Marwick 3/2016 ENG

MARWICK first-hand content

May/June 2016

FIVE PROBLEMS OF HUMAN KIND – ABOUT TO BE SOLVED Amendment to Labour Code again pushes limits of employee protection • Ondřej Šteffl is preparing our kids for the future • Data analytic tools reveal who’s about to leave your firm • Bike sharing is conquering the Czech Republic A magazine for clients and friends of KPMG Česká republika

Management Consulting They say know your business inside out.

We bring the outside in.

We look at business from a different perspective.

We know how to link knowledge, data and technology.

We offer local experience with a global outlook.

www.kpmg.cz © 2016 KPMG Česká republika, s.r.o., a Czech limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

editorial

A promising future Czech educational visionary Ondřej Šteffl bases the concept of his alternative school on the premise that change is a permanent state. As he told us in an interview for this edition of Marwick, he aims to prepare his pupils for a world undergoing perpetual change. Nobody knows with certainty what the world will look like when our children will become grown-ups. What they will do, what skills and knowledge they will need to have…

Their future occupation might not even exist yet, so what should we prepare them for? The same in all likelihood also holds for businesses – should you found your company on a paradigm only valid in today’s world?

New technologies, the acceleration of communications, digitalisation and robotization – a particular solution’s applicability interval is continuously getting shorter. Society, businesses as well as individuals have to remain able to react to the never-ending changes and transform. Understanding the changes is vital. In the current edition of Marwick we take a look at five spheres of social and business activity which we believe will dramatically change within the next few years. But don’t imagine a future inspired by post-apocalyptic movies. Dystopian visions have been with human kind since its inception and most of them have not come to fruition. The future can just as well turn out great – humanity is at the threshold of several fundamental discoveries which may change the world. Hence, this issue of Marwick is dedicated to futuristic topics. We have tried to find out more about the future of education, energy, real estate, legislation as well as gastronomy.

We also take a look at the evermore important concept of a sharing economy. Since we place great importance in CSR, we have also charted the modern undertakings of a number of firms with, in our opinion, exemplary approaches to corporate social responsibility.

Petr Bučík Partner in charge of Management Consulting KPMG Česká republika pbucik@kpmg.cz @PetrBucik

3 © 2016 KPMG Česká republika, s.r.o., a Czech limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

contents

MARWICK May/June 2016

briefing

Czechs looking for higher quality groceries What did KPMG’s annual survey of shopping habits in the Czech Republic reveal about the Czechs‘ consumer behaviour this year? page 5

topic

Don’t worry, the future looks good The human ability to solve seemingly unsurmountable problems should not be underestimated. Are we at the threshold of revolutionary discoveries for humanity’s sake? page 10

case study

Decision Science in HR Be a step ahead of your employees and reveal with mathematical precision whether your top people are thinking about leaving. page 18

interview

Alternative education Our schools are not preparing our children for real life and nobody really knows what the world will be like in 30 years. Ondřej Šteffl in an interview for Marwick. page 22

business lunch

Catering to the future Food as an experience and catering as an B2B business.

That’s how Sanjiv Suri, founder and owner of the Zátiší Group thinks of his business. page 34

Marwick – A magazine for clients and friends of KPMG Czech Republic. Published six times a year by KPMG Czech Republic, Pobřežní 1a, Praha 8.

MK ČR E 22213. For subscriptions of on-line versions, go to www.marwick.cz. Editor-in-chief: Michaela Raková, art director: Štěpán Prokop, photo editor: Barbora Mráčková, proof-reader: Edita Bláhová. © 2016 KPMG Česká republika, s. r. o., a Czech limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative („KPMG International“), a Swiss entity. All rights reserved. Štěpán Prokop

4 © 2016 KPMG Česká republika, s.r.o., a Czech limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

commentary

Growing customer insistence on quality groceries For the fourth year in a row, KPMG has surveyed the shopping behaviour of Czech consumers. Even though Czechs remain fairly conservative in their shopping habits, the survey brings forth a couple of interesting trends.

Greater variances in some shopping parameters like the origin of groceries can be found among younger respondents. Overall, younger customers are relatively frugal.

It thus appears that price considerations in particular cause the somewhat surprising attitude of young people between the ages of 15 and 24 towards on-line grocery shopping. It is this age group that buys groceries via the internet least often, even though they have basically the same experiences with on-line shopping as the other age groups. On-line shopping does not seem economical enough to young customers, as they generally order a smaller amount of groceries intended for immediate use and hence do not reach the common spending limits for free-of-charge home delivery.

The number of Czech experiences with on-line grocery shopping has increased by two percent over last year. Almost a fifth of Czech have tried to buy their groceries in this manner at least once; 19% compared to 17% in 2015.

Customers aged 25 to 45 shop this way most often.

Emphasis on quality growing alongside trust in shop providers Steady trends become apparent when one compares the results of all four annual surveys. People have become more interested in the contents of their groceries. In fact, 18% list their food’s ingredients as the main criteria when buying, which is the highest number for the last four years. In contrast, about a third of respondents look first and foremost at the price of food before buying, but this group is slowly getting less numerous (from an initial 34% to 32% and this year ending up at 30%).

Also growing in the long-term is the trust in retailers, especially when it comes to properly marking down products. A fifth of respondents actually take time to verify whether goods which should be on sale have really been discounted. Only two years ago, just every eleventh shopper could be bothered to do so. Among today’s customers, 13% trust their grocer’s labelling, whereas in 2014, only 4% believed every sticker in the store.

Bakers, fishmongers and butchers A further sustained trend is the growing popularity of fresh fish. This year, three fourths of respondents try to

include fresh fish in their meal plans, while last year only two thirds did so. To purchase fresh fish, 19% prefer to visit specialised seafood shops. A large number of Czechs (32%) buy their baked goods in bakeries rather than in supermarkets, and 31% of them conclude their meat purchases at local butcher shops.

Czech dairies on top Every year, we assess the customers’ spontaneous brand awareness of Czech food producers and so far, Czech dairies have always come out on top. First place most definitely goes to Madeta, whose name spontaneously comes to mind for 18 % of Czech customers. Olma is a name that every tenth respondent comes up with; Hamé placed third and Mlékárna Kunín was fourth. What’s interesting is that the national quality label Klasa had the sixth highest recall among customers, who have become so used to it that some of them obviously mistake it for a food producer’s brand name.

Karel Růžička Partner in charge of Consumer Markets KPMG Česká republika kruzicka@kpmg.cz

18 % of Czechs consider a food’s ingredients the main criterion for its purchase.

30 % of consumers make purchasing decisions mostly based on price.

About the survey KPMG Česká republika’s fourth annual survey of purchasing behaviour in the Czech Republic was conducted by Data Collect, an independent research agency. Data was collected on-line between 10 and 15 February from 1000 respondents targeted for age and place of residence. The surveyed sample consisted of both women (70%) and men (30%), while those responsible for a household’s grocery shopping were questioned.

5 © 2016 KPMG Česká republika, s.r.o., a Czech limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

briefing

In the works Effectiveness of eIDAS Directive drawing near On 1 July 2016, the eIDAS Directive will become effective and replace the 15-year old regulation of electronic signatures in the Czech Republic as well as in the European Union. While this does not signify a revolution in the methods for electronic identification, it nonetheless brings forward a number of interesting innovations and raises several noteworthy questions.

