Things are getting back to normal Presenting the results ......(2011 Q2) (2012 Q1) (2012 Q2) (2013...

Things are getting back to normalPresenting the results of the Deloitte CE CFO Survey, conducted among large companies in Poland and Central Europe Q4 2013 | 5th Edition, January 2014

2

The economy is getting back to normal and appears to be stable enough for Polish businesses to focus on priorities like growing revenues and restructuring.

3Things are getting back to normal Presenting the results of the Deloitte CE CFO Survey, conducted among large companies in Poland and Central Europe

Dear Sir/Madam,

It is my pleasure to present the results of the fifth edition of the CE CFO Survey that Deloitte has conducted among the CFOs of large companies in Central Europe. Our regular publication focuses on the predictions and challenges faced by Polish CFOs. It also serves as a means of comparing the sentiments of Polish CFOs with those of their peers from 13 other CE economies: the Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, Hungary, Latvia, Lithuania, Romania, Serbia and Slovenia, Slovakia.

The latest predictions regarding the future of the Polish economy show growing optimism among Polish CFOs. Over 60% of them expect GDP growth to exceed 1.6%. The economy is getting back to normal and appears to be stable enough for Polish businesses to focus on priorities like growing revenues and restructuring. In addition, Polish CFOs are ranked in the top three of the 13 countries covered by the survey in five categories: plans for increasing financial leverage (1); intention to increase risk appetite (2); availability of new bank loans (3); GDP growth (3); and decreasing unemployment (3).

The main concerns among Polish heads of finance are price pressures and liquidity problems. In many CE countries, businesses are planning to continue the strategy of exercising strict controls on costs and financial liquidity as well as reducing investment. However, an appetite for risk is returning to some countries, including Poland, with a particularly strong focus on growing revenues from existing and prospective markets. This is clearly a positive indication, which promises economic and market improvements in these countries.

I hope you find our report interesting and inspirational, and I would like to take this opportunity to invite you to take part in our next survey.

Introduction

Krzysztof PniewskiPartner, Finance Transformation Leader Deloitte Poland

4

Key trends and comments on the results of the CFO Survey in Poland – a significant improvement in sentiment:• CFOs’ predictions for the economic realities of the Polish economy are proven – their forecast of 1.5% GDP

growth in 2013 was accurate.

• According to our respondents, the situation is returning to normal for the Polish economy and companies: CFOs predict: a sustainable level of growth at 2% (60.7% predict growth to exceed 1.6%); a low inflation rate of under 3% (88% of CFOs); stable foreign exchange rates around PLN/EUR 4.1-4.2 (56% of respondents); attractive (42%) or relatively easily available and reasonably priced (80%) bank loans; and good investment prospects and risk appetite for most businesses (39%).

• We have seen a further improvement in the snet optimism of Polish CFOs, up from +24% to +44%.

• Price pressure (according to 34% of CFOs) and maintaining financial liquidity in a time of economic growth (20%) are the main challenges for 2014. Some of the key strategic priorities resulting from these challenges are: pressure on revenue growth in existing (84%) and prospective (70%) markets. There will also be a strong focus on cutting direct costs (the main priority for over 80% of respondents) and indirect costs – this is a result of the pressure on prices and striving for operational excellence to ensure profitability and competitiveness in the face of falling prices.

• The percentage of CFOs who see the recession and a fall in demand as the main risk has fallen from 48% to 17%.

• Polish companies are satisfied with the current level of their investment in R&D. 68% do not plan to increase the level of their R&D spendling during the next year.

• The percentage of negative responses naming regulatory change as the main obstacle to the development of Polish companies has increased. This is a result of the numerous changes made to the CIT, VAT and PIT provisions that companies have to comply with. VAT regulations (81%) and CIT regulations (58%) are quoted as the key administrative obstacles to business activities.

• Finding the right employees is also becoming increasingly difficult (24% last year compared to 37% this year).


CFOs forecasts for 2014

Litwa

Łotwa

Polska

Albania

Słowacja

Rumunia

CzechyWęgry

Bułgaria

Serbia

Bośnia

Chorwacja

Słowenia

0%

10%

20%

30%

40%

I Edycja II Edycja III Edycja IV Edycja V Edycja

Slowdown

Moderate growth

Recession

Growth

Chart 1. GDP forecast

What will GDP dynamics be in the opinion of CFOs?

Chart 2. Appetite for risk in selected Central European countries

Is this a good time to be taking greater risk onto your company’s balance sheets?

