a better understanding our daily actions have on people’s Siderala Foundation and the National of the financial sector. Therefore, they lives, but this high appreciation from Olympic Committee, which enhances are very receptive to such trainings. CFI proves that our banking business our efforts to participate in the is wisely managed and that it responds community life. What other programmes does to the needs of Moldova's society, the bank support? improving people’s lives. One of our social missions is to bring a positive change to Moldova’s child Taking into account that micro, small We have committed to contribute to and youth education. To this end, and medium-sized enterprises are a the development of society and we MAIB backs the National Business Plan key sector of the national economy, understand how important this is for Contest, which is annually organised MAIB became a traditional partner the development of the whole country, in partnership with the National of the International Conference of and hence, of the bank I have the honour Association of Young Managers. For to manage. As the famous British Prime more than 16 years, the bank has been Minister Winston Churchill said, for a providing support to the Educational good reason, “The price of greatness is Advising Centre to organise the Merit Accelerated social responsibility”. Scholarships programme, within which and economic the best 50 Moldovan students are What, in your view, will the granted special study scholarships. changes compel future of SCR look like in The bank undertakes the same level of businesses to Moldova? responsibility within the Scholarships The insistent involvement in the SCR for Your Future programme as well. change their sector of a small group of companies, at The project is designed to help students the end of the day aroused the awareness from socially-vulnerable families, with business models of most Moldova-based businesses. the best 30 of them being granted and how they Currently, most companies are aware of scholarships to continue their studies. the importance to take action and back interact with communities. Therefore, I am confident Significant efforts have been customers and that social corporate responsibility taken lately at world level in Moldova has great development to improve young people's stakeholders. prospects. TOP 100 banks 20 TOP 100 BANKS/interview 21 22

in millions of euro Gross written Y/Y change Net profit/loss Net profit/ 2016 2015 Company name Country premium in GWP 2016 loss 2015 rers 2016 u 1 1 Zavarovalnica Triglav d.d. Slovenia 593.1 1.17% 75.3 58.5

2 5 Zavarovalnica Sava d.d. (formerly Zavarovalnica Maribor d.d.)* Slovenia 345.0 1.47% 23.4 27.9

3 2 Croatia Osiguranje d.d. Croatia 301.0 -1.14% 6.8 6.7

4 3 Adriatic Slovenica d.d. Slovenia 298.8 0.73% 11.9 14.3

5 4 Vzajemna Zdravstvena Zavarovalnica d.v.z. Slovenia 275.7 0.14% 1.6 4.4

TOP 100 ins 100 TOP 6 6 Allianz - Tiriac Asigurari SA Romania 270.3 16.74% 21.5 15.4

7 14 Asirom Vienna Insurance Group SA Romania 241.5 75.80% 7.3 -8.4

8 7 Omniasig Vienna Insurance Group SA Romania 238.5 10.91% 8.5 2.9

9 9 Groupama Asigurari SA Romania 205.3 22.88% 7.1 3.7

10 10 Euroins Romania Asigurare Reasigurare SA Romania 191.7 21.17% 6.4 -66.3

11 8 Dunav Osiguranje AD Serbia 186.0 6.67% 7.3 3.2

12 16 City Insurance SA Romania 173.9 51.00% -8.8 -1.2

13 12 Generali Osiguranje Srbija AD Serbia 161.1 6.43% 21.9 21.0

14 11 Allianz Zagreb d.d. Croatia 147.7 -5.96% 10.4 13.5

15 13 NN Asigurari de Viata SA Romania 145.7 5.24% 5.6 4.1

16 19 Generali Romania SA Romania 141.6 32.68% 14.9 13.2

17 17 Triglav Zdravstvena Zavarovalnica d.d. Slovenia 114.8 5.37% 1.2 3.1

18 18 Euroherc Osiguranje d.d. Croatia 111.5 2.81% 14.1 14.3

19 28 UNIQA Asigurari SA Romania 104.9 30.93% -1.2 1.7

20 25 Lev Ins AD Bulgaria 99.9 20.02% 0.223 5.4

21 15 Carpatica Asig SA - in bankruptcy proceedings Romania 99.5 -22.61% -6.8 -45.2

22 22 Bulstrad Vienna Insurance Group AD Bulgaria 97.5 2.94% 3.2 -7.5

23 20 Armeec AD Bulgaria 93.2 -12.24% 4.3 5.1

24 23 Generali Zavarovalnica d.d. Slovenia 92.2 2.71% 4.0 5.6

25 26 DZI - General Insurance EAD Bulgaria 86.6 6.08% 5.1 4.6

26 30 DDOR Novi Sad AD Serbia 83.9 9.79% 2.7 1.8

27 29 Allianz Bulgaria AD Bulgaria 83.4 3.85% 4.2 5.3

28 31 Wiener Osiguranje Vienna Insurance Group d.d. Croatia 78.3 8.58% 3.5 3.5

29 33 Wiener Stadtische Osiguranje AD Serbia 77.3 20.81% 2.2 2.9

30 24 UNIQA Osiguranje d.d. Croatia 76.1 -13.77% 3.4 7.2

31 32 Jadransko Osiguranje d.d. Croatia 72.5 4.88% 6.8 6.8

32 37 Bul Ins AD Bulgaria 72.3 13.62% 0.034 0.097

33 45 Generali Insurance AD Bulgaria 71.3 85.98% 0.619 -6.9

34 34 Generali Osiguranje d.d. Croatia 66.0 4.48% 1.4 1.5

35 35 NLB Vita d.d. Slovenia 63.8 2.16% 7.4 7.1

36 27 Zavarovalnica Tilia d.d.** Slovenia 63.4 -20.49% 0.000 4.3

37 36 Euroins AD Bulgaria 59.9 -1.06% 0.473 1.6

38 38 BCR Asigurari De Viata Vienna Insurance Group SA Romania 54.8 -5.43% 4.6 6.1

39 40 Grawe Hrvatska d.d. Croatia 50.8 -3.03% 6.0 5.8

40 42 Triglav Osiguranje d.d. Croatia 48.8 7.20% 0.028 -4.5

41 41 Merkur Zavarovalnica d.d. Slovenia 46.9 1.90% 2.6 2.9

42 47 Grawe Zavarovalnica d.d. Slovenia 41.6 16.12% 1.3 1.9

43 58 Agram Life d.d. Croatia 40.5 45.38% 5.4 3.6

44 44 OZK - Insurance AD Bulgaria 39.9 0.29% 1.2 0.726

45 55 Croatia Zdravstveno Osiguranje d.d. Croatia 38.5 29.28% 0.935 1.1

46 51 Bulstrad Life Vienna Insurance Group AD Bulgaria 37.0 8.48% 1.2 1.0

47 46 Merkur Osiguranje d.d. Croatia 35.8 -2.84% 3.1 3.1

48 92 Dall Bogg Zhivot i Zdrave EAD Bulgaria 35.0 166.44% 0.573 0.438

49 57 Triglav Osiguranje AD Serbia 34.4 24.21% 1.0 0.002

50 54 Pool-ul de Asigurare Impotriva Dezastrelor Naturale SA Romania 32.3 8.90% 7.9 6.0

(*) Zavarovalnica Sava d.d is a merger of Slovenian Zavarovalnica Maribor d.d., Zavarovalnica Tilia d.d and Croatian Velebit Osiguranje d.d. and Velebit Zivotno Osiguranje d.d. (**) Data up to Sept 30, 2016 23

in millions of euro TOP 100 ins Gross written Y/Y change Net profit/loss Net profit/ 2016 2015 Company name Country premium in GWP 2016 loss 2015 2016

51 59 UNIQA Life Insurance AD Bulgaria 31.6 15.15% 0.334 0.638

52 56 Lovcen Osiguranje AD Montenegro 29.9 2.24% 0.000 -6.6

53 62 UNIQA Osiguranje d.d. Sarajevo Bosnia and Herzegovina 29.9 9.84% 1.0 0.902 u rers 54 60 Sigal UNIQA Group Austria sh.a. Albania 29.8 7.16% 2.7 2.2

55 63 Grawe Osiguranje AD Serbia 29.4 10.28% 5.4 2.6

56 48 UNIQA Nezivotno Osiguranje AD Serbia 29.0 -14.76% 0.539 -1.9

57 52 UNIQA AD Bulgaria 28.6 -10.65% -1.3 0.062

58 New Wiener Stadtische Versicherung AG - Branch Ljubljana Slovenia 28.4 5.44% 5.2 3.3

59 53 Sarajevo Osiguranje d.d. Bosnia and Herzegovina 28.2 -8.43% 0.028 0.231

60 43 Allianz Bulgaria Life AD Bulgaria 28.2 -6.07% 3.2 4.5

61 61 Euroherc Osiguranje d.d. Bosnia and Herzegovina 27.5 0.66% 3.1 2.6

62 68 Hrvatska Osiguravajuca Kuca d.d. Croatia 24.7 4.46% 1.5 2.2

63 70 Croatia Osiguranje d.d. Bosnia and Herzegovina 23.9 8.28% 1.2 0.335

64 69 Erste Osiguranje Vienna Insurance Group d.d. Croatia 23.2 2.11% 1.7 1.6

65 74 BRD Asigurari de Viata SA Romania 23.1 17.92% 3.5 3.1

66 73 AMS Osiguranje AD Serbia 23.0 13.94% 0.710 0.133

67 67 Bosna-Sunce Osiguranje d.d. Sarajevo Bosnia and Herzegovina 22.9 2.59% 1.2 1.1

68 71 Milenijum Osiguranje AD Serbia 22.6 9.12% 2.3 0.198

69 75 UBB-Metlife Life Insurance Company AD Bulgaria 22.6 19.32% 3.2 3.6

70 49 Energia AD Bulgaria 22.5 -34.29% 8.9 8.9

71 72 Triglav Insurance AD Macedonia 21.6 2.61% 0.887 0.303

72 77 Gothaer Asigurari Reasigurari SA Romania 21.6 19.41% -7.3 -5.6

73 76 Triglav Osiguranje d.d. Sarajevo Bosnia and Herzegovina 20.4 11.03% 0.591 0.554

74 New ERGO Asigurari SA Romania 20.2 180.79% -0.323 -0.130

75 80 Olympic Insurance Company - Bulgaria Branch Office Bulgaria 20.2 24.78% -11.1 -7.1

76 87 Eurosig sh.a. Albania 16.6 13.22% -0.499 -0.620

77 83 Grawe Osiguranje d.d. Sarajevo Bosnia and Herzegovina 16.6 7.52% 1.0 1.0

78 66 Modra Zavarovalnica d.d. Slovenia 16.6 -32.58% 6.6 4.7

79 79 Wiener Osiguranje Vienna Insurance Group a.d. Banja Luka (formerly Jahorina Osiguranje Vienna Insurance Group a.d.) Bosnia and Herzegovina 16.1 -0.55% -2.9 -1.6

80 New AXA Zivotno Osiguranje AD Serbia 15.6 48.41% -1.6 -4.4

81 64 Sigma Interalbanian Vienna Insurance Group sh.a. Albania 15.4 -2.55% -0.179 -0.220

82 86 Osiguruvanje Makedonija Vienna Insurance Group AD Macedonia 15.2 1.62% 2.2 3.9

83 85 UNIQA Zivotno Osiguranje AD Serbia 14.9 0.74% 0.778 1.0

84 84 Merkur BH Osiguranje d.d. Bosnia and Herzegovina 14.8 -2.83% 1.1 1.3

85 New Sava Nezivotnno Osiguranje AD Serbia 14.7 3.96% 0.117 -0.578

86 91 GRAWE Bulgaria Life Insurance EAD Bulgaria 14.7 9.76% 1.1 0.360

87 82 SID – Prva Kreditna Zavarovalnica d.d. Slovenia 14.4 -6.72% 1.7 0.932

88 89 Eurolink Osiguruvanje AD Macedonia 13.8 -4.10% 0.774 0.800

89 65 DZI - Life Insurance AD Bulgaria 13.4 -7.96% 6.1 4.2

90 90 Certasig - Societate De Asigurare Si Reasigurare SA Romania 13.4 -5.92% 0.692 0.366

91 New Signal Iduna Asigurari de Viata SA Romania 13.2 28.89% -1.4 -2.2

92 New Winner Vienna Insurance Group AD Macedonia 13.0 17.26% 0.686 0.678

93 96 VGT Osiguranje d.d. Visoko Bosnia and Herzegovina 13.0 9.40% 0.022 0.031

94 New Albsig sh.a. Albania 12.8 34.28% 0.688 0.755

95 81 Eurolife ERB Asigurari de Viata SA Romania 12.5 -22.65% 0.321 0.747

96 95 Drina Osiguranje a.d. Bosnia and Herzegovina 12.5 4.79% 2.3 2.1

97 93 Prva Osebna Zavarovalnica d.d. Slovenia 12.4 -3.58% 3.3 3.7

98 New Societe Generale Osiguranje AD Serbia 12.2 223.76% 0.519 0.206

99 99 Sava Osiguruvanje AD Macedonia 12.2 6.91% 0.466 0.453

100 97 Intersig Vienna Insurance Group sh.a. Albania 11.8 2.10% 0.316 0.436 24

SEE insurers pocket record rers u high earnings, premiums despite challenging market TOP 100 ins 100 TOP by Siana Mishkova

Supported by a robust euro. The bronze medal was grabbed macroeconomic envi- by Zagreb-based Croatia Osiguranje, ronment, stable fiscal which lost one place due to a 1.1% de- conditions and buoyant cline in premiums. consumption, Southeast 6 . 3 % Europe’s (SEE) insur- The improvement in profitability of S ance industry remained the region’s biggest insurers was also Rise in GWPs booked by resilient to pressure stemming from SEE's top 100 insurers aided by the lack of the huge losses re- the persistent record low interest rate corded by two major Romanian play- environment, financial market volatil- ers in 2015. The country’s fifth-largest ity, stricter regulatory requirements, insurer, Bulgarian-owned Euroins, re- and demographic changes. In the words bln turned to a small profit in 2016 after of top insurance managers, 2016 was euro a massive 66 million euro loss in 2015, “once again extremely challenging” for 7.2 when it was forced by Romania’s fi- the sector, however, the Top 100 SEE nancial supervision authority, ASF, to insurers booked the highest combined GWP booked by SEE's top implement a financial recovery plan af- earnings and gross written premiums 100 insurers in 2016 ter failing to comply with the Solvency (GWP) in the history of our annual II regime’s capital requirements. At rankings. Moreover, the annual growth the same time, the net loss of Dutch- in premiums was the highest for the owned Carpatica Asig, which entered last eight years, while the aggregate net itable insurers – 89 companies were in bankruptcy proceedings in mid-2016, profit rose by a substantial 56%. the black last year, reporting aggregate was cut substantially. earnings of 408 million euro, versus 83 Romania and Serbia shined with a dou- in the 2016 list with a profit of 403 mil- Romania's insurance market enjoyed a ble-digit growth in premiums and a re- lion euro. 10% increase in GWP, to a post-crisis markable improvement in profitability, peak of 2.3 billion euro, according to while Albania stood out with above av- The GWP booked by the region's ASF data. The 18 Romanian insurers that erage performance. 100 biggest insurers biggest insurers entered the Top 100 SEE ranking had reached a record high of 7.2 billion combined premiums of 2.0 billion euro, Looking ahead, the sector confronts euro in 2016, up 6.3% on the year, the up 10.9% from last year’s list, which is both challenges and opportunities in fastest growth rate in at least eight well above the average 6.3% growth the face of ageing population and migra- years. Ljubljana-based Zavarovalnica for the total ranking. Notably, the pre- tions, regulatory and political interfer- Triglav remained firmly on the top of miums of each of the five Romanian in- ence in view of the necessary changes in the ranking also in 2016 with premiums surers in the top 10 saw a double-digit the pension and healthcare systems in and earnings well ahead of its nearest annual percentage growth, with those the region, as well as rapid technologi- competitors. The Slovenian insurer of Vienna Insurance Group’s (VIG’s) cal development that requires fast and with operations across the region, Asirom soaring 76%. The flourishing of adequate response to customer needs. which has been occupying the rank- Romania’s insurance market is also vis- ing’s first place over the last decade, ible by the considerable improvement in The Top 100 insurers in SEE recorded collected 593 million euro in premiums the aggregate profit of its Top 100 SEE a combined net profit of 365 million last year, up 1.2% from 2015, and made entrants to 63 million euro, compared euro for 2016, up 56% from the earn- a net profit of 75 million euro, up 29%. to a loss of 31 million euro by last year’s ings made in 2015 by last year’s rank- Its earnings were more than twice as 19 participants. ing entrants. If we look at the same 100 high as those of its nearest competitor, companies in the 2017 list, their profit compatriot Zavarovalnica Sava, which, Insurance is the only ranking in which growth is even more impressive - 83%. despite a 16% drop in profit, climbed Romania, the region’s biggest econo- The significant improvement is also evi- by three spots in the ranking thanks to my, comes as runner-up. With a 27.8% denced by the higher number of prof- a 1.5% increase in GWP to 345 million market share by GWP, it followed Slov- 25 TOP 100 ins enia by 0.1 percentage point. mainly TOP 100 INSURERS COMBINED FINANCIAL RESULTS 2008-2016 because Slovenian insurers' operations (in millions of euro) 8000 16 have spread across the less developed GWP, Net profit/loss Threshold former Yugoslav markets, while the 7000 14 Romanian ones are focused domesti-

cally. Slovenia had 14 entrants in the 6000 12 u

2017 list with GWP of 2.0 billion euro rers and net profit of 145 million euro, the 5000 10 largest by country. Compared to last 4000 8 year’s ranking, the number of Slov- enian participants rose by one, while 3000 6 their premiums grew 6.5% and earnings 2000 4 climbed 7.7%. 1000 2 The third biggest insurance market in SEE, according to our ranking, is Croatia 0 0 2016 2015 2014 2013 2012 2011 2010 2009 2008 with a 15.5% share by GWP, followed -1,000 by Bulgaria with 13.3%, and Serbia with Gross written premium Net Profit/Loss 9.8%. The number of Croatian entrants Threshold for entry into SEE TOP 100 ranking Source: SeeNews remained unchanged at 14, while their premiums edged up 2.4% on the year and their earnings fell 1.2% to 65 mil- result reported last year due toст aр. self-25 beginning of 2017 to buy the non-life in- lion euro. At the same time, the number made correction in the 2015 figures. surance portfolio of ATE Insurance Ro- - на лявата скала да се добави of Bulgarian participants decreased The company reclassified two major mania, a subsidiary of Greece’s Piraeus by three and their assets shrank 0.1%, products from ‘insurance’ to ‘invest- на дяснат- а скBank.ала да се Over добави the previous three years, but their profit jumped 36% to 32 mil- ment’, thus severing roughly 10 million it purchased several businesses in Bul- lion euro. Serbia achieved the biggest euro from its 2015 GWP. In February garia, Romania, and , and plans growth in GWP among the top five 2017, Bulgaria announced the results to look for more opportunities on the markets – by 11.1% - with two new en- of an asset quality review and stress markets where it is present as well as trants, boosting the total number to 13, tests of local insurers and reinsurers, on new ones in the region. and a profit of 44 million euro, up 45% saying that the sector is adequately year-on-year. capitalised and stable. In Croatia, the top insurer Croatia Osig- uranje completed in 2017 the acquisition Of the smaller markets, Albania shined There were eight newcomers to the of the local unit of French BNP Paribas as its five entrants recorded premiums 2017 ranking, with Serbia’s Societe Gen- Cardif Insurance and that of reinsurer of 87 million euro and a profit of 3.0 mil- erale Osiguranje at number 98 standing Croatia Lloyd. Its efforts for more than lion euro, up from 80 million euro and out with a 224% growth in premiums. a year to get a third of Zavarovalnica 1.3 million euro, respectively, reported The entry threshold increased to 11.8 Sava remain, however, fruitless. by last year’s four participants. The million euro from 11.2 million euro last number of Bosnian entrants remained year. unchanged at 11, that of Macedonian Methodology rose by one to five, whereas that of On the M&A front, Vienna-head- Montenegrin fell by one to one. Bosnia’s quartered VIG was an active player, SEE TOP 100 insurers is a ranking of the GWP rose 2.3% to 226 million euro, but strengthening its position as a leading largest insurers (excluding re-insurers) in its earnings edged down 0.6%, Macedo- insurer in the region. In the summer Southeast Europe in terms of gross written nia achieved a remarkable 23% GWP of 2016, VIG announced the purchase premium from non-consolidated income growth, accompanied by a disappointing of the Romanian life and savings in- statements for 2016. 9% profit drop, whereas Montenegro’s surance operations and the Serbian To allow comparison, all local currencies bottom line improved to a breakeven, life and non-life insurance operations have been converted into euro, using the but its premiums shrank 26%. of France-based global insurer AXA central banks’ official exchange rates on Group. At the beginning of 2016, it the last working day of 2016 and 2015, The biggest gainer in the 2017 Top 100 finalised the acquisition of Bulgarian respectively. Local currency figures have insurers ranking was Bulgaria’s Dall bank insurance company UBB AIG. In been used when calculating year-on-year Bogg Zhivot i Zdrave, which climbed March 2017, the group said it plans to changes. 44 places to number 48 with a 166% expand its health insurance portfolio All data is sourced from central banks, rise in premiums, after entering the in Romania, Bulgaria and three other national commercial registers, financial list last year with a striking 848% European countries. supervision commissions, insurance jump. On the opposite end, Bulgarian associations, government and corporate DZI Life Insurance, a unit of 's Another ambitious player, Euroins, websites, and companies themselves. KBC Group, was the biggest loser, which aims at a market share of 6%-10% The initial pool of companies exceeds 270 shedding 24 places to 89th position, in the non-life insurance sector in Cen- insurers. as its GWP plummeted 47% from the tral and Eastern Europe, agreed at the 26

Triglav to keep focus on

/interview core business, profitability,

rers put more emphasis on u digitalisation of processes

By Nevena Krasteva TOP 100 ins 100 TOP Slovenian insurance- financial group Triglav Group posted a consolidated net profit of 82.3 million euro in 2016. Gross written premiums from insurance and co-insurance grew 2% to 936 million euro in 2016. The group, listed on the Ljubljana Stock Exchange, is active in Slovenia, Croatia, Bosnia and Herzegovina, Serbia, Montenegro, and Macedonia. Zavarovalnica Triglav, the controlling company of the Triglav Group, evolved from Vzajemna Zavarovalnica, a Ljubljana mutual insurer established in 1900.