The directive includes two main regulation areas: the setting of rules for electronic trust services, especially concerning electronic transactions, and the establishment of a legal framework for electronic identification (electronic signatures and other tools). The aim of eIDAS is to replace the not all too successful regulation of electronic signatures contained in the directive of 1999, which eIDAS renders invalid.

IFRS 16 to change the accounting of leases The new standard authored by the International Accounting Standard Board (IASB), mandatory from 2019, will fundamentally change the accounting and reporting of leases on the part of lessees. It will have an especially significant impact on companies which use operative leasing to rent real estate, means of transportation, machinery and other equipment.

IFRS 16 unifies the rules for the accounting and reporting of financial and operative leases. After its application, a firm’s balance sheet will also reflect all assets leased under operative leases. The new standard brings hardly any changes for lessors, however, and will allow for exceptions for assets of lesser value or short-term leases. Effectively, for lessees it means that they will report a greater number of assets but also a higher level of indebtedness.

its current version still envisions that Czech banks would have to create approximately CZK 150 billion of additional capital. Together with several other states the Czech Republic is negotiating for the consideration of specific national circumstances.

How to implement IFRS 16 Conduct impact analysis

Assess all existing leasing contracts

Conduct analysis of impact on financial statements and profit and loss

Assess effect on key indicators

Assess impact on company’s IT systems

Minimum requirement for own funds and eligible liabilities – MREL Topic number one this year are bound to be the developments in the area of MREL regulation. The new standard specifies an institution’s capital requirements. As a reaction to the 2008 crisis, the standard is also to aid in the rescue of banks in case of default so that governments need not spend taxpayers’ money on the banks’ eventual recapitalisation.

Since its first version, submitted in 2014, the draft regulation has undergone a number of changes. Nonetheless,

Make decision to proceed with implementation of new rules

Implementation

6 © 2016 KPMG Česká republika, s.r.o., a Czech limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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7 © 2016 KPMG Česká republika, s.r.o., a Czech limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

tax

Heard from the tax office lately? Prepare for the worst!

Imagine this scene in the lobby of a well-known hotel after a successful business meeting: the receptionist in his well-fitting uniform comes up to you and discretely whispers into your ear that the payment with your corporate card has been denied. He adds that it seems your card has been blocked. At the same time, your cell rings (as it has been in the last thirty minutes) with your CFO on the line. Finally you answer, telling him to call back later as you’re dealing with some credit card problems right now. “The tax office has blocked all our accounts,” he manages to blurt out before you can hang up.

Does this seem like an unlikely story to you, never to happen to a big and stable firm like yours? Recent experience has shown that similar unfortunate situations are in practice by far not the exception.

The tax office is stepping up its game Recently, we have witnessed a significant toughening in the tax authorities’ approach toward corporate tax payers. Not only is the number of targeted inspections on the rise, but the tax office appears to have dusted off a number of tools dormant in its weapons depot, including securing orders and tax liens.

All under the banner of the fight against tax evasion, the tax administration fairly recently introduced new additional analytical tools, like the appendix summarising selected group transactions or the highly discussed VAT ledger statement. And to boot, it initiated the picking of the (often rather unripe) fruits of these tools a long time ago. All of this, however, points to the fact that the real harvest lies still ahead of us. Last year, first place among the tax inspection departments’ favourites was without a doubt shared by VAT and transfer prices.

Still early days for VAT reapings Some time ago, a special team of crime fighters, tax administrators and customs agents, assembled as the Tax Cobra, were called on to help fight fraud in the VAT and excise tax areas. The beat of the Tax Cobra is not in any way limited. The team not only focuses on profaned commodities like gold and energy products but is not beyond investigating any market or commodity. The speed of their adjustments is murderous and not only typical fraudsters and tax dodgers are in their viewfinder, even though it may seem so from media reports.

The locale of the media-hyped battle against tax evasions is thus being moved into the offices of regular tax payers, renowned companies often among them, as the tax

administration has decided to conduct its drive against VAT fraud from the bottom up and is now focusing on recipients of supplies claiming tax deductions. In the opinion of the tax administration, the introduction of the VAT ledger statements promises an increase in collected VAT and a faster detection of tax evasions.

As is appropriate for every well-fought battle, the tax administration underestimated neither its strategy nor any related tactical approaches for the verification of evidence gained from submitted ledger statements. It neither neglected detailed instructions for its administrators, grouped according to various model situations and their appropriate communication tools (ranging from the informal addressing of a tax subject to the highly formalised procedure to remove doubt).

Harvest festival a long way away?

As soon as the suspicion arises that accepted supplies (be they goods or services) have been tainted with VAT fraud, either committed by the direct supplier or any other subject within the supply chain, imaginary blue lights and sirens go off at Tax Cobra headquarters, initiating the relatively strenuous ordeal of having to prove the legitimacy of one’s entitlement to VAT deduction.

For the actual foray, the tax administrators have been forearmed with their own interpretations of the European Court of Justice’s case law, which denies the entitlement to VAT deduction to subjects who knew or could have known that they were taking delivery of supplies tainted with VAT fraud.

In their arsenal are also the conclusions of the Highest Administrative Court regarding a fairly specific case concerning the trading of emission allowances. Thus equipped, the civil servants undertake to evaluate the internal risk procedures of tax payers while pointing at their obligation to provide extensive investigations of all suppliers within reach; something that any financial institution would not be ashamed of in its credit check of a client asking for financing.

In the opinion of the tax authority, prior to engaging in any kind of cooperation, tax payers should not only investigate the entitlement to act on the potential supplier’s behalf but also the supplier’s business model. A natural part of this investigation should also be the revision of the business history of this supplier, their pricing methods and their delivery and payment conditions. Prior to doing business, tax payers should in essence conduct a legal and tax due diligence of the other side and to review whether the potential business partner has all required entrepreneurial permits and if all

8 © 2016 KPMG Česká republika, s.r.o., a Czech limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

tax

financial statements have been duly filed with the Commercial Register, and so on. The listing of the tax officials’ requirements may be quite broad but unfortunately not final.

Once the tax officers suspect VAT fraud in connect with certain supplies (and this does not need to have occurred on your supplier’s level, but instead with their sub-supplier) they only very rarely will consider any adopted measures to be sufficient to justify the tax payers’ explanation that they did not and could not have known that the supply had been affected by VAT fraud. Strengthened by these conclusions, the tax authority will basically automatically proceed to assess additional VAT. In practice, all that remains for us is to wait until the courts have evaluated the adequacy of the tax authority’s approach.

Additional transfer pricing assessments in full swing Another highly valued analytical tool often used by the tax authority is a company’s transfer pricing documentation, required as an appendix to the tax return once the company reaches a certain size. It is not surprising that companies that declare losses in one or more periods and at the same time report material transactions within the group they belong to have become the main targets of tax inspections.

But the attention of the tax administration is not limited to loss-making companies; they might also be tempted to check transfer pricing methodologies if they see a significant decline in profits, especially if this occurs right after the company is no longer taking advantage of investment incentives.