Czech RepublicPoland Hungary

Slovakia Romania

Lithuania

Latvia

Poland

Albania

Slovakia

RomaniaBulgaria

Serbia

Bosnia

Croatia

Slovenia

Hungary Czech Republic

I Edition II Edition III Edition IV Edition V Edition

(2011 Q2) (2012 Q1) (2012 Q2) (2013 Q1) (2013 Q2)

Economic growth expectations for 2014 in Poland are optimistic. Only in Poland, Lithuania and Latvia more CFOs forecast slight or dynamic growth of GDP than would expect recession or stagnation. Slovenian, Croatian and Bosnian are on the other side of the scale.

In five categories CFOs from Poland are ranked in the first three places out of 13 surveyed countries: willingness to increase the financial leverage (1), ability to increase risk (2), availability of new loans (3), increase of GDP (3), decrease of unemployment (3).

6

Evaluation of the economic situation

The International Monetary Fund’s 2014 GDP growth forecast is as follows:

• Global – 3.6%;

• Developed economies – 2%;

• Emerging economies – 5.1%;

• Poland – 2.4%.

This is particularly interesting, because we have historically noticed a strong link in Poland between the level of CFO optimism and actual GDP increase. In the current survey, the level of optimism continues to grow. Should we therefore expect 2014 to be a good year?

Introduction

Graph 3. Global increase of GDP

GDP increase according to IMF

Developed economiesWorld Emerging economiesPoland

Graph 4. CFOs’ optimism versus GDP

Are CFOs right in their forecasts as to GDP increase?

GDP (scale to the right side)Net optimism (scale to the left side)

Source: WEO, IMF data.* IMF projection

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014*

Source: Deloitte analysis based on WEO, IMF data.

0%

1%

2%

3%

4%

5%

6%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%


The macro-economic forecast of Polish CFOs shows a moderate level of optimism.

The majority (61%) of CFOs in Poland predict economic growth of 1.6% or over. In the opinion of as many as 20%, the growth rate will exceed 2.5%. The proportion of CFOs who meanwhile expect the unemployment rate to fall a little (46%) was almost three times greater than those who expect a slight increase (15%).

The inflation rate is expected to be low. A total of 88% of CFOs believe that the inflation rate will be below 2.9% next year. 49% expect it to be in the 2%-2.9% range and 39% predict it to be under 2%. Respondents also predict the EUR/PLN exchange rate to be in the 4.1-4.19 range, which is close to the current rate (as of 14 January 2014).

Moderate GDP growth, a low inflation rate and a small fall in unemployment

Chart 5. Forecast GDP change in 2014

What will GDP dynamics be in the opinion of CFOs?

2%

23%

64%

11%5%

49%46%

0%5%

43%50%

2%3%

36%41%

20%

0%

20%

40%

60%

80%

=0,5% 0,6% - 1,5% 1,6% - 2,5% 2,6% - 3,5%

11%

28%

52%

8%5%11%

69%

15%14% 12%

69%

5%

46%37%

15%

2%

0%

20%

40%

60%

80%

Zmniejszy sięnieznacznie

Bez zmian Zwiększy sięnieznacznie

Znaczniewzrośnie

Chart 6. Forecast unemployment within the next 12 months

What will the unemployment rate be in opinion of CFOs?

Chart 7. Forecast inflation for 2014

What will inflation be in opinion of CFOs?

2%

31%

59%

8%2%

48% 48%

1%

33%

55%

10%

2%

39%

49%

10%2%

0%

20%

40%

60%

80%

1,9% 2-2,9% 3-3,9% 4-4,9%

Chart 8. Forecast exchange rate at the end of 2014

What will exchange rate be in opinion of CFOs?