Uroš Ivanc, Member of the Management Board, Zavarovalnica Triglav

The Triglav Group achieved this year. I believe that the good results sidiaries of the group consistently car- premium growth and main- are the consequence of our strategic ry out client-oriented sales activities, tained a high capital adequacy focus on core businesses and profit- increase effectiveness, develop both for a second year running in ability, on safety of our operations and internal and external sales networks, 2016. What were the pillars of on maintaining the financial stability of and implement a proactive marketing your strategy? Triglav Group. These were the cor- strategy. In general, the situation on nerstones of our former strategy, and the insurance markets of the region is Last year, Triglav Group achieved pre- we have brought them forward also in slowly improving, mainly as a result of mium growth for the second consecu- our new four-year strategy period. All more favourable macroeconomic con- tive year, and the trend has continued insurance and asset management sub- ditions. 27 TOP 100 ins This year, we have recorded growth in Serbia is one health and pension insurance market. our insurance portfolios, gained new Due to the relatively low level of devel- clients and expanded the scope of in- of the most opment of the pension system in Slov- surance coverage with existing clients. enia and the increasingly unfavourable This is partly a consequence of the im- promising age structure of the population, I believe provement of the environment, but it insurance markets that further pressures on the public pen- u is also a result of our consistent work. sion system can be expected and conse- rers Our growth in Slovenia, the largest and in the region. quently the second pension pillar needs the most developed market of Triglav to be strengthened. The growth dynam- Group, was higher than market growth. ics of the Slovenia market depends on /interview Triglav Group the dynamics of the changes to the ex- In the new strategy, an additional empha- isting pension system. sis has been given on business develop- will maintain ment and digitalisation of our processes, We expect that in the long run our mar- whilst a greater focus is on present and a relatively kets outside Slovenia will grow faster future needs of our clients. conservative than the Slovenian market, primarily due to the current differences in the devel- As the leading insurance/financial group investment policy. opment of individual insurance markets. in the region, we exploit our competitive We will continue to actively develop the advantages and use experiences gained insurance markets in the region as our through our long-standing presence on its existing relatively conservative invest- interest is long-term. The markets of SEE the local markets. We know them well ment policy, placing emphasis on fixed- represent foremost potential growth in and, therefore, we are able to tailor our rate investments. Furthermore, it will the non-life insurance segment (exclud- range of new and innovative products continue to invest on financial markets ing motor vehicle insurance) and various and services, upgraded with assistance that ensure adequate liquidity, diversifi- life and health insurance classes. services, to each individual market. cation and the expected return. Triglav has been the top insur- Demographic changes, record- Triglav Group’s operations are very dy- er by gross written premium low interest rates and volatility namic and impacted by the demographic in SEE over the past decade. on financial markets continue changes such as the ageing population What were the biggest chal- to constrain the operations of and migrations, uncertainty of the eco- lenges you faced during this insurers in Southeast Europe nomic environment, as well as by rapid period? (SEE). How do you plan to off- technological, business-ecosystem, reg- set their adverse impact? ulatory and broad social changes. As a The greatest challenges are the diversity result of the ageing of the population, of markets, various consumer habits, Yes, our environment is changing and new reforms in mandatory pension and different regulatory frameworks and bringing new challenges. We see them health insurance are expected, which specific risks. We are aware that we are more as opportunities for our future will lead to further limitation of social operating in a highly competitive and development and growth than threats benefits. For insurers, a longer life - ex demanding environment, in which the to our current market position, though. pectancy brings not only threats but also specificities of individual insurance mar- Our vision is to dynamically develop new opportunities, and the fact is that client kets of Adria region play an important ways of doing business as the foundation needs will change significantly. role. We strive to continuously transfer of the group’s responsible long-term de- good practices among the group mem- velopment, while at the same time op- In addition, insurers are also faced with bers. In the markets where the group erating profitably and safely. In SEE, our challenges posed by young generations, holds a high market share and a leading aim is to continue to establish ourselves who require faster and easier access position, the consolidation strategy has as the leading provider of innovative and to our services, which are adapted to been and will continue to be pursued, comprehensive insurance and service their needs by taking a comprehensive whilst on the remaining markets, where products and asset management serv- and personal approach. Therefore, in our presence is still being built, focus will ices, while having a well-regulated and accordance with the new strategy, the be on strengthening the group’s market efficient management and governance group is developing omni-channel sales, position. In all markets, however, our system of the group, effectively manag- services tailored to the clients through- goal is to make good use of the group’s ing the risks and ensuring the financial out their whole life span and upgraded competitive advantages, such as effec- stability of the group. In the new strat- with broad scope of assistance services. tive and rapid claim settlement, a strong egy period, special attention is given to and trusted brand, our size and capital the development of the group into a Which segments – both on the strength, a broad portfolio of products, modern, innovative and dynamic insur- domestic market and outside services and clients, branched and de- ance/financial group. Slovenia – do you view as the veloped sales channels. An important most promising in terms of distinction from our regional competi- As regards the situation in the capital premium growth? tors is our attitude towards the market, markets, no improvement is expected in while ensuring a long-term return on in- the short term. The group will maintain We see opportunities for growth in vested assets and increasing productivity 28

through synergistic effects. than the average growth of the insurance Digitisation will market. As a result, the group’s share in What key factors do you ex- be one of the key the Serbian insurance market went up pect to impact your develop- from 1.8% to 5.7% as at 31 March 2017, /interview ment by 2020 – both at home future elements ranking us fifth among the 19 insurers and on the wider SEE market? of operational registered in Serbia. rers

u The insurance industry embodies stabil- efficiency. Triglav has been developing ity, but at the same time the environ- advanced telematics solutions ment requires us to change, to be dy- over the past years. In what namic. The penetration of digitisation of to continue to pace growth in ways will new technologies af- business, integration with other sectors premiums by 2020? fect your operations in the of the economy and the development of short and medium term?

TOP 100 ins 100 TOP methods of use of various data open up We operate in six countries of Adria re- new possibilities. The environment in gion. Our growth and development are The insurance industry follows innova- which we operate is characterised by more and more recognised in markets tions but in the areas where this is fea- rapid market changes and low interest outside Slovenia, where Triglav Group sible. I estimate that digitisation will be rates. Financial stability, profitability, in- booked 17.3% of total premium in 2016. one of the most important future ele- creasing the value of the group, effective We are pleased that macroeconomic ments of operational efficiency. Through management of assets of the policyhold- conditions are improving, resulting in the development and introduction of ers and the company remain the contin- growth in insurance markets, which we advanced technologies, we can optimise uous focus of our operations. as the leading insurance/financial group business processes and promote their in the region have also recorded. This transparency and simplicity. The digital The insurance industry is increasingly trend is expected to continue. Atten- environment also enables us to continu- faced with various challenges, such as tion is also paid to other factors of our ously improve our services. In coop- additional regulations, digital business business environment, such as significant eration with start-ups, we develop and models, the need to connect with com- changes in the regulatory environment transfer to practice advanced solutions plementary players and technological and the political and economic situation. in telematics, traffic safety promotion, development, e.g. smart homes, self- Triglav Group assesses and evaluates all etc. for the benefit of our policyhold- driving cars. Of course, not all this will these potential changes in the environ- ers. be a reality by 2020, but some client ment in terms of risks and duly takes needs in connection with the above are them into account in its operations. In Triglav Group, we are very open to already emerging. Changes will not hap- all technological solutions that improve pen overnight; however, our long-term In general, the insurance markets of our operations and provide the oppor- competitiveness would be threatened if SEE, including Serbia, have an enor- tunity to offer our clients better serv- we believed that we could adapt to them mous potential for development, there- ices. Therefore, they are systematically overnight. A necessary step for our fu- fore strengthening the group’s position introduced into our operations, with ture success is therefore the realisation and increasing the volume of business priority given to e-business. On the that the current favourable market situ- in these markets is important to us. In Slovenian market in particular, and grad- ation does not ensure long-term success total written premium, by far the larg- ually on other markets, we continuously and that we must now begin with the est segment remained non-life insur- expand options of concluding insurance transformation of our business opera- ance, the bulk of which was accounted contracts and reporting claims online, tions by adopting modern and innovative for by motor vehicle insurance. The life managing insurance policies (i.triglav) approaches. insurance market continues to increase and other forms of interactions with our gradually and consistently. As a conse- clients. New mergers and acquisitions quence, the awareness about safety is took place on the regional in- rising and thereby the need for insur- Furthermore, modern technologies are surance market in 2016. Are ance, which people increasingly perceive being introduced into other parts of you considering potential as an investment in a safe future. the group’s operations. For example, in takeovers? 2015 Triglav, as the first insurance com- Serbia is one of the most promising in- pany in the region, entered the world of Our goal is to grow organically in the surance markets in the region. Total telematics with its DRAJV mobile appli- region, however potential takeovers are premium in the overall market increased cation, which enables drivers to improve not ruled out should an appropriate op- by almost 44% in the last three years, their driving; last year DRAJV was intro- portunity present itself. because with the approximation to the duced in Croatia and this year on the EU the need for insurance services in Serbian market. The penetration of the The share of gross written pre- Serbia is growing and thereby the mar- digitisation of business, integration with miums booked by the Triglav ket. Since the group recognised this po- other sectors of the economy and the Group on the markets outside tential in due time, it appropriately re- development of the use of big data open Slovenia has been increasing. sponded to it. Over the last three years, up new possibilities and opportunities Do you expect to sustain this we achieved an 88% growth in written for further development of the Triglav trend? Do you expect Serbia premiums, which is significantly higher Group. 29

Reported positive results TOP 100 ins give Euroins solid ground u

for further growth rers /interview

How did you manage to main- best interest of its customers. Euroins tain a leading position in Ro- Romania reported in the first quarter of mania at a time when new 2017 a nearly 47% annual rise in GWP rules and increased capital re- and is expected to further sustain a high quirements put a pressure on growth rate driven by the strengthening the local players? economic growth. On a group level, we expect a total premium income of 350 As you know, all rules, regulations million euro for the whole year. In the seg- and requirements are in the benefit of ment of motor insurance where we hold consumers and customers as well as the a high market share, we will pursue a con- companies. All of the above mentioned solidation strategy, while on the remaining were conditions for the improvement segments - non-motor and life insurance, of our business and our portfolio of where the group's presence is still being products, with direct effect on the built, the focus will be on strengthening increased quality of relationship with our the group's market position. beneficiaries. Euroins Romania managed to improve its position in the last years Do you see any further con- thanks to a mix of shareholders’ support, solidation taking place in Ro- management skills, and insurance products mania and on the other CSEE savvy. I am fortunate to work shoulder to markets and does Euroins plan shoulder with the best team of managers to enter new markets in the in the insurance industry. We invested region? Mihnea Tobescu a lot of time and effort into redesigning Euroins Romania CEO the products portfolio with a sharp eye Euroins Romania has recently acquired on the risk categories and other criteria, the non-life insurances portfolio of ATE which gave us an edge over the market. Insurance Romania, a subsidiary of Pi- Euroins Romania's GWP grew by an raeus Bank, the biggest bank in Greece. Euroins Romania is one of the leading annual 22% in 2016 to almost 200 million Acquisitions are part of EIG's strategy. insurance companies in Romania. It is euro and it posted 6.5 million euro profit The group acquired businesses in the re- the largest subsidiary of Bulgaria-based before tax. Our combined ratio value gion in the past years and will continue Euroins Insurance Group (EIG), which declined to 92% which is quite below the to look for more opportunities on the is an independent insurance group, average level in the sector (100%). Euroins markets where it is present as well as operating in Central and Southeast Romania also turned out to be one of the new ones in the region. The goal is to Europe (CSEE) and providing a full most sufficiently reserved companies. grow EIG as the leading independent in- range of products in the areas of general, Actually, last year was a turning point for surance group in CSEE. Our plan is to health and life insurance. EIG provides the business of the whole group as EIG further expand in these markets, both services in seven European countries put up a remarkable performance on all through organic growth and potential and owns insurance subsidiaries in of its markets. Profitability has been rising acquisitions, should an appropriate op- Bulgaria, Romania, Macedonia and and the achieved solvency and capital portunity arise. They help us diversify Ukraine. The insurance group has been ratios are in line with the regulatory and improve the quality of our insurance operating in Greece since 2014. It has requirements. The reported positive portfolio. over 2 million clients, 1600 employees results ensure a solid ground for further and almost 300 million euro in gross future growth that will provide coverage How do you see the future of written premiums (GWP). EIG is a of the solvency and capital requirements the insurance business in the subsidiary of Eurohold Bulgaria, a in the next years. light of the new and upcoming leading Bulgarian company listed on technological changes? BSE-Sofia and WSE. Eurohold Bulgaria What are your expectations operates across CSEE with a focus on and goals for the following pe- Digitalisation will be among the most im- non-banking financial services and riod? portant future elements of the industry. asset management. Euroins is digitalizing its business by intro- www.eig.bg; We are looking to a growing market on ducing modern technology in its opera- www.eurohold.bg which Euroins Romania is acting in the tions. The process has already started. 30

Sigal Uniqa Group Austria

/interview puts client needs, digitalisation

rers at centre of strategy u

Regional insurance group Sigal Uniqa Group Austria is composed of seven insurance companies (life, non-life,

TOP 100 ins 100 TOP reinsurance) and one pension fund that operate successfully in Albania, and Macedonia. Sigal Uniqa is the market leader in Albania since 2002 with an average market share of 30%. Since 2007 Sigal Uniqa is part of Uniqa Insurance Group, which is one of the leading insurance groups in its core markets of Austria and Central and Eastern Europe. Around 20,000 employees and exclusive sales partners serve over 9.6 million customers in 18 countries.

Avni Ponari, Sigal Uniqa Group Austria (Albania, Kosovo, Macedonia) CEO

Sigal Uniqa posted healthy Kosovo and Macedonia. Sigal Uniqa In its strategy, Sigal Uniqa Group growth in pre-tax profit and is the market leader in Albania since Austria sets the main emphasis on the total gross written premiums 2002 with an average market share of core insurance business, paying special in 2016. What are your 30%. Since 2007 Sigal Uniqa is part of attention to voluntary insurance and expectations for 2017? Uniqa Insurance Group, which is one pension funds. Bearing this in mind, we of the leading insurance groups in its are focused on, and strongly oriented 2016 has been a positive year for Sigal core markets of Austria and Central to, addressing client needs as well as Uniqa Group Austria despite the and Eastern Europe. Around 20,000 digitalisation. We effectively achieve many challenges in the market and employees and exclusive sales partners the set strategic objectives, which is economic Client needs, digitalisation serve over 9.6 million customers in reflected in the business results, in in Sigal Uniqa Group Austria's focus 18 countries. environment. Being premium growth. Avni Ponari, Sigal Uniqa Group Austria the market leader since 2002 puts us (Albania, Kosovo, Macedonia) CEO on the front row when it comes to Satisfied clients will continue to Regional insurance group Sigal Uniqa finding proper solutions and ways to be our main concern and focus of Group Austria is composed of seven effectively overcome obstacles. In this activities. We will put an emphasis insurance companies (life, non-life, regard, I am happy to say that Sigal on the development of our services, reinsurance) and one pension fund Uniqa is well positioned and prepared the availability and diversity of sales that operate successfully in Albania, for a successful 2017. channels, which are increasingly 31 TOP 100 ins supported through online operations system in Albania and the increasingly and strengthening the sales network unfavourable age structure of the on all markets of the group. euro per population, I believe that we can expect 20 capita further pressures on the Albanian public Digitalisation will be very important in pension system, and consequently the the future and I think will play a big role Albania's insurance density, need to strengthen the second pension u for a company’s success. In 2016 we with 18 euro per capita pillar. The growth rate of the Albanian rers launched online sales for the first time market will depend on the dynamics of in Albania and we have since received spent on compulsory motor changes to the existing pension system. a very positive feedback. We have insurance /interview alreadystarted to see concrete results GWP growth on Albania's of our digitalisation strategy. insurance market has accelerated. What are your Such an environment allows us not only expectations about its to continuously improve our product development in the short and range tailored to client needs but also 2% medium term and what key to introduce modern technology so trends will influence it? as to optimise business processes Share of Albanians with life and promote their transparency and insurance I strongly believe that the insurance simplicity, all of which keeps changing market is one of the most important our relationship with clients and our pillars of a country’s economy because business operations. a well-developed financial market is a Albania has an insurance density of major support to every government. What are the main factors about 20 euro per capita, meaning that As such, the insurance market should impacting your performance? approximately 18 euro per capita is spent be supported by tangible incentives on obligatory insurance, on compulsory and clear policies of state institutions We are straightforward; we shape; motor insurance in particular. This in accordance with the market needs. we develop and we inspire: this is our means that Albania has indeed a very For the time being, there is a gap in basic attitude. We try to show this high potential for market development, the insurance legislation and in general behavior in our everyday work, while especially in the life and health insurance in the entire insurance infrastructure striving to offer innovative products, segment. With less than 2% of Albanians that impedes such development. As I quality customer service, prompt having life insurance, this market is of mentioned before, I see a huge potential claims handlingand continuous honest high interest for insurance companies in voluntary insurance and in this regard communication. per se and foreign investors that have there is a great need for concrete state entered the market since 2003. Several reforms in private pension schemes, Another important factor is our life insurance products, similar to the property and health insurance. These keyshareholder: Uniqa Insurance Group, ones offered all over the Europe, are reforms would boost a more rapid one of the biggest financial groups in also provided in Albania through Sigal development that would serve both the Europe, which we entered in 2007. Uniqa Uniqa Group Austria. customers, state institutions and private has provided both financial support and companies. expertise to the entire local market by In the non-life segment, both property investing its 180 years of experience in and health insurance are of high interest. Since its liberalisation almost 20 years Sigal Uniqa Group (Albania, Kosovo and Albania’s location in a seismic zone, as ago, the Albanian insurance market Macedonia). well as uncontrolled construction in has experienced sustainable growth, the last two decades, urge the need for yet it remains a small market with a Additionally, one of the main assets home and casualty insurances. great potential. Important European of a company is its staff. That’s why investors entered the market 10 years we continually invest in recruiting and Health insurance has been experiencing ago thus bringing excellent know-how developing our people, especially abroad solid growth in the Albanian insurance that is being implemented and we will with the best insurance companies in market in terms of gross written soon see additional results and benefits the U.S., , , France premiums (GWP) and number of of such investments. and the countries in the region. They customers but also in terms of benefits bring new knowledge, experience and of health insurance packages both Additionally, public awareness and best practices at Sigal Uniqa so that in Albania and abroad. Additionally, the general attitude toward insurance we can we guarantee quality and a the improved health infrastructure in has been improving and now there competitiveedge for the future. Albania especially in the private sector, is better understanding of insurance has pushed the need for private health and a greater need for it. As a result, Non-life insurance accounts for coverage. increasing demand for insurance will over 90% of Albania's market. push all actors on the market, both On which other segments In the long run, I see growth potential companies and authorities, to deliver do you see biggest untapped also in the private pension sector. Due effective strategies and results both in potential for growth? to the relatively underdeveloped pension the short and medium term. 32

Slovenia remains at top of SEE per capita rankings, Petrol strengthens lead capita per top

by Ivaylo Mihaylov

Over the last decade, Slovenia has been TOP 100 Revenue per Capita in euro SEE TOP Company Per capita Per capita No. Country dominating the SEE per capita ranking, which 100 No. name 2016 2015 demonstrates the importance of individual 1 2 Petrol d.d. Slovenia 1 557 1 509.7 companies for the local economies. The 2 13 GEN-I d.o.o. Slovenia 802.4 868.2 former Yugoslav republic of some two 3 18 Poslovni Sistem Mercator d.d. Slovenia 650.2 682.4 O million, which has the best developed 4 17 Johnson Matthey DOOEL Macedonia 649.1 579.3 Holding Slovenske economy and was the first in the region to join the EU 5 19 Slovenia 626.8 642.2 and the Eurozone, occupied 11 positions in the 2017 SEE Elektrarne d.o.o. TOP 20 per capita ranking, including the medal winners, 6 25 Krka d.d. Slovenia 558.8 555.8 the same as last year. 7 29 Revoz d.d. Slovenia 527.4 501.9 8 8 INA d.d. Croatia 479.1 553.8 Fuel distributor Petrol, one of the largest in Slovenia and the 9 38 Lek d.d. Slovenia 436.6 433.7 Western Balkans, led the ranking for the tenth consecutive 10 209 Elektroprivreda Crne Gore A.D. Montenegro 423.3 412.9 year with per capita revenue of 1,557 euro, up 3.1% year-on- 11 60 Gorenje d.d. Slovenia 354.9 346.5 year, firming its already strong lead to its nearest competitor, 12 64 Telekom Slovenije d.d. Slovenia 328.1 332.2 electricity and gas trader GEN-I, which saw a 7.6% drop to 13 284 Voli Trade D.O.O. Montenegro 323.43 306.4 802 euro. The bronze medallist, retailer Mercator, maintained 14 5 Lukoil Neftochim Burgas AD Bulgaria 323.3 365.4 its position despite a 4.7% decline in per capita revenue to 15 7 JP Elektroprivreda Srbije (JP EPS) Serbia 297.5 194.9 650 euro. In addition to the 11 Slovenian companies, the 16 73 IMPOL d.o.o. Slovenia 285.5 288.9 ranking features two entrants from Croatia, Montenegro 17 24 Hrvatska Elektroprivreda d.d. Croatia 281.0 296.5 and Bulgaria, each, as well as one member from Macedonia, 18 84 OMV Slovenija d.o.o. Slovenia 263.1 291.3 Romania and Serbia, each. 19 12 Aurubis Bulgaria AD Bulgaria 236.5 308.2 20 1 Automobile-Dacia SA Romania 233.8 215.9 Impressively, Macedonia’s entry, the local subsidiary of UK chemicals specialist Johnson Matthey, achieved a 12% jump 13.5% decrease in per capita revenue, falling one place to in per capita revenue, climbing one position further to no.8, after losing five places last year. Its other representative, number four, well above its eighth position two years ago. state-owned power utility Hrvatska Elektroprivreda (HEP), This underlines the importance of the recently attracted maintained its 17th position despite a 5.2% fall in revenue. foreign investments for the small country that is not EU or NATO member. Montenegro's top entry was majority state-owned power utility Elektroprivreda Crne Gore (EPCG), which climbed Another remarkable entry, Serbia’s state-owned power one place higher to no.10 thanks to a 2.5% increase in per utility Elektroprivreda Srbije (EPS), leapt by 14 spots to capita revenue. Wholesaler and retailer Voli Trade, which take the 15th position, recording the largest year-on-year was among the most remarkable newcomers two years ago, increase in per capita revenues of 52.7%. This outstanding advanced by three spots to number 13 with a 5.5% revenue result come after in 2015 the Serbian government adopted growth. a large-scale restructuring plan, including enhanced bill collections, lower technical and commercial losses, regulated Notably, Romania, the region’s biggest economy and most tariff increases and a reduction of operating costs through populated country with 20 million people, had only one increased efficiency, optimisation of the supply mix, and entry, car maker Dacia. staff cuts.