Lately, we have registered a number of inspections whose structure is essentially identical. After its initial assessment of the situation, the tax administration will ask managing employees of selected departments (e.g. purchasing or sales) to give evidence. Such employees will, not suspecting any harm, often give simplified answers to well-targeted (almost manipulative) questions and provide officials with an overview of all the issues in which the Czech company is influenced by their parent company. And hence it happens that based on selectively accentuated responses the tax authority comes to the simplified conclusion that the Czech affiliate is in fact in the position of a contractual producer or distributor whose risks are limited.

Pointing at the common contractual producer concept, as a rule tax officials subsequently will ask that at least a minimum profit be recognised. Such a tilt of a so far loss-making company (whose turnover often amounts to billions) into a low-percentage profit business in practice then leads to a fairly significant assessment of additional taxes (not even mentioning related appurtenances like penalties and late payment interest).

Anything you say can and will be used against you While giving evidence and in subsequent argumentations with the tax authority, tax subjects may do well to remem-

ber (more often than they would expect) the good old warning: “Anything you say can and will be used against you” and hence weight each word and each proffered document on an imaginary pair of scales. Right from the beginning an expert weathered in the tax process and all related issues should be involved, as the tax authority’s processes (while elaborated into the smallest detail) are not always sufficiently founded in valid tax regulations.

From a harmless tax inspection to frozen accounts So what does our initial story (or nightmare) ending in frozen bank accounts and credit cards have to do with this?

Well, if the tax administration suspects that any unpaid or unassessed taxes may prove to be irrecoverable or that its enforcement will be fraught with significant difficulties, it may issue a securing order; telling the tax payer to pay a portion of the expected taxes as some sort of guarantee (security). The due date of such a security payment is more than skimpy - a bare three days and in some cases even immediate upon receipt of the order. Once payment is not made, the tax authority is entitled to start distrainment proceedings, i.e. freeze bank accounts and receivables and seize real estate and company vehicles.

All this can and in practice does occur ever more often even before the actual tax inspection has come to a close. Defensive measures do exist but involve extensive, long-term proceedings at whose end the winner may (but doesn’t have to) hope for the cancellation of the securing order through the Highest Administrative Court, as tax regulations do not offer an immediately effective weapon against securing orders.

What at the beginning appeared to be just an innocent inquiry by the friendly lady from the tax office concerning some irregularities in, let’s say, the VAT ledger statement, can very quickly turn into the complete paralysis of a company’s activities. What remains to be said is that the era of tranquil tax inspections, easily left up to a firm’s finance department, is definitely behind us. Any kind of tax inspection should thus not be underestimated, as appropriate measures undertaken in time can in many cases minimise the risks and the un-happy endings imagined in our initial scene.

Daniel Szmaragowski Director, KPMG Česká republika dszmaragowski@kpmg.cz Alena Švecová Manager, KPMG Česká republika asvecova@kpmg.cz Jana Fuksová Tax Specialist, KPMG Česká republika jfuksova@kpmg.cz

9 © 2016 KPMG Česká republika, s.r.o., a Czech limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

topic

Five problems of humankind, about to be solved Climate changes, resource depletion, pollution, population surges in the developing world. A casual glance at news reports could make one easily believe that the end of humankind is at hand. However, history teaches us never to underestimate the human ability to solve seemingly insurmountable problems.

Text: Zdeněk Mihalco, Illustrations: Daniela Olejníková

10 © 2016 KPMG Česká republika, s.r.o., a Czech limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

topic

Peter H. Diamandis and Steven Kotler Peter H. Diamandis heads the X PRIZE Foundation and has co-founded Singularity University, a Silicon Valley business incubator and think tank offering educational programs. He has founded several high-tech companies and holds degrees in Molecular Genetics and Aeronautical Engineering from MIT as well as a medical degree from Harvard Medical School. Steven Kotler is an award-winning publicist and journalist. Among his most well-known works are A Small Furry Prayer, West of Jesus or The Angle Quickest for Flight. His essays have appeared in more than sixty publications including The New York Times Magazine, Wired, Discover, GQ and National Geographic.

In the ‘70s, the media was full of reports that for the rapidly expanding human population food would soon run out.

Other sources warned of acid rain; still others claimed that petroleum sources would soon dry up. Today, genetically modified foods are a reality, shale gas is being mined and the predicted catastrophe didn’t happen.

We can find similar examples of unfulfilled dark prognoses in the book by entrepreneur Peter H. Diamandis and publicist Steven Kotler, Abundance: The Future Is Better Than You Think. “We live in a world filled with catastrophic scenarios.

The fact remains, however, that at least the developed countries are safer than they have ever been,” so the authors.

Their book is a celebration of humanity’s ability to overcome huge obstacles. And also an overview of the many catastrophes we expected in the past but which never materialised.

These days, one could easily come to believe that overpopulation, poverty and global climate change are just about unsurmountable. However, this pessimism is not shared by thousands of scientists and visionaries who are patiently looking for new unencumbered trails.

Why are we so afraid for the future of the human race? “People have the tendency to be local optimists but global pessimists”, says Tomáš Potměšil of KPMG Česká republika’s Management Consulting department. It has been proven that we tend to overestimate the significance of negative news – automatically, we consider them to be more important than good news.

Negative world news with which we have no personal experience evoke in us an extraordinary amount of insecurities.

Everyday media has nothing better to do than to frighten us senseless with reports of tragedies and the gloomy predictions of habitual naysayers. What is really important, i.e. real global fundamental problems, gets lost among all the clamour.

Below are some of the main issues publicists and experts say are facing the world today. Our attention should be on finding answers, as the advent of realistic solutions to these problems will be the only way to prevent the dark visions which are currently so prominently voiced in the media.

Issue number one: food and water In this world, more people own a mobile phone than have access to clean water. In developing countries, almost two million children die each year due to bacteria-infested water. How to assure access to clean water and sufficient food to all inhabitants of our planet and how to deal with the corresponding waste are problems of gigantic proportions, definitely the biggest ones facing humanity today.

Hopeful research projects nonetheless exist and examples of successful approaches show that these problems do not necessarily have to remain unsolvable. Successes inspiring hope include the genetic modification of food, projects providing effective agricultural usage of water and Bill Gates’ recent pet project – a technological method processing safe drinking water from human waste.

Czech scientist Petr Carban has been successful with a similar invention. Water reclamation has been his scientific interest for many years. He has invented a filtration system which uses nanotechnology and is able to reclaim drinking water from chemical waste, saltwater or even liquid swine waste. Today, Carban’s invention helps to clean water in a number of developing countries.

Many people fear that the third world’s sudden access to clean drinking water and quality nutrition would mean enormous population growth which the planet could no longer handle. As the authors of the above mentioned book have shown, however, this ominous theory is probably far from the truth. Once society reaches a certain level of prosperity and lower levels of infant mortality, the birth rate will continue to rise for about a generation but will then significantly fall off on its own. Cynically speaking, parents will find out that they no longer need so many children as they do not have to be afraid to remain uncared for in their old age.

Morocco may serve as a classic example. In the ‘70s, parents on average had eight children. After child mortality decreased, it took one generation before the birth rate began to peter out. Today, Moroccan women bear an average of 2,5 children.

