Expenses - PDF by liuqingyan

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									Expenses
                                                              EXPENSES
EXPENSES


Content
We can divide expenses into particular categories:
1. Costs of entrepreneurship                                     2
1.1. Costs of setting-up a company                               2
1.2. Costs of company maintenance and administration             2
1.3. Real estate costs                                           5
1.4. Workforce costs                                             6
1.5. Recruitment costs                                           7
2. Costs of living                                               7
2.1. Accommodation                                               7
2.2. Transport costs                                             8
2.3. Communication costs                                         9
2.4. Food costs                                                 11
2.5. Leisure time expenses                                      11


Expenses are one of the major issues, which have to be taken into account, when planning an investment. It is
important for an investor to get an overview about particular costs, connected to starting entrepreneurship and
living in Slovakia. Thus an investment does not comprise only direct costs, such as purchasing equity or costs of
its reconstruction, but also indirect costs, such as setting up, or buying a company, its maintenance, wages of
employees, and additional ones, resulting from everyday living.



1. Costs of entrepreneurship

1.1. Costs of setting-up a company
        It is usual, when entering a new market, to set-up a legal entity, which represents an entrepreneur in the
face of authorities and other business subjects. According to the Slovak commercial code there are recognized 4
kinds of companies: limited liability company, joint-stock company, limited partnership and unlimited partnerships,
but the two most used are limited liabilities company and joint-stock company. There are following expenses,
joined with setting-up most common company types.

 Fees for services rendered by law firms to foreign investor joined with setting-up business companies

 Business companies                               Min (SKK)          Max (SKK)
 limited liability company                        35 000             100 000
 joint-stock company                              70 000             150 000

 Additional obligatory fees

 Limited liability company
 Entry to the commercial register                                    10 000
 Trade license register                                              1 500
 Document & signature attestation                                    2 000
 Notary services                                                     1 500

 Joint-stock company (expenses in addition to Ltd.)
                                                 Depends on amount of the basic
 Central depository registration                 capital 5-20 thousands
 Extra notary services                           5-10 thousands




                                                        2
                                                               EXPENSES
1.2. Costs of company maintenance and administration
          This depends mostly on where a company is situated. The most significant factor, which influences the
height of company’s expenses is its location. It is obvious, that costs joined with administration of a company
based in the centre of Bratislava will be much higher, than costs of a company based in the eastern or southern
part of Slovakia. There are following major expenses joined with the administration of a company in accordance to
its location:

                                        Water                   Sewage
                                        SKK/m3                  SKK/m3
                                                    with 19%                                   with 19%
                                                    VAT                                        VAT
Bratislava – city                       20,10       23,92                           30,00      35,70
Bratislava region Including Nitra
and Trnava regions                      32,00       38,08                           21,50      25,59
Trenčín - city                          24,10       28,68                           22,40      26,66
Trnava - city                           20,20       24,04                           19,60      23,32
Košice and Prešov regions
- up to 500 000 m3 incl. / year         32,00       38,08                           20,00      23,80
- 500 000 m3 to 1 000 000 m3 incl. /
year                                    29,00       34,51                           20,00      23,80
- over 1 000 000 m3 / year              27,00       32,13                           20,00      23,80
Banská Bystrica regions                 27,90       33,20                           23,40      27,85
Žilina region
                                                                Districts: Dolný
                                                                Kubín,
Districts: Dolný Kubín,                                         Námestovo,
Námestovo,Tvrdošín, Liptovský                                   Tvrdošín,
Mikuláš                                 21,85       26,00       Liptovský Mikuláš 25,50        30,35

1.2.1 Prices for water and sewage systems in SKK/month valid for 2005

                                                                Districts.
                                                                Považská
                                                                Bystrica, Púchov,
Districts: Považská Bystriva, Púchov,                           Ilava, Martin,
Ilava, Bytča                          20,00         23,80       Čadca, Bytča        22,80      27,13
                                                                Districts: Kysucké
                                                                Nové Mesto,
                                                                Ružomberok,
Districts: Čadca, Kysucké Nové                                  Turčianske
mesto, Žilina,                          20,00       23,80       Teplice. Žilina    22,80       27,13