2% 2%

20%

56%

17%

3%

0%

20%

40%

60%

3,80 PLN -3,89 PLN

3,90 PLN -3,99 PLN

4,00 PLN -4,09 PLN

4,10 PLN -4,19 PLN

4,20 PLN -4,29 PLN

powyżej4,30 PLN

2012 Q1

2012 Q2

2013 Q1

2013 Q2

2012 Q1

2012 Q2

2013 Q1

2013 Q2

2012 Q1

2012 Q2

2013 Q1

2013 Q2

Will insignificantly decrease

No change Will insignificantly increase

Will significantly increase

more than 4,30 PLN

3,80 PLN- 3,89 PLN

3,90 PLN- 3,99 PLN

4,00 PLN- 4,09 PLN

4,10 PLN- 4,19 PLN

4,20 PLN- 4,29 PLN

=0,5% 0,6%-1,5% 1,6%-2,5% 2,6%-3,5%

8

17%31%

48%

21%10%

51% 33%

32%

34%35%

21%28%

19%43%

46%

3% 8% 1% 2% 8%

7% 5%

-28%

24%

44%

-50%

0%

50%

100%

2011H2 2012H1 2012H2 2013H1 2013H2

28%

10% 9% 5%

30%

52%

52%40%

41%

44%

10%

28% 47% 50%

24%

7% 10%

4% 3% 2%

0%

20%

40%

60%

80%

100%

2011H2 2012H1 2012H2 2013H1 2013H2

The net optimism, expressed as the percentage of respondents who anticipate an improvement minus the percentage of those who predict a deterioration, has gone up from +24% to +44%. The percentage of CFOs who are optimistic about the prospects for growth of their companies has increased to 54% over the past six months.

More and more CFOs feel the level of uncertainty is normal (up from 5% to 30%). The number of CFOs who see the level of uncertainty as normal had halved (from 53% to 26%).

Optimism can be seen across the whole region, especially in those countries predicting economic stagnation (Bosnia, Bulgaria, and Serbia).

State of uncertainty or normality?

Chart 9. Economic uncertainty

Evaluation of economic uncertainty by CFOs

Standard

Over standard

High

Very high

2012 Q22012 Q1 2013 Q22013 Q12011 Q2

Chart 10. Financial perspectives for Poland

Financial perspectives comparing to situation 6 months ago

2012 Q22012 Q1 2013 Q22013 Q12011 Q2

Very Optymistic

Fairly optimistic

No change

Less optimistic

Net optimism

The economic prospects of Polish companies are returning to normal


-10% -18% -6%-7% -15% -11% -17% -21% -6%

-11%-27%

-14%

10%

36% 32%51%

37%50%

40% 41% 41% 49%32%

43% 50% 33%

46%32%

43%56% 33%

41% 35% 38% 27% 53% 27%33% 47%

8%

18%

2%8%

7%18%

4%

3%

3% 10%

44%

32%37%

49%

20%

38%

25%

17%

39%46%

3%

22%

67%

-50%

0%

50%

100%

Polska Słowacja Czechy Rumunia Węgry Albania Bułgaria Litwa Łotwa Serbia Słowenia Chorwacja Bośnia iHercegowina

Chart 11. Financial perspectives for Central Europe

Financial perspectives comparing to situation 6 months ago

Poland Slovakia Czech Republic

Romania Hungary Albania Bulgaria Lithuania Latvia Serbia Slovenia Croatia Bosnia and Herzegovina

Very Optymistic

Fairly optimistic

No change

Less optimistic

Net optimism

10

Key business risks and priorities

Price pressure, payment gridlocks and liquidity problems are seen as considerably greater key risks than in the previous survey of May 2013. The percentage of respondents who see the recession and falling demand as the key risk, however, has reduced from 48% to 17%.

Pressure on prices is a result of tougher competition in the market as well as the struggle for market-penetration and growth. Growth is fuelled by working capital, which encourages businesses to focus on maintaining financial liquidity.

The types of risks taken are typical of a growing business that is vying for market share and which needs cash to fund its inventory and liabilities.

There is growing pressure on prices and less concern about recession

22%

5%

9%

20%

13%

5%

8%

11%

2%

6%

46%

9%

13%

5%

2%

3%

9%

48%

10%

22%

3%

3%

5%

12%

17%

20%

34%

0% 20% 40% 60%

Ryzyko kursowe

Niedostępne finansowanie

Wzrost kosztów działalności

Brak dostępu do wykwalifikowanychpracowników

Zmienne prawo podatkowe i gosp.

Recesja i spadek popytu

Problemy z płynnością

Presja cenowa

Chart 12. Risk

What risk factors do CFOs perceive as the most important?