11 © 2016 KPMG Česká republika, s.r.o., a Czech limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

topic

Issue number two: clean air

Issue number three: energy

For 12 years, scientists from the Czech Geological Survey have been trying to find a way to capture waste carbon dioxide (CO2) and to store it underground. So-called CCS technology should in the future serve to mitigate the contribution of fossil fuel emissions to climactic changes.

Putting it simply, CCS intends to enable factories and power stations using fossil fuels to capture CO2 before it enters the atmosphere. Then it could be stored in underground geological formations. Currently, the technology has a number of shortcomings, among others its high price. But this may change soon.

“Around 2030 we can expect the preparation of the first big CCS projects within the industry and energy sectors.

These projects will include analyses of the most suitable technologies for the capture of CO2, surveys and assessments of possible geological repositories in the Czech Republic,“ so Vít Hladík, one of the Czech Geological Survey’s scientists studying carbon dioxide waste capturing possibilities.

This technology is only a small stone in the mosaic, however. Similar research projects are taking place all over the world and most of them interconnect with other areas – e.g. the already mentioned purification of water but also with concerns about the future of the energy sector.

“The energy sector is currently undergoing its biggest revolution of the last 100 years. Today, its face for the next 100 years is being decided.” Daniel Beneš, Chief Executive Officer and Chair of the Board of Directors of ČEZ sums up.

Renewable resources are completely revolutionising the entire sector, hand in hand with decentralisation. Big traditional power plants are being supplemented by thousands of small sources in large part operated by energy consumers themselves. This is fundamentally changing the behaviour of customers, producers and distributors alike.

To advance decentralisation and energy production from renewable sources one thing will be key: we have to learn how to store energy. By no means does this have only have to involve large-capacity accumulators.

Czech scientists are at the forefront in this area as well. For several years the nuclear research institute ÚJV Řež, a. s. has been researching the utilisation of hydrogen in the energy sector. „Even though today hydrogen technologies are considered mainly experimental, they will continue to change our view of the energy and especially the transportation sector,” says Aleš Douček of ÚJV Řež, a. s. It is to be expected that by 2030, energy storage technologies will commonly be deployed to store energy, including hydrogen produced from energy surpluses. “We will then be able to use this hydrogen to power buses, cars and other means of transportation. Hydrogen will serve as a readily accessible alternative fuel in transportation, while for shorter distances, battery-powered electro-mobiles will be used instead”, Douček is convinced.

KPMG’s Tomáš Potměšil adds: “We are closer than we have ever been to the production and storage of clean energy. Once we succeed, one of human kind’s most critical problems will have been solved”.

12 © 2016 KPMG Česká republika, s.r.o., a Czech limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

topic

Issue number four: access to quality health care

Issue number five: access to education

What’s more, it appears that when it comes to advances, in the next twenty years only very few other sectors will be able to compete with the field of medicine. Currently, the AIDS epidemic appears to have been contained. Scientists are also close to solving one of today’s biggest public health concerns – malaria. Improvements in the length and quality of human life in the developing world appear to lie ahead.

Medical research dares to go even further in its predictions for many areas. “A significant step forward will be the introduction of personalised medicine. Many diseases may be caused by defects of various genes. We will be able to treat patients depending on by what gene defect their disease was caused, rather than just taking care of the symptoms, which may be the same no matter what gene is affected,” explains biochemist Václav Pačes.

According to him, doctors will no longer just treat an illness’ symptoms, but actually cure diseases, by for example changing or substituting defective genes. It is likely that by 2030 physicians and pharmacists will be able to utilise special genetically modified microorganisms tailor-made for specific tasks. The microorganisms will then produce new drugs. “Today’s big problem is the growing resistance of bacteria to antibiotics. Microorganisms will produce new types of antibiotics with modified genes,” adds Václav Pačes.

The tailor-made trend is not just limited to health care but also applies to a number of other fields, from sales to education.

As Peter Diamandis and Steven Kotler point out, new technologies are currently changing educational systems on a global scale. So far, education has been traditionally based on the industrial revolution of the 19th century, which required mostly engineers and mathematicians.

Today, however, other fields are needed. And what’s more, why should people spend time sitting in school when they can continue their education individually according to their own personal needs, schedules and preferences?

The internet and other technologies also have provided access to education to people in the most faraway places. Millions of people participate in projects like the Khan Academy on the internet.

Straightforward access to education is the main link intended to help fight the above mentioned global problems.

Whether it will be possible to solve all of them the way we have envisioned above is by no means guaranteed. A number of inventions which today we could hardly imagine doing without in reality came about as a matter of chance.

Futurological books written 150 years ago today appear humorous. More often as not, the future finds its own path.

Diamandis and Kotler nevertheless believe that the age of abundance is awaiting us soon. Are their beliefs just wishful fantasising of better tomorrows, using the same type of divination as the media soothsayers who predict bad times ahead? Only the future will know the right answer to this question.

Be that as it may, it is still encouraging to find out that the future by far does not have to be as apocalyptic as some would like us to believe. In fact, we may even be able to look forward to it.

13 © 2016 KPMG Česká republika, s.r.o., a Czech limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

topic

Predicting what will happen 15 years from now is quite a tricky undertaking.

Nonetheless, even in our ever-changing times is it possible to predict with almost absolute certainty which currently emerging trends will influence our lives and will help us find solutions to the social and global problems we are faced with today.

Hence, we asked several experts to tell us how new technologies will change their field of expertise and consequently our lives.

We’ll get to understand the diseases of the human brain In my opinion, one of the most beneficial technologies in 2030 will be the application of stem cells in the treatment of different diseases where traditional medicine has failed. Stem cells will be applied and combined with different biomaterials and nanoparticles. I believe that in less than a generation we will also advance significantly in the study and treatment of brain and spinal cord diseases. We will uncover further aspects of the brain’s role in ear and eye diseases, the neural mechanisms of aging and the influence environmental factors have on these health problems. I see a lot of promise in the combination of the study of the brain and its diseases with new treatment methods based on gene manipulations, in the discovery of new drugs in the form of nanoparticles, in tissue engineering and stem cell therapy.

Eva Syková Senator and Director of the Institute for Experimental Medicine of the Czech Academy of Sciences

Consumers will produce their own energy The energy sector is currently going through the greatest revolution of the last 100 years and decisions are being made about what the sector will look like in another 100 years. Whereas so far, energy supplies have been a oneway street - from the power station through transmission and distribution networks to the consumers - the future lies in decentralised energy systems. Thousands of small powerhouses, with which consumers themselves will produce a majority of their electricity, will supplement the big traditional power companies. This will fundamentally change the behaviour of consumers, producers and distributers alike. To be able to further decentralize and produce energy from renewable resources, energy storage technologies will be of key importance, be they concerning energy storage in large-capacity batteries or

as hydrogen or methane. Progress in this area can literally change the world. That’s certainly one of the reasons ČEZ is investing in energy storage technologies. Last year, we acquired shares in Sonnen, a producer of battery systems, and in Sunfire, whose fuel cells can transform electricity into gas and vice versa. On our own, we conduct research at ÚJV Řež. Any large-scale utilisation of these new technologies will depend on several factors. Technical factors like efficiency and economic ones - like the cost for each stored kilowatt hour. But political decisions are also important. The first steps in this regard have already occurred – the EU has approved its energy targets and policy objectives until 2030 and the international community in Paris reached a consensus on global climactic goals.