At the opposite end of the spectrum, the Bulgarian smelter Methodology of Hamburg-based copper producer Aurubis recorded the SEE TOP 100 per capita is a ranking based on the same pool of largest drop in revenue per capita – of 23.2%, losing four 2,700 companies as in SEE TOP 100. The ranking is compiled places to 19th position. The other Bulgarian representative, by dividing the total revenue in euro of each company by the Russian-owned refinery Lukoil Neftochim Burgas, lost two population estimate in the country of registration. This benchmark places to number 14 with an 11.5% decline in revenue. indicates the importance of individual companies for the local economies. Croatia’s best performer, oil and gas group INA, posted a 33 SEE MOSTSEE DYNAMIC Serbia comes out on top in revenue gainers list

by Ivaylo Mihaylov

The 2017 Top 10 rank- Most Dynamic Companies in 2016 ing of the most dynamic No SEE TOP 100 No Company name Country Industry Y/Y Change in revenue 2016 1 59 EPS Distribucija DOO Serbia Electricity 63.68% companies was domi- 2 7 JP Elektroprivreda Srbije (JP EPS) Serbia Electricity 53.57% nated by Romania with 3 69 Nelt Co DOO Serbia Transportation 49.75% seven entrants, however 4 80 Dante International SA Romania Wholesale/Retail 45.05% T Serbia took all the med- 5 85 Fildas Trading SRL Romania Wholesale/Retail 44.34% als. The gold and silver went to state- 6 70 Altex Romania SRL Romania Wholesale/Retail 41.38% controlled power grid operator EPS Dis- 7 56 ADM Romania Trading SRL Romania Agriculture 39.69% 8 51 Continental Automotive Romania SRL Romania Automobiles 35.32% tribucija, and its parent Elektroprivreda 9 89 Hella Romania SRL Romania Automobiles 34.40% Srbije (EPS), while private logistics group 10 44 Profi Rom Food SRL Romania Wholesale/Retail 32.11% Nelt took the bronze. MOST DYNAMIC COMPANIES IN 2009-2016 Average annual EPS Distribucija recorded a 64% annual Rank Company Country jump in revenue in 2016, while EPS saw growth rate 1 Ford Romania SA Romania 58.0% a 54% growth, mainly thanks to restruc- 2 Mercator-S DOO Serbia 52.7% turing of their businesses. In 2015, the 3 OMV Petrom Marketing SRL Romania 42.0% Compania Nationala de Administrare a Infrastructurii Rutiere SA - CNAIR (formerly Serbian government adopted a large- 4 Romania 34.1% scale restructuring plan in order to Compania Nationala De Autostrazi Si Drumuri Nationale Din Romania Sa - CNADNR) 5 OMV Petrom Gas SRL Romania 30.8% improve the efficiency of the country’s 6 Oltchim SA Romania 30.1% electricity sector. The three-year plan 7 Zeleznice Srbije AD Serbia 27.8% included enhanced bill collections, lower 8 EPS Distribucija DOO (formerly Elektrodistribucija-Beograd DOO) Serbia 27.1% technical and commercial losses, regu- 9 GEN-I d.o.o. Slovenia 26.1% lated tariff increases, and a reduction of 10 Dedeman SRL Romania 24.3% operational cost through increased effi- ciency, optimisation of the supply mix, region's biggest market and top econom- namic list after having no representatives and staff cuts. EPS Distribucija thus limit- ic performer, which posted a 4.8% GDP last year. German-owned Continental ed the losses on the electricity transmis- growth last year mainly on the back of Automotive Romania and Hella Romania sion and distribution network to 12.96% strengthening household consumption. ranked eighth and ninth, respectively. of total output last year from 14.02% in 2015, which resulted in savings of more The highest ranked wholesale/retail Although lacking companies with year- than 6.5 million euro. For its part, EPS company with a 45% revenue growth on o n - ye a r r e ve n u e g row t h i n t h e t h r e e - d i g i t achieved a 2.5% rise in electricity output the fourth place was Dante Internation- category, this year’s ranking features an in 2016, with coal production at EPS- al, the South African-owned operator increased entry threshold, as the no.10 operated mines up by 2%. Nelt also im- of online stores, among which are the company came in with a 32.11% revenue pressed with a 50% increase in revenue, popular eMAG and Fashion Days, active growth versus 28.33% the previous year. entering the Top 100 companies list at on the Bulgarian and Romanian markets. The differences in growth among the 69th position. The e-tailer is new to the SEE top 100 top 10 revenue gainers diminished dras- companies ranking, entering at the 80th tically compared to last year - an indica- The rest of the table was occupied by position. tion of greater competitiveness on the Romania with five retailers and whole- markets. salers and two auto parts suppliers. The The other wholesalers/retailers in the dominance of retailers and wholesalers list operate in various sectors, including clearly expanded this year, as there were pharmaceutical distribution (Fildas Trad- Methodology only three sector members in the 2016 ing), electronics and IT stores (Altex), Most dynamic companies is a ranking ranking. This is hardly surprising, given agricultural products wholesale (ADM of the top 10 companies with the highest that rising consumption is one of the Romania Trading), and supermarkets change in revenue in SEE TOP 100. main drivers of the region's accelerating (Profi). Change in revenue is calculated as a year- economic growth. Even less surprising is on-year change of total revenue, calculated the fact that all wholesalers and retailers The auto industry has managed to draw in local currencies. in the ranking operate in Romania – the in two companies in the Top 10 most dy- 34

in millions of euro Stock Market capitalisation Y/Y 2016 2015 Company name Country Stock exchange symbol 2016 change

1 1 Ina-Industrija Nafte d.d. Croatia Zagreb Stock Exchange INA-R-A 3 837 -1.74%

2 2 OMV Petrom SA Romania Bucharest Stock Exchange SNP 3 256 -10.00%

3 8 Zagrebacka Banka d.d. Croatia Zagreb Stock Exchange ZABA-R-A 2 288 46.03%

4 3 S.N.G.N. Romgaz SA Romania Bucharest Stock Exchange SNG 2 122 -8.09%

5 10 Privredna Banka Zagreb d.d. Croatia Zagreb Stock Exchange PBZ-R-A 1 941 28.38%

6 7 Banca Transilvania SA Romania Bucharest Stock Exchange TLV 1 915 18.26%

7 5 Fondul Proprietatea SA Romania Bucharest Stock Exchange FP 1 888 -5.42%

8 9 Hrvatski Telekom d.d. Croatia Zagreb Stock Exchange HT-R-A 1 831 17.04% companies listed TOP 9 6 BRD - Groupe Societe Generale SA Romania Bucharest Stock Exchange BRD 1 823 -1.82%

10 4 Krka d.d. Slovenia Ljubljana Stock Exchange KRKG 1 735 -18.87%

11 11 Electrica SA Romania Bucharest Stock Exchange EL 1 003 7.87%

12 12 Naftna Industrija Srbije A.D. Serbia Belgrade Stock Exchange NIIS 980.2 23.33%

13 13 Crnogorska Komercijalna Banka A.D. Montenegro Montenegro Stock Exchange CKBP 792.3 0.00%

14 15 Adris Grupa d.d. Croatia Zagreb Stock Exchange ADRS-R-A 763.4 9.09%

15 14 S.N.T.G.N. Transgaz SA Romania Bucharest Stock Exchange TGN 762.3 6.14%

16 16 Jadranski Naftovod d.d. Croatia Zagreb Stock Exchange JNAF-R-A 706.6 17.78%

17 19 Petrol d.d. Slovenia Ljubljana Stock Exchange PETG 678.0 27.05%

18 29 Valamar Riviera d.d. (formerly Riviera Adria d.d.) Croatia Zagreb Stock Exchange RIVP-R-A 581.3 44.83%

19 21 Rompetrol Rafinare SA Romania Bucharest Stock Exchange RRC 553.7 15.85%

20 18 Zavarovalnica Triglav d.d. Slovenia Ljubljana Stock Exchange ZVTG 527.5 -1.28%

21 17 BH Telecom d.d. Bosnia and Herzegovina Sarajevo Stock Exchange BHTSR 491.5 -17.21%

22 23 C.N.T.E.E. Transelectrica SA Romania Bucharest Stock Exchange TEL 471.4 0.17%

23 22 Telekom Slovenije d.d. Slovenia Ljubljana Stock Exchange TLSG 464.7 -2.62%

24 30 Ledo d.d. Croatia Zagreb Stock Exchange LEDO-R-A 443.0 18.05%

25 20 Poslovni Sistem Mercator d.d. Slovenia Ljubljana Stock Exchange MELR 414.2 -17.07%

26 35 Adris Grupa d.d.* Croatia Zagreb Stock Exchange ADRS-P-A 412.8 26.00%

27 32 Jamnica d.d. Croatia Zagreb Stock Exchange JMNC-R-A 409.9 21.85%

28 23 Makedonski Telekom AD Macedonia Macedonian Stock Exchange TEL 405.3 -10.30%

29 39 Plava Laguna d.d. Croatia Zagreb Stock Exchange PLAG-R-A 397.6 23.94%

30 25 Elektorprivreda Crne Gore A.D. Montenegro Montenegro Stock Exchange EPCG 393.7 -13.64%

31 31 Atlantic Grupa d.d. Croatia Zagreb Stock Exchange ATGR-R-A 389.1 5.90%

32 33 Maistra d.d. Croatia Zagreb Stock Exchange MAIS-R-A 366.4 10.05%

33 40 Podravka Prehrambena Industrija d.d. Croatia Zagreb Stock Exchange PODR-R-A 355.6 13.02%

34 36 Luka Koper d.d. Slovenia Ljubljana Stock Exchange LKPG 350.0 8.70%

35 34 Aerodrom Nikola Tesla A.D. Serbia Belgrade Stock Exchange AERO 322.0 0.26%

36 27 S.N. Nuclearelectrica SA Romania Bucharest Stock Exchange SNN 319.0 -25.16%

37 38 Croatia Osiguranje d.d. Croatia Zagreb Stock Exchange CROS-R-A 309.1 -4.64%

38 28 Telekom Srpske a.d. Banja Luka Bosnia and Herzegovina Banja Luka Stock Exchange TLKM-R-A 256.3 -36.65%

39 44 Komercijalna Banka A.D. Serbia Belgrade Stock Exchange KMBN 237.4 7.02%

40 45 Koncar - Elektroindustrija d.d. Croatia Zagreb Stock Exchange KOEI-R-A 234.8 3.30%

41 46 Pozavarovalnica Sava d.d. Slovenia Ljubljana Stock Exchange POSR 227.6 2.08%

42 50 SIF Banat Crisana SA Romania Bucharest Stock Exchange SIF1 223.4 9.48%

43 73 Stopanska Banka AD Skopje Macedonia Macedonian Stock Exchange STB 220.6 82.76%

44 48 SIF Oltenia SA Romania Bucharest Stock Exchange SIF5 208.2 -3.55%

45 53 Cementarnica USJE AD Macedonia Macedonian Stock Exchange USJE 206.8 12.18%

46 43 Sopharma AD Bulgaria Bulgarian Stock Exchange 3JR 205.4 -10.73%

47 54 Ericsson Nikola Tesla d.d. Croatia Zagreb Stock Exchange ERNT-R-A 205.1 11.38%

48 85 Chimimport AD Bulgaria Bulgarian Stock Exchange 6C4 204.6 93.64%

49 62 Tchaikapharma High Quality Medicines AD Bulgaria Bulgarian Stock Exchange 7TH 201.7 45.94%

50 56 Hrvatska Postanska Banka d.d. Croatia Zagreb Stock Exchange HPB-R-A 201.2 17.34% (*) Peferred shares 35

in millions of euro top listed companies Stock Market capitalisation Y/Y 2016 2015 Company name Country Stock exchange symbol 2016 change

51 72 Croatia Airlines d.d. Croatia Zagreb Stock Exchange CRAL-R-A 196.5 57.89%

52 41 JP Elektroprivreda BiH d.d. Bosnia and Herzegovina Sarajevo Stock Exchange JPESR 193.1 -31.91%

53 57 Monbat AD Bulgaria Bulgarian Stock Exchange 5MB 192.6 15.00%

54 58 First Investment Bank AD Bulgaria Bulgarian Stock Exchange 5F4 188.4 14.73%

55 49 Alro SA Romania Bucharest Stock Exchange ALR 183.9 -11.36%

56 51 Zentiva SA Romania Bucharest Stock Exchange SCD 179.0 -4.41%

57 55 SIF Moldova SA Romania Bucharest Stock Exchange SIF2 178.3 -0.76%

58 64 CEZ Distribution Bulgaria AD Bulgaria Bulgarian Stock Exchange 3CZ 170.8 25.98%

59 82 HUP - Zagreb d.d. Croatia Zagreb Stock Exchange HUPZ-R-A 160.0 45.78%

60 42 Bulgartabac Holding AD Bulgaria Bulgarian Stock Exchange 57B 150.3 -38.47%

61 60 Conpet SA Romania Bucharest Stock Exchange COTE 150.2 2.34%

62 59 Liburnia Riviera Hoteli d.d. Croatia Zagreb Stock Exchange LRH-R-A 148.2 -6.32%

63 78 Gorenje d.d. Slovenia Ljubljana Stock Exchange GRVG 146.4 30.33%

64 71 Turisthotel d.d. Croatia Zagreb Stock Exchange TUHO-R-A 143.2 13.45%

65 92 Arenaturist d.d. Croatia Zagreb Stock Exchange ARNT-R-A 135.3 37.80%

66 76 Albena AD Bulgaria Bulgarian Stock Exchange 6AB 134.3 17.92%

67 New Alcomet AD Bulgaria Bulgarian Stock Exchange 6AM 133.5 117.07%

68 52 Crnogorski Telekom A.D. Montenegro Montenegro Stock Exchange TECG 133.3 -27.69%

69 80 M+S Hydraulic AD Bulgaria Bulgarian Stock Exchange 5MH 132.7 20.85%

70 New Cinkarna Celje d.d. Slovenia Ljubljana Stock Exchange CICG 132.0 113.16%

71 94 Energoprojekt Holding A.D. Serbia Belgrade Stock Exchange ENHL 127.1 37.99%

72 69 Alkaloid AD Macedonia Macedonian Stock Exchange ALK 125.4 -1.06%

73 63 Dukat Mlijecna Industrija d.d. Croatia Zagreb Stock Exchange LURA-R-A 123.1 -11.39%

74 87 NLB Banka AD (formerly NLB Tutunska Banka AD) Macedonia Macedonian Stock Exchange TNB 120.9 15.93%

75 67 SIF Transilvania SA Romania Bucharest Stock Exchange SIF3 120.3 -8.59%

76 70 AIK Banka A.D. Serbia Belgrade Stock Exchange AIKB 117.8 -4.79%

77 66 SIF Muntenia SA Romania Bucharest Stock Exchange SIF4 116.6 -11.83%

78 New MedLife SA Romania Bucharest Stock Exchange M 116.4 N/A

79 61 Crnogorski Elektroprenosni Sistem A.D. Montenegro Montenegro Stock Exchange PREN 115.7 -16.71%

80 97 Aerostar SA Romania Bucharest Stock Exchange ARS 109.7 20.22%

81 New Messer Tehnogas A.D. Serbia Belgrade Stock Exchange TGAS 109.5 49.49%

82 83 Tvornica Cementa Kakanj d.d. Bosnia and Herzegovina Sarajevo Stock Exchange TCMKR 109.0 2.23%

83 93 Sopharma Trading AD Bulgaria Bulgarian Stock Exchange SO5 106.0 13.31%

84 New Komercijalna Banka AD Macedonia Macedonian Stock Exchange KMB 105.8 24.36%

85 84 Speedy AD Bulgaria Bulgarian Stock Exchange 0SP 98.9 -7.05%

86 99 Kras Prehrambena Industrija d.d. Croatia Zagreb Stock Exchange KRAS-R-A 98.2 9.10%

87 91 Velgraf Asset Management AD Bulgaria Bulgarian Stock Exchange 1VX 96.8 -0.82%

88 65 JP Elektroprivreda HZHB Mostar Bosnia and Herzegovina Sarajevo Stock Exchange JPEMR 96.0 -29.17%

89 New Atlas Banka A.D. Montenegro Montenegro Stock Exchange ATBA 95.6 22.66%

90 New Adriatic Croatia International Club d.d. Croatia Zagreb Stock Exchange ACI-R-A 94.0 9.89%

91 75 Advance Terrafund REIT Bulgaria Bulgarian Stock Exchange 6A6 90.9 -20.53%

92 New Cakovecki Mlinovi d.d. Croatia Zagreb Stock Exchange CKML-R-A 88.9 28.00%

93 New Central Cooperative Bank AD Bulgaria Bulgarian Stock Exchange 4CF 88.5 29.66%

94 New Holding Varna AD Bulgaria Bulgarian Stock Exchange 5V2 88.3 35.27%

95 100 Tankerska Next Generation d.d. Croatia Zagreb Stock Exchange TPNG-R-A 86.7 0.00%

96 New Luka Rijeka d.d. Croatia Zagreb Stock Exchange LKRI-R-A 86.5 8.97%

97 New Neochim AD Bulgaria Bulgarian Stock Exchange 3NB 80.9 28.45%

98 77 JP Hrvatske Telekomunikacije d.d. Bosnia and Herzegovina Sarajevo Stock Exchange HTKMR 80.7 -28.57%

99 New Antibiotice S.A. Romania Bucharest Stock Exchange ATB 76.9 -2.26%

100 New AD Plastik d.d. Croatia Zagreb Stock Exchange ADPL-R-A 76.7 40.15% 36

Total capitalisation of Top 100 listed companies edges up, no change at the top

by Mario Tanev companies listed top The combined capitali- followed with three representatives. a total of 12 new companies enter the sation of the 100 big- Top 100, up from 11 in 2015. Bulgarian gest listed companies in As in 2015, five Romanian companies and Croatian firms formed the majority Southeast Europe (SEE) made it to the top ten, while another of the newcomers, with four companies rose slightly to 45.762 four came from Croatia. Slovenian drug from each of the two countries entering T billion euro in 2016 from maker Krka was the only company out- the 2016 ranking. 44.886 billion euro of the entrants in the side the two countries to make it to the ranking a year earlier, reflecting cautious top ten, as it took the tenth place, fall- The entry threshold decreased 10.8% optimism among investors amid an im- ing six positions compared to the 2015 year-on-year to 76.7 million euro, as proving macroeconomic climate. ranking. Croatian plastic products manufacturer AD Plastik took the last position in the The ranking traditionally sees little Croatian and Romanian entrants also 2016 edition. change, and 2016 produced no surprises. formed the majority in the wider Top 100 Croatian oil and gas company INA re- ranking, with 30 and 21 companies from The Romanian bourse remained the big- tained its top position, despite a slight the two countries, respectively, featured gest in the region, with a market capitali- drop in its capitalisation, by 1.74% to in the 2016 edition. In the 2015 edition, sation of 32.3 billion euro at end-2016, 3.837 billion euro. The oil and gas heavy- a total of 27 Croatian and 20 Romanian unchanged from a year earlier. The Za- weight turned to a consolidated net prof- firms were included in the ranking. Bul- greb Stock Exchange and Ljubljana Stock it of 13.6 million euro in 2016, from a net garia came third, with 17 companies in- Exchange followed in second and third loss of 183.5 million euro last year, on cluded, the same number as in 2015. place. the back of strong exploration and pro- duction. The Croatian government owns A total of 61 companies from the Top Following a 12.75% increase to 4.9 billion a 44.84% stake in INA, with a further 100 saw their market capitalisation rise in euro at end-2016, the Bulgarian Stock Ex- 6.08% held by institutional and private in- 2016. Bulgarian diversified group Chimim- change surpassed the Belgrade bourse as vestors. In August 2017, the government port recorded the sharpest increase the fourth largest in the region, as the Ser- in Zagreb announced it hired an adviser among the top listed companies, as its bian bourse recorded a 14.6% drop in its in the possible purchase of the remaining market capitalisation nearly doubled to market capitalisation to 4.8 billion euro. 49.08% stake, held by Hungary's MOL. 204.6 million euro as at end-2016, bringing it to 48th place in the 2016 ranking, from The combined market capitalisation of The top ten companies too remained the 85th place in 2015. the nine bourses in SEE rose by an annual same, for a third year in a row. However, 4.7% to 108.55 billion euro at end-2016, Croatian lenders Zagrebacka Banka and Bulgarian aluminum products manufac- quickening from a 3.6% growth in 2015. Privredna Banka Zagreb gained five posi- turer Alcomet shined as the top new- tions each compared to the 2015 rank- comer, taking the 67th place in the rank- The blue-chip indices of all bourses ing, ending up third and fifth. Zagrebacka ing. The 2016 edition of the ranking saw across SEE recorded increases in 2016. Banka’s market capitalisation rose 46.03% to 2.29 billion euro, while Privredna Ban- ka Zagreb recorded a 28.38% increase to Methodology 1.94 billion euro. SEE TOP 100 listed companies ranks the biggest companies in Southeast Europe by market capitalisation as of December 31, 2016, sourced by Banja Luka Stock Exchange (BLSE), The total market capitalisation of the top Belgrade Stock Exchange (BELEX), Bucharest Stock Exchange (BVB), Bulgarian Stock ten companies rose by an annual 2.7% to Exchange (BSE), Ljubljana Stock Exchange (LjSE), Macedonian Stock Exchange (MSE), 22.6 billion euro at end-2016. A total of Montenegro Stock Exchange (MNSE), Sarajevo Stock Exchange (SASE) and Zagreb Stock six companies from the top ten saw their Exchange (ZSE). Our pool of listed companies, monitored in 2016 includes more than 1 200 market capitalisation drop in 2016, while public companies, located in South East Europe with their regular shares. We excluded from four recorded an increase. the ranking both companies, listed on the Bucharest Stock Exchange, but not headquartered in SEE countries such as Erste Group Bank AG. To allow comparison, all local currencies The banking sector was most heav- in the ranking have been converted into euro, using the respective central bank’s official ily represented in the top ten with four exchange rate on the last working day of 2016 and 2015. companies, while the oil and gas sector 37

Rubber firms regain TOP IND

top spot in most profitable U STRIES industries ranking

by Radomir Ralev

The rubber and rub- Most profitable industries 2016 SEE TOP 100 ranking, including the ber product makers Industry Return on revenue 2016 leader - Renault’s Automobile Dacia, in Southeast Europe 1 Rubber/Rubber Products 16.31% seven other Romanian firms, as well regained the top spot 2 Pharmaceuticals 9.60% as one Serbian and one Slovenian car in the most profitable 3 Chemicals 9.02% maker. T industries ranking for 4 Furniture/ Decoration 8.61% 2016, ousting the chemicals sector, 5 Food/Drinks/Tobacco 7.37% The construction industry dropped which slid to the third place. Repre- 6 Telecommunications 6.36% out of the top five in the industrial sented by two Romanian tyre makers 7 Construction 5.93% ranking, losing two positions to the in the S E E TOP 10 0 r ank ing , the rubber 8 Electricity 4.69% seventh place. The sector's only rep- sector managed to increase its return 9 Petroleum/Natural Gas 3.67% resentative in the top 100 ranking, on revenue to 16.31% from 15.51% in 10 Wholesale/Retail 2.71% Romanian public roads authority, 2015. The chemicals took the leader- CNADNR, saw its revenue return ship place of the rubber makers last The reshuffle among the top five in decline to 5.93% from 9.09% in 2015. year thanks to a controversial large the 2017 SEE industrial ranking was The negative return on revenue of the state debt write-off. completed by the food, drinks and to- agriculture sector narrowed to 0.57%. bacco industry, which climbed up to The units of US conglomerates ADM The pharmaceutical sector gained the fifth spot, displacing the construc- and Cargill, recorded a combined loss one level on the podium and ranked tion sector. With an 8.33% increase in of 13.5 million euro, while Swiss-based second, although its return on reve- total revenue and a rise in return on Ameropa's revenue return declined to nue declined to 9.6% from 11.1%. The revenue to 7.37% in 2016 from 5.16%, 0.54% from 0.58%. decrease was caused by the slump in the food, drinks and tobacco sector revenue return of Slovenia's Lek and has been steadily improving its finan- The wholesale and retail industry end- Krka, to 8.92% and 8.30%, respective- cial performance since 2013. Four Ro- ed the dominance of the oil and gas ly, which was only partially offset by manian companies represented the companies in the Top 100 SEE 2016 the positive performance of Croatia's industry in the SEE TOP 100 ranking. ranking, as the number of its repre- Pliva. sentatives rose to 24 from 19, thanks The auto industry gave up its top 10 to three new entrants from Romania The chemicals industry, which took place, although its revenue return and one from Slovenia and Bosnia each. the gold in 2015 chiefly due to the rose to 2.52% from 1.65%. The sector The combined revenue of the whole- one-off effect of the debt cancellation got two new representatives in the sale and retail firms grew 10.5% in 2016 at insolvent Romanian company Oltch- SEE TOP 100 ranking, namely Ger- amid rising household consumption im, saw its return on revenue plum- man-owned Continental Automotive across the region. The number of oil met to 9.02% from 31.54%. This year, Romania and Hella Romania, while its and gas companies in the top 100 fell Oltchim departed from the SEE TOP total revenue rose 8.73%. The indus- to 21 from 24, whereas their total rev- 100 ranking, leaving the chemicals in- try had a total of 10 entrants in the enue dropped 7.3%. dustry with only one representative, namely the Macedonian unit of UK Johnson Matthey. Methodology The SEE industrial ranking pools together the revenue generated by all companies in SEE The furniture industry managed to TOP 100 and ranks sectors by cumulative revenue. Year-on-year changes in the sectors’ total retain its fourth place, although its revenue have been calculated using the figures in euro. The comparative figures for 2015 are revenue return fell to 8.61% from revised to allow a fair comparison. 9.86%. The return on revenue of the The sub-ranking of the industries with the highest return on revenue was calculated by only representative of the industry dividing the cumulative net profit/loss within each industry by the cumulative revenue. in the SEE TOP 100 ranking, the Ro- We have based our rankings on an industry classification which treats filling station manian unit of Austria's Holzindustrie operators and gas trading/distribution companies as Petroleum/Natural Gas companies, Schweighofer, declined for the fourth pharmacies and pharmaceutical distributors as Wholesale/Retail, and automotive and car year in a row, while the company slid parts manufacturers as Automobiles. by 10 positions to the 95th place. 38

SEE auto sector booms on STRIES U lower production costs, friendly investment climate TOP IND TOP

By Radomir Ralev

The automotive indus- try generates an ever increasing share of the value added of the econo- mies of Southeast Europe T (SEE) – a region where strategic investors can find ample op- portunities to expand.