Districts: Martin, Ružomberok,
Trenčianske Teplice                     19,00       22,61


1.2.2. Electricity prices in SKK/MWh valid for the year 2005

The investor can choose his own electricity supplier. His choice is not restricted to the territory of the Slovak
republic. The prices for companies depend on the details of the individual contract. At present in Slovakia operate
these energy suppliers:

Západoslovenská energetika, a.s. - http://www.zse.sk
Západoslovenská energetika, a.s. supplies electric power via its own distribution networks in the territories of four
Western Slovakian regions and Bratislava.




                                                         3
                                                               EXPENSES
Stredoslovenská energetika, a.s. - http://www.sse.sk
Stredoslovenská energetika, a.s. is a regional energy distribution company operating in the area of Central
Slovakia.

Východoslovenská energetika, a.s. - http://www.vse.sk/b2c-vse/
Východoslovenská energetika, a.s. Košice is a regional energy distribution company operating in the territories of
Košice region, Prešov region and the part of Banská Bystrica region.
Based upon an example, there are following estimated electricity costs:
 A very high voltage                 B high voltage                      C low voltage
 (over 52 kV)                        (from 1 kV to 52kV)                 (up 1 kV)

 Western     Middle       Eastern      Western     Middle     Eastern      Western     Middle       Eastern
 Slovakia    Slovakia     Slovakia     Slovakia    Slovakia   Slovakia     Slovakia    Slovakia     Slovakia

 1611,67      1541,67       1643,34    2033,34      2271,43      2438,34     3933,34     3714,29     3431,25
 1917,89      1834,59       1955,58    2419,68      2703,01      2901,63     4680,68     4420,01     4083,19
*Second line = price with 19% VAT
**Prices are valid for the year 2004 and are in SKK/MWh
***In 2005 there has been a slightly price decline for major offtakers of approximately 2-5% in accordance to
particular region

1.2.3. Gas prices in SKK/month valid for the year 2005

Table    Gas supplied from the         Fixed       Fixed    rate  of     Variable rate     Yearly rate per 1
of       gas main network              monthly     contracted    and     of    real gas    m3 daily volume
Tariff                                 rate        extended capacity     offtake           Sk/m3
Price                                  Sk/month    Sk/m3                 Sk/m3
1.       2.                            3.          4.                    5.                6.
         Yearly     gas   offtake      727,88      0,67                  7,13              -
Tariff   volume up to 60 ths. M3
S        included and Yearly gas
         offtake volume over
         60 ths. m3 to 400 ths.
         m3 included

Tariff   Yearly     gas     offtake    1 268,67    0,67                  6,19              102,78
V1       volume over 400 ths. m3
         up to 2 mil. M3 included

Tariff   Yearly      gas     offtake   20 851,28   0,67                  5,99              123,34
V2       volume over 2 mil. M3 up
         to 15 mil. m3 included

*Prices without VAT

Legend (Tariff price):

3. Fixed monthly rate: always paid; in case of gas offtake or none gas offtake
4. Yearly contracted offtake volume x 0,67
5. Real gas offtake volume x 7,13 (6,09, 5,99) !The variable rate will vary monthly, the rates will be published on
the website of the Slovak Gas Company: www.spp.sk -
http://www.spp.sk/Archiv/Slovak/februar2005_vstupy%20na%20web%20SPP-ceny%20S,V1,V2.pdf !
6. Daily contracted maximum x 123,34 (123,4) (will be obliged for his daily maximum needed during the entire
year)

Total yearly payment of the offtake volume: FMS x 12 + ROM x 0,67 + SOM x 7,13 (6,09, 5,99) + DM x 123,34
(123,34)

FMS = fixed monthly rate; ROM = yearly contracted offtake volume; SOM = real gas offtake volume;
DM = daily contracted maximum; Source: Regulation Office of Distribution Sectors


                                                          4
                                                                EXPENSES
1.3. Real estate costs

This information is important in case that an investor wants to purchase or rent office space, production and
warehousing space, or land. In the following tables, there are specified estimated average real-estate prices.