Daniel Beneš CEO and Chairman of the Board of Directors, ČEZ

Nanosensors will transform our lives A very important sector of nanotechnology is nano-sensorics, where tremendous future development is expected and which will influence our lives to a great extent.

Sensors invisible to the naked eye and able to monitor all kinds of physical and chemical parameters will be present everywhere. They will be the invisible sensors of artificial intelligence, which will become a common part of human life in the 21st century. Autonomous cars, drones or robots will be able to fully examine their surroundings and to immediately adapt to any changes. Nanosensors in clothing but also in the human body will be connected on-line with an AI physician who will monitor a person’s health around the clock. Thanks to nanotechnologies, the health care of the future will be nothing like what it is today. And here I am not even talking about the distribution of medications through nano-capsules or of nano-skeletons for the cultivation of replacement organs.

Jiří Kůs Entrepreneur and Chairman of the Executive Board of the Nano Association of the Czech Republic

The fourth industrial revolution will change both production and business models Today, we stand at the threshold of the fourth industrial revolution and can expect to be fully reaping its benefits by 2030. Thanks to digitalisation, the main pillar of the fourth industrial revolution, the time from the inception of a product to its introduction to the market will significantly shorten, production according to specific customer demands will become easier and production efficiency will increase while its energy intensiveness will decrease.

The upcoming revolution will completely change not only

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industrial production in its current form, but also established business models, our views on unemployment and on the structure of the educational system. Approaches towards sustainable development and climactic changes will be of fundamental importance. Siemens is aware of the importance of the living conditions of future generations: by 2020 we will have reduced CO2 emissions by half and by 2030 our world-wide activities will be carbon-neutral.

New technologies, some of them already available today, will help us achieve these goals.

Eduard Palíšek Director General of the Siemens Group in the Czech Republic

Teachers will become educational guides New technologies will definitely destroy the schools’ monopoly on delivering content. Gone will be the factory model of education in which students are mainly passive recipients of information and which has not significantly changed since the industrial revolution. The traditional role of schools will no longer make sense. This does not mean that we no longer will need to have schools. Instead, their importance will increase as places of social interaction, as some social competences cannot be replaced by even the best and most innovative technology. The role of teachers will have to change fundamentally, however. They will become guides to education who, aided by various technologies will have to figure out how to help students reach their greatest potential. The teacher of the future will facilitate students’ discussions or work with individual students according to their specific needs, but they will no longer stand in front of pupils and present bare factual knowledge. I trust that these times are almost behind us.

Jan Straka Education expert, Project Manager for the Depositum Bonum Foundation

Top-rate consulting will be led by guru-analysts The tumultuous developments in the area of consulting technologies will definitely mean a greater involvement of ‘robots’ which will take on the manual-labour aspects of our jobs. The final evaluation and decisions will remain in the hands of concrete individuals. Thus, in top-end consulting I predict the advent of guru-analysts who will utilise data analytics to make better-informed decisions.

Personally, I do not expect a radical break of audit away from advisory services. At the same time I think that a rapidly changing world is not a threat for consulting but instead offers great opportunities. Topics like demographics, climate changes, health care and mobility will always require strategic decision-making.

If the Czech Republic wants to succeed in the ‘new world’, it cannot forget two largely neglected areas: education and culture. Cultural sophistication is Europe’s biggest asset. It’s why people from all over the world come to visit and what they most admire about this continent.

Jan Žůrek Managing Partner, KPMG Česká republika

Expect to disconnect In comparison to other services, the legal profession is a rather conservative field. I really don’t expect that the next 15 years will bring forward technologies so revolutionary as to significantly change the functioning of traditional law offices. Especially since in the last 15 years we didn’t really encounter such a technological revolution either. We still work at desks, write with keyboards, make phone calls, send emails and take advantage of electronic databases…

I do believe that eventually, we will do away with paper documents; that these will be entirely replaced by electronic versions and that electronic communication will simplify.

On the other hand I also expect that the trend to disconnect will get stronger, i.e., more people will understand the importance of leisure time and privacy and will disconnect their Wi-Fi, mobile phone, tablet and fitness bracelet and will look for entertainment and relaxation through non-electronic means.

Martin Hrdlík Counsel, KPMG Legal

The future revolves around CO2

In 2030 the political and economic elites will be confronted with the urgent need to significantly decrease greenhouse gas emissions as the goal to reduce them by 80% by 2050 will draw closer. For a number of industrial branches and the remaining sections of the fossil energy sector, the most important (and in some cases even the only possible) technology which will help them survive will be carbon dioxide capture and sequestration (CCS). Around 2030 we can expect highly intensive activities aimed at the preparation of the first big CCS projects in the industry and energy sectors. These projects will include the analysis of the most suitable second generation technologies for the capture of CO2, research into and the evaluation of possible geological storage sites in the Czech Republic, attempts to find possibilities for carbon capture and utilization or the utilisation of the emerging European infrastructure for the transport of CO2 and its storage abroad.

Vít Hladík Geologist, Czech Geological Survey

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legal

Amendment to Labour Code again pushes limits of employee protection This April, it has been ten years since the current Labour Code became effective. Its original wording is by far no longer valid, however. Within the last decade the text has been reworded on more than thirty occasions. And the Ministry of Labour and Social Affairs plans to celebrate the code’s current anniversary with yet another amendment. Under preparation are changes which will be a lot more than just cosmetic.

Significant adjustments are expected to the passages that regulate working from home, vacations and agreements to perform work outside of employment relationships.

The introduction of a top management employee category has also been planned. The amendment is currently only at the beginning of its legislative process, but if things go according to the ministry’s plan, we could be expected to adhere to the new legislation by next spring.

Will the new elements in the Labour Code be beneficial or are they instead something to lament about?

The amendment’s authors have let it be known that the aim of their efforts has been to make labour-law relationships more flexible and to decrease the administrative burden on employers. At the same time, they intended to strengthen the protection of employees. In our opinion, their ambitious intentions have not been fulfilled. Yes, the proposed amendment changes to Labour Code are to the advantage of employees. In places so much so as to have a counterproductive effect.

Work from home – another administrative burden The currently valid wording of the Labour Code regulates the conditions for work from home only in a very cursory manner. Employers took advantage of the opportunity this offered and present the permission to work from home as a benefit according to rules adapted to the needs of their company. Employees are happy and the demand for work-from-home opportunities is growing.

The broad space for invention provided by the Labour Code has been a thorn in the side of the labour unions.

The amendment heeds their call and plans to introduce the employers’ obligation to compensate employees for all expenses which they incur while working from home.

This of course in practice brings up a slew of unanswered questions for employers. How does one measure how much electricity an employee uses while working and

how much after their at-home shift has ended? How will the expenses be documented? Will it be necessary to adjust reimbursements to the prices of individual suppliers?

The amendment also stipulates that employers adopt measures to counteract the possible social isolation employees working from home may feel and to allow for regular contact with colleagues. However, the amendment does not set out what form such social visits should take and whether they will be counted against working hours. The amendment also doesn’t take into consideration that employees who work from home a couple of times per month may actually enjoy getting some quiet time to work on their own.

