Doing Business in the Czech Republic and EU Dates and Topics July 6Doing Business in the Czech Republic - Introduction July 9Commercial Corporate Banking July 10Public Finance/ Health Care Sector in CR July 13Czech National Bank July 14 Prague Stock Exchange July 16Foreign Direct Investment in the Czech Republic July 16 Microsoft Business Activities in Central-Eastern Europe

Balance sheet ASSETS short term Cash and Marketable securities Account receivable Inventory ASSETS long term Gross property, plant & equipment –Accumulated depreciation Net property, plant & equipment LIABILITIES short term Account payable Short term debt Accruals LIABILITIES long term Long term debt Preferred stock Equity

Cash and Marketable Securities +enough alternative instruments to choose from. -relatively high fee structure

Receivables +Approaching level of standardization expected in modern business environment. + Financing of receivables through Pledging and Factoring available. - Cost is relatively high. -Relatively large variability around agreed terms of payments

Inventories +Introduction and use of modern methods of inventory financing (field warehouse financing, trust receipts, blanket inventory lien, etc.) - Cost of financing relatively high -Modern methods of inventories management (EOQ, etc.) are confined to large companies only.

Accounts Payables +heightened awareness of cost of trade credit if used as a source of financing. -too often misused as a source of financing with a disregard for buyer/ seller relationship. - Enforcing payment discipline costly and time consuming

Short term debt + Improvement in the variety of short term borrowing options from banking sector. -High fees structure. +Non Banking sector active as a lender to small and medium businesses, but costs are high. -banks don’t analyze borrower need and tend to concentrate only on large companies with good tracking record.

Acquisition of plants and equipment +Large companies use modern capital budgeting decision tools. -Medium size and small companies use payback method at best, if at all. +Market for leases relatively well developed - Recent government regulation intended to protect the lessee is slowing down expansion of market

Long term Debt +Corporate bond market is beginning to take off. Large corporation construct their offerings up to par with developed financial markets standards. -Market is still too thin a for many companies too expensive. + Bank loans are predominant source of long term funds

Equity source of financing +IPO’s done on the Prague stock exchange (Zentiva, ECM, Pegas, AAA Auto Group) in past four years Brewery Lobkowicz!! Hopefully, this trend will continue. -Unfortunately IPO’s are too few and far between, even as compared with equity markets in other “new market economies” (Poland).