A total of 573,328 motor vehicles were produced in the region last year, up 52% on 2006, according to data of the Inter- national Organization of Motor Vehicle Manufacturers (OICA).

Some of the countries in SEE have a significant advantage in attracting large investors than others, Lyubomir Stanis- lavov, CEO of Automotive Cluster Bul- garia, told SeeNews in a recent e-mailed interview. Source: Fiat Chrysler Automobiles N.V. ary 2012. Its output was sold in several Romania was the biggest manufacturer In 2016, Romanian neighbouring markets, including Roma- of motor vehicles in the region last year, exports of nia, Macedonia and Serbia. followed by Slovenia and Serbia. In 2016, Romanian exports of machinery and machinery and “The lack of a large car manufacturer by transport equipment accounted for 47% transport equipment itself is an advantage for attracting one,” of the country’s total exports, up from according to Stanislavov. “The first who 44.5% in 2015, according to data of the accounted for 47% sets foot in our country will have the ad- office of national statistics. vantage of choosing from and develop- of total exports. ing a wide network of suppliers without The Romanian government launched worrying about competition from the two schemes for support of companies gross domestic product (GDP). Two biggest companies in the industry.” in the automotive sector with a total large companies have factories there – budget of some 600 million euro. The Renault (Dacia) and Ford,” Stanislavov Serbia has boosted its motor vehicle car and auto part makers operating in said. In comparison, the share of the production nearly eight-fold in the last the country amounted to about 600, automotive industry of Bulgaria’s GDP ten years. FCA Srbija, a joint venture of with 203,600 employees last year. stands at 4%, he noted. the Serbian government and Italian car- maker Fiat, has invested more than 1 bil- “In Romania, the automotive industry Investors wanted! lion euro in the production of the FIAT generates between 7% and 10% of the 500L model in Kragujevac since 2008, No passenger cars were manufactured in according to the South East Europe Manufactured vehicles Bulgaria last year, as Chinese automaker Regular Economic Report (SEE RER) by country Great Wall suspended production in the of the World Bank, issued in the spring 2016 2015 2006 country in January with a large number of 2016. FCA Srbija was the biggest ex- Serbia 80 320 83 630 11 182 Romania 359 306 387 177 213 597 of its vehicles remaining unsold. The car porter from the country with exports of Slovenia 133 702 133 092 150 320 assembly plant near Lovech, in north- 1.068 billion euro last year, the country’s Source: http://www.oica.net/category/production-statistics/ ern Bulgaria, opened officially in Febru- finance ministry said in February 2017. 39 TOP IND Advantages The low cost of labour is among the ad- vantages which the region is offering to U

investors, according to many of the in- STRIES vestment promotion government agen- cies in SEE. Romania and Bulgaria were the countries with the lowest average monthly salary in the European Union (EU) in 2016, while Slovenia and Croatia ranked 15th and 21st, respectively, ac- cording to data by Eurostat. Non-EU Macedonia and Serbia were at par with Fast (43 kW+) Bulgaria in terms of the average monthly salary last year. Accelerated (22 kW)

Standart (3kW) Still, the salaries in the automotive in- Source: chargemap.com dustry in SEE are significantly higher Out of service than the ones in other sectors, accord- ing to Stanislavov.

the Financial Times. Serbia's "otherwise SEE countries Chinese disappointing economic performance" automaker Great has been outweighed by regulatory should not reform, low labour costs and access Wall suspended to the EU single market, the Financial lose the gained production Times said in August. "Most investors momentum. are attracted to Serbia as an export activites in platform rather than as a market in its own right," the newspaper pointed out. “The most important factor for the de- Bulgaria in 2016. The number of greenfield projects in velopment of car industry in Bulgaria is Serbia announced by foreign investors the favourable economic climate, the rose to 77 last year from 57 in 2015, overall good economic environment due In the opinion of Stanislavov, Slovakia and 53% of them were in manufactur- to the 10% flat tax, the stability of the can serve as an example for the coun- ing, primarily in electronic components lev currency and the membership in the tries in SEE. The automotive industry and car parts, followed by real estate European Union,” Stanislavov said. generates 60% of GDP of the country and textiles. where six factories of large manufactur- Another country in SEE, Macedo- ers operate and a seventh one is under Serbia attracted a significant amount nia, ranked third in the global green- construction. of investments in its car parts industry field foreign direct investment index in 2016. Chinese company Mei Ta an- compiled by fDi Intelligence with 9.18 Greenfield investment nounced plans to invest 60 million euro points. Similarly to Bulgaria, the Mac- in the construction of a factory near edonian investment agency highlights Automotive parts manufacturing is one Belgrade, with financial support from the flat corporate and income tax, of the fastest growing sectors in SEE, as the Serbian government. Sector play- which also stands at 10%, as one of the the region is attractive to foreign inves- ers such as Teklas, IG Bauerhin, Meca- country’s advantages. The current ac- tors. The production of car parts in SEE for, Delphi Packard, Yazaki also revealed count deficit of Macedonia was more ranges from electrical and electronic investment projects in the country last than fully financed by net foreign direct equipment to aluminium and steel wheel year. According to the World Bank, car investments, largely concentrated in rims, batteries, tires, windshields, paints, part manufacturers created 3,000 jobs, the automotive industry, the World filters, etc. or 0.1% of Serbia’s total employment. Bank said in its SEE RER report issued in the spring of 2017. For manufacturers, the low cost of con- struction, land and services in SEE is es- “Companies value highly qualified exec- sential, Stanislavov said. Therefore, the Serbia boosted utives, with a large number of manufac- automotive industry in the region is at- its motor vehicle turers mainly employing development tracting a lot of greenfield investment. staff, IT engineers and digital profes- production nearly sionals,” Stanislavov said. “The highly Serbia leads the global greenfield for- eight-fold in the qualified staff and the competitive eign direct investment index compiled economic environment make Bulgaria by fDi Intelligence, a data division of last ten years. a preferred country for investments 40

even in the face of traditional leaders such as .” STRIES

U More than 120 companies produce over 1,400 parts and components for almost all international car brands in Bulgaria. Wages in the sector grew by 4.8% year- on-year in 2016. Since starting opera- TOP IND TOP tions in Bulgaria, many businesses have doubled or tripled their manufacturing capacities and this process will continue, Stanislavov added.

Research and development (R&D) com- panies are focused on improving the Source: Automobile Dacia automation of manufacturing, as well as designing contemporary electronic sys- Dacia is the most MOST POPULAR PASSENGER tems, according to a report by Colliers popular brand in four CAR MODELS IN SEE International for 2016. The total revenue 2016 2015 SEE countries Bosnia and Herzegovina Skoda Octavia Skoda Octavia of the industry in Bulgaria represented Bulgaria Dacia Dokker Dacia Dokker 3.5% of its GDP last year, according to Croatia VW Golf VW Golf the report. Dacia was the most popular brand Macedonia Dacia Duster olkswagen Passat in terms of sales in three countries in Moldova Dacia Logan Dacia Logan It is important for Bulgaria to respond Southeastern Europe in 2016, namely Romania Dacia Logan Dacia Logan with attractive conditions to the in- Romania, Moldova and Bulgaria. The Serbia Fiat 500L Fiat 500L terest of investors and seize the op- Dacia Logan model was the most pop- Slovenia Renault Clio Renault Clio Source: http://bestsellingcarsblog.com/ portunity by offering them developed ular in Romania for the 12th year in a industrial parks, tackling corruption row, although its market share declined and providing tax incentives, Stanisla- to 17.8% in 2016 from 20% in 2015. The New passenger car vov opined. second place was for the Dacia Duster registrations in SEE 2016 2015 y/y pct change model, followed by Skoda Octavia. Bulgaria 26 370 23 500 +12.2 Bulgaria’s Trakia Economic Zone has Croatia 43 015 34 820 +23.5 attracted a greenfield investment of Renault Clio remained the most popu- Macedonia 4 847 -- -- 500 million euro in the automotive in- lar model in Slovenia in 2016, although Montenegro 15 927 13 718 +16.1 dustry. Sensata Technologies, an inter- Volkswagen kept the top spot as the most Serbia 19 166 16 017 +19.7 national manufacturer of sensors and popular brand in terms of sales. As a result Slovenia 63 674 59 450 +7.1 controls for the automotive industry, of the rising orders and the inability by its Bosnia 7 478 5 715 +30.8 Romania 94 924 81 162 +17.0 has opened a $40 million plant in the current assembly lines in Flins, France, and Moldova 4 195 3 376 +24.3 economic zone near . The em- Bursa, , to keep up with demand, Source: European Automobile Manufacturers Association (ACEA) and ployment in Bulgaria’s automotive sec- Revoz announced in March 2016 plans to national statistical offices tor has been constantly growing since relaunch the output of Renault Clio at its 2000. One of the main growth drivers production site in Novo Mesto. registrations increased by 30.8% and of the car parts manufacturing indus- 24.3%, respectively, according to data of try are well developed infrastructure The Fiat 500L model kept its leadership ACEA and Moldova’s statistical office. including easy access to main roads in Serbia. and railway lines. Other advantages As for commercial vehicles, Serbia, are the competitive salary, the flat tax The highest number of new passenger Slovenia, Croatia and Romania are the rate of 10% and tax benefits for mak- car registrations in 2016 was recorded only producers in the region. In 2016, ing business in regions with a high un- in Romania, the biggest country in SEE. the output of Serbia stood at 960 units employment rate, the Colliers report However, the largest annual rate of in- and the production of Romania to- shows. crease was registered in Bosnia and talled 445. Serbian bus maker Ikarbus Herzegovina and Moldova, where car is the largest producer of commercial “Automobile production is among the industrial activities promoted with pri- Sales of passenger cars of most popular brands by country ority by the state. It pays off with many Dacia Volkswagen Renault Skoda Fiat Hyundai Opel jobs and rich opportunities to build Bulgaria 3 914 3 778 3 778 - - - - chains of suppliers and subcontractors," Croatia - 6 445 3 715 - - - 4 135 Stanislavov said. “This results in a chain Serbia - - - 3 759 3 118 - - of production with high added value and Slovenia - 10 511 8 610 5 906 - - - Bosnia and Herzegovina - 1 293 - 1 221 - - 789 a large number of employees, and di- Romania 35 448 11 983 - 10 268 - - - rectly affects the quality of life of entire Moldova 670 - - 650 - 536 - regions.” Source: http://ceauto.at/ 41 TOP IND vehicles in the region, with revenue of annual circulation tax. call for projects launched by AFM be- 1.226 billion dinars in 2016. In Roma- tween September 15 and November 15 nia, Roman SA produces trucks and However, the lack of direct subsidies for last year attracted 49 projects from 39 military vehicles, while in Slovenia, the purchase of electric cars in Bulgaria companies and administrations. Partici- U

TAM-DuraBus d.o.o. makes buses un- is not a determining factor, as subsidies pants applied for funding for installation STRIES der the TAM-Europe brand. In 2016, usually distort the market and have a of 150 normal power and 109 high-pow- Croatia’s Crobus signed a ten-year negative long-term effect, Vasilev said. er charging stations in 23 counties. As agreement for the delivery of 2,000 In Bulgaria, electric vehicles are also ex- expected, the strongest demand came buses to Iraq. empt from annual circulation tax. The from Bucharest, 12 applications for 98 Bulgarian government cut the registra- stations, the Association for Promoting Electric mobility tion tax for electric vehicles by 30% in Electric Vehicles in Romania said. deployment in SEE April 2016. The country’s environment ministry also introduced a scheme for In April 2016, Bulgarian company Emo- still in initial phase financing 20% of the purchase price of bility International launched its Eldrive Although SEE is still in the initial phase electric vehicles acquired by the public project to demonstrate in a convincing of electric mobility development, sales administration. and attractive manner the benefits of of alternative fuel vehicles in some driving electric cars and raising aware- countries in the region exceeded 2% of The number of electric vehicles in Bul- ness of electric vehicles in the cities of all new car sales in 2016. In Bulgaria, garia is expected to stand in the range Plovdiv, Varna and Burgas, with support 593 hybrid and electric vehicles of 3,000 – 8,000 units by the end of from the JESSICA financial engineering registered in 2016 represented 2.25% 2020, an increase driven mainly by falling instrument of the EU. The company of new passenger car registrations last prices of second-hand electric cars on plans to install over 500 chargers in Bul- year, while in Romania the share of the European markets, BAEPS said in a garia, Romania, Macedonia, Greece and those cars was 2.1%. market analysis in October 2016. Albania, including two types of stations - fast charging of 50 kW DC and standard The low purchasing power of the popu- Cleaner & cheaper of 22 kW AC. lation and lax control over emissions is the main reason for the still low share of Electric vehicles are cleaner, noiseless Optimism, after all electric cars, according to Kamen Vasi- and more efficient. For example, given lev, member of the executive board of the current electricity prices in Bulgaria, “The owners of electric cars need more the Bulgarian Electric Vehicles Associa- a distance of 100 km can be travelled in electric charging stations, but we should tion (BAEPS). an electric vehicle at a cost of 2-3 levs have in mind that any distribution board (1.0-1.5 euro), Vasilev said. could become a charger. Many large re- “Test drives should be carried out more tailers install chargers at parking lots, in often to make customers acquainted In SEE, Slovenia had the largest number order to attract customers with a higher with the advantages of electric cars,” of electric vehicle (EV) charging stations purchasing power,” Vasilev said. Vasilev told SeeNews. People think of in 2016, nearly twice more than second- electric vehicles as an expensive whim of ranked Croatia, according to data of the In this way, even if the charging is for the wealthiest parts of society, but when European Alternative Fuels Observatory. free, customers pay it through their bill they drive them for the first time, they The number of EV charging stations grew at the supermarket, he added. Accord- see the difference, he said. the most in Croatia, where it more than ing to Vasilev, there are around 70 elec- trebled last year. Romania and Bulgaria re- tric car chargers in Bulgaria at present, According to data of Romanian Automo- main behind but are taking steps to improve including fast chargers. tive Manufacturers and Importers Asso- their electric mobility infrastructure. ciation (APIA), a total of 167 electric ve- Last year, the Central European Green hicles were registered in the country in Slovenia relies on a large number of Corridors (CEGS) launched a project to 2016, up a whopping 263%. The registra- fast AC chargers, as around 250,000 deploy 115 high power charging stations in tions of hybrid vehicles in Romania rose residents of the country drive a smaller Austria, Croatia, Germany, Slovakia, and 125.8% to 1,016. In Slovenia, the number distance per day than the average range Slovenia to create a recharging network of electric vehicles rose to 457 at the end of the most popular electric vehicles. with country-wide coverage in Austria, of 2016 from 288 a year earlier. Yet, the Ljubljana city administration targets a Slovenia and Slovakia. A limited number sales of electric vehicles appear to be total of 400 chargers in the capital in of the high- power charging stations will negligible in SEE, well below 1% of total. 2020. In 2015, the Slovenian energy min- provide connections from this network istry adopted a plan for energy sector to major cities in Croatia (Zagreb) and Some governments in the region are development which envisages all vehicles Germany (Munich). At each charging sta- promoting the sales of electric vehicles in the country to be electric in 2055. tion, service for vehicles with AC/Type 2, by providing a range of subsidies and DC/Combo 2 as well as DC/CHAdeMO other incentives, both on the demand A programme for developing electric interfaces will be provided, thus being and supply side. For example, in Ro- mobility infrastructure of the Romanian compatible with most electric vehicles mania electric and hybrid vehicles are Environment Fund Administration (AFM) with high-power charging technology on exempt from registration tax, while the has the ambition to support the installa- the market. All charging stations will form owners of electric vehicles do not pay tion of 600 stations by 2020. The first one interoperable network. 42

IT, retail, real estate

/interview deals to dominate M&A scene in SEE

correlation with transactions in the its own favored industry, however real

TOP INDuSTRIES TOP region. Strategic investors have been estate, manufacturing and retail were dominating and forming the M&A most active sectors in the region. IT market in SEE. Together with this a has been traditionally very active in the lot of regional investors keep looking countries of SEE being very international for new markets and contribute to the in its core and therefore very open to development of the region - Acibadem transaction activity. Traditionally IT buying into the health sector in Bulgaria sector closes a large number of smaller is a good example. There have also deals and I expect IT to continue to grow been great local success stories such as in the future. Another growing sector is SBB and Danube Foods in Serbia which Retail & Consumer Products (RCP) – drive others to pursue investment in line with growing consumption and opportunities. Last but not least lots disposable income I expect RCP deals of local businesses are getting to the to also increase. stage of maturity and founders are looking to monetize their hard work in Real estate will also have a boom as offi ce surviving the recession and delivering and commercial space will be required good businesses. Successful local for growing regional businesses. businesses will continue to form and have a greater impact over the M&A on which markets in the region Robin Jowitt, market in the region. do you see untapped growth EY Capital Transformation potential? Leader, CSE what are your estimates regarding the volume and Strategic investors with solid cash po- number of deals in the region sition will continue to screen the SEE How did the M&A market in in 2017 and in the next years? market for consolidation opportunities Southeast europe (See) evolve going forward, whilst interest would be over the past decade? Following on the trend from the last dominantly limited to sector national years I expect deals to go for similar champions or high value-added niche In the past couple of years, M&A numbers (5.5 - 6 billion dollars) but defi - product companies. Former Yugoslav activity in most SEE countries suffered nitely increasing in size. states, excluding EU countries and small- to a different degree from the small size er markets, will become the next growth of the national consumer markets and which sectors are most active frontier. As local companies continue to political instability. Nevertheless, we saw in terms of M&A deals? Do you grow they will more often appear on the M&A deals in Southeast Europe steadily see any new sectors emerging radar of acquirers. Romania will keep growing over the last ten years. 2014 has as leaders? its position as the main market in SEE. seen a decrease in most of the countries Private equity will continue to provide in the region excluding Romania while According to the most recent M&A opportunities for consolidation activity in 2015, 2016 and 2017 we see more of Barometer published by EY, in the fi rst in the region and will continue to seek to a steady state of growth. We estimate half of 2017 each country in SEE had back good management teams. the SEE market size at about 6 billion dollars. EY (Ernst & Young) is a global leader in assurance, tax, transaction and which are the main factors advisory services. The insights and quality services we deliver help build infl uencing its development? trust and confi dence in the capital markets and in economies the world over. In 2016 EY’s Transaction Advisory Services (TAS) practice has been In the last years European economy awarded the Financial Adviser of the Year in Central and Eastern Europe, has returned to a steady growth. by Mergermarket, an independent mergers and acquisitions intelligence With local SEE economies being much and data provider. The Mergermarket M&A Awards are the most coveted dependent on the state of European accolades in the deal industry across Europe. economy we have seen a positive 43 TOP INDuSTRIES M&A deals volume in Bulgaria seen rising on good liquidity in financial markets, real economy growth

During the last two years be best realized by partner- volume and number /interview there has been a strong pipe- ing with a strategic investor. of M&A deals on the line of M&A deals and while Bulgarian market in specifi c industry concentra- which sectors do you 2017 and how would tion is not that obvious and see dominating Bul- they compare to 2016? deal size vary within a wide garia's M&A market in what are your expec- range, I would identify two the coming years? tations for 2018? Diana Nikolaeva, distinctive trends: Partner, Transaction Strengthening M&A activity The activity so far suggests Advisory Services, The structure of the market was especially visible in the real that the value of deals will EY Bulgaria in various industries suggests estate sector. We have seen a probably exceed 2016 deal a continuous consolidation number of large deals in com- volume. The good liquidity among industry players to mercial real estate. Food and in the fi nancial markets, the achieve synergies and en- beverage is also an industry growth of the real economy, what key trends are hance competitive strength. witnessing investor interest the disruptive effect of tech- currently impacting and the IT sector, of course. nology on all aspects of busi- the development of Many companies have reached ness suggest that this trend Bulgaria's M&A mar- a level of development where what are your esti- will continue in the near ket? their further growth would mates regarding the terms at least. 44

FMCG landscape in SEE: STRIES

U Consumer health segment set for strongest growth TOP IND TOP

By Giedrius Daujotas, Analytics Manager at Euromonitor International

Southeastern Europe The largest well in SEE region. Remarkably, Con- (SEE) is becoming more sumer Health is a strong performer in attractive for consumer retailers are slower growth environment, as well as goods companies. While higher growth environment. growth in the historic expanding their S 2011-2016 period in SEE share of the SEE A mix of international was hampered by the macroeconomic and local companies headwinds – especially in Slovenia, Ser- markets, except bia, and Croatia, where it averaged less in Slovenia. In terms of companies, we have selected than 1% in annual real terms over the last Packaged Foods as industry to preview, five years, it is expected to recover dur- as it tends to have a good mix of local ing 2016-2021, and the consumer market and international companies, showing is set to benefit from stronger growth consumer preferences. momentum. This profile presents a This market has grown steadily and is number of developments in consumer set to continue enjoying a 4% growth Romania and Bulgaria have a stronger markets across SEE countries as well as in the 2016-2021 period, which looks share of multinationals- Mondelez Inc., its retail environment. very healthy as compared to the flatter Lactalis group, Unilever and Danone western European markets. Alcoholic have a strong presence. The rest of the Market sizes for Drinks is the second largest market, markets are more fragmented, with consumer goods in SEE worth 6.5 billion U.S. dollars, followed strong presence of Agrokor across Bal- by soft Drinks and Beauty and Personal kan countries. When thinking of SEE’s consumer Care. markets, Romania and Bulgaria usu- Retailing landscape ally get the most attention, as these Consumer Health, in the meantime, is two are the largest market sizes for set to record the largest growth dur- While there is some homegenu- many goods, and have been targeted ing 2016-2021 at 6% annual growth. The ity among SEE markets, the route to by international companies first for ex- industry includes many over the coun- market is very different depending on pansion. Romania, for example, has a ter medications and nutritional supple- which country you are targeting. If very competitive retail landscape, with ments, which have enjoyed fast growth you take a dairy sector as an example the presence of major international globally recently, and is also performing and look where people go to do their chains – Kaufland, Lidl, Carrefour and Auchan. The Balkan states, however, Fastest growing consumer industries, 2016-2021 offer much potential that should not be (selected markets) overlooked. Market size for packaged 2016 market size CAGR % CAGR % (USD million) (11-16) (16-21) food and other consumer goods in Ser- Consumer Health 1 761.9 7.0% 6.1% bia and Croatia is in fact even leading Soft Drinks 3 922.6 2.1% 5.3% Bulgaria currently. Alcoholic Drinks 6 583.5 2.1% 5.2% Beauty and Personal Care 3 136.0 2.8% 5.0% The largest consumer market across Home Care 1 427.4 2.5% 4.9% the seven countries researched by Eu- Hot Drinks 1 435.0 1.5% 4.7% romonitor International is packaged Packaged Food 22 300.2 3.1% 4.0% Note: The data refers to Romania, Bulgaria, Serbia, Croatia, Slovenia, Bosnia-Herzegovina and Macedonia. food, worth 22.3 billion U.S. dollars. Source: Euromonitor International 45 TOP IND WHERE PEOPLE SHOP FOR DAIRY PRODUCTS IN SEE, 2012-2017 Retail Value

Romania Croatia Serbia Slovenia Bulgaria Bosnia and Herzegovina Macedonia 100 U STRIES

