Economic Processes of the Fejér District’s TOP 400 in 2015

Introduction

Our analysis aims to offer a comprehensive picture of the economic performance for the running calendar year concerning companies with double-entry bookkeeping and with corporate seats in Fejér Country, as per the corporate income tax Quick Report of 2015. The basis for qualifying for the TOP 400 biggest tax payers was reliant on the condition of having achieved at least 642 million HUF net turnover. Position 100 is occupied by a company that has achieved 2 846 million HUF in net turnover, which is almost 18 percent (425 million HUF) higher than the same position in 2014. 19 newcomers have been included in the TOP 100, but the first eight positions have not changed.

Companies that have opted for a different fiscal year, due to the later deadline of the balance sheet submissions, will be referred to in our chapter regarding the 2014 cumulative tax returns.

I. Most significant economic characteristics of 2015

The dominance of the largest net revenue TOP 400 companies of Fejér County is obvious throughout all segments of the economy, being responsible for 85 percent of the county’s turnover and 95 percent of export revenues. Operating profit increased by 36% and pretax profits have also grown by 43%. A staggering 63 percent of the county’s workforce were employed by this group of businesses, being also responsible for 75 percent of the total payroll expenditures. Considering turnover, the most important 100 companies have achieved a total of 23.2 billion HUF in sales revenue. Financial losses are compensated by a 42 percent increase in operating income and therefore profit before tax has also increased by 57%. Also of note is their decisive role in the various developments within the county, coming to an average of 1.6 billion HUF investment value.

II. Number of tax declarations

As per the submitted tax declarations of the TOP 400 companies with the biggest revenues, it is revealed that 60 % are concentrated in just 2 sectors: 123 companies in the trading and 113 in the manufacturing branches.  As to the number of employees, the 400 biggest businesses show quite varying numbers. 117 companies employ anywhere between 10 – 49 people, followed by 164 of those employing more than 50.

III. Main indicators of economy

1. Revenue

The operating income of the TOP 400 companies with the biggest revenues have increased by 9.8%. While in 2014 83% of the countys operating revenues were realized by these businesses, the percentage in 2015 has increased to 84.5%.

As far as the net proceeds of the TOP 400 are concerned, 58.6 percent has been achieved by the manufacturing industry, followed by the trading and car repair branches with a total of 28 percent.

Average revenues for 2015 were in the amount of 6, 7 billion HUF (increase of 8.5 percent compared to the previous year).

Revenue figures for export within the county can be attributed in a 98 percent degree to the TOP 400. This trend is also valid for national distribution and trade since almost three quarters were realized by the same companies.

2. Costs and Expenditures

The TOP 400 companies make up for 85 percent of the county’s total expenditure costs (2 653.6 billion HUF)

The biggest percentage of expenditures in the county, 85 percent to be exact, is also related to the TOP 400 companies.

Expenditure figures show an average of 6.6 billion HUF which is most likely due to the high operating costs of the manufacturing and trading companies.

3. Number of employees and average wages

63% of the total workforce in the county is employed by the TOP 400. There has been an increase of 1.453 employees out of which 901 went towards the manufacturing industry. The second largest employer-segment is represented by the trade and automobile industries, hiring an additional 319 people.

As far as the average vages are concerned, data indicates that employees earned 3 103 thousand HUF in 2015, representing a rise of 3% compared to 2014. Employees at the TOP 100 companies have seen an even bigger increase of 6 percent, while headcount has also increased by 1 percent, average vages thus amounting to 3 233 thousand HUF.

IV. Joint company results

1. Components of pre-taxation results

In 2015 four fifths of the total operating profits in the county have been realized by the TOP 400 companies, an increase of 3 percent compared to 2014. Overall, data shows that companies increased their profits by 22 percent while managing to cut losses by 27 percent.

Operating at a loss – as opposed to 2014 – are the industrial branches of energy and finance. The manufacturing industry, constituting a total 78.5 % share,  again managed to increase their operating profits to a total of 132 billion HUF.

The Top 400 companies raised their profits before tax to 48 billion HUF but the energy, financial and insurance branches continue to struggle. Only the manufacturing industry managed to increase their profit by 27.6 percent.

2. Base tax, tax relief, tax liability

Considering that 79 percent of the positive base tax is directly related to the TOP 400 companies, the 30% increase was accompanied by a 32% growth in the calculated tax. The biggest tax breaks are due to development aids and sport sponsorships.

Concerning corporate tax for the TOP 400, there has been a number of 371 companies liable to pay 17.1 billion HUF.

On regional level, the overall percentage of the tax breaks stayed consistent when compared to the previous year, burdens having increased from 9.1 to 9.8 percent.

V. Balance sheets

1. Assets

The Top 400 companies have had a total balance sheet of 2 726.3 billion HUF. This is more than four fifth of the district´s total. The  tax report revealed that the company assets amount to four fifth of the county’s total. Important growth has also been shown in the 84% rise of securities.

2. Funds

The TOP 400 has achieved an increase in private equities of 70%. Considering long-term assets, there has been an overall increase in tangible assets, while the invested financial assets dropped for both the TOP 400 circle and Fejér County. The assets in short-term loans in excess of long-term assets, increased markedly. In terms of funds, personal equity within the initial capital has decreased by 3 percent both at the TOP 400 and the district as well, while the regional tendency shows a slight increase. Provisions and reserves representing sixty percent have moved into a positive direction, however the profits as per the balance sheets for both the county and the TOP 400, although still in the positive area, have markedly decreased. This is most likely due to the fact that profits were overall smaller while losses were bigger than anticipated. The liabilities have risen everywhere, but a rearrangement has occurred since while the long- term debts have decreased, the short-term loans have markedly risen.

VI. Investments

From the TOP 400 companies, 329 enterprises carried out development projects worth 570.6 million HUF on average. It is noteworthy that the county’s 61.1 billion HUF increase is almost entirely linked to the TOP 400 taxpayers, the increase in investor confidence indicating that investment levels have increased significantly.

VII. Characteristics of companies choosing a different fiscal year

Several important companies have opted for a different fiscal year and thus, due to the later deadline of the balance sheet submissions, most corporate income tax reports could not be finalized and are therefore not included in our Quick Report. Their commercial activities are rely on the comprehensive report based on the 2013-2014 tax returns.

Within the county, there have been 34 companies opting for a different fiscal year, the most significant ones are the 13 active in the manufacturing industry and 10 in trading, car repair.

Total operating revenues for 2014 have been in excess of 97% in net sales.

Noteworthy as well is the fact that they are to the greatest part export oriented since 90 percent of profits come from foreign markets. Operating costs and expenses were mostly material expenses and since the increase in costs slightly exceeded the total operating revenue, this led to a 4% decline in operating income.

The profit before tax also showed a positive balance in 2014, the balance sheet total revealing an increase of 36 percent.

34 companies have increased their headcount by a total of 837 employees and the average yearly wages amounted to 3 561 thousand HUF.

County Fejér Tax Directorateof the National Tax and Customs Administration