Employers whose employees perform their work with the help of information technology will have a number of additional obligations to fulfil.

The new regulation deepens the protection of employees to such an extent as to actually work against them. Instead of wasting time with endless paper work, employers may decide not to allow their employees to work from home.

New rules for high-earning managers The currently valid Labour Code already contains a definition of management employees and deals with them differently in certain aspects. The amendment now proposes

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a new separate category of top management employees, grouping together employees who are on either of the top two rungs of a company’s career ladder and whose monthly salary exceeds CZK 100 000.

Upon agreement with their employer, top management employees will be able to draw up their own independent work schedule, while in return for this privilege they will need to give up any entitlement to over-time pay for weekend or after hours or to compensation for certain obstacles to work.

The new regulation thus reacts to what is in some cases already considered common practice. Even without the Labour Code’s expressive permission, many employers have already handed over the decision concerning working hours to their top management. The question remains whether taking advantage of this new practice has to be necessarily linked to the minimum monthly salary requirement.

Agreements to get stricter Agreements on work performed outside of employment relationships are very popular among employers, as such contracts offer a flexible employment form not as strictly bound by rigid rules as regular employment agreements.

But this is supposed to change as well. Upon the urging of labour unions, the listing of legal regulations which will not apply to agreements on the performance of work or to work contracts is supposed to get much shorter.

Hence, employees working based on such agreements or contracts will next year also be affected by regulations guaranteeing wages, maximum shift lengths, compulsory breaks as well as mandatory records of hours worked. The change which is bound to have the biggest impact on employers is the inception of the entitlement to paid vacations for employees working based on agreements to perform work.

The possibility to conclude such agreements is currently limited by a maximum of yearly hours employees can work while under them. The strengthening of protective elements may not serve employees well as employers may decide to engage agency staff instead, while employment with a job agency is usually even less advantageous for workers.

Changes to vacation entitlement calculations?

Fundamental changes also await the regulations governing employee vacations. Currently, the Labour Code provides for the assessment of vacation entitlements in weeks, but the amendment calls for the assessment to be made in hours. According to the authors of the amendment, the current regulations are unfair to workers who work shifts of different lengths.

The necessity for such a change, bound to be administratively demanding for employees, is debatable, as injustices in this area are just about unheard-of. Employers who schedule their employees’ work in different time increments have already been recalculating vacation entitlements into hours. It additionally appears that according

to the draft amendment even employers whose employees have regular working hours and where no risk of discrimination arises would have to adjust their internal processes as well.

What’s more, the ministry already assumes that it will not be able to push this conceptual change through the legislative process. It thus has prepared a backup variant of the amendment, in which the changes to the current vacation treatment are less pronounced.

Mandatory employee stress prevention In the opinion of the ministry, employers should put in a bigger effort to protect employees from stress caused by demands for more effective job performance. To eliminate any stress threats, employers will have to introduce preventive measures.

Employers are yet again faced with an unfulfillable task, as it is impossible to remove stress from a work place; indeed, a certain amount of mental strain is inherent in every kind of work. The vague wording, neither explaining what type of measures employers will have to undertake to keep their employees from stressing out nor specifying how the Labour Inspection will assess the fulfilment of the obligation will certainly not protect anybody from being mobbed at the workplace nor will it keep undesirable stress at bay.

Such ambiguity will thus only serve perennial malcontents who will now easily be able to claim that their employer is not doing enough to contain the stress they face at work.

But there’s more…

Employers will without a doubt welcome both the proposed simplification of rules concerning the delivery of documents to employees as well as the more unequivocal definition of the transfer of rights and obligations. A step in the right direction is indubitably the simplification of collective bargaining proceedings in cases where several different labour unions are active at a workplace. Employers will certainly be less impressed with the new concept of the outplacement of workers.

Which final form of the amendment will eventually become part of the Labour Code depends in large part on the awaited parliamentary proceedings. However, the ministry doesn’t seems to expect any problems with the amendment’s passing, as it claims to have consulted the new regulations with representatives from both the labour unions as well as employers’ associations.

Martin Hrdlík Counsel, KPMG Legal mhrdlik@kpmg.cz @MHrdlik Barbora Bezděková Junior Lawyer, KPMG Legal bbezdekova@kpmg.cz

17 © 2016 KPMG Česká republika, s.r.o., a Czech limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

case study

Decision sciences in HR

We know what you are about to do…

Employee fluctuation is the bogeyman not only for HR managers, but the entire management of a company. This issue, however, lends itself perfectly for the utilisation of data analytics for the benefit of the firm. KPMG’s forecasting model implemented at one of the largest global recruitment companies is capable of accurately predicting up to 65% of a firm’s employee departures even before employees consciously decide to leave.

Giving proof to the fact that more often as not things don’t go as intended are the almost 50% of employees who decide to leave their present place of employment.

In HR, they call this high fluctuation or turnover and it is considered enemy number one. Expressed in monetary terms, a firm can spend up to several tens of millions on the selection and training of new employees a year.

Now, if you are a market leader, it may be that all who ever wanted to work for you already do so and that nobody else is left on the market. And that’s a problem so fundamental that it won’t let even a company’s board members sleep at night.

The work of a recruiter is no picnic. Basically, you spend your entire day calling potential and existing clients to see whether they need to hire, while trying to find suitable candidates to top-up your database. If all goes as it is supposed to, you place applicants in available positions and the bonuses which make up a considerable part of your pay-check easily find their way onto your bank account. When things go awry, however, and they often do, difficult-to-place candidates pile up in your database or you have too many vacant positions to fill and nobody suitable to fill them with. And at home, you’re also in trouble, as you usually work late with no bonuses to show for the extra hours. So, finally, you pack up your proverbial cardboard box to go and engage the services of a recruiter’s recruiter.

Discover the rock stars To face this problem head-on, at our client, an international recruiting firm, we used our decision science tool.

Based on a network of internal as well as external data sources and advanced data analytics, this tool can create and train a model which can predict what goes on in employees’ heads. If one is able to apply and integrate the results into one’s processes, half of the battle is just about won. At the end of 2015, we were able to complete the first prototype (proof of concept) of the model.

To be able to manage turnover, you need to correctly predict two things – you need to know who has the potential to become a well-engaged and performing employee, i.e. a future rock star; and also who among your existing personnel is thinking about leaving the firm. By linking

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case study

these two coordinates you will be able to identify groups of employees where any kind of activity will be time well invested. Should you be then successful in that activity, you will prevent the departure of people who are strategically more important for your firm than the recovery of debts. These people are your future rock stars.

Within the first phase of the project we mined several dozens of sources which already existed in the firm, i.e. figures on historical sales, performance bonuses, meeting room reservations, training participation, etc. We then enriched these sources with external data, e.g. the characteristics of the place of residence, local unemployment rates, etc. Such data we call signals and in the project we utilised over eight thousand of them.

Subsequently, we stacked the signals according to their time dimensions. For every consultant who left the firm we looked at what happened to their signals several months prior to their departure and searched for patterns which could have indicated that the employee was about to leave. Now, to predict the future of current employees, our recipe calls for looking at current data and if we recognise the same signal patterns for a staff member, we know that a heightened departure risk exists. As the employee has not left yet, the employer is at an advantage and can undertake measures to prevent the turnover.