1.3.1. Average prices of real-estates
                                                                                        Land for
                                                                                        industrial
                             Office space       Trade space             Depot space     construction
                             rent      sale     rent     sale           rent     sale   sale
Bratislava centre            112,5     897      198      1055           41,5     290    60 - 100
Bratislava region            90        380      93        395           30       65     10 - 60
Trnava                       82,5      450      124       390           35       270    20 - 50
Trnava region                71        354      91        368           21       189    10 - 30
Nitra                        75        426      84        457           35       83     15 - 40
Nitra region                 68,3      362      80        387           28       80     10 - 25
 Banska Bystrica            68      283         106       261           38       82     10 - 25
 Banska Bystrica region     58      229         75        246           32       76     5 - 10
 Zilina                     90      281         101       205           27       97     15 - 40
 Zilina region              76      261,5       91        178           24       72     10 - 15
 Trencin                    97      400         108       441           35       106    15 - 35
 Trencin region             83,5    337         97        376           29       97     10 - 15
 Kosice                     81      399         120       501           35       117    10 - 30
 Kosice region              71,5    288,5       81        346           32       73     2 - 10
 Presov                     55      228         65        218           32       50     10 - 20
 Presov region              52,5    212         58        222           25       38,5   2 - 10
 *Sale prices are average in EUR/m2
 **Rent prices are average in EUR/m2/year
 ***Exchange rate: 1EUR=39SKK
Source: Research SARIO 2005

1.3.2. Estimated costs of construction works
 Roads (depends on material)                             20 – 83 €/m2
 Sewerage external (depends on pipe diameter)            150 – 333 €/m
 Water mains (depends on pipe diameter)                  143 – 193 €/m
 Electricity (high voltage line)                         57 – 150 €/m

 Industrial halls (according to construction material)   63 – 127 €/m3
 Industrial buildings                                    93 – 167 €/m3
 Office buildings                                        93 – 194 €/m3

 Rough landscaping                                       13 – 67 €/m2
 Final landscaping                                       4 - 12 €/m2

 Structural steel (with assembly)                        1,3 – 1,8 €/kg
 Brickwork                                               90 – 130 €/m3
 Concrete floors                                         117 – 183 €/m3
 Reinforced concrete structures                          83 – 183 €/m3
 Pre-cast concrete structures                            67 – 167 €/m3

 Cladding + roofing w/o insulation                17 – 33 €/m2
 Cladding + roofing w/ insulation                 50 – 83 €/m2
Source: ÚRS, 2002; Real Time System-Stavitel 2001


                                                           5
                                                              EXPENSES
Example case of constructing an industry hall in Nitra
Construction of 5.000 SQM production hall - free height 6m with:
        Air conditioning
        Humidity control
        Antistatic floors
        Automatic gates
        250 SQM office space

Total cost: 120 mil. SKK, which is approximately 3,08 mil. EUR
Cost per 1SQM: 616EUR

Example of rent for new turn-key industrial hall built according to the investor’s request by Developer
Company
4,00 – 4,50 EUR / m2 / month - standard warehouse and assembly space
8,00 – 10,00 EUR / m2 / month - office space
0,50 – 0,75 EUR / m2 / month - reward for services (security, roads cleaning, surrounding maintenance)

Example of rent for existing industrial hall according to investor’s request (a reconstruction is frequently
needed)
15 – 40 EUR/m2/year – standard warehouse and assembly space. The price depends on location.


1.4. Workforce costs

The amount of labor costs depends basicly on two factors. On one hand it is the number of employees and the
origin of the employer, that means bigger, foreign companies pay higher than average wages. On the other hand
it is the region, where the company is situated.