80

60

Retail Distribution 40

20

0 Independent small grocers Discounters Food/drink/tobacco specialists Internet retailing Supermarkets Convenience stores Mixed retailers Hypermarkets Others Non-grocery specialists Source: Euromonitor International daily grocery shopping several things is preference for alternative channels. emerge. Serbia for example is still Romania and The share of top 5 companies has been very fragmented from the retail per- Slovenia lead rising fast in Romania, Croatia and Bul- spective and small independent gro- garia. cers account for the majority of retail the SEE region sales. Slovenia, on the other hand, has Internet Retailing the strongest modern grocery chan- in terms of nel among all countries, with super- internet retailing Internet retailing has been one of the market/hypermarkets and discounters great growth stories in FMCG market together accounting for the vast ma- development globally. Its influence is multi-fold, on jority of retail sales. In Romania – Hy- one-hand, it has made market entry permarkets are the dominant channel, easier for international companies, es- thanks to strong expansion by inter- Retailing industry pecially those that are not big enough national chains such as Auchan, and consolidation to have direct presence in the country, the independent small groceries seg- with cross-country retailers like Ama- ment is shrinking fast. There expansion of modern grocery zon making it easier to bring products also brings a consolidation in the retail- to many markets at once. There are Modern grocery expansion is a trend ing industry, which is likely to continue. less logistical headaches and less mar- to watch in the region, especially in The clear trend is that largest retailers keting expenses fighting for the shelf countries outside of Romania and Slov- are capturing more market, with the space. enia where there is less presence of the exception of Slovenia, where retail is chains. already very consolidated, and there Romania and Slovenia lead the SEE re-

Top Packaged Foods Companies in SEE countries, 2016 market share %, retail value Romania Bulgaria Serbia Croatia Slovenia Bosnia-Herzegovina Macedonia Lactalis, IMB Mlekara Lactalis, Groupe 3.8 Bella Bulgaria AD 4.7 Danube Foods Group BV 11.3 Agrokor dd 9.4 9.2 Agrokor dd 6.7 7.4 Groupe Bitola ad Mondelez Mondelez Beogradska Pekarska 2.3 3.7 6 Lactalis, Groupe 9.2 Podravka dd 5.8 Danube Foods Group BV 6.4 Lactalis, Groupe 4.3 International Inc International Inc Industrija ad Pomurske Danone, Groupe 2.2 Chipita SA 3.4 Agrokor dd 5.2 Podravka dd 5.1 3.5 Lactalis, Groupe 5.2 Pekabesko ad 2.5 Mlekarne dd Cristim 2 Prodcom Karol-Fernandez Mlekarna 2.1 2.4 Neoplanta ad 4.3 Vindija dd 4.9 2.9 Meggle GmbH 4.6 Brilijant doo 2.3 SRL Meat Ltd Celeia doo Royal Friesland 2 Unilever Group 2.4 Carnex ad 4.3 Kraš dd 2.8 Agrokor dd 2.8 Podravka dd 4.3 Ideal Sipka ad 2.2 Campina NV

Source: Euromonitor International 46

leADING INTeRNeT ReTAIlING coMPANIeS IN See Bosnia-Herzegovina Bulgaria croatia Macedonia Serbia Slovenia Romania Ebay eMAG (Naspers) Ekupi Market Konekt (RZ Infomedia) Tehnomanija Mimovrste eMAG (Naspers) Imtec Technopolis (Videolux hold.) eBay Sport Vision ComTrade Enaa (Gambit Trade) Altex Ekupi Amazon A007 Grouper (Vebspot) Win Win eBay Fashion Days (Naspers) Source: Euromonitor International

gion in terms of internet retailing de- mode, as disposable incomes are set to highest grocery retail space per capita velopment, with 3.2% of total retail grow in the region, providing a growth in 2016, 532m2 and 492m2 per 1,000 TOP INDuSTRIES TOP sales online, for both countries and per window for many local and international people, respectively. This puts them in household spend of 141 euro and 240 companies. similar range to Germany and , euro, respectively. This is still compara- in terms of retail space per capita. In- tively low in global context, so we can Among the headwinds to look after is terestingly, Romania, despite the strong expect internet retailing to outpace the population decline, as all countries presence of international retail chains, store-based retailer growth. In the in the region with the exception of still shows room for grow with 245m2 UK, for example, internet retailing ac- Slovenia and Macedonia are expected per capita. The retail consolidation counted for 15% of all retail sales, and in to see a decline in population 2016- could in turn benefi t the expansion of France – 7.5%, yet at the same time, only 2021. The demographic change is most internet retailers even more. 3% in Italy. The proportion of internet noticeable in Bulgaria where popula- retailing is set to gradually increase in all tion is expected to decline by 3.5% un- As more global FMCG companies are SEE countries, in Romania, for example, til 2021. coming to the SEE region, consumers internet retailing is expected to account will be looking for variety and local for 6% of total sales in 2021. The demographic development can brands stand to benefi t here, as they spur consolidation in the retail envi- have brand loyalties established from outlook ronment, especially in markets that childhood. Despite the presence of pri- have over-expanded, prompting stores vate label products, the branding will The consumer goods outlook is gener- closures to maxime footfall in existing remain one of the strongest growth ally pointing towards a stronger growth stores. Croatia and Slovenia had the drivers.

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Locations: Athens | Thessaloniki | Lefkosia | So a Bucharest | Belgrade | Podgorica | Tirana | Skopje Zagreb | Pristina | Banja Luka | Sarajevo | Cairo | Alexandria Tbilisi | Kiev | Moscow | Beirut | Erbil | Tehran 47 TOP INDuSTRIES Institutional investors to dominate Bulgaria's real estate market /interview

will continue to grow as a result of in- our new external project - Ellipse Cen- tranational migration. The new offi ces tre. It is an example of a professional and expected to be delivered in the medium mutually benefi cial partnership between term will partly offset the supply-side the developer Ilpa Development and pressure and will balance out prices. Landmark as a Property Manager.

At the same time, the IT/BPO compa- what are your expectations nies, the tech environment and the drive regarding Bulgaria's market towards a shared economy face us with of industrial space in 2017 and new market demands. As our services’ 2018? Do you see any new re- bundle remains client-oriented, we no gions emerging as hot loca- longer provide just the premises but of- tions for large investors? fer support for all basic modern offi ce needs including administration person- We are witnessing increased demand nel lease, wholistic environment-friendly for new logistic parks, warehouses with and sustainable energy supply solutions, good adjacent infrastructure and quick even electro mobility - helped by our sis- access to highways and Sofi a, including ter companies. intracity warehousing. Logistic and indus- trial parks with suffi cient electricity ca- The market uptrend and higher client pacity, access for heavy trucks and good Yuri Katanov, expectations prompt us to upgrade transportation links are well-positioned Landmark Holdings CEO our assets quality – we are changing to fi nd tenants in competition with com- the systems wherever needed and im- panies across the whole SEE region. Landmark Holdings consolidates the plementing modern CRM technological business interests of Alfa Finance solutions to cater to our tenants' needs. Large investors are eyeing less popular Holding in the real estate sector One showcase example is our Bulgaria areas with suffi cient human capital. Var- in Southeast Europe (SEE). The Center project, which was recently up- na is one location whose importance is company provides comprehensive asset graded to a real class A building. more widely acknowledged. Blagoevgrad, management services starting from Razlog and the nearby towns could be conceptual design to fully operational Which type of offi ce spaces are identifi ed as the new industrial centres buildings. The list of projects for which in highest demand and compa- for many Greek companies. Northern L a ndma rk ha s prov ided se r v ic e s inc lude s nies from which sectors are Bulgaria is posed to attract the attention Business Park Sofia, Bulgaria Mall, most active in the search of of West European and CEE companies Ellipse Centre, Plovdiv Retail Park, new premises? seeking to expand their premises. Landmark Centre Sofia, Landmark Centre Varna and many others. Location, location, location - the old rule Several shopping centres in is still true, and all new facilities devel- Bulgaria changed their owner- oped in areas with good city transporta- ship over the past year. Do you which are the main trends on tion attract high demand. Competition expect this trend to continue? Bulgaria's offi ce space market? and city development have led to the emergence of several preferred zones. We expect the infl ow of foreign capital Lack of new supply of offi ces in the last However, the fi nal mile run to a success- to continue, not only to shopping centres few years brought about a shortage of ful deal with clients remains the human but also to all real estate asset classes. quality offi ce spaces in Sofi a. At the touch. It is the extra effort in customer Market sentiment has changed in the last same time the capital continued to at- care - user experience, if you wish the two years and investors that have stayed tract young urban population and new technological and eco-friendly solutions for a while on assets would like to divest, companies opened offi ces in the coun- and modern approach to fi t-outs that while newcomers are looking for oppor- try. However, the master factor on the win over the client. tunities. Most deals will target assets suit- market is Bulgaria’s demographic devel- able for institutional investors, predomi- opment. Despite the macro challenges Naturally, projects frozen for years have nantly in Sofi a. Secondary locations will in this area we tend to think that over been restarted - we see this among all have to wait but in a mid-term perspec- the next two or three years big cities major transport arteria roads, incuding tive we are bullish on our market. 48

We believe in the long-term

/interview approach to creating sustainable value for our business and STRIES U our stakeholders TOP IND TOP

Nikos Zois, General Manager of Zagorka AD

Zagorka brewery, established in Stara Zagora, enters in its of the production capacity. Currently, the brewery in Stara second century of operation. In 1994, Zagorka AD became Zagora is one of the most modern and innovative in the part of the HEINEKEN global family. Since then, for more region of Central and Eastern Europe. than 20 years now, over 133 million euro have been invested Nikos Zois is General Manager of Zagorka AD since June, in Zagorka AD for processes modernisation and increase 2016. 49 TOP IND Sustainability has been at the Protecting which is very well accepted from our core of Zagorka's business consumers. strategy for years. Where do water resources,

you focus your sustainable Which segments do you view U development efforts at present reducing CO2 as the most promising in terms STRIES and what goals are you striving of sales growth? to achieve? emissions and The trend we actively see in the We at Zagorka believe that a successful advocating premium beers segment is related to /interview business is a sustainable business. As a responsible new tastes and ingredients. The global company with over 110 years of history, trend regarding health, which is coming a company with a portfolio of brands consumption is to Bulgaria as well, is focused in the low that Bulgarians love, a company which and no alcohol products. Bulgaria's beer is part of the most international brewer Zagorka's focus. sales hit an eight-year high in 2016. worldwide – Heineken, we believe in the long-term approach to creating What main trends do you sustainable value for our business and see shaping up the local beer our stakeholders. Zagorka over the past year are energy market in the short term? efficient. This is part of the long term Our corporate social responsibility Heineken policy to have “green” fridges, Bulgaria has long brewing traditions is incorporated within the Brewing which save 30% energy. and consumers are well aware of the a Better World platform, which is a qualities of good beer. According to data business imperative for Heineken, and In regard to sustainable resources, the of the Union of Brewers in Bulgaria, in Zagorka applies it in Bulgaria. endeavors of Zagorka are directed to 2016, the volume of the beer market maintaining a sustainable supply chain, has reached 5.2 million hectolitres and A long-term project in Bulgaria, which based on buying materials from Bulgarian average consumption per capita of 73 we take very seriously is Zagorka Green suppliers and support for the Bulgarian litres. Fund. We launched Zagorka Green Fund economy. in 2011, and this year marks its seventh When we refer to trends and edition. Zagorka reported a recordhigh development, at the present moment, operating profit in 2016. What they are directed toward innovations In 2016, we also commenced with are the main factors influencing in main segments, which are to answer initiatives related to responsible your performance? to the needs of the consumers. We can consumption. These initiatives include expect new offers, as well as we hope for our own campaign Game Over – Alcohol Zagorka AD continues to maintain active discussion related to the positive is not a Game, which focuses upon the its excellent financial performance story of beer. harm of underage alcohol consumption. as a company oriented towards In 2016 Heineken announced a significant providing high quality and innovative What are your investment global partnership with Formula One products, inspirational campaigns, plans for the next three years? Management, and ran the campaign for and implementing very good green responsible consumption stating "If you initiatives, which are part of the We plan additional investments in our drive, never drink" with ambassador Sir platform Brewing a Better World. brewery in Stara Zagora, we also focus Jackie Stewart." In 2017 we continue We are also oriented toward efficient on responsible energy and water use and to actively communicate the problem processes, and rely on our very capable applying state-ofthe art practices within related to alcohol consumption by and engaged people. The last green the working process. minors. action through our brand Ariana was to remove the upper paper label from The health and safety of our employees In 2017 we published our third annual our PET bottles, having partnership will continue to be very important Sustainability Report, where we summa- with ECOPACK to us, alongside the care for the rise the progress related to the platform local community and responsible Brewing a Better World. At Zagorka we Bulgaria and WWF Bulgaria – we consumption. No business plan will set focus on protecting water resources, help nature in a positive campaign, work without people, and our priority reducing CO2 emissions, sourcing sus- will be precisely this – the development tainability, promoting health and safety, and care for the people. advocating responsible consumption and support for the local communities. A The Zagorka brewery is one of the most major goal for the company is to have 73 litres modern and innovative enterprises influence in the spheres in which it op- within the Heineken group and we are erates and to which it can bring positive very proud of the fact that we have a change. Average annual per capita brewery, which has managed to keep its consumption of beer traditions and identity and at the same Also, 100% of the fridges purchased by in Bulgaria. time creates innovations. 50

Going renewable in SEE: STRIES U Multinational companies slowly drive demand up TOP IND TOP

by Mariyana Yaneva, Renewables Now Managing Editor

Viewed in a climate 100% renewable energy sourced (RES) EU-member states Bulgaria, Romania, change context, energy electricity by 2020 under the RE100 Croatia and Slovenia, the electricity consumption frequently initiative created in 2015. By mid-July market regulations are not sufficiently represents businesses’ this year, the initiative has already passed liberalised to facilitate such contracts. single largest contribu- 100 members, three years ahead of National power markets in SEE are V tion to greenhouse gas schedule, and has created a demand for largely dominated by state-owned emissions. Hence, turning to renew- 146 TWh of renewable power per year. utility companies and renewable power able energy is the obvious solution for This combined demand is roughly equal projects are financed through state all companies that want to decarbonize to the annual electricity consumption of support schemes like the feed-in tariff their electricity use faster than the na- . in Bulgaria and the green certificates tional grid would allow. This is especially system in Romania, Plamen Popov, true in Southeast Europe (SEE), where Companies in SEE, especially the Head of Trading South East Europe the utility power sector is still heavily larger commercial and industrial (C&I) at Statkraft Markets GmbH, tells dominated by fossil-fuel power plants. consumers, are generally less concerned Renewables Now. with their carbon footprint and corporate Over the last decade, technological renewable energy buyers are scarce at The most popular way advances and increased implementation present. Yet, the region is following the to go green on electricity have helped bring down prices of worldwide trend with steadily growing in SEE seems to be buying renewable energy technologies, wind and interest in RES electricity strategies. renewable power through the photovoltaic (PV) power, in particular. These can vary from investing directly European Energy Certificate Wind turbine prices have fallen by in a generation asset, or purchasing the System (EECS). almost a third since 2009 while solar power from a third party’s project to panels costs have plummeted as much buying renewable certificates. Managed by a non-profit Association of as 80%, allowing business to make their Issuing bodies (AIB), EECS is the basis sustainability goals cost-effective as well. Investing directly in a renewable energy for certificate schemes in 20 European installation on site, mostly PV, is common countries and enables international Worldwide, corporate demand for small businesses. Corporate power trade. for renewable power is strongly purchase agreements (PPA) - long- on the rise. term contract, under which a business Slovenia-based GEN-I group, a member agrees to purchase electricity directly of AIB with operations in more than Many of the world’s most influential from a renewable power producer, are 20 European countries, says that the companies have committed to using very uncommon in the region. Even in number of clients who opt for 100% RES supply grows each year but in SEE the MARKET FOR GO-DOCUMENTED RENEWABLE ELECTRICITY IN EUROPE private sector’s main criteria (in TWh) when buying electricity is still 400 377 price, not origin of electricity. 367 Only certain segments, like companies 350 343 314 from tourism sector or smaller 300 consumers, which have relatively low

250 236 246 energy bill, are more likely to purchase 223 green electricity, Tjana Kozlin of GEN-I 200 182 group tells Renewables Now. 150 148 111 100 75 “In SEE, demand for certified 50 renewable power is primarily 25 37 8 17 driven by sustainable develop- 0 5 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 H1 2017 ment and corporate respon- Source: based on statistics from the Association of Issuing Bodies (AIB). sibility strategies of multina- 51 TOP IND U STRIES

tional corporations with local "In SEE, demand for certified origin, to traders. footholds,” Simeon Valchev of Nval- ue Energia commented for Renewables renewable power is primarily Green electricity trading faces Now. driven by sustainable development another red-tape hurdle when it and corporate responsibility comes to transferring the guarantees Europe-wide, the GO markets have strategies of multinational of origin between traders. In a free grown consistently over the last corporations with local footholds." market environment, electricity can decade. Demand for GO-documented be sold from one trader to another renewable electricity in Europe, marked Simeon several times before reaching the end a 39% year-on-year growth in the second Valchev, Nvalue customer. To certify that the electricity quarter of 2017, AIB figures show. By Energia comes from renewable energy sources, the end of June 2017, 377 TWh of GO- each time the power is sold, the documented renewable power was trader must apply for transfer of the purchased, already exceeding the total a few roadblocks on the way that may associated guarantees of origin with volume for all of last year with 11 TWh. trip less motivated buyers. the Sustainable Energy Development “Given that this development continues Agency (SEDA). It is currently a lengthy at the same pace, total demand for A few roadblocks on the way process that could be costly as well. 2017 will likely reach nearly 500 TWh,” If this transfer process is streamlined says Tom Lindberg, managing Director The industry body notes that current and “intra-day” power trading is in ECOHZ, a -based company design of the electricity market in the introduced on the power exchange, which sold and delivered more than country does not really encourage renewable energy producer would be 55 TWh of documented renewable trade in green electricity. All major able to cut on balancing costs and offer electricity in 2016. renewable energy producers, especially a more competitive price to spur green wind and PV power producers, have electricity trading, ATEB notes. The Association of traders with long-term power purchase contracts electricity in Bulgaria (ATEB) tells to sell their output at feed-in tariffs. Renewables Now that local companies When the limit for electricity output Renewables Now is an independent have started to show interest in buying which is guaranteed an off-take under one-stop shop for business news and market intelligence for the global renewable energy over the past few the feed-in tariff is reached, then the renewable energy industry. years. Some of its members do handle producers can start offering their Keep up with the latest in the such contracts but these deals account energy on the free market. PV plants, industry on renewablesnow.com or for a very small fraction of the market. for example, reach their limit around contact us for bespoke research at Demand is driven almost exclusively August or September, thus leaving a [email protected] or by international companies and their limited amount of electricity that can +359 (2) 80 12 622 environmental policies and there are be sold, along with its guarantees of 52

M&A in SEE – Strong 2016 STRIES U and Accelerating Investment Activity TOP IND TOP

by Julian Gikov, Aleksander Biesaga, Richard Golden, Raiffeisen Bank International

In the past couple of years, M&A activity in most countries in Southeast Europe (SEE) was influenced by political headwinds, persistent global eco- nomic uncertainty as well as the limited size of the respective domestic markets. Romania kept its lead as the hands down market leader in the region supported by sound economic performance and sector maturity. Following an improved 2016, in the current year Bulgaria’s M&A activity is set to outperform on the basis of robust GDP growth and political stability, whereas Croatia’s political volatility affected deal flow. The slow recovery of the Serbian economy still depresses transaction flow, whilst privatiza- tion may improve the M&A landscape. Slovenia continued its multi-year M&A activity climb on the back of improving economic outlook attracting deals in manufacturing and financial sectors. From sector perspective, in 2016 and 2017 SEE sees a surge in interest in FMCG, technology and me- dia, and infrastructure.

M&A DEALS IN SEE (2010-2017)

180 8 000

160 Julian Gikov, 7 000 M&A Director Southeast 140 Europe, Raiffeisen Bank 6 000 International 120 Raiffeisen Bank International AG (RBI) 5 000 considers Austria as well as Central 100 and Eastern Europe (CEE) as its home 4 000 market, where it is a leading corporate 80 and investment bank. 15 markets of the 3 000 region are covered by subsidiary banks. 60 Additionally, the Group comprises 2 000 numerous other financial service 40 providers, for instance in the fields of 1 000 leasing, asset management as well as 20 mergers and acquisitions. In total, around 51,000 employees service 14.2 million customers through 2010 2011 2012 2013 2014 2015 2016 H1 2017 around 2,600 business outlets, the Deal value M&A volume (Number of deals) Source: Raiffaisen rearch and analys great majority of which are located in CEE. RBI has 119 billion euro of total assets and a top 5 market position in Bulgaria by increasing GDP growth and shrinking 11 countries. RBI is also present in the unemployment. largest global financial centers. The stable level of M&A activity in As part of the Investment Banking Bulgaria significantly accelerated in 2016 Major M&A deals in Bulgaria last activity, RBI has been a leading M&A and 2017. Among numerous favourable year included telco BTC’s corporate advisor in Austria, CEE, Russia and macroeconomic factors, the rise in restructuring driven sale to Viva Telecom Turkey. M&A deals value has been supported for a consideration of 330 million euro, 53 TOP IND Volume of M&A transactions in millions of euro Albania Bosnia Bulgaria Croatia Macedonia Moldova Montenegro Romania Serbia Slovenia TOTAL 2010 6 2 18 12 - 1 2 40 10 9 100 2011 1 3 20 20 3 2 1 32 18 14 114 2012 2 4 34 14 3 1 - 31 9 16 114 U STRIES 2013 3 2 27 16 - - 3 51 13 23 138 2014 1 5 21 18 2 1 2 44 9 20 123 2015 1 2 26 17 2 - 2 39 12 27 128 2016 7 3 28 23 1 - 2 62 13 23 162 YTD 2017 - - 11 6 1 1 2 34 9 6 70