Price pressure

Liquidity problems

Recession and decreased demand

Changing tax and economic law

Shortage of qualified workforce

Increased costs of business

Unavailable financing

Foreign exchange risk

2012 Q1 2012 Q2 2013 Q1 2013 Q2


0% 50% 100%

Wzrost przychodów (obecne rynki) - 2013H2Wzrost przychodów (obecne rynki) - 2013H1Wzrost przychodów (obecne rynki) - 2012H2

Wzrost przychodów (nowe rynki) - 2013H2Wzrost przychodów (nowe rynki) - 2013H1Wzrost przychodów (nowe rynki) - 2012H2

Redukcja kosztów – koszty bezpośrednie - 2013H2Redukcja kosztów – koszty bezpośrednie - 2013H1Redukcja kosztów – koszty bezpośrednie - 2012H2

Redukcja kosztów – koszty pośrednie - 2013H2Redukcja kosztów – koszty pośrednie - 2013H1Redukcja kosztów – koszty pośrednie - 2012H2

Poprawa płynności - 2013H2Poprawa płynności - 2013H1Poprawa płynności - 2012H2

Inwestycje - 2013H2Inwestycje - 2013H1Inwestycje - 2012H2

Revenue growth continues to be one of the top priorities for Polish firms. Over three quarters of respondents will generate growth in their existing markets, whereas 70% will generate revenue from prospective markets. Revenue can be hard to earn, however, due to the growing pressure on prices, slow economic growth and falling investments.

Interestingly, there is a stronger focus on cutting direct costs, which is the main priority for over 80% of businesses. It seems as though this is an effect of the crisis period, which has highlighted the need to invest in the competitiveness of a business in a time of prosperity. Consequently, we should expect companies to implement operational excellence, lean manufacturing and ongoing improvement in their core operating areas.

Revenue growth and savings are the priority

Businesses’ strategies for 2014

Chart 13. CFO priorities

CFO priorities for the next 12 months (1 - the lowest, 6 – the highest)

Investments - 2012H2Investments - 2013H1Investments - 2013H2

Improvement in liquidity - 2012H2Improvement in liquidity - 2013H1Improvement in liquidity - 2013H2

Cost reduction – indirect costs - 2012H2Cost reduction – indirect costs - 2013H1Cost reduction – indirect costs - 2013H2

Cost reduction – direct costs - 2012H2Cost reduction – direct costs - 2013H1Cost reduction – direct costs - 2013H2

Increase in revenues (new markets) - 2012H2Increase in revenues (new markets) - 2013H1Increase in revenues (new markets) - 2013H2

Increase in revenues (current markets) - 2012H2Increase in revenues (current markets) - 2013H1Increase in revenues (current markets) - 2013H2

2

3

1

4

5

6

12

New dimension to restructuring – continuing improvement

Business restructuring is becoming increasingly important as a key strategy (involving changes to the business model). In 2014, restructuring will be the key priority for 30% of the Polish respondents, a fact that is true of all countries in the survey except Lithuania.

41%

48%

15%

15%

25%

32%

66%

47%

28%

23%

24%

29%

29%

38%

32%

67%

33%

48%

46%

27%

41%

36%

27%

52%

44%

41%

21%

20%

18%

52%

27%

22%

7%

12%

36%

50%

24%

27%

30%

0% 20% 40% 60% 80%

Słowacja

Czechy

Rumunia

Węgry

Albania

Bułgaria

Litwa

Łotwa

Serbia

Słowenia

Chorwacja

Bośnia i Hercegowina

PolskaPoland

Bosnia and Herzegovina

Croatia

Slovenia

Serbia

Latvia

Lithuania

Bulgaria

Albania

Hungary

Romania

Czech Republic

Slovakia

Chart 14. Restructuring as a priority in Central Europe

To what extent will restructuring be a priority over the next year?

It will not be the priority

It will be one of many priorities

It will be the key priority

41% 42% 48%41%

25% 28% 10% 30%

0%

20%

40%

60%

80%

100%

2012H1 2012H2 2013H1 2013H2

Chart 15. Restructuring as a priority in Poland

To what extent will restructuring be a priority over the next year?

It will be one of many priorities

It will be the key priority

2012 Q22012 Q1 2013 Q22013 Q1


76%65%

78%69%

61%

24%35%

22%31%

39%

0%

20%

40%

60%

80%

100%

2011H2 2012H1 2012H2 2013H1 2013H2

We have seen a further rise in the appetite for risk among Polish CFOs. 39% of those we surveyed believe now is a good time for increasing risk, the highest level. Lithuania is the only country with a greater number of CFOs than Poland who are ready to take risk.

The Czech Republic (30%) and Romania (30%) are ready to make investments, too. In spite of a positive attitude towards risk, investments are not the top priority for Polish CFOs. Some investments will get the go-ahead, but heads of finance in Poland will look more closely to revenue, costs and profitability.