We reveal future rock stars in the same manner. We have learned to recognise current signals of future high performance and are able to identify it in people who so far have

not displayed any signs of greatness (maybe because they haven’t gotten their bearings within the firm yet).

The prototype aims at 90% accuracy With the results from the prototype, created in just 12 weeks, we are able to identify 65% of all employees who are getting ready to leave their place of employment and 60% of future rock stars. These numbers refer only to the prototype and from experience we know that the accuracy of the model can be fine-tuned to up to 90 % with a negligible error rate (around 5%).

Our client decided to implement the model with our assistance. The beauty of our approach lies within the elegant simplicity of its outputs. Every month and for every employee the model calculates the probability that this staff member will give notice (or turn into a rock star, for that matter) and provides management with a reason code explaining why we think that our predictions will come true. The client’s response team, trained by us, then sees to it that every employee is taken care of and that the company retains as many rock stars as possible. While the members of the board impatiently await the concert.

Michal Osuský Associate Manager Data Analytics, Management Consulting KPMG Česká republika mosusky@kpmg.cz

19 © 2016 KPMG Česká republika, s.r.o., a Czech limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

money

Jewels in a time of crisis Not just diamonds, but also rubies, emeralds, sapphires and tourmalines.

The prices of many precious gemstones and gemstone jewellery have in the last years been continuously on the rise. Are precious stones and metals a good investment or do they involve too many risks?

Text: Zdeněk Mihalco

Whereas in the mainstream media articles about the suitability of gold for investment during troubled times are a dime a dozen, not much mention is made about other precious metals or gemstones. However, as shown by data from the recent global financial crisis, such investments may actually be counted among those representing a safe haven during hard times. Jewellery and gem stone purchases should follow certain characteristic specifications, however.

Interest in gems and jewellery is growing “In 2009, for example, we sold a ring in white gold with a central 0.41 carat diamond for ca. CZK 114 000. Today, this ring would be worth CZK 169 000”, says Alojz Ryšavý, jeweller and owner of ALO diamonds. And he offers another example: “The value of a necklace in white gold with diamonds and 4.36 carat sapphires, costing CZK 496 000 in 2012, today has grown to CZK 600 000.”

Fans of investments into precious stones and metals often point to the fact that their purchase was definitely worth it for those who invested their money in this manner during the last financial crisis. The value of jewellery and of its components grew already during the crisis, while this growth has only accelerated during the last couple of years. The numbers are certainly impressive: In the last ten years, the price of diamonds has gone up 122 per-

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cent, even though it appeared to slightly decline in recent months.

A survey conducted by the above mentioned jeweller confirms that behind almost every fourth jewellery purchase lies the intention to invest – and interest continues to grow: “If we compare 2015 with the previous year, we can see that purchases of investment jewellery have grown by more than a quarter”, Ryšavý points out.

Simply put, it seems that Czechs know about investment jewels and buy them increasingly more often. One favourite combination appears to be white gold paired with diamonds. Also on the rise is the popularity of coloured gemstones and in some cases, their prices even surpass those of diamonds.

Among popular coloured gemstones are rubies, emeralds and sapphires, but also lesser known precious stones. As an example we mention tourmaline, desired for its two different colours, each fading into the other one, from greens to pinks. Also popular is tanzanite, a beautiful blue gem which can only be found in the Maasai deserts of Tanzania.

How to make sure you got a good deal Usually, larger precious stones form the basis for investment jewellery. But the size of the gem is not the only significant parameter, important are also clarity, colour and cut.

The value of investment jewellery is formed by the continuously growing price of precious stones, expensive metals and precision craftsmanship. A basic principle says that every piece of investment jewellery should contain at least one larger gemstone, as it is the price of gems that increases at the fastest pace.

For the jewels to keep up with changing trends and taste, the piece buyers select should feature a timeless design.

A further important factor is the artistic rendition, which can often raise the value of the precious stones and metals to even higher levels. Investment jewellery should thus stem from a renowned jeweller with a long-standing tradition.

s: Pro

ent estm v n i ss timele ime er t v o rease ises values tend to inc g cr n i r le du usually remain stab

s: Con idity liqu

er to purchase and safe-keepin low elated g r s t os ra c medium and long term hor a h t i ext izon ent w estm v n i

A long-term investment Investors into jewellery and precious metals would do well to respect certain specifics and should be aware of the risks, similar to those of investments into art or gold.

One problem with gems and jewellery in general is their somewhat low liquidity. To find a buyer for a specific piece at the expected price is often times not a feat of days or weeks but can take much longer. Investments in jewellery also do not bring any dividends and need to be kept in a safe and secure place. Suffice it to say that jewels are investments of a conservative and long-term nature whose purpose is to hold a very concentrated value for a significant number of years. Certainly, they are not suited for speculative quick investments.

The actual purchase of the gems of choice is a very important step and it definitely pays to look for only highly trustworthy jewellers who can guarantee the authenticity and quality of an investor’s purchase. According to estimates, between 15 to 20 percent of diamonds on the Czech market may be either overvalued or even fake.

When purchasing gems set into pieces of jewellery, buyers should receive a certificate and attestation from an independent and court-certified expert. Big stones should always carry international credentials, something like their birth certificate listing the specific characteristics of the given gem. This certificate then also acts as proof that the precious stone was acquired legally.

21 © 2016 KPMG Česká republika, s.r.o., a Czech limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Change is a permanent state for us Ondřej Šteffl, Director of Scio

Text: Richard Valoušek, Photos: Barbora Mráčková

22 © 2016 KPMG Česká republika, s.r.o., a Czech limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

23 © 2016 KPMG Česká republika, s.r.o., a Czech limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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When a memory comes up, what is it about?

I remember that later at the gymnasium I had mononucleosis and an universal doctor’s note. So I only went to school sporadically and my results improved rapidly. That I remember well (laughter).

How was that even possible?

Because I started to look for my own learning sources, trying to find my own view on things. I definitely was not bored.

You probably drew on that later as a teacher, right?

Later, when during my university studies I worked as a substitute teacher at various middle schools, I gathered information from everywhere, scientific books, articles, journals. Today, you can find everything on the internet.

Are you familiar with ted.com?

Is the limited space available for self-learning something you consider the main handicap of today’s schools?

Their main problem is that in order for them to change their directors and teachers would have to change and, what’s even more important, the parents would have to change. But they and the rest of us went to school for too long and can no longer change. Every change seems strange to us. Even though it is readily apparent that today’s schools are not functioning well and are not fulfilling their mission and that’s why change is necessary.

Ondřej Šteffl Ondřej Šteffl is the director of Scio. He graduated from university in Math and Physics and holds a degree in Sociology. In 1990 he founded Czechoslovakia’s first private middle and high school – PORG. In 1995, he established Scio, which ever since has been shaping the admission test for Czech high schools and universities and generally focuses on testing the educational results of schools and individuals. In the last couple of years it also has been emphasising the importance of learning taking place outside of the traditional school environment. In his free time, Ondřej Šteffl likes to snowboard (freeride), windsurf and cook. steffl@scio.cz, www.facebook.com/osteffl

What memories do you have of your school days?