M&A transactions total value Albania Bosnia Bulgaria Croatia Macedonia Moldova Montenegro Romania Serbia Slovenia TOTAL TOTAL 2010 57 11 920 592 - 12 18 455 145 659 2 869 2011 - - 1,650 290 78 7 20 410 1,506 375 4 336 2012 850 20 2,080 160 19 13 - 365 149 319 3 975 2013 4 - 1,360 285 - - 20 490 1,160 1,927 5 246 2014 100 79 820 584 4 - 65 1 480 224 770 4 126 2015 - 45 1,003 1,004 - - 47 3 074 715 1,038 6 926 2016 585 7 1,382 796 8 - 8 3 442 185 1,076 7 489 YTD 2017 - 46 1,430 273 - - 124 452 171 146 2 642 the acquisition of the largest glass CEE water and beverage player KMV. In general trends: a return of international container producer Drujba Staklarski addition, British American Tabaco (BAT) investors in select sectors, and an Zavodi by the Portuguese group BA acquired the most popular cigarettes increasing significance of local players. Vidro from Yioula as part of a regional brands from Bulgartabak for a price of Following a few years of foreign package deal, the sale of the Japanese- 105 million euro. investors interest focused on scalable owned hospital operator Tokuda Group export-oriented or small-to-mid cap and Citi Clinic Group by the hospital In the past twenty months, the financial niche players, an encouraging recent operator Acibadem, HHI Holding's services sector was on top in terms of trend is the gradual recovery of trust gaining control of Overgas through a number of closed deals. In the banking in local purchasing power thus inbound capital increase, the 50% stake sale in sector, KBC’s acquisition of UBB was M&A targets are increasingly players the largest consumer electronics retailer followed by TBI Bank’s sale to the with solid positions on the domestic Technomarket, the acquisition of MAN Latvian 4finance Holding at a price of consumer markets. The continued trucks distributor MVB Trucks & Bus 69 million euro. The leasing sector was robust GDP growth in 2017 and the by M-trucks. The financial institutions particularly active with the sale of Pireaus country’s political stability are expected sector, commercial real estate and Leasing, TBI Rent, BM Leasing, and the to support the positive momentum of renewable energy sector shaped the package purchase of MKB Autopark by M&A activity in the medium term. small- to mid-cap transactions segment. the French-German ADL Automotive. In the insurance sector Generali sold Croatia The number and value of deals already their life-insurance portfolio to the local announced in 2017 demonstrate a sig- competitor Saglasie, whilst AIG sold Croatia continues to experience elevated nificant acceleration in the country' s their operations to Fairfax Financial levels of deal making activity especially M&A activity. The ten top deals had a Holdings. in the mid-sized segment with 2016 total value of disclosed transactions being a record-breaking year in terms north of 1,450 million euro in the first All real estate segments attracted of M&A volume, up by 24% from 2015. half of 2017, which is already more than significant foreign and local interest. This stable performance is underpinned the value of the entire previous year. So Targets included Serdica Mall, Sofia by a continuously improving economic far, the largest deals announced this year Mall, The Mall, Sofia Airport Center, situation. At the same time it should were the closing of the consolidation Galeria – Varna, Somat Logistic Center. be noted that although the number of driven acquisition of UBB and Interlease Moreover, the trend was complimented deals continued to increase, the deal by KBC Group for 610 million euro, and by numerous acquisitions of hotels in value sunk by over 20% in 2016. The the acquisitions of Mall Serdika and The the Black Sea resorts. overwhelming political instability in Mall by the South-African Fund NEPI. 2016 has contributed to the limited Another indication of strengthening for- The most notable public sector investment in the private sector and eign investors’ confidence in consumer investment opportunities are select has practically blocked the initiated purchasing power are the acquisitions pending concessions with key highlight privatisation attempts. of the largest bottled water producer being the rescheduled tender process Devin by Belgium's Spadel for 120 million for Sofia Airport. Key industries driving private sector euro, as well as the purchase of the ex- M&A are traditionally tourism and clusive Pepsi beverages and Prisun juices Recent developments on the Bulgarian hospitality, real estate, food and producer and distributor by the leading M&A market seem to indicate two consumer goods, financial services 54

as well as energy. The largest deals main drivers. The interest of financial can already observe the above trends materialized in the commercial real sponsors is growing from year to year, materialising as two sizable deals took estate sector with the acquisition of whereas private equity funds backed place in 2016 and 2017. In August 2016 Iri STRIES

U Arena Centar by the South-African fund deals made up over half of the total deal Forest Assets acquired Prokon Hit Timber NEPI for consideration of 237.5 million value in 2016. for a consideration of 40 million euro euro, as well as the takeover of City In May 2017, PHI Group, a US company, Center One Zagreb by Morgan Stanley Deals in the energy sector represent acquired a 51% stake in Maxagro. RE at a value of 220 million euro. the major part of recent M&A TOP IND TOP activity, including the acquisition of Privatisation may well again be a There has been increasing activity in the a 51% stake in KMG International, significant contributor to M&A activity energy sector as investors in renewable owner of Rompetrol, by CEFC China in Romania in the near future. Excluding energy sources have faced damaging Energy Company for 596 million euro. the privatisation of minority interests regulatory changes. This has resulted in Another high profile transaction in the through the stock exchange, the main a number of distressed asset sales and power sector involved Allianz Capital pending privatisations include to the significantly halted the development of Partners which acquired a 30% stake in sale of postal operator Posta Romania, new wind farms. the power and gas distribution system the national freight railway transport operator E.ON Distributie Romania company CFR Marfa with planned SE Financial services is the sector that from E.ON for a total consideration of listing, the chemical producer Oltchim featured arguably the largest Croatian 270 million euro. which will potentially be up for sale again deal of 2016, when Societe Generale after carrying out a restructuring plan, decided to sell Splitska Banka to OTP A sector which accounted for a Bucharest Airports, Constanta Sea Port banka Hrvatska. significant part of recent M&A activity is and the salt producer Salrom. wholesale and retail. The acquisition of In addition, the government has recently Profi Rom Food by Mid Europa Partners The excellent economic performance restarted the restructuring process for 533 million euro was the largest of Romania in the recent years seems of fertilizer producer Petrokemija. Romanian deal in 2016. Other sizeable to make it an attractive destination for Additional potential transactions transactions included the acquisitions of M&A in the foreseeable future. Sustained include a planned repurchase of MOL’s dairy products producers Albalact and interest on the part of financial spon- stake in the oil and gas company INA S.C Covalact S.A. by the French Groupe sors conveys confidence that doing busi- by the Croatian government as well as Lactalis. ness in the country can generate good the potential coinciding sale of a 25% returns for investors. The strength of stake in the national utility HEP. Other The real estate sector saw two of the Romania’s M&A market is underpinned state-owned companies earmarked for largest ten deals in Romania in 2016: the by the fact that deals are generated by privatisation are food producer Podravka, 100 million euro acquisition of Shopping many sectors across the economy, with electrical equipment producer Koncar, City Sibiu by New Europe Property new sectors emerging as further M&A marina operator ACI, Croatia Banka as Investments (NEPI), and the 50 million drivers. Non-reliance on privatisation well as the port of the northern Adriatic euro acquisition of Metropolis Center which is an unsustainable and problem- city of Rijeka. by the Czech PPF Group NV. ridden source of M&A renders a further advantage. Going forward, it could be expected that the M&A activity will rebound Romania accounts serbia due to the positive development in GDP growth. Furthermore, Croatia’s for more than a M&A activity in Serbia still lacks volumes accession to the EU is expected to have third of M&A and depths compared to neighboring a positive impact by increasing investor countries, as 2016 and 2017 did not confidence and providing access to deals in SEE. see any single large-scaled deals. Mid- long-term EU funding, which is likely to cap transactions included SBB’s add- particularly benefit construction-related on acquisition of competitive telecom sectors. The ongoing consolidation Healthcare remains a particularly operator IKOM, a consolidation driven and privatisation in the tourism and busy segment driven chiefly by private purchase of the dairy producer Niska hospitality sector is another driver of equity investments. Following Mid Mlekara by the largest sector player M&A activity. Europa’s acquisition of Regina Maria, Imlek, AXA’s exit from their life- and a network of clinics and hospitals, the non-life insurance business to Vienna ROMANIA fund has purchased a number of add- Insurance Group and the takeover of on investments, including Ponderas the sugar producer te-To Senta by its Romania is the leader in M&A activity Hospital, Almedica Berlin Prahova and Serbian rival Sunoko. within SEE, accounting for more than Ixia Medica. a third of the number of deals in the The single public asset transaction was the region. M&A activity is taking place in Another promising sector is agriculture, sale of the state-owned steel mill company many sectors of the economy – financial where interest and room for further Zelezara Smederevo after the government services, real estate, transportation consolidation in the sector exists, which acceptance of the 46 million euro bid from and consumer goods being among the can set the stage for future M&A. We China’s Hebei Iron & Steel Co. 55 TOP IND In 2017 transactional activity highlights In the private December 2015. In March 2017, Apollo the intended majority stake acquisition in Global announced the acquisition of sugar producer Sunoko by the Austrian- sector, food and Summit Leasing, a leasing company, from based Agrana from MK Group. The deal- Sumitomo Corporation. U

flow is complemented by the increase to retail are expected STRIES a majority ownership of Napred razvoj Slovenia is also rapidly becoming a darling in the country’s largest construction to continue to of private equities with an unprecedented company Energoprojekt Holding. drive M&A activity levels in recent years. Apart In addition, GTC acquired Belgrade from the above mentioned transactions Business Center, whilst the Serbian in Serbia. that had a PE backing, AGIC Capital, the food concern Swisslion acquired the China-based PE, acquired Fotona d.o.o., winemaker Vršački Vinogradi. The data development which are increasingly a company engaged in the development storage and imaging services company attractive. and manufacture of laser systems Data Outsourcing Centre d.o.o. was for medical applications. CEE Equity taken over by the leading US NYSE- SLOVENIA Partners have acquired an 84% stake in listed data management player Iron Javna Razsvetljava / Enlux, a company Mountain – despite the relatively small The total transaction value in Slovenia in engaged in providing lightning systems. In size the transaction highlights IT sector 2016 amounted to 1.076 million euro, up September 2016, one of Slovenia's largest attractiveness in the inbound M&A 6% from 2015. Industrial sector, banking food retailers, Mercator, continued its radar. restructuring, private equity in-bound restructuring efforts by conducting the investment and privatisation are the key sale of its subsidiary Intersport, a sporting The Serbian government is currently M&A drivers in Slovenia. Due in part goods retailer, to Enterprise Investors, making another attempt to privatise the to the very limited ability of local banks the Poland-based private equity firm. Belgrade airport. to offer acquisition finance at present, private M&A activity is primarily driven However, Slovenia still has a relatively Other state-owned enterprises for by international and regional investors. large state-owned sector. The which privatisation procedures are in government plans to privatise a further preparation include the insurer Dunav The largest share of transactions in 80 enterprises. However, it plans to Osiguranje and Komercijalna banka. 2016 was traditionally made up by the retain significant influence (25% + 1 industrial/manufacturing segment. In of the shares) in 23 of these, including In addition, after a process of restruc- the No 1 transaction on the market, energy company Petrol, gas supplier turing and debt-for-equity swaps, sev- Japanese paints player Kansai acquired Geoplin, household appliances maker eral other large state-owned companies Helios Group for a total consideration Gorenje, holding company Sava, steel now have good prospects to be more at- of 678 million euro. Other deals in the group SIJ, gaming company Hit, national tractive to investors and may soon be on sector included the privatisation of the lottery company Loterija Slovenije, the privatization agenda – e.g. the phar- auto parts producer Cimos, which was petrochemical company Nafta Lendava maceutical producer Galenika, whose sold to Italian TCH Cogerne group for and reinsurer Pozavarovalnica Sava. privatization attempt failed in the first a consideration of 110 million euro, as quarter of 2017. Metals producer RTB well as the acquisition of a 76% stake In addition to privatisation, a number of Bor and agricultural company PKB are in ETI Elektroelement, a provider of companies controlled by one or more among the most tangable privatization electrical products and services, by banks also are for sale as a result of debt options. Some smaller state owned com- Andlinger & Company, a US PE fund, for restructuring implemented during the panies expected to be placed for sale in a consideration of 28 million euro. past few years. a longer term include the bus producer Ikarbus,, the rubber manufacturer Tigar, A number of deals in the financial However, the sale of companies the furniture producer Simpo and the services sector has taken place in the controlled by banks is often hindered bus company Lasta. past 20 months (2016 – 2017YTD) with by their significant indebtedness and private equity capital driving the bulk of the unwillingness of the shareholders to One of the reasons for the low level of transactions. Earlier in 2015, Apollo and book losses as a result of the disposal, M&As in Serbia so far was that the coun- EBRD acquired NKBM (Nova Kreditna where a recent example was the freezing try has been slow to emerge from the Banka Maribor d.d) for a consideration of sales process of the country’s leading long recession while growth continued of 250 million euro. Subsequent to logistics company Intereuropa. to be depressed due to public spending this purchase, the buyers have are cuts. The situation is gradually improv- implementing a strategy to consolidate The strengthening of the country’s ing as the economic recovery marked by the market. In October 2016 NKBM, in financial infrastructure following the country’s real GDP growth turning posi- turn, announced the purchase of KBS restructuring of the banking sector has tive in 2015 and approaching 3% in 2016 banka, from Austria’s Raiffeisen Bank already improved the investment climate and 2017. International. The deal represented a and boosted the interest of international second transaction between RBI and investors. The positive macroeconomic In the private sector, food and retail are Apollo in the Slovenian market, with outlook will further boost private M&A expected to continue to drive M&A, the latter having first acquired Raiffeisen activity which is already at high levels joined by technology and software Banka d.d., RBI’s Slovenian unit back in across many sectors. 56

Multinational companies must acknowledge need for expert /interview staff in international taxation

(OECD) was made in early 2016 with ing in material transactions exceeding the adoption of new laws in the fi eld of specifi c threshold amounts with related

TOP INDuSTRIES TOP taxation for legal entities. Due to a low parties, should prepare TP documenta- corporate income tax rate of 10%, there tion on an annual basis. was no motivation for profi t shifting away from the country. Tax authorities did not what are the key TP risk pay much attention to TP until recently, areas? but the introduction of the new legisla- tion has made it a matter of extreme in- I always state that large deductible pay- terest so as a result all regions in Bosnia ments to related parties are in the tax introduced rulebooks on TP in order to authorities’ focus in every country. This further adopt the OECD Guidelines. includes royalties, interest payments, service transactions without any justifi - In Croatia the latest change related to cation or inconsistent with the business Anastasia Sagianni, the TP legislation concerns the Advance of the taxpayer or inconsistent with the Head of Transfer Pricing Pricing Agreements (APAs) which was providers’ origin. Can you imagine a Division, Eurofast introduced in the Corporate Income Tax Greek company paying high marketing Act provisions as of January 1, 2017. fees a company based in a jurisdiction Eurofast is a business advisory Furthermore, CbC reporting require- with signifi cant lower tax rate even if employing over 200 advisors at 21 ments were published on March 29, 2017 the provider is not a related party? Tax offices in Southeast Europe (SEE) and by the Croatian Tax Administration. Authorities will defi nitely look closely the Middle East. With over 28-year into that transaction with the said pro- experience, having worked with many To show the increasing importance of TP vider. Another risk area includes trans- global brands and leading institutions, rules, the Bulgarian Ministry of Finance in actions with companies registered in operating in the manufacturing, retail, 2013 approved a table published by the jurisdictions with preferential tax sys- airline, and professional services NRA, according to which, up to March tems. Generally, an inconsistent profi t- sectors, Eurofast is uniquely positioned 31, 2014 every legal entity is obliged to ability for the taxpayer with what might as a one-stop shop for investors looking complete and submit a table that con- be expected for a similar uncontrolled to enter the region. tains information regarding related party taxpayer is indicative and can lead to an www.eurofast.eu, [email protected] transactions. Additionally, Bulgaria intro- audit by the tax authorities. duced the implementation of the “CbC what are the latest trans- Report” in August, 2017 in accordance How do you advise your clients fer pricing developments in with the OECD Action 13, accompa- to manage their risks? Southeast europe (See) and nied with severe penalties for taxpayers. particularly in countries where MNEs will submit the CbC report in Bul- A clearly designated person should eurofast is present? garia if the ultimate parent company is tax be dealing with TP reporting in every resident in Bulgaria and the consolidated entity in addition to the experts. Apart Anti-avoidance rules are becoming Group Revenue exceeds 51 million euro from external advisors, every company stricter across member states of the Eu- for the fi scal year immediately preceding should have or should recruit a person ropean Union as well as beyond the un- the reporting fi scal year, or if a constitu- with international tax experience. ion’s borders. Transfer pricing (TP) rules ent entity of a MNE Group is tax resident MNEs should understand that organising as part of the Commission’s ambitious in Bulgaria, the ultimate parent entity is their departments in tax reporting is agenda towards a more fair and effective not obliged to submit a CbC report in as important as organising the sales corporate taxation in the EU are imple- its jurisdiction and the total consolidated department. We tend to underestimate mented and embodied in national legisla- group revenue exceeds 750 million euro, people who save money and time for an tions in a growing number of countries under certain circumstances as well. organisation while on the other hand we in the SEE Region. overestimate people who bring money. Serbia has developed TP rules since Of course, avoiding all the above- For instance, in Bosnia and Herzegovina 2013 but not yet implemented the CbC mentioned risks is one way to mitigate the nearest step towards approaching report while Romanian Law - in accord- risk and adverse tax consequences as is the rules of the Organisation for Eco- ance with the ordinance Nb. 442/2016 trusting your TP advisor! At the end of nomic Cooperation and Development - defi nes that “large taxpayers” engag- the day, your TP advisor is your choice. TOP 100 BANkS/interview Beirut | Erbil | Tehran Beirut | Erbil | Athens | Thessaloniki Athens | Locations: Alexandria | Tbilisi | Kiev | Moscow Alexandria | Podgorica | Tirana | Skopje | Zagreb | Skopje | Tirana | Podgorica Lefkosia | So a | Bucharest | Belgrade | So a | Bucharest Lefkosia Pristina | Banja Luka | Sarajevo | Cairo | Banja Luka Pristina 57 Balance Balance in South East Europe 2017 East Europe in South of the Year Pricing Firm Transfer www.eurofast.eu [email protected] |

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Your Regional Business Advisory Organisation Regional Business Your B

your Transfer Pricing Risks! Transfer your O L G ANNUAL

to mitigate tax risks, penalties and adverse tax consequences. advice to mitigate tax risks, offer the right expert We 58

Fintech company Credissimo

/interview embraces innovation to expand further STRIES U

have introduced, are another proof that platform - Facebook Messenger. There

TOP IND TOP we are able to respond adequately to was no other similar service worldwide consumer demand by continuously ex- at the time and it was entirely developed panding our technology expertise and by Credissimo's IT department. The competencies in line with global trends chatbot, through a conversation with in our sector. the user, completes all the necessary fields for the credit application process Through the entrepreneurial spirit of and in this way it saves the client time. the business model we are developing, the multiple innovations and creative Earlier this year we adopted the Bitcoin concepts for our products and markets, cryptocurrency as an official payment we have become a long-standing leader tool for faster and more efficient cus- in the field of online microcredit and fi- tomer service. There are no comparable nancial services. We believe that inno- solutions in the Bulgarian market. vation is what distinguishes us from our competitors, and this became clear from The next steps ahead of us are related the first place we were awarded by Bul- to the introduction of an artificial intel- garian consumers in the only consumer ligence assistant. ranking in the country - My Love Marks. After successfully positioning Ivelin Kamburov You talk a lot about innova- the company in the Macedo- CFO and board of directors tions, what are the achieve- nian market, you entered the member, Credissimo ments of the company in this Polish market in 2016. What area and what is in the pipe- are your long-term and short- line? term expectations? I v e l i n K a m b u r o v h o l d s a n i n t e r n a t i o n a l l y recognised ACCA qualification and Credissimo was the first company in The market of financial services target- is a member of The Association of Bulgaria to introduce an entirely online- ing individual consumers in Poland is Chartered Certified Accountants, UK. based application and approval process, extremely developed and diversified in Kamburov is winner of the CFO of the a new method for validation of bank terms for participants, solutions, and Year 2016 award in the Liquidity and accounts, and automated processing of products. We are proud that despite the Risk category granted by EY Bulgaria payday loan applications. This made it big names that already have years of ex- and Forbes magazine. possible for our clients to go through perience in this market, still technologi- the application process in just minutes. cal solutions, such as our chatbot, are What are the main factors im- not widespread. This gives us a strong pacting the performance of Our innovative technologies allow us to competitive advantage right from the Credissimo so far? instantly verify the identity of a customer start, and our long-term expectations and the bank account they want to use are to establish ourselves and maintain We believe that a company’s success is to obtain their credit. The verification leadership in our market niche. Evidence above all the result of a well-established is carried out by means of communica- of our strong positioning in Poland is the team. At present, our company employs tion with a third-party application called fact that our company was accepted as a over 120 professionals, who on a daily ba- Instantor, which was first integrated in full member of the Loan Companies As- sis strive to improve our work processes Bulgaria by us, laying a new milestone in sociation (ZFP), even before we officially and the products and services we offer. the prevention of fraud and customer started our operations in the country. data protection. As a consumer-oriented company, our The expansion we are planning on for- primary goal is to provide our custom- Another revolutionary solution for the eign markets will be largely based on our ers with convenient and quick solutions market was the introduction of the au- CRM system, which can be implemented when they need short-term financing. tomated chatbot service for granting with minimal changes in every country Our achievements in recent years, re- online consumer loans that is available where we begin operations, like we did lated to the innovative solutions we on the most commonly used messaging in Macedonia and Poland. 59 TOP 100 BAN K S /interview 60

Manually processing

/interview massive data is like digging with pick instead ations v of excavator

SEE inno Identrics is a young technology company providing custom semantic solutions for compa­ nies in Southeast Europe (SEE), including media groups and business intelligence providers.

Iva Marinova, Data Scientist at Identrics

Why is Identrics focusing on ment. The problems that we solve are finite resource unable to swiftly scale up SEE and what are the main connected with the automation of the to meet sudden demand or scale down challenges related to the adop- mundane, manual data processing tasks at idle times. And this is where Identrics tion of Artificial Intelligence in done practically in every business. comes in. By applying smart technolo- the region? gies, we add value to businesses, letting Processing data on a massive scale with- them harness human expertise and grow Wit h t he growing volumes of information out automation is like harvesting wheat their effectiveness. created every day, effective information without a combine harvester. A human- management is a key business require- only workforce is an expensive, fixed and Southeast Europe (SEE) is where Iden- 61 SEE trics is headquartered and this naturally which allows common working environ- and local political developments online

gives us the know-how and experience ment for media monitoring between hu- platforms are giving them the power inno of local and regional idiosyncrasies few mans and machines. This environment to misinform on a larger scale, affecting can match. Then there are the statis- solves the scalability and coherence the credibility of information providers, tics, showing growing interest for Ar- problems in companies that use manual brands, companies and people. v tificial Intelligence, or AI, in Bulgaria, annotation processes to analyse huge ations Croatia, Romania, Serbia and Greece. amounts of data. The task is a global challenge at this time A simple check in Google Trends on and scientists worldwide are working

search terms and topics like “machine Another project we are working on is hard on choosing the best algorithm for /interview learning” or “deep learning” shows an related to articles deduplication and the solution. Identrics too has joined the increase in exponential interest in the similarity measurement for big news efforts to tackle fake news by working on last five years. Moreover, countries like groups. They are now able to analyse the algorithms capable of deciding whether Bulgaria have long embraced machine popularity trends and suggest the most or not specific news, comments, tweets learning when it comes to academic relevant content on a particular topic to and even profiles are fake. and scientific developments. In other their users. words, there is a lot of potential and In what way are you expect- opportunities to help enterprises in There are also some new inquiries com- ing Identrics to develop in the SEE gain a competitive advantage over ing from the e-commerce sector from next couple of years ? mature markets like those in Western Europe for our automated content gen- Europe. eration solutions, which we are excited We have always set ambitious goals for about. ourselves. In the short-term our aim The challenges in the region are mostly is to raise awareness of our machine connected with the richness and diver- What are some other more learning capabilities in order to help sity of local languages. And not only that. specific solutions you offer and more companies from different indus- Despite the huge potential of AI a large what are their business impli- tries to solve their pressing problems part of the business community still re- cations? with productivity, cost and business lies on conventional work methods and growth. Our work is part of the glo- technologies. So as an innovative solu- А common and quite interesting exam- bal trend to facilitate information ex- tion provider, we continuously put a lot ple is our tool for sentiment analysis, traction and use the power of big data. of effort into educating the market and which can find applications in absolutely 2018 will validate this trend with best explaining the practical gain for their any industry. Sentiment analysis helps practices and routines in the business, business. On the bright side, as we are discover how people feel about a partic- which will lead to more acceptable working on more and more projects we ular topic. Say you want to know if peo- business environment for companies have plenty of reason to believe the cur- ple on Facebook think that restaurant X like Identrics in the region. rent challenges will translate into future in the Romania capital Bucharest is good products. or bad. Facebook sentiment analysis will answer the question. You can even learn Identrics is What projects is Identrics cur- why people think the restaurant is good rently working on? or bad, by extracting the exact words working on that indicate why people did or didn’t We are working on a number of tailor- like it. algorithms made projects. For example, a leading identifying fake provider of business news and market Through such text mining solutions, intelligence for SEE has asked us to align you can get answers in seconds in the news, comments, its long-stored archives of 400,000 ar- comfort of your office chair. This kind of ticles and 4,000 company profiles. The analyses are pretty accurate and can eas- tweets and client wanted to link the news stories ily reach above 90% precision compared profiles. with the profiles so that the reader with human annotations. Generally our could make immediate reference to the production ready models aim to provide company owners, sales, executives, lo- between 90%-99% precision which can Machine cations, etc. be improved over time. learning can For a publishing and financial information In recent years fake news have company we have developed software taken centre stage. How se- help companies for text content analysis. Such service, mantic technologies and deep solve their for example, is machine identification of learning can help in the fight entities of special interest for the client against fake news? productivity, such as individuals, companies and prod- ucts in news articles. The issue with classifying news as “fake” cost and is similar to sentiment analysis. Fake news business growth We have also developed a product for have been around since the dawn of com- another client with global presence, munication, but with some recent global problems. 62