The risk appetite level in the 30-50% range should be considered average, which is another sign that things are getting back to normal.

Risk appetite is rising – are things getting back to normal?

0% 50% 100%

Słowacja

Czechy

Rumunia

Węgry

Albania

Bułgaria

Chorwacja

Litwa

Łotwa

Serbia

Słowenia

Bośnia i Hercegowina

Polska

39%

28%

0%

7%

12%

57%

21%

21%

15%

24%

30%

30%

21%

Chart 16. CFO priorities in Central Europe

To what extent are new investments a priority for the next 12 months

(1 – the lowest, 6 – the highest)

2

3

1

4

5

6

Poland

Bosnia and Herzegovina

Slovenia

Serbia

Latvia

Lithuania

Croatia

Bulgaria

Albania

Hungary

Romania

Czech Republic

Slovakia

% of CFOs who think that it is a good time to be taking greater risk

Chart 17. Appetite for risk

Is this a good time to be taking greater risk onto your company’s

balance sheets?

Yes

No

2012 Q22012 Q1 2013 Q22013 Q12011 Q2

14

2%

15%

64%

14%

5%

Znacząco wyższe

Wyższe

Na tym samym poziomie

Niższe

Znacząco niższe

2%

8%

68%

19%

3%

Zdecydowanie spadnie

Spadnie

Pozostanie niezmieniony

Wzrośnie

Zdecydowanie wzrośnie

According to CFO forecasts, 68% of Polish businesses have no scope to increase their R&D budgets for the next year. Only 22% of large companies in Poland are set to increase their R&D spending during the year, whereas 10% predict their R&D expenses will actually fall. In addition, 60% of finance heads claim that their companies’ expenditure is the same as that of their closest competitors.

The largest single proportion (17%) of Polish CFOs believe that financing an organisation’s internal R&D resources is the best way to improve its innovativeness. Only 5% of respondents said their R&D projects were financed with EU funds or state aid.

Level of R&D expenses unchanged

Chart 18. R&D investments

Compared to the past 12 months, your R&D investment next year will:

Definitely increase

Increase

Remain on the same level

Drop

Definitely drop

Chart 19. R&D investments

Compared to its immediate competitors, R&D investments in your Company will be:

Definitely increase

Increase

Remain on the same level

Drop

Definitely dropChart 20. Most effective methods in improving the

innovativeness of a business

Funding internal R&D in the company

Training and development of the existing workforce

Hiring highly qualified specialist

Purchase of latest machines and equipment

Increasing investments in IT and informatization of business activities

Funding projects in respect of R&D cooperation with R&D institutions and higher education institutions

Co-funding innovation development programmes from EU and local funds

Acquisition of and integration with innovative companies

Co-funding R&D or work on implementation of new standards by a consortium of companies

Purchase of patents and licences

17%

12%

11%

11%11%

10%

10%

8%

5%5%


50% of the CFOs we surveyed predict a small increase in the level of M&A activity in Poland. Over the past six months, the number of CFOs expecting the level of M&A activity to rise has gone down by 9%, while the number of those predicting only a slight fall has gone up by just 3%.

Poland and Slovenia are the countries with the biggest proportions of CFOs predicting a material increase in the level of M&A activity (up from 5% to12% in Poland over the last year).

Strategic projects for Polish CFOs: level of M&A activity

Chart 21. Change in M&A level in Poland

What changes do CFOs expect at the level of mergers and acquisitions?

Will slightly increase


No change

Will slightly decrease

5% 3% 2% 11% 5% 5% 11% 2%3% 3% 10%

44% 53% 54%48%

40%53% 36%

27% 25%

75%

35% 33%

36%

38%

44% 42% 34%47%

42%

46%70% 69%

21%

47% 57%51%

12%

2%7% 8% 7%

3% 4% 4% 15%7%

3%

0%

20%

40%

60%

80%

100%


Chart 22. Change in M&A level in Central Europe

What changes do CFOs expect at the level of mergers and acquisitions?



Will slightly decreaseNo changeWill slightly increaseWill significantly increase

7% 8% 7% 2% 5%

34% 33% 40%39%

44%

38% 43%39% 52% 38%

21% 16% 14% 7% 12%

0%

20%

40%

60%

80%

100%

2011H2 2012H1 2012H2 2013H1 2013H22012 Q22012 Q1 2013 Q22013 Q12011 Q2

16

The debt financing market has returned to normal. Bank loans are an attractive source of finance in the opinion of 42% of Polish CFOs. This result should not come as a surprise considering that borrowers in Poland are enjoying the lowest interest rates since 1989.