1.4.1. Monthly wages according to sectors
                                                      average monthly
                             Sector                     wage in EUR
 Overall                                                            429
 Agriculture                                                        326
 Fishery                                                            313
 Industry
 Raw materials mining                                                 446
 Industrial production                                                439
 Electricity, gas and water production and supply                     612
 Building industry                                                    400
 Wholesale and retail                                                 429
 Hotels and restaurants                                               308
 Transport, warehousing, post and telecom                             476
 Financial                                                           1002
 Real-estate, rental and business activities                          517
 Public administration                                                486
 Education                                                            317
 Health service                                                       312
 Other public, social and personal services                           353
 *exchange rate: 1Eur=39SKK
Source: Statistical office of the Slovak republic


1.4.2. Monthly wages according to region
                                                    average     monthly
 Region                                             wage in EUR
 Bratislava                                                        579
 Trnava                                                            392


                                                        6
                                                                  EXPENSES
 Trencin                                                                 373
 Nitra                                                                   360
 Zilina                                                                  379
 Banska Bystrica                                                         361
 Kosice                                                                  414
 Presov                                                                  342
 Overall                                                                 429
 *exchange rate: 1Eur=39SKK
Source: Statistical office of the Slovak republic


1.5. Recruitment costs

In Slovakia there are 25 major recruitment companies. Each one of them charges generally the amount of 3-
months wage for each position. In a case of an average job the usual guarantee (the recruitment company has to
guarantee the quality of the candidate) is during 3 months probation period. When recruiting to a job position of a
senior manager the usual guarantee ranges from 6 – 12 months. In case of a bigger volume recruitment
exceeding 15.000,- EUR recruitment companies usually offer a discount of approximately 15%.


2. Costs of living

2.1. Accommodation costs

The expenses of accommodation can be divided into costs for buying or renting an apartment and costs of
staying in a hotel. The costs for buying/renting a place to live are mainly influenced by two factors: First one is
location. There is a significant price gap when buying or renting an apartment in the centre of Bratislava and in the
rest of the city. The same, although in smaller range, applies also to other cities in Slovakia. At the present time,
there are a lot of investments coming, especially for development of apartments, which pushes down the prices of
older apartments. That is the second factor, which influences the price of living. In the following chart, there are
average prices for apartments.

  Buying/renting a flat      1-room flat         2-rooms flat      3-rooms flat        4-rooms flat
                             rent sale           rent sale         rent   sale         rent   sale
 Bratislava****              210 28200           410 35900         640    51300        1000 64100
 Trnava*****                 170 14870           250 22800         320    28900        390    40500
 Trencin*****                115 13850           180 18300         230    25700        320    32000
 Nitra*****                  140 15800           185 18500         260    21300        350    30770
 Zilina*****                 140 14100           180 19900         225    23200        330    26900
 Banska Bystrica*****        145 9000            180 14360         220    17450        320    23700
 Kosice*****                 140 13300           180 19360         240    22300        340    27000
 Presov*****                 90       11800      140 14870         170    19230        210    23600
 *Sale prices are average in older buildings in EUR
 **Rent prices are average in EUR/year
 ***Exchange rate: 1EUR=39SKK
****price for a new apartment in city centre is 1580EUR/m2
    price for a new apartment in wider centre is 1050EUR/m2
    price for a new apartment in suburb is 920EUR/m2
    price for a new apartment in villages around Bratislava is 710EUR/m2
*****price for a new apartment in the cities around Slovakia is 660EUR/m2

                                               ***         ****
 hotel prices                                  min   max   min    max
 Bratislava                                    40    100   75     240
 Banska Bystrica                               26    90    42     67
 Trencin                                       65    85    58     75



                                                             7
                                                                 EXPENSES
 Kosice                              25       90        75      110
 Zilina                              36       72        -       -
 Nitra                               25       58        42      100
 High Tatras Mountains               25       75        52      190
 * prices are in EUR/night



2.2. Transport costs

                Taxi                  initial fee    call price/km     city tax/km
 Taxi in Bratislava                  0,5 - 1        0,28 - 0,44        0,56 - 0,77
 *Price in EUR
 **Exchange rate: 1EUR=39SKK