SEE IT markets 2016: ations v Third platform technologies driving growth, legacy SEE inno markets on decline

by Neli Vacheva, IDC Bulgaria Country Manager

In 2016 the ICT mar- the same time the transition to the smartphones in the SEE region ex- ket in Southeast Europe Third platform (cloud, social, mobility ceeded those of 3G ones – a milestone (SEE) grew 2.35% on an and BigData) shifted investments to- which Western Europe reached two annual basis, driven by a ward replacement of outdated IT in- years ago. According to the IDC Quar- gradual rise in spending frastructure and adoption of mobility terly Mobile Phone Tracker, 63.2% of on IT services and soft- and cloud technologies. Device sales smartphones shipped in CEE in 2016 ware and strong perform- are now dominated by mobile devices, were 4G/LTE, and the company fore- I ance of the smartphone as cloud service providers represent a casts that this share will reach 85.2% in segment. The market's growing proportion of all infrastruc- 2021. All SEE countries except Bosnia subdued performance came after slow ture hardware and software sales even and Herzegovina have 4G networks in recovery of the economies in the re- though the cloud market in Central different stages of development. The gion combined with political instabil- and Eastern Europe (CEE) is lagging share of 4G smartphones was highest ity affected IT investments by both the behind peer regions. The technology in Serbia – 74.3% versus 69.1% in Bul- public and private sectors in 2015. The services market in CEE is worth over garia and 63.8% in Romania. The mar- IT markets in Macedonia, Montenegro 14 billion dollars, as the cloud services ket in CEE, and in particular in SEE, and Slovenia even saw declines year on market represents about one-tenth of continued to be very price sensitive. year, while the markets in Bulgaria, Ro- it. Nevertheless, the uptake of cloud The 2016 average smartphone price at mania, Croatia, Bosnia and Herzegovina is about five times more dynamic and 200 U.S. dollars retail before tax was and Serbia expanded only moderately. consequently the share of cloud de- less than half that in Western Europe. The highest growth rate, by 4.57%, was livery is rapidly increasing. Medium- In the first half of 2017 stable econom- seen in Serbia, followed by Croatia with sized business account for the largest ic performance and a recovery of for- 3.23%, Romania with 1.34% and Bulgaria portion of overall spending on public eign currency exchange rates boosted with 1.21%. cloud service. consumer confidence and demand for notebooks started to pick up in SEE. The IT markets in SEE are highly de- In the consumer segment, tablet and pendent on the performance of hard- notebook sales were outpaced by Regardless of the overall picture of cau- ware sales. The negative trends on the smartphones. In 2016 sales of 4G tious IT investments by the local organi- hardware market continued into 2016, sations, the IT sector in SEE is one of with a significant stagnation on the PC the most dynamic economy branches. market, which shrank 13.63% in terms It is heavily export-oriented and home of U.S. dollars, and the tablets market, Transition to the to numerous R&D and outsourcing cen- which was down 23.10% in U.S. dol- Third platform tres of large IT vendors and innovative lars. The imaging and hardcopy device start-ups developing cutting-edge tech- markets grew slightly after two years of shifted investments nologies which are competitive on glo- declines. toward replacement bal markets. In a situation of uncertainty, the busi- of outdated IT New technologies, which IDC calls "In- ness became cautious about IT in- novation Accelerators" will provide vestments and companies prolonged infrastructure worldwide almost 7.4 trillion U.S. dol- the replacement cycles. While the lars in aggregate industry revenue in business in the region is faced with and adoption of 2015-2020, adding 1.8 trillion U.S. dol- the need to improve its competitive- mobility and cloud lars to the overall size of the industry in ness, IT spending is primarily focused terms of annual sales by the end of the on cost savings and optimisations. At technologies. forecast period. A large proportion of 63 SEE TOTAL IT MARKET CAGR % FORECAST 2017-2021 connectivity that enable the IoT. The

in millions of U.S. dollars IoT use cases that are expected to at- inno HEADLINEHEAD Bulgaria CroatiaRomania Serbia Slovenia Rest of SEE tract the largest investmentsLINEHEADLINE in 2017 10 000 include freight monitoring,in mln, $ smart grid technologies for electricity, gas, v

10 ations 8 000 and water, and manufacturing opera- tions. Production asset10 management 6 000 and smart home technologies are also forecast to attract20 significant in- vestments this year. While these use 4 000 cases will remain the30 largest areas of IoT spending in 2021, smart building 2 000 technologies are predicted60 to experi- ence strong growth of 34.4% CAGR 0 over the five-year forecast.10 The use 2015 2016 2017 2018 2019 2020 2021 cases that will see the fastest spend- 554 Source: IDC CEE Black Book, Q1 2017 ing growth are smart Q1gridQ2 technolo‘12‘12 XX- X gies for water, insurance telematics, Sour ECB this spending will come from the fast- and electric vehicle charging, though growing Internet of Things (IoT) mar- Regardless all will start from a relatively small ket, which is forecast to reach almost of cautious initial base. 1.3 trillion U.S. dollars in annual revenue by 2020, of which more than 1 trillion investments, the According to a survey among attend- U.S. dollars represents new opportu- ees of the IDC CIO events in SEE and nity outside of traditional technology IT sector in SEE the framework for assessment of the market categories (devices, infrastruc- is one of the most digital maturity of organizations IDC’s ture, software, services, and telecom). DX Maturity Scape, most of the organ- Robotics, AR/VR, security, cognitive/ar- dynamic economy isations in SEE are in the “Repeatable” tificial intelligence, and 3D printing will stage of their digital maturity. The DX contribute the rest of this fast-growing branches. Maturity Scape framework enables or- portion of the ICT market. ganisations to assess and benchmark their digital maturity across five key Between 2015 and 2020, overall ICT billion dollars by 2020, as CEE will be dimension: Leadership, Omni-experi- spending, excluding the Innovation Ac- one of the regions that will see fastest ence, Information, Operating Model, celerators, will see a compound an- growth over the review period. and Work source. A typical stage of nual growth rate (CAGR) of just 1% in the Repeatable stage of maturity is that constant currency terms. Including the In CEE, according to IDC forecasts, business and IT strategies are aligned Innovation Accelerators, ICT spend- spending on IoT will grow 20.6% year at the enterprise level to achieve near- ing will increase by 5% over the same on year in 2017, reaching just over term goals. Digital customer product period. In total, the Innovation Accel- 12 billion U.S. dollars. By 2021, CEE and experience initiatives are under erators will post a CAGR of 18%. Asia/ IoT spending is expected to total way, but the business is not yet focused Pacific excluding represents the nearly 27 billion U.S. dollars as or- on the disruptive potential of digital largest market for Innovation Accelera- ganisations continue to invest in the initiatives. Information is managed as tors, forecast to reach more than 600 hardware, software, services, and an asset and its intrinsic DX value is established. Enterprise-wide DX op- COUNTRY IT MARKETS GROWTH FORECAST 2017/2016 erations are emerging and architecture in millions of U.S. dollars and standards are organized to imple- (y/y change in %) ment the best DX practices.HEADLINEHEAD 3500 LINEHEADLINE 4.2 2016 2017 in mln, $ 3000 * * * 10 4.1 International Data Corporation (IDC) is a 2500 global provider of market10 intelligence, ad- 4.0 2000 visory services, and events for the informa- tion technology, telecommunications20 and 3.9 1500 consumer technology markets. More than 1,100 IDC analysts provide30 global, regional, 3.8 1000 and local expertise on technology and in- dustry opportunities and60 trends in over 110 3.7 500 countries worldwide. IDC is a wholly-owned 10 3.6 0 subsidiary of International Data Group 2017 2018 2019 2020 2020 Bulgaria CroatiaRomania Serbia Slovenia Rest of SEE (IDG), a technology media, research, and 554 Source: IDC CEE Black Book, Q1 2017 events company. Q1 Q2 ‘12‘12 XXX Sour ECB October 13-15, 2017

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www.cotrugli.org 65 SEE On-demand business intelligence: inno Transforming data into v actionable insights ations /interview

stop-shop business intelligence tailored You have mentioned requests to the specific needs of every client look- for research-on demand for ing for partners, reviewing competitors some niche markets. Is this al- or considering entry in new markets. ways the case?

How can research on-demand Our expertise ranges from energy and help companies face the chal- transport to IT and agriculture. We have lenges of business growth? produced more than 3,000 tailor-made reports so far, most of them are on We help companies find solutions in specific segments or subsectors. They critical situations. We address issues include, for example, outdoor advertis- which cannot be solved by traditional ing in Bulgaria, ceramic tiles in Macedo- approaches because they require knowl- nia, legal expenses insurance in Bulgaria, edge of the industries in the SEE region, Germany and the UK, medical diagnos- the specifics of the Balkans. For example, tic laboratories in Bulgaria, automotive after frost damaged the walnut crops in lubricants, outsourcing in SEE, etc. the region we had a request for a report on the walnut and almonds market by a We are not confined to niche markets, businessman who wanted to sound out part of our research is focused on the Valentina Gerasimova, the competition and develop an import leading industries in the region - energy, Head of Research strategy for the region. banking, chemicals, transports, whole- sale and retail. The annual ranking of SeeNews On-demand services Our report on outdoor pig breeding the big players in the region of the TOP regulations in neighbouring and western 100 SEE edition is also based on our re- European countries was prompted by search. You have been long in mar- the lack of EU standards for free-range ket intelligence, how has your pork. The research found out that in Among our recent clients are IBM, the business evolved in the age of the western countries the free-range Bulgarian Outsourcing Association, the Big Data? system was a well-established practice Bulgarian Association for People Man- and raised the issue of introducing such agement, the Bulgarian Mining Chamber, Data has been around for decades but regulations. embassies, PR and investment agencies, what has made it big are the new tech- banks and other large companies. nologies and the user needs. More than It is not only emergencies that we at- 15 years ago we started as a research tend to but we also respond to current What is 2018 holding for and market consultancy with the sole or anticipated customer demand. The SeeNews in terms of market purpose to provide a comprehensive da- onslaught of low-cost carriers on the intelligence? tabase of company profiles, industry and Balkans and the fast growth of the seg- macroeconomic reports for Southeast ment in SEE has raised interest in their Our latest development project aims at Europe (SEE). We sought to support lo- business and operational practices, their turning Big Data into an affordable busi- cal and overseas businesses in getting a impact on the leisure and travel market, ness intelligence tool for companies, complete picture of the marketplace. prompting us to come up with a report especially SMEs, which do not have big which can be accessed freely. market intelligence budgets. It will com- Nowadays, clients expect us not only bine data with ontologies, tailored for to provide information on market size, We are the only researcher that has each client, to generate sector reports potential, trends and players but also the resources and the expertise to using automatic extraction, storage, to transform it into actionable insights support a company to find a solution analysis and visualization. to help them discover unmet customer for the SEE market. We have the data needs, competitive advantages, and un- corpus, the real time information, as It will help companies to navigate in the foreseen obstacles. Now, we are more well as long-term partnerships with lo- business environment by highlighting than a data and analytics provider, but cal information providers, analysts and sector trends, market potential and op- a trusted business partner offering one- consultants. portunities.

67 SEE

In-depth knowledge of country INNOvATIONS specifics key to grasping SEE communications market /interview

chance to observe, analyse, and to some The network operates on different mar- extent drive the communications mar- kets within and outside the EU. These ket evolution in Bulgaria and the region. countries are relatively small and have Back then there was neither a clear defi - signifi cant differences in terms of legisla- nition, nor a clear understanding of our tion, media landscape, political and eco- business. There was little competition nomic environment. Probably the great- and fewer and mostly traditional media. est challenge in our work is the in-depth We offered fewer services in our port- knowledge of these differences, keeping folio, had fewer communication channels up with their dynamic alterations and the available and more time to react. Every- ability to adapt our communication and thing is quite different now. content in the most effective way. The key to this knowledge are the strong lo- Everything is shorter, faster and more cal teams and the synergy between the visual. Research shows that humans offi ces. I strongly believe that this is what now have a shorter attention span than gives us the competence and expertise goldfi sh. Our work as PR professionals that make us the preferred regional nowadays is pretty much dominated by partner to companies and brands such as the need to grab this attention and keep Coca-Cola, Nestle, Microsoft, Telenor, it for as long as possible in the context of different markets, platforms, cultures Tomislav Tsolov, and languages. Everything is Founder and General Manager shorter, faster and APRA Porter Novelli In 2015 we united our offi ces in the re- gion into APRA Porter Novelli Balkans more visual. Communication Group in order to pro- APRA Porter Novelli is a private vide professional consultancy and solu- communications company founded in tions across markets by a multinational Beiersdorf, Bridgestone, GlaxoSmithK- 1994 in Bulgaria. In 2012 the company team of local experts familiar with the line, YTONG, Samsung and many more, expanded by entering Albania, Kosovo, specifi cs of each country in the network. with some of which we have a long-term Bosnia and Herzegovina, Macedonia, In 2017 we are already looking towards partnerships over the years. Montenegro and Serbia. In order to the successful completion of numerous further develop the synergy between all trans-border projects of the group and on which See markets do you regional offices in the network, in 2015 have many more planned ahead. see untapped growth poten- they were all incorporated in APRA Porter tial? Novelli Balkans Communication Group. which industries are most gen- The agency is among the founders of the erous in spending on PR and ad- Naturally, we consider economic growth Bulgarian Association of PR Agencies, the vertising in See and has there as the basis for growth potential in our Institute for Risk Management and Crisis been a change in this depart- business. At present, the regional lead- Communications (IRMCC) and APRA ment over the past decade? ers in terms of economic growth are PN Academy - the educational centre of Slovenia, Croatia and Romania, which the agency, certified by the Ministry of In our region these would traditionally I believe hold a lot of opportunities. Education and Science. be the banking and fi nance, telecom and From our point of view, the Balkans are FMCG industries. In the last years we a huge market in which we expect con- are witnessing a growing interest in our solidation and growth. Therefore, we How did the PR market in services on the part of companies oper- are constantly following the trends and Southeast europe (See) evolve ating in the areas of outsourcing, con- transformation processes in the region. over the past decade and what struction and defence. As every market has a different level and key trends are shaping up its pace of development, we are focused on development at present? What country-specifi c challeng- both targeting local clients and offering es do you see on the See mar- our regional expertise to international For more than 20 years we have had the kets on which APRA operates? brands. 68 RS

U Nostalgia, country-of-origin preferences drive social media

SEE COLO perception of car brands in SEE

By Petar Galev, Viktor Laskov, Boyan Ivanovich, Maria Simeonova, Media analysts, Perceptica

The automotive mar- Romania ket in Southeast Eu- Exterior rope (SEE) offered Interior some interesting Price dynamics in 2016, Fuel Consumption Problem/Durability as locally produced Drive Feel models vied for the Engine/Transmission consumers’ attention Country of Origin/Producer T Other with some of the glo- Overall Score bal leaders in the field. Thus, the Dacia Dacia Logan Skoda Octavia Logan and the Fiat 500L emerged as the best performers in Romania and Serbia robust GDP growth and to a change in cerns interior design discussion where respectively. The likes of the Skoda Oc- local legislation abolishing the environ- the Octavia is praised for the quality tavia, on the other hand, offered a much ment tax on vehicles without introduc- and comfort it offers, while Dacia is at- praised price-quality ratio that helped ing an alternative. tacked by unhappy customers complain- propel the models to the top three in a ing about the plastic interior. number of SEE countries. The locally produced Dacia Logan and This analysis focuses on the top ten the imported Skoda Octavia have led the The Logan prevailed only in the price bestselling models in five key markets: sedan segment, sharing a large consumer category due to its low cost profile Romania, Slovenia, Croatia, Bulgaria, base offering their owners low tax rates which fits well a Romanian market that Serbia. Our team of expert analysts coupled with relatively low maintenance favours strongly cheap vehicles. The Oc- then proceeded with assessing their so- costs. Sedan vehicles being traditionally the tavia comes with a significantly higher cial media performance, pinpointing the predominant choice for drivers, the Logan price in comparison, thus it appears that two best performing models. During and the Octavia are often featured in dis- this category is not a selling point for the the process, we also had to exclude ve- cussions when it comes to buying a new Czech vehicle, at least among Romanian hicles that were not comparable to the car. The people mention the low price of customers. rest (e.g. SUVs like the Dacia Duster and Dacias as a main reason for purchase while the Nissan Qashqai). The final stage fea- Octavia is often chosen because people In the more technical discussions about tured an in-depth analysis of the social trust the German quality of its car parts. consumption, engine and durability, the media opinion of the two top models in Skoda is consistently regarded as the eight key areas plus all other additional The new Skoda Octavia is praised for better car compared to Dacia. Both cars comments grouped under the ‘Other’ having a high quality engine featuring a have low fuel consumption rates, but Oc- category. The overall performance un- lower-than-expected fuel consumption. tavia manages to tie them up with a more der all criteria formed a total social me- People discuss the vehicle’s performance powerful engine, while Logan is criticised dia score that helped determine the best in urban environments and mention they for its weak engine, often compared to model for each country. have used the car intensively and find it one of a small motorbike. Both cars are a reliable and problem-free solution for mentioned as durable and reliable, but anyone looking for a new car. Both the Dacia is held back by some negative sto- TSI and the TDI version of the engine are ries from people who had problems with being discussed, with customers praising Logans while Skoda benefits from the both and noting that even inexperienced German automotive industry’s overall drivers manage to keep consumption positive image. Many customers see the low with these engine versions. Octavia as an affordable Czech car offer- ing German quality and reliability. Romania The sentiment analysis pitting the two cars in a head-to-head race shows that Slovenia The Romanian automotive market has Skoda Octavia is preferred in seven of been growing in size in the last couple the eight categories on which the analy- Despite decidedly positive mainstream of years thanks to both the country's sis is based. The largest difference con- coverage of the models, Slovenian con- SEE COLOURS ------try of origin. The VW Golf an was object often of mockeries by theirdiscontentvoiced withits features. users who The repetitive design, often described as “plain boring”, limited interior space andthe price theof modelsnewer were among the biggest negative reputation drivers. Social media users also believe that choosing the Golf choosing to engage was in and support equalcer char topsychology national distinctive tain acteristics. On the other hand, the Clio registered mostly positive to Key categories. nine of chartseight in comments, its topping popularity was the low fueltion consump which, when combined with “fresh” and innovative design choices (both on the inside and the outside), helped se cure the first place in Croatia. Media analysis showed an interesting drive behind people’s choices it came to when picking a brand. While the Clio was portrayed as a great “urban car” thanks to its comfortableprice- consumptionand fuel seats, low front quality ratio, the Golf emerged vehicle favoured as by manual labourers. a This led to social media thatRenault successfully implemented concluding the idea that the and invoked overall drive emotionsfeel were more im portant than raw characteristics such type,transengineasandhorsepower mission. This is model shines exactly – users believe that the where the brand managed to strike to the right balance between price, performance. quality and The Clio managed to beat the almost Golf all in categories, except for coun WVGolf Renault Clio ------r a 69 Price Other Interior Exterior Drive Feel Overall Score Fuel Consumption Problem/Durability Engine/Transmission Country of Origin/Produce CROATIA Croatia Croatia boasts a well-developed auto motive industry with a long trackin components recordmanufacturing, excellent infrastructure and proximity to the big ger markets and production facilities in Western and Central Europe. New car sales in Croatia year-on-year soared in 23% 2016 to trations, 43,015 regis with Volkswagenremaining in and control Opel of ing charts. the Renault also top surged 33% to sell overtake the regional favourite Skoda. The situation is a little bitcomparing differentparticular car models. In the when models ranking, the VW Golf took the first spot for the third time in the past four years, followed by the Renault Clio and the Skoda Octavia. Despite winning in the sales category, the Golf was over taken by the Clio in terms of social me dia performance where the latter the undisputed was leader. tween the models in the problems/dura bility category,where the Skodaperformed Octavia far better than the Renault Clio. The two cars performed well equally in terms of energy/transmissions,albeit for different reasons – the won out in terms Clio of drive feel, while the Octavia stood outin terms of reliability. comfortable. The Renault Clio was seen as more fun to drive than the Skoda Octavia, which was said to be a reliable, but boring car. This was reflected in the disparity be Renault Clio Skoda Octavi ------r Price Other Interior Exterior Drive Feel A Overall Score Fuel Consumption Problem/Durability Engine/Transmission Country of Origin/Produce In comparative analysis, the Skoda Oc ditions, while they celebrated the boost in production, which was expected to contribute to the country’sGDP. tavia’s interior was praised across the board, as the car was seen as spacious and comfortable, almost luxurious, on the inside despite its “boring” exteri or. In contrast, the Renault Clio said wasto look good on the outside, but its seats were often seen as less than The country of origin was also actively discussed with regards to the Clio, as the Renault car is produced in Slovenia. However, commenters also factoryandcon sales car poor Renault’s lamented As was the case with other countries in the region, the finalcontest of the two most popular models on Social Mediacame down to a the Skoda showdown Octavia and the Renault Clio. between Despite the latter’s stark advantage terms of indesign, the Octavia performed better than the Clio in the majority monitored of categories in social comments. The media car was praised for its sturdiness and affordability, and was of sumers came across as both a discern ing and highly sceptical audience in the of process media analysis. Besides being knowledgeable with regards to pricing and technology, Slovenians were very concerned also with the origin vehicles of they drove. the ten compared favourably to the expensive Volkswagen. more Many comment Sko lifelongdescribedthemselvesas ers da fans, and the fact that the Octavia is fre wasRepublicCzech the in produced quently pointed out as one of its many advantages. SLOVENI 70

SERBIA RS Bulgaria Exterior U Interior Bulgaria’s automobile market offered Price some interesting developments in 2016, Fuel Consumption which further added to some specifics Problem/Durability of local car sales. The Dacia Dokker sat Drive Feel Engine/Transmission