Polish CFOs are the second largest group in the region claiming that new bank loans are easily available for businesses (20%). Nearly 60% of CFOs in Poland claim that availability of bank loans is at a normal level. Compare this with Romania and Slovenia, where none of the surveyed CFOs believes that bank loans are easily available, and about 40% and 20% respectively believe the availability of bank loans is at a normal level.

Financing – bank borrowing is more attractive and available

Chart 23. Attractiveness of loans

How attractive are loans as a source of financing?

Chart 24. Availability of loans

How do CFOs evaluate the loan availability?

Chart 25. Granted loans

Size of bank receivables from enterprises

23%33%

16% 20%

67%60%

70% 60%

10% 7% 14% 20%

0%

20%

40%

60%

80%

100%

2012H1 2012H2 2013H1 2013H2

Easily available Normally available Barely available

2012 Q22012 Q1 2013 Q22013 Q1

10%24%

14% 12%

63%51% 61%

46%

27% 25% 25%42%

0%

20%

40%

60%

80%

100%

2012H1 2012H2 2013H1 2013H22012 Q22012 Q1 2013 Q22013 Q1

Attractive Neutral Unattractive

232 228223 220

216 215 216 217 218228

238

251 251258 261 260 258 260 262 261

210

220

230

240

250

260

270


10% 5%19%

34%

11%

14% 18%

23%

30%

45%

66%55%

48%

36%39%

10%22%

10%5%

0%

20%

40%

60%

80%

100%

2011H2 2012H1 2012H2 2013H1 2013H2

21% 15% 20% 15%32%

31%52%

55%57% 31%

48%33%

25% 28%37%

0%

20%

40%

60%

80%

100%

2011H2 2012H1 2012H2 2013H1 2013H2

The number of CFOs predicting lower costs of finance is falling (only 10%), in this edition while a growing number (39%) expects the cost of borrowing to go up. Clearly, CFOs are not expecting any further interest rate cuts or tougher competition in the banking sector which would trigger a drop in interest rates.

The percentage of CFOs predicting an increase in debt has gone up from 28% to 37%, as have those who are planning to reduce their debt (from 16% to 32% of respondents). This is typical and shows that business funding patterns are getting back to normal.

Sentiments in other countries in Central Europe are similar to those prevailing in Poland.

Debt fluctuations are at a normal level

Chart 26. Planned level of indebtedness in Poland

What is the planned level of indebtedness within 12 months

DecreaseNo changeGrowth

Chart 27. Financing costs in Poland

Forecast of changes in financing costs within 12 months



No change


2012 Q22012 Q1 2013 Q22013 Q12011 Q2

2012 Q22012 Q1 2013 Q22013 Q12011 Q2

18

2% 2%3% 3% 3%

10%

5%

38%

21%

34%7%

3%

15%

22%2%

3%

44%53%

57%

26%

36%

37%

45%

34%

31%

56%

47%36%

49%

39% 44%35%

34%40%

24%

38%60%

51%

22%

44% 57%43%

5% 3% 3% 3% 2% 7% 3%

9%5% 5%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


Chart 28. Financing costs in Central Europe

Forecast of changes in financing costs within 12 months





No change


Will significantly decrease


Equity financing is not seen as an attractive source of financing and is rarely used. After a short period of heightened IPO activity in the second half of last year, we should not expect the same leveI of IPO activity on the Warsaw Stock Exchange in the first half of 2014.

Few IPOs on the capital market

Chart 29. Attractiveness of share issues

How attractive are share issues as a source of financing?

Chart 30. WIG20

Situation at stock exchange - WIG20 index

39% 41%32% 30%

47% 47%

46%58%

14% 12%23%

12%

0%

20%

40%

60%

80%

100%

2012H1 2012H2 2013H1 2013H22012 Q22012 Q1 2013 Q22013 Q1

Attractive

Neutral

Unattractive

1512

1862

2192

23892496

2271

26152744

2817 2802

21892144

228722752371

2583

2370

2151

23912401

1400

1600

1800

2000

2200

2400

2600

2800

3000

20

Obstacles to business

Complex VAT procedures are considered the main obstacle to business

CFO’s believe that VAT reform and simplification would do most to facilitate business activity. 81% of respondents name VAT as one of the five main regulatory systems that need to be changed.