             Rent-a-car                 price/day
 low class                            20 - 40
 middle class                         30 - 80
 high class                           66 - 160
 *Price in EUR
 **Exchange rate: 1EUR=39SKK

  Public transport in Bratislava        price           discount
 10 min                            14                7
 30 min                            18                9
 60 min                            22                11
 24 hours                          90
 48 hours                          170
 72 hours                          210
 7 day                             310
 *Price in SKK
            Fuel prices               minimum          maximum
 91-octane petrol                  33                34
 95-octane petrol                  33                35
 98-octane petrol                  35                37
 100-octane petrol                 38                40
 diesel                            33                34
 EVO diesel                        35                36
 *Price in SKK
 **Prices depend on exchange rate and oil prices on world markets

 IC Train prices (EUR)               distance       price            duration
 Bratislava - Kosice                 445            16               5h30min

Road tax
Road tax is another expense for the company. Road tax s a local tax and it is slightly different in every region.
For personal cars the road tax is determined by the capacity of an engine.
From 900 cm3 – over 3 000 cm3          1600 SKK – 6160 SKK
For buses and utility vehicles it’s determined by axles and weight
1-2 axles: 1800 SKK, for weight less then 1 t – 70 180 SKK for more then 30 t
3 axles: 14 600 SKK for less then 15 t – 78 980 SKK for more then 40 t
4 axles: 18 600 SKK for less then 23 t – 67 320 SKK for more then 40 t
You can find the tables for each group and region on this web site
http://openiazoch.zoznam.sk/zivot/dane/cestna.asp



                                                            8
                                                             EXPENSES
2.4. Communication costs
There are 2 mobile network operators (Orange, Eurotel) and 2 fixed network operators (Slovak telecom, Dial
telecom). The mobile phone market penetration reached on 1.1.2005 79,2%. The market share of Orange was on
the same date 55,2% and Eurotel 44,8%.


2.3.1. Orange
  Program – prepaid min        activation fee      monthly fee
                      60                    800             400
                     120                    800             790
                     250                    800           1400
                     500                    800           2300
                    1000                    800           3200
 Roaming                                   2000                0
 *Prices are in SKK

                                                  Working days
                               Working days        18:00-22:00;    Working days
      Prepaid minutes           8:00-18:00           7:00-8:00      22:00-7:00     Weekends
                        60                   8                 2               1           1
                      120                    6                 2               1           1
                      250                    4                 2               1           1
                      500                  1,5               1,5               0         1,5
                     1000                  1,9                 1               1         1,5
 *Prices are in SKK/min within Orange network after reaching the prepaid minutes


     International calls          daily 0-24
 EU - fixed network                           4,2
 EU - mobile network                          9,2
 zone 1                                       8,3
 zone 2                                      10,3
 zone 3                                      17,8
 zone 4                                      23,8
 zone 5                                      38,9
 zone 6 - mobile networks                    12,8
 zone 7 - satellite network                    99
 *Prices are in SKK/min
Zone1 - USA, Switzerland, Canada, Monaco, Puerto Rico, Vatican
Zone2 - Andorra, Australia, Belarus, Croatia, Bulgaria, Hong-Kong, Island, Israel, Japan, Norway, New-Zealand,
Romania, Russia, San Marino, Turkey, Ukraine Zone3 - Albania, Egypt, South Africa, Libya, Morocco…
Zone4 - Argentina, Brazil, China, South Korea, Mexico, Panama…Zone6 - Australia, Bosnia, Croatia, Norway,
Monte Negro, Switzerland
Zone7 – Thuraya

2.3.2. Eurotel
     Business program          Activation fee      Monthly fee
 ::Business more::                          400             200
 *Prices are in SKK


                within Eurotel Network        to fixed network              to orange
  phoned                    19:00-7:00                  19:00-7:00                19:00-7:00
  minutes      7:00-9:00    weekends      7:00-19:00    weekends     7:00-19:00 weekends
0 - 100                5,9          1,9            5,9         2,9           8,9          5,9