SEE COLO comfortably at the top of the rankings in Country of Origin/Producer terms of sales for the fourth consecutive Other year. However, the fact that it is almost Overall Score universally used as a company car means Opel Astra Fiat 500L that it is also virtually absent from social media discussions. Users tend to only durability, the great drive feel (espe- discuss their personal cars, leaving com- cially important for Bulgaria’s less than pany ones behind. ideal roads), and to some extent – its reasonable fuel consumption. On the Thus, the Nissan Qashqai, the Skoda other hand, its three-cylinder engine Octavia, and the Renault Clio emerged (described as suitable only for the small- as the most popular models in the coun- ish Smart) almost handed the first place try – both in terms of sales and social to the Clio. The country of origin and gin theme was certainly one of the most media presence. We chose to look into the manufacturer are also an important popular in terms of share of voice. Serbs’ the performance of the two vehicles that factor for Bulgarian buyers. Perhaps strong patriotic feelings continue to play belong to roughly the same class – the curiously, social media users seem to a vital role when making a decision on Octavia and the Clio. The differences prefer the French car (the Clio) to the buying new cars with users seeing the between the two in terms of social me- one manufactured by the German VAG purchase as a way to support the local dia score were practically non-existent, concern. economy. with the Octavia managing to oust the Clio by the slimmest of margins. Serbia Nevertheless, the media analysis re- vealed a number of problems related to The automotive industry in Serbia has new cars purchases, such as Serbs’ low a long tradition and is one of the most income, the rather uninteresting exte- prominent economic sectors, supply- rior design and poor interior choices. ing numerous European and Asian car Although Fiat scored better than Astra manufacturers. Given its history with in the exterior department, it was con- brands such as the Zastava, it comes sidered more repetitive than truly revo- as no surprise that the best-selling car lutionary. in the country for the last year was the The exterior design seemed to be one locally-assembled Fiat 500L. The brand In the eyes of social media, Astra had of the focal points of social media dis- holds onto the first place for a second two traits to brag about – its proven cussions. While there was little to criti- consecutive year despite seeing its sales durability and its formidable engine cize about the appearance of the Clio, drop 6% to 1,709. Skoda Octavia man- performance. Those themes were also the Octavia was subject to some nega- aged to climb to the second place fol- amongst the lowest performing for Fiat. tive reviews. This mostly had to do with lowed by the traditionally popular in the None of the models exceeded the oth- the designer’s decision to split the front country Opel Astra. Despite Fiat hold- ers in terms of fuel consumption, with lights in two in the restyle version from ing the first place in terms of sales, the users from both sides saying they con- 2016. The move was viewed as unfortu- brand was overshadowed by Opel Astra sidered purchasing them because of it. nate by the majority of users. As is often which took its crown in terms of social On the other hand, users felt vexed the case, the Octavia managed to make media score. about Fiat’s price policy, especially when up for the exterior shortcomings with compared to other brands. Even some its spacious interior. It would be an exaggeration to say the of the most supportive commenters ad- Elsewhere, the Octavia also excelled only reason behind the local success of mitted that there was a large portion of thanks to its great price-quality ratio, Fiat is nostalgia, but the country of ori- users who bought the Fiat out of nostal- gia about Serbia’s market position in car BULGARIA making and not explicitly because of its Exterior advantages over the competition. Interior Price * * * Fuel Consumption Perceptica (www.perceptica.com) is a team Problem/Durability of professionals specialised in creating in- Drive Feel novative in-depth reports based on online Engine/Transmission Country of Origin/Producer media analytics. Mapping brand perceptions Other among customers provides valuable insights Overall Score for helping brands, individuals and organisa- Skoda Octavia Renault Clio tions thrive. SEE LANDSCAPE a 21 20 9.1 4.3 0.7 4.5 10.5 N/A -34.3 -33.2 108.7 0.843 16 loss loss 2015 20 Gross profit/ Gross Source: Bank of Albani in millions of euro 2020 15 9.7 3.0 1.4 4.4 -3.7 13.2 13.6 20 N/A -79.7 0.484 loss loss 2016 19 Gross profit/ Gross 20 14 20 18 N/A 2.14% 8.42% 11.26% e) -13.60% -43.16% -12.03% -10.94% -17.46% -36.06% 20 revenue Y/Y change in ) forc 13 20 17 l labour 20 95.0 2016 385.5 328.6 151.4 131.0 118.0 127.3 113.6 101.8 111.2 tota 0 0 0 0 0 0 0 0 0 Source: International Monetary Fund (IMF) World Economic Outlook Database – April 2017 .0 .8 .6 .4 .2 .0 .8 .6 .4 .2 of 98 96 94 920. 90 88 86 84 82 80 Total revenue revenue Total 16 15 15 15 15 15 14 14 14 14 1 000 FDI UNEMPLOYMENT RATE FORECAST (in millions of euro (% s 2021 2016 Industry 71 Electricity Petroleum/Natural Petroleum/Natural Gas Petroleum/Natural Petroleum/Natural Gas Electricity Petroleum/Natural Petroleum/Natural Gas Telecommunications Petroleum/Natural Petroleum/Natural Gas Metals Wholesale/Retail Construction Source: Institute of Statistic 2025 2020 2014 2019 company name Source: International Monetary Fund (IMF) World Economic Outlook Database – April 2017 2013 2018 Operatori i Shperndarjes se Energjise Elektrike (OSHEE) Sh.a. Kastrati Sh.a. Bankers Petroleum Albania BankersLtd. Petroleum Korporata Elektroenergjitike (KESH) Shqiptare Sh.a. Genklaudis Sh.a. Vodafone Albania Sh.a. Vodafone Europetrol Albania DurresSh.a.* Kurum International Sh.a. Agna Sh.a. Spiecapag - Albania Spiecapag Branch- 2012 125 164 392 443 470 448 481 507 533 490 100 No

See ToP See ToP 2017 000 000 000 000 000 000 000 000

2 8 0 6 280 320 300 360 340 400 380 420 9 1 1 2 3 4 6 5 7 9 8 10 No 1 1 1 1 1 1 1 1 3.7 3. 3. 3. 4. 4. 4. (y/y change, in constant prices) GDP GDP FORECAST (in billions of Albanian leks) (*) Net profit/loss Monitor Media magazine-Albania Union estimations Source: Group, based on the data provided by the tax office. Albania ToP 10 SEE LANDSCAPE GDP FORECAST Ltd, Source:Sarajevo Engineering LRC 10ToP Herzegovina and Bosnia (in billionsofBosnianmarka GDP (y/y change,inconstantyprices) 2. 4. 3. No 10 25 26 26 27 27 28 25.0 9 8 7 6 5 4 3 2 1 5 3 5 4 5 .0 .5 .5 .0 .5 .0 2017 See ToPSee 2012 100 No 100 267 250 241 194 192 168 126 122 99 88 Petrol BH Oil Company d.o.o.Company Oil PetrolBH Sarajevo a.d. Srpske Republike Elektroprivreda Telekomunikacijea.d. Srpske Republike d.o.o. Arcelormittal Zenica BH Telecomd.d. d.o.o. Luka Grupa Banja Optima Konzum DOO Konzum Bingo d.o.o.Bingo Tuzla Holdina d.o.o.Holdina Sarajevo JP Elektroprivreda BiH d.d. BiH Elektroprivreda JP ) 2018 2013 Source: InternationalMonetary Fund(IMF)WorldEconomicOutlookDatabase–April 2017 company name company 2019 2014 Source: AgencyforStatisticsofBosniaandHerzegovin 2025 2020 Petroleum/Natural Gas Petroleum/Natural Electricity Telecommunications Metals Telecommunications Gas Petroleum/Natural Wholesale/Retail Petroleum/Natural Gas Petroleum/Natural Wholesale/Retail Electricity 72 Industry 2016 2021 a (% (in millionsofBosnianmarka UNEMPLOYMENT RATE FDI 23 24 25 Totalrevenue 80 40 90 60 30 20 50 70 10 23 24 25 of .5 .5 .5 0 0 0 0 0 0 0 0 0 0 Source: InternationalMonetary Fund(IMF)WorldEconomicOutlookDatabase–April 2017 tota 213.5 223.3 228.9 277.6 279.1 320.1 384.5 387.9 468.2 528.8 2016 20 l labour 20 17 12 forc Y/Y change in change Y/Y revenue 20 20 -11.84% -14.29% -17.09% -11.84% -11.05% e) 13.46% -3.52% -0.36% 5.78% 5.12% 13 18 ) 20 20 Source: CentralBankofBosniaandHerzegovin 14 19 Net profit/Net loss 2016 loss -0.394 -116.8 -21.5 35.9 47.4 34.5 4.2 3.0 4.3 6.6 20 2020 15 in millions of euro of millions in Net profit/Net loss 2015 loss 20 0.952 -70.4 41.7 41.0 28.7 -9.8 16 1.2 1.0 2.1 1.9 20 21 a SEE LANDSCAPE 21 4.4 16 -3.2 41.8 10.4 17.1 42.1 -62.4 -45.6 -0.260 20 loss loss 2015 Net profit/ in millions of euro 2020 20 15 Source: Bulgarian National Bank 20 1.9 loss loss 2016 Net profit/ 19 20 14 20 18 e) 7.80% 13 revenue 20 20 forc Y/Y change in l labour 17 12 20 20 433 -1.48% 0.695 852650547 11.63% -9.24% 45.0 0.342 2016 tota 1 682 -23.67% 100.6 112.0 1 576 -5.04% -65.8 Source: International Monetary Fund (IMF) World Economic Outlook Database – April 2017 of 0 5 0 0 0 0 0 0 0 0 0 0 5 0 5 0 0 Total revenue revenue Total 5. 4. 3. 2. 1. 9. 8. 7. 6. 3. 2. 2. 1. 1. 0. UNEMPLOYMENT RATE FORECAST (% FDI (in billions of Bulgarian levs) 2021 2016 Industry 73 Petroleum/Natural Petroleum/Natural Gas 2 300 -12.01% 60.9 Metals Electricity Electricity Petroleum/Natural GasWholesale/Retail 1 404Electricity Wholesale/Retail -8.60% Petroleum/Natural Gas Petroleum/Natural Gas 518 -2.0 465 -28.15% -11.51% 18.8 13.3 Source: National Statistical Institute Source: National Statistical Institute 2020 2025 2014 2019 company name Source: International Monetary Fund (IMF) World Economic Outlook Database – April 2017 2013 2018 Aurubis AD Bulgaria AETs Kozloduy EAD Kaufland Bulgaria EOOD & Co KD CEZ Elektro AD Bulgaria And Express DistributionLogistic EOOD Bulgargaz EAD OMV Bulgaria OOD Lukoil-Bulgaria EOOD 12 109 45 66 82 90 100 16 100 No 2012

See ToP See ToP 2017 .0 .0 .0 .0 .0 .0

3 5 8 6 7 4 9 74 76 80 78 82 84 1 1 5 Lukoil Neftochim AD Burgas 2 6 8 9 34 145 Natsionalna Elektricheska Kompania EAD 7 10 No 2. 2. 2. 2. 2. 2. 3. (y/y change, in constant prices) GDP (in billions of Bulgarian levs) Source: SeeNews Source:

GDP FORECAST Bulgaria ToP 10 74 Croatia

ToP 10 in millions of euro See ToP Total revenue Y/Y change in Net profit/ Net profit/ SEE LANDSCAPE No company name Industry 100 No 2016 revenue loss 2016 loss 2015 1 8 INA d.d. Petroleum/Natural Gas 1 998 -15.05% 21.2 -157.4

2 24 Hrvatska Elektroprivreda d.d. Electricity 1 172 -6.94% 175.2 212.7

3 42 HEP-Operator Distribucijskog Sustava d.o.o. Electricity 875.8 -5.69% 88.3 95.0

4 49 Hrvatski Telekom d.d. Telecommunications 812.2 2.05% 120.2 117.0

5 77 Petrol d.o.o. Petroleum/Natural Gas 564.9 -12.38% 13.1 9.1

6 78 Pliva Hrvatska d.o.o. Pharmaceuticals 561.1 6.83% 73.4 22.3

7 87 Lidl Hrvatska d.o.o. k.d. Wholesale/Retail 529.3 7.75% 32.1 24.3

8 91 Plodine d.d. Wholesale/Retail 511.9 -0.27% 10.1 4.6

9 104 Kaufland Hrvatska k.d. Wholesale/Retail 446.0 4.65% -3.9 0.883

10 108 Prvo Plinarsko Drustvo d.o.o. Petroleum/Natural Gas 437.0 -11.98% 23.8 27.0

Source: SeeNews

GDP FDI (in billions of Croatian kuna) (in billions of Croatian kuna)

335 2.5

330 2.0

325 1.5

320 1.0

315 0.5

310 0 2012 2013 2014 2025 2016 2012 2013 2014 2015 2016 Source: Croatian Bureau of Statistics Source: National Bank of Moldova

GDP FORECAST UNEMPLOYMENT RATE FORECAST (y/y change, in constant prices) (% of total labour force)

3.0 14.5

14 2.8

13.5 2.6 13 2.4 12.5

2.2 12

2.0 11.5 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 Source: International Monetary Fund (IMF) World Economic Outlook Database – April 2017 Source: International Monetary Fund (IMF) World Economic Outlook Database – April 2017 75 SEE LANDSCAPE SEE Macedonia

ToP 10 in millions of euro See ToP Total revenue Y/Y change in Net profit/ Net profit/ No company name Industry 100 No 2016 revenue loss 2016 loss 2015 1 17 Johnson Matthey DOOEL Chemicals 1 345.6 11.95% 121.3 91.3

2 124 EVN Elektrostopanstvo na Macedonija AD Electricity 385.9 -5.97% 28.1 28.4

3 174 Okta AD Petroleum/Natural Gas 311.1 -5.60% 5.4 1.3

4 202 Makpetrol AD Petroleum/Natural Gas 269.4 -10.79% 6.1 0.212

5 244 Elektrani na Makedonija AD Electricity 226.8 -13.28% 13.7 6.7

6 341 Makedonski Telekom AD Telecommunications 173.1 -1.01% 20.4 23.9

7 374 Sinohydro Corporation Limited - Skopje Branch Construction 158.2 N/A 31.1 N/A

8 445 Van Hool Makedonija DOOEL Automobiles 129.0 N/A 8.9 N/A

9 459 ONE.VIP DOO Skopje Telecommunications 123.3 N/A -17.6 N/A

10 495 Alkaloid AD Pharmaceuticals 108.8 5.40% 11.5 10.5

Source: Central register of the Republic of Macedonia

GDP FDI (in billions of Macedonian denars) (in millions of euro)

440 400

350 430 300 420 250

410 200

150 400 100 390 50

380 0 2012 2013 2014 2025 2016 2012 2013 2014 2015 2016 Source: State Statistical Office of the Republic of Macedonia Source: National Bank of the Republic of Macedonia

GDP FORECAST UNEMPLOYMENT RATE FORECAST (y/y change, in constant prices) (% of total labour force)

3.9 23.6 23.4

3.7 23.2

23.0

3.5 22.8

22.6

3.3 22.4

22.2 3.1 22.0 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 Source: International Monetary Fund (IMF) World Economic Outlook Database – April 2017 Source: International Monetary Fund (IMF) World Economic Outlook Database – April 2017 76 Moldova

ToP 10 in millions of euro See ToP Total revenue Y/Y change in Net profit/ Net profit/ SEE LANDSCAPE No company name Industry 100 No 2016 revenue loss 2016 loss 2015 1 195 Moldovagaz SA Petroleum/Natural Gas 276.4 11.45% 12.6 -144.9

2 358 Energocom SA Electricity 167.1 -18.57% 1.0 0.114

3 469 Termoelectrica SA (formerly known as CET 2 SA) Electricity 118.1 4.52% -3.4 -16.8

4 475 Orange Moldova SA Telecommunications 116.1 -4.56% N/A N/A

5 493 Moldtelecom SA Telecommunications 109.6 -1.12% 3.5 4.4

6 624 Sudzucker Moldova SA Food/Drinks/Tobacco 70.1 40.78% 4.3 -1.0

7 681 Floarea Soarelui SA Food/Drinks/Tobacco 58.7 55.93% 0.098 -0.163

8 706 Moldcell SA Telecommunications 53.3 -2.04% N/A N/A

9 713 Supraten SA Building materials 52.8 -1.67% 0.666 0.652

10 737 Tirex-Petrol SA Petroleum/Natural Gas 49.0 -32.42% 0.584 1.1

Source: SeeNews

GDP FDI (in billions of Moldovan lei) (in millions of US dollars)

130 400

350 120 300

110 250 200 100 150

100 90 50

80 0 2012 2013 2014 2025 2016 2012 2013 2014 2015 2016 National Bureau of Statistics of the Republic of Moldova Source: National Bank of Moldova

GDP FORECASTS IMPORTS, EXPORTS FORECASTS (y/y change, in constant prices) (y/y change in %)

4.7 8 imports 7 4.5 exports 6 4.3 5

4.1 4

3 3.9 2 3.7 1 3.5 0 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 Source: International Monetary Fund (IMF) World Economic Outlook Database – April 2017 Source: International Monetary Fund (IMF) World Economic Outlook Database - April 2017 77 SEE LANDSCAPE SEE Montenegro

ToP 10 in millions of euro See ToP Total revenue Y/Y change in Net profit/ Net profit/ No company name Industry 100 No 2016 revenue loss 2016 loss 2015 1 209 Elektroprivreda Crne Gore A.D. Electricity 263.7 2.69% 21.9 10.8

2 284 Voli Trade D.O.O. Wholesale/Retail 201.4 5.72% 3.4 2.8

3 451 Mercator-CG D.O.O. Wholesale/Retail 126.0 7.50% 1.9 2.0

4 462 Hard Discount Lakovic D.O.O. Wholesale/Retail 120.0 16.93% 4.1 4.0

5 474 Jugopetrol A.D. Petroleum/Natural Gas 117.4 -15.06% 5.0 4.9

6 540 Crnogorski Telekom A.D. Telecommunications 93.3 -7.45% 9.4 15.9

7 634 Montenegro Airlines A.D. Transportation 68.5 -0.21% -11.5 -10.4

8 641 Telenor D.O.O. Telecommunications 67.5 -32.19% 14.9 46.9

9 654 Franca Marketi D.O.O. Wholesale/Retail 64.8 8.33% 0.846 0.839

10 709 Meso-promet D.O.O. Wholesale/Retail 53.1 -5.56% 1.6 1.8

Source: SeeNews

GDP FDI (in billions of euro) (in millions of euro)

3.8 800

3.7 700

3.6 600 500 3.5 400 3.4 300 3.3 200

3.2 100

3.1 0 2012 2013 2014 2025 2016 2012 2013 2014 2015 2016 Source: Statistical Office of Montenegro Source: Central Bank of Montenegro

GDP FORECAST IMPORTS, EXPORTS FORECAST (y/y change, in constant prices) (y/y change in %)

3.6 10.0 imports 8.0 3.4 exports 6.0 3.2 4.0 3.0 2.0 2.8 0 2.6 -2.0 2.4 -4.0 2.2 -6.0 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 Source: International Monetary Fund (IMF) World Economic Outlook Database – April 2017 Source: International Monetary Fund (IMF) World Economic Outlook Database – April 2017 78 Romania

ToP 10 in millions of euro See ToP Total revenue Y/Y change in Net profit/ Net profit/ SEE LANDSCAPE No company name Industry 100 No 2016 revenue loss 2016 loss 2015 1 1 Automobile-Dacia SA Automobiles 4 619 8.07% 100.5 99.0

2 3 OMV Petrom Marketing SRL Petroleum/Natural Gas 3 211 -2.97% 84.9 73.2

3 4 OMV Petrom SA Petroleum/Natural Gas 3 100 -12.46% 199.9 -139.4

4 6 Kaufland Romania SCS Wholesale/Retail 2 143 5.53% 143.9 143.4

5 9 Rompetrol Rafinare SA Petroleum/Natural Gas 1 985 -8.06% 15.4 18.6

6 10 Rompetrol Downstream SRL Petroleum/Natural Gas 1 820 -0.95% 13.7 -30.7

7 11 British American Tobacco (Romania) Trading SRL Food/Drinks/Tobacco 1 811 11.37% 148.1 96.3

8 20 Carrefour Romania SA Wholesale/Retail 1 277 10.99% 36.1 28.2

9 21 Lidl Discount SRL Wholesale/Retail 1 243 17.53% 47.9 38.0

10 22 Lukoil Romania SRL Petroleum/Natural Gas 1 182 -1.57% -3.6 7.7

Source: SeeNews

GDP FDI (in billions of Romanian lei) (in millions of euro)

150 4.5 4.0

145 3.5

3.0 140 2.5

2.0 135 1.5

130 1.0 0.5

125 0 2012 2013 2014 2025 2016 2012 2013 2014 2015 2016 Source: National Institute of Statistics Source: National Bank of Romania

GDP FORECAST UNEMPLOYMENT RATE FORECAST (y/y change, in constant prices) (% of total labour force)

4.4 6.2

4.2 6

4 5.8

3.8 5.6

3.6 5.4

3.4 5.2

3.2 5

3 4.8 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 Source: International Monetary Fund (IMF) World Economic Outlook Database – April 2017 Source: International Monetary Fund (IMF) World Economic Outlook Database – April 2017 79 SEE LANDSCAPE SEE Serbia

ToP 10 in millions of euro See ToP Total revenue Y/Y change in Net profit/ Net profit/ No company name Industry 100 No 2016 revenue loss 2016 loss 2015 1 7 JP Elektroprivreda Srbije (JP EPS) Electricity 2 089 53.57% 71.2 98.6

2 15 Naftna Industrija Srbije AD Petroleum/Natural Gas 1 546 -10.94% 130.6 132.8

3 26 FCA Srbija DOO Automobiles 1 107 -7.55% 17.2 19.7

4 39 Mercator-S DOO Wholesale/Retail 897.4 -3.60% -14.6 3.1

5 57 Telekom Srbija AD Telecommunications 760.9 -5.86% 123.2 134.6

6 59 EPS Distribucija DOO Electricity 742.1 63.68% -3.0 50.7

7 63 Delhaize Serbia DOO Wholesale/Retail 698.8 7.48% 10.3 18.3

8 69 Nelt Co DOO Transport 622.5 49.75% 7.9 9.2

9 71 JP Srbijagas Petroleum/Natural Gas 613.3 -25.01% 17.6 24.4

10 131 Telenor DOO Telecommunications 379.2 0.27% 72.4 79.8

Source: SeeNews

GDP FDI (in billions of Serbian dinars) (in millions of euro)

3 250 2 000 1 800 3 210 1 600 1 400 3 170 1 200 1 000 3 130 800 600 3 090 400 200 3 050 0 2012 2013 2014 2025 2016 2012 2013 2014 2015 2016 Source: Statistical Office of the Republic of Serbia Source: National Bank of Serbia

GDP FORECAST UNEMPLOYMENT RATE FORECAST (y/y change, in constant prices) (% of total labour force)

4.1 16.5

3.9 16

3.7 15.5

3.5 15

3.3 14.5

3.1 14

2.9 13.5 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 Source: International Monetary Fund (IMF) World Economic Outlook Database - April 2017 Source: International Monetary Fund (IMF) World Economic Outlook Database – April 2017 80 Slovenia

ToP 10 in millions of euro See ToP Total revenue Y/Y change in Net profit/ Net profit/ SEE LANDSCAPE No company name Industry 100 No 2016 revenue loss 2016 loss 2015 1 2 Petrol d.d. Petroleum/Natural Gas 3 214 3.20% 43.7 30.1

2 13 GEN-I d.o.o. Electricity 1 656 -7.53% 8.6 8.1

3 18 Poslovni Sistem Mercator d.d. Wholesale/Retail 1 342 -4.67% -77.4 -3.8

4 19 Holding Slovenske Elektrarne d.o.o. Electricity 1 294 -2.35% 44.4 -323.1

5 25 Krka d.d. Pharmaceuticals 1 153 0.57% 102.9 146.3

6 29 Revoz d.d. Automobiles 1 089 5.14% 15.9 11.6

7 38 Lek d.d. Pharmaceuticals 901.1 0.71% 74.8 115.9

8 60 Gorenje d.d. Electronics 732.4 2.46% 3.7 -4.0

9 64 Telekom Slovenije d.d. Telecommunications 677.1 -1.17% 40.5 48.3

10 73 IMPOL d.o.o. Metals 589.2 -1.17% 15.4 6.4

Source: SeeNews

GDP IMPORTS, EXPORTS FORECAST (in billions of euro) (y/y change in %)

38.5 7 imports 38.0 6 exports 37.5 5

37.0 4

36.5 3

36.0 2

35.5 1

35.0 0 2012 2013 2014 2025 2016 2017 2018 2019 2020 2021 Source: Statistical Office of the Republic of Slovenia Source: International Monetary Fund (IMF) World Economic Outlook Database - April 2017

GDP FORECAST UNEMPLOYMENT RATE FORECAST (y/y change, in constant prices) (% of total labour force)

7.2 3.5

7.0

3.0 6.8

6.6 2.5 6.4

2.0 6.2 Row 11 6.0

1.5 5.8 2017 2018 2019 2020 2021 Source: International Monetary Fund (IMF) World Economic Outlook Database – April 2017 Source: International Monetary Fund (IMF) World Economic Outlook Database - April 2017 SEE LANDSCAPE 83 SEE LANDSCAPE 84