Synergon carries out major reorganizations with job cuts until Christmas; the company plans to only focus on the profitable activities. The CEO hopes to achieve a one-million HUF cost saving, and profits in the next year. The company doesn’t know about the Hagyó case.
According to the semiannual company report the company decided on some major important steps. What are these changes the decisions were about?
On the Board of Directors meetings we presented the detailed plans on how to make the group work more efficiently than in the previous one-one and a half year, and we also discussed the suggestions on the reorganization of the company group, and accepted the principles of shifting to the holding structure. The members of the Board of Directors unanimously supported our ideas. The main principle of these changes is the strengthening of those areas that work efficiently, and the elimination or outsourcing of long-running, highly risky projects and activities. Activities not creating profits had to be liquidated. Neither we, nor our competitors – and not even the best companies – can afford to make losses in the long-term for the mere promise of future profitability. Those areas, where we don’t have competence and the market doesn’t need our services, will be eliminated.
As opposed to many of our competitors, we have a job to do. Together with our subsidiary, we calculated that our profit will exceed 20 billion HUF this financial year. Because of all of these changes and reorganization processes we also have to decide what we wish to do in order to preserve our very favourable position in the market. For that we plan to decrease our fixed costs by one billion HUF on an annual basis, and the elimination or outsourcing of certain activities will result in job cuts. I cannot provide exact numbers yet, but we are planning to execute this task by mid-December.
What the company expects from these changes?
The revision of expenditures isn’t finished with the 1 billion HUF we have managed to save due to the changes so far. The company won’t have a negative balance in 2012 under my control. Neither the Board of Directors, nor I would give our names to such thing to happen. The Board wouldn’t give their consent to a plan like this. Despite the crisis and the rumours, Synergon has the power and opportunity to take advantage in troubled times. Everybody wants to cut back costs. For this we already have a business strategy, products and signed contracts.
The absence of public tenders in the portfolio of Synergon is evident. Would you like to increase the share of revenue from them?
In my opinion these orders are missing from the market in the first place, and it is because the government’s activity fell back as a result of the crisis. As the state budget and the supply of tenders is limited, it would be a mistake to rely on it in our strategy. As we are present on the stock exchange, changes on the market always appear in some form, and due to our transparent strategy we communicate the changes in the company’s life. Others rather stay silent in order not to bring attention. It is worth comparing the numbers of the end of 2011 and previous years of certain players; it won’t be a pleasant reading. I don’t think I should govern such a huge enterprise like Synergon by myself. I am not a fan of “one man shows”, our task here much more serious than that. One of my first tasks as a CEO was to set up an adequate management. I am glad to say that I have found the best people for the positions; I wish to put the company in the hands of experienced, highly skilled professionals.
We are adapting to the new market situation by standing on more pillars. Those contracts related to public procurements meant significant exposure to us. Since then times have changed, and we have to adapt.
The names of the Board members – and mine also – are established and serve as a guarantee in the public sector, and we also have several experiences in transactions. We are prepared for change, and certainly not surprised by the decrease in public tenders. We have filled up the lack of public orders with our growth in the private sector and in foreign markets. Owners of a lot of smaller companies on sale are pleased when they are contacted about a possible deal. It may be a more realistic approach for survival than just waiting for public tenders.
What about Microsoft licence agreement between Synergon and the Ministry of Rural Development? Will it end up at court?
I rather not make a comment to this situation, apart from our opinion, according to which they hold back the money unlawfully. Currently we are having negotiations in order to avoid a lawsuit and have a consensual solution. We want to come to terms with them.
In the past few weeks information has appeared on the news that Synergon might be involved in the BKV-Hagyó scandal. What can be known about this?
As far as I know, Synergon have always been in favour of transparency. It is inevitable due to the fact that the company is present on the stock market. This approach can only be strengthened under my lead. We also know about the case from the press, and we were surprised when reading the news. Neither Synergon, nor former employees were contacted by any of the authorities. It would make sense to ask the question: whose intention it may be, and for what reason to make statements like that. Although we have heard about numerous suspects, but none of them was from Synergon.
Recently a new executive option program was approved, which can be exercised when the share price goes above 420 HUF in the consecutive two weeks. Who initiated this price level: the Board of Directors or the owners? What’s your opinion about whether it is possible to exercise the option?
If the leaders of the company don’t have confidence in the company, then there is a huge problem. I trust in Synergon and see the opportunities in it, and that’s why we agreed upon becoming a part owner of the company I manage. It may sound like demagogy, but I mean it. Being an owner always means a stronger bond to the company than any other management agreement. I try to manage this company on the basis of these, the same way I have managed every other company in the past.
The previous CEO left the company in the beginning of May, after that the Board of Directors started the reorganization process and looked for a new CEO. When started the negotiations with the Board, we clarified that I am interested in the position only if I also become an owner of Synergon. Regarding the option’s price level, we came to an agreement from, which both parties can benefit as the initiated 420 HUF price level has been reached recently. If both the capital market and the company will be on an emerging path, then this price can be quickly reached. We would like to see the share price to be about 1,000-2,000 HUF; we work on this, not on the 420 HUF upper limit. This price level just gives me the possibility of exercising the option; one can expect a particularly motivating package at a much higher price.