62%

36% 35% 33%27% 26%

18%

1%

81%

54%

35%

58%

34%

46%

22%

5%

0%

20%

40%

60%

80%

100%

Podatki - VAT Ubezpieczeniaspołeczne

Kodeks pracy Podatki - CIT Raportowaniestatystyczne

Postępowaniasądowe

Podatki - inne Inne

Chart 31. Barriers for business

What areas do CFOs believe to be the most important obstacles to running a business?

Taxes – VAT Social Security Labour code Taxes – CIT Statistical reporting Court proceedings Taxes – other Other

2013 Q2

2013 Q1

System simplification plans have been discussed for years. The European Commission has launched a number of projects to measure VAT-related administrative burden and costs. Still, no breakthrough proposition has been put forward. Most spectacular changes implemented in the last few years concerned rates and they were mainly rate growths. Local tax authorities, however, are increasingly interested in the opinion of entrepreneurs. If the system cannot be changed, we should strive to find areas for improvement in regulations in order to eliminate unclear and ineffective solutions resulting in additional tax risks for businesses from the existing law, says Joanna Stawowska, Partner, Indirect Tax Team Leader Deloitte.


33%

25%

18%

16%

8%

29%

20%

16%

5%

30%

0% 20% 40%

Kontroling

Systemy IT w finansach

Rachunkowość

Zarządzanie ryzykiem

Finanse i skarb

4%

37%

28%

28%

2%

14%

14%

42%

23%

7%

0% 20% 40% 60%

Absolwenci uczelni

Stanowiska niższego szczebla

Stanowiska średniego szczebla

Stanowiska wyższego szczebla

Stanowiska najwyższego szczebla

Good employees are harder to find

More and more businesses are finding it hard to recruit new employees, with the right set of competencies (a 37% increase, compared to just 24% last year).

Turning to the most sought after finance specialists, this shortage is greatest in middle-ranking (42%) and high-level (23%) positions. It is also becoming slightly more difficult to find the right employees among university graduates.

Specialists in modern finance and treasury (30%) and financial control (29%) are the hardest to find.

Chart 32. Availability of employees

Do CFOs expect difficulties in finding employees?

Yes

No

Chart 33. Labor market

At what levels do difficulties in finding employees occur?

The highest level position

High level positions

Medium level positions

Low level positions

University graduates

2013 Q1

2013 Q2

Chart 34. Labour market

In what areas do most difficulties in finding employees occur?

Finance and treasury

Risk management

Accounting

IT systems in finance

Controlling

2013 Q1

2013 Q2

76%69% 63%

24%31% 37%

0%

20%

40%

60%

80%

100%

2012H2 2013H1 2013H22013 Q12012 Q2 2013 Q2

22

3%

6%

7%

10%

10%

8%

10%

22%

24%

5%

6%

7%

8%

10%

10%

11%

16%

27%

0% 5% 10% 15% 20% 25% 30%

Utrzymywanie pracowników na wszystkichszczeblach

Atrakcyjne wynagrodzenia i pakiery socjalne

Elastyczne formy zatrudnienia

Tworzenie ścieżek kariery

Kreowanie szans i wyzwań zawodowych dlapracowników

Redukcja zatrudnienia i kosztów personelu

Rekrutacja pracowników o unikalnychumiejętnosciach

Rozwój liderów i planowanie sukcesji

Utrzymywanie zaangażowania/moralepracowników

By ranking the talent management challenges that CFOs say they face, we can see that the main theme is around sustaining employee engagement/morale. This challenge is hardest for businesses during a period of investment freeze.

CFOs named the following as the three biggest talent-management challenges in finance for 2014:

• sustaining morale by creating opportunities and challenges for employees

• developing leaders and succession planning

• recruiting hard to find skill sets.

Talent management in finance – the challenges

Chart 35. Talent management

What are the most significant challenges in talent management?

2013 Q1

2013 Q2

Sustaining employee engagement/morale

Developing leaders and succession planning

Recruiting hard-to-find skill sets

Reducing employee headcount and costs

Challenging job opportunities for employees

Creating career paths

Providing flexible work options

Providing competitive compensation and

benefit packages

Retaining employees at all levels


Positive long-term perspectives

Long-term perspectives are still are of the best in Central Europe

We can see a clear improvement in the long-term outlook of Polish CFOs. 61% (compared with 73% in the previous survey) predict a further improvement in their ability to service debt over the next three years.