                                                       9
                                                               EXPENSES
 101 - 200            4,9            1,9           5,9          2,9           8,9           5,9
 over 200             3,9            1,9           5,9          2,9           8,9           5,9
 *Prices are in SKK/min

                                                                 8:00-   18:00
    Tariff zone number                     Tariff zone           18:00   -8:00   Weekends
 1                              Czech republic                      14      12            12
 2                              Europe                              22      20            20
 3                              Chosen countries I                  31      29            29
 4                              Chosen countries II                 63      59            59
 5                              Rest of the world                   93      89            89
 6                              Mobile networks                     26      24            24
 satellite1                     IRIDIUM 8816, 8817                 100     100          100
 satellite2                     INMARSAT MINI-M, Thuraya           100     100          100
 satellite3                     INMARSAT B, M, EMSAT               125     125          125
 satellite4                     INMARSAT A, Aero                   200     200          200
 *Prices are in SKK/min
**Chosen countries I - Australia, Hong-Kong, Island, Israel, Japan, Canada, Morocco, New Zealand, Russia,
Tunisia, Turkey, Ukraine, USA

2.3.3. Slovak Telecom
      Setting up a fixed line        Price (SKK)
 classic fixed line                  999
 2Mbit/s fixed line                  100000
             monthly fee             Price (SKK)
 Business standard                   349
 Business active                     499
 2Mbit/s access                      7999
               Call fee              7:00-19:00          19:00-7:00        Weekend
 local calls                         1,9                 1,2               1
 intercity calls                     3,6                 1,9               1,5
 mobile networks calls               8,6                 5                 5
 *Prices are in SKK/min

          International calls          Business standard      Business active
 0. tariff zone                        5,9                    3,9
 1. tariff zone                        5,9                    3,9
 2. tariff zone                        9,9                    9,9
 3. tariff zone                        19,9                   19,9
 4. tariff zone                        59,9                   59,9
 mobile networks                       11,9                   11,9
 *Prices are in SKK/min
*0. tariff zone – Czech republic, Hungary, Poland, Germany, Austria
 1. tariff zone – Belgium, Denmark, France, Holland, Ireland, Norway, Russia, USA, Spain, Italy, Sweden, UK, etc.
 2. tariff zone – Argentina, Australia, China, Israel, Japan, Hong-Kong, Croatia, Mexico, New Zealand, etc.

2.3.3. Dial Telecom
Started its business only recently and offers a price discount of 15% from the Slovak telecom prices.




                                                         10
                                                      EXPENSES
2.4. Food costs

       Restaurant prices              main dish + garnish         coffee          dessert
standard restaurant             minimum price maximum price   average price   average price
in Bratislava                   3               7,7           1               1,5
in Banska Bystrica              2,5             5             0,75            1
in Kosice                       2,5             5             0,75            1
prestigious restaurant
in Bratislava                   3,85            13            2               1,5
in Banska Bystrica              3,5             9             1               1
in Kosice                       3,5             10            1               1
*Prices in EUR
**Exchange rate 1EUR=39SKK

Common food                     average price
bread                           0,7
250g butter                     1,5
1l milk                         0,6
1kg pork meat                   3,8
1kg beef meat                   5,6
1kg chicken                     4,5
0,5l beer                       0,25
0,75l quality wine              4,5
1,5l mineral water              0,35
1kg fruit                       1
1kg vegetable                   0,5
*Prices in EUR
**Exchange rate 1EUR=39SKK

2.5. Leisure time expenses

Leisure time activity           entry/price
Aqua parks                       4,9 - 11,5
Swimming pool                    1,3 - 2,5
1 day ski pass in High Tatras   12,5 - 17,7
1 day golf                        9 - 28,2
1 hour squash court                   4
1 hour tennis court                   4
Gym                                1,5 - 3
ZOO Bratislava                       2,6
Cinema in Bratislava             2,5 - 4,2
Theatre                            2 - 10
*Prices in EUR
**Exchange rate 1EUR=39SKK




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