The long-term outlook is therefore still positive. In fact, Poland is second on the list of 13 countries with the highest percentage of CFOs who have a positive long-term outlook.

Chart 36. Ability to service debt in Poland

Evaluation of three-year perspective of the ability to service debt in Poland

Will significantly increase Will slightly increase No change

Will slightly decrease Will significantly decrease

7% 2%

6%4%

7% 12%5%

19%14%

7%3%

7% 6%4%

3%

10%

5%32%

53% 71%41%

47%

31%45%

47% 45%64% 52% 50% 55%

51%

32%21% 33%

26%

49%

45% 40% 45%

29%27% 26%

32%

10%

3% 3%

11% 14% 7% 7%4% 4%

12% 14%

5%

0%

20%

40%

60%

80%

100%


Chart 37. Ability to service debt in Central Europe

Evaluation of three-year perspective of the ability to service debt in Central Europe



Will slightly decreaseNo changeWill slightly increaseWill significantly increase Will significantly decrease

2% 2%7%

16%2% 7%

38%

31%

33%

26%32%

28% 54%

34%

57%51%

28%14% 14% 16% 10%

0%

20%

40%

60%

80%

100%

2011H2 2012H1 2012H2 2013H1 2013H22012 Q22012 Q1 2013 Q22013 Q12011 Q2

24


Contacts

CFO Programme Leader

Krzysztof PniewskiPartner in the Consulting DepartmentFinancial Solutions Leader+48 (22) 511 01 [email protected]

Paweł ZarudzkiSenior Manager in the ConsultingDepartment+48 (22) 511 01 [email protected]

Marcin Maciejasz Consultant in the ConsultingDepartment+48 (22) 511 08 [email protected]

Clients & Markets

Halina FrańczakClients & Markets Directorfor Central Europe+48 (22) 511 00 [email protected]

Małgorzata ReifClients & Markets Manager+48 (22) 511 02 [email protected]

Magdalena CieleckaClients & Markets+48 (22) 511 08 [email protected]

Function leaders

AuditRadosław Kuboszek+48 (22) 511 06 [email protected]

TaxKrzysztof Moczulski+48 (22) 511 09 [email protected]

ConsultingDariusz Kraszewski+48 (22) 511 01 [email protected]

Financial AdvisoryTomasz Ochrymowicz+48 (22) 511 08 [email protected]

Enterprise Risk ServicesZbigniew Szczerbetka+48 22 511 08 [email protected]

www.deloitte.com/pl/cfo

This publication contains general information only, and none of Deloitte Touche Tohmatsu Limited, Deloitte Global Services Limited, Deloitte Global Services Holdings Limited, the Deloitte Touche Tohmatsu Verein, any of their member firms, or any of the foregoing’s affiliates (collectively the “Deloitte Network”) are, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your finances or your business. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser. No entity in the Deloitte Network shall be responsible for any loss whatsoever sustained by any person who relies on this publication.

Deloitte provides audit, tax, consulting and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in 150 countries, Deloitte brings world-class capabilities and deep local expertise to help clients succeed wherever they operate. Deloitte’s 200 000 professionals are committed to becoming the standard of excellence.

Deloitte’s professionals are unified by a collaborative culture that fosters integrity, outstanding value to markets and clients, commitment to each other, and strength from diversity. They enjoy an environment of continuous learning, challenging experiences, and enriching career opportunities. Deloitte’s professionals are dedicated to strengthening corporate responsibility, building public trust, and making a positive impact in their communities.

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/pl/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.

© 2014 Deloitte Poland. Member of Deloitte Touche Tohmatsu Limited

MethodologyThe 5th CE CFO survey took place in October & November 2013. A total of 580 CFOs across 13 countries completed our survey. The survey is divided into two parts, first - local analysis based on responses from Hungary and the second part is based on all the responses across the region. Not all survey questions are reported in each annual survey. If you were interested to see the full range of questions, please contact [email protected].

We would like to thank all participating CFOs for their efforts in completing our survey. We hope the report makes an interesting read, clearly highlighting the challenges facing CFOs, and providing an important benchmark to understand how your organization rates among peers.

Date post:	05-Oct-2020
Category:	Documents
Upload:	others
View:	0 times
Download:	0 times

Things are getting back to normal Presenting the results ......(2011 Q2) (2012 Q1) (2012 Q2) (2013...

Documents