I should say that I basically have almost no memories, as I have an incredibly poor episodic memory. I really remember just bits and pieces. But I do know that in elementary school we had a really great math teacher, Marie Turková, and later in the advanced math class a couple of okay professors. To this date, I am friends with Emil Calda, our homeroom teacher. All in all, I have to say that I was really bored in school; that’s really my main memory.

I can see that you have a particular example in mind; out with it!

Take kids in first grade, for example, they will be on top of their game sometime in 2045. Schools, just like us, have no idea what will be going on then, so how are they supposed to prepare students for it, when they have both feet firmly grounded in the last century.

So what are you preparing them for at the ScioSchool?

That’s just it: constant changes. Just because you don’t know what the world will look like in 30 years does not mean that you can’t prepare for it. Let’s say you’re traveling to Madagascar and don’t know what awaits you, you’re still going to pack something and it will certainly be something else than if you were traveling to a sea-side resort.

But then there’s a pretty good likelihood that I won’t need a lot of the stuff I am taking.

For sure, but if you first think about what may be waiting for you there, chances are that you’ll be prepared and will take the right luggage and that you’ll just have a minimum of the useless stuff. Maybe you’ll discover that if you don’t know what exactly you will need, it’ll be better to expect that you’ll have to buy some things after you get there.

The world is changing incredibly fast and we might not know what’s going to happen in 2022 or in 2045 but we can learn to live with changes and be prepared for them.

24 © 2016 KPMG Česká republika, s.r.o., a Czech limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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So that’s why the ScioSchool motto is “for us, change is a permanent state”?

Exactly. We all can agree that today’s children will in the future be faced with constant changes. So what does it mean, to prepare for change? To constantly learn something new, to learn how to learn, to learn things when they become necessary, to gain experiences, where to find sources, who can advise me, whom to go to, where to look. The Chinese have a saying: “When the wind increases, most will build a wall, but only some will build windmills”. And we teach kids how to build those windmills.

How do your students’ parents react to such arguments?

Some of them, when they bring their first grader, their first question is: Will you prepare them for the middle school entry exams? The kid is a first grader, so that means that they will be taking the entry exams in 2025.

And so we tell them: Do you know to what middle school they’ll be applying? How those exams will look like? We want to teach their kids to be able to decide on their own what they want to study, to be able to independently prepare for those exams, to find all the information they will need. That’s what makes sense to us.

Isn’t exposing children to the pressure of life’s changes too stressful? Don’t they in elementary school need a sense of security, consistence and stability most of all?

Yes, children do need permanent fixtures in their lives, especially when they’re little. Those permanent fixtures are adults, guides, their peers, their school’s atmosphere, those are things that don’t change much. Our school is a safe haven for our students, but from an early age we teach them to go out and have an adventure in knowledge.

So, if today’s elementary schools are at a deplorable level, why are most parents silent?

Because a lot of people still think that their school was great, they have great memories and want them for their children as well. This inertia in people, the fact that they want their kid’s schooling to be just as it was when they were in school, is almost incredible. In some ways, it’s understandable, but then again, it’s also very silly; after all, the world has changed tremendously. Thankfully, more and more people are beginning to think that no matter whether their own school was great or not, their kids will need something else for the lives they will be living.

How do you explain this inertia even in our times?

Most of us went to school for 18 years, so it’s kind of hard to accept that school should take on a different form. No subjects? No homogeneous classes, where kids are all the same age? That they will get to choose what kind of project they’ll want to do? No grades, no homework? How can school even function without all of this? No way will I have my kids attend this school, they’ll say.

Is it hard to get parents to trust you enough to enrol their kids with you?

ScioSchool parents must be more courageous than other parents. Plenty of people flirt with the idea to enrol their kids with us, but the number of those who really end up doing it is much smaller. But we also hear that some regret not having done so. The first ScioSchool is doing well.

What do you think parents are most afraid of?

They are afraid of new things. The insecure feeling that this is an untried experiment that they are enrolling their kids into is very strong. They do know of course that traditional schools are not good and that this could be a change into the right direction, but because they haven’t tested it, they are afraid.

Is there a comparison that comes to mind?

It’s like they are sending their children on an expedition whose happy ending is not in sight. To that I say: every child is a sort of experiment, full of surprises; you don’t know how it will turn out. But that’s exactly why our school is such a great adventure, both for the children and the parents.

Do the parents try to compare your school with others?

They often ask us: And will the children know the same as they would in a normal school? But so often the kids from normal schools know hardly anything at all. People are frequently under the illusion that in the regular schools the children end up learning everything that’s in the curriculum. But usually there’s not much truth to that.

Do you do research on this?

Our colleagues from Kalibro [an educational testing organisation, trans. note] ask children all kinds of standard questions. For example, in the 7th grade after learning about the composition of matter, they go and ask: Is sulphuric acid made up of atoms and molecules? Most of the kids will tell them that it is. But if they ask them whether their lunch contains atoms and molecules as well, a third or even two thirds won’t know. They don’t have a clue that the whole world is composed of atoms. What the heck did they learn, this was supposed to be part of the curriculum.

Do you want to go on?

There’s loads of examples. For example, half of high school graduates don’t know how to subtract from ½.

Do you know what parents expect from their children’s time at elementary school?

We talk to them about it often and have had very interesting results. For example, parent’s highest priority for their children is that they will be able to find joy in life.

Then, their child comes home from school and their first question is about what grades the child got, not whether they enjoyed their day in school, whether anything was

25 © 2016 KPMG Česká republika, s.r.o., a Czech limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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fun, what they didn’t like and what gave them joy. So, one has to wonder how they want their child to enjoy life.

Which brings us to parallel learning. Can you briefly describe it?

Parents want their children to gain knowledge but don’t believe that they will get it in school, which is indeed often times not the case. That’s why we try to help them outside of school – parallel to it. We try to come up with different devices, like the Emušák. The Emušák is a toy which develops emotional intelligence. In it are eight flies, each one representing a different emotion. A book has two fairy tales for each emotion and instructions for the parents on what to ask their children after reading the fairy tales to them and what games to play with the flies, and so on. And so, if the schools aren’t doing it, you yourself can develop your child’s intelligence at home – in parallel. And it works.

Talking about the quality of schools, do you see any examples abroad, where they are working on changes for the better?

Finland comes to mind. Even though I see a number of gaps in their reform, it’s great that they are trying to do it. In Finland, people have a lot of trust in their government and hence they can do things that wouldn’t be possible here.

What in your opinion is the most interesting aspect of their reform?

There’s a couple of them, for example they have made writing by hand non-compulsory; it’s enough to be able to write on a keyboard. If this were to happen here, it would be too hard a pill to swallow.

And if we look beyond Europe?

We can find nice examples there, too. A number of countries can’t look back on a long history of schools and are not rooted in stereotypes. I’ve been to Brazil and they are doing well there, for example.

Why is that, do you think?

Because not many people went to school there in the past.

Among grandparents, maybe 5% went to school, so it won’t happen that a student’s father will go see his children’s teacher to complain that his kid is being taught some kind of new-fangled nonsense when he and his father were taught in a certain way. There, it is likely that neither the dad nor the grandfather went to school at all. And that’s why alternative schools have a lot of room to manoeuvre.

Is there some historical example that fascinates you and which could serve as model for your efforts?

In the early 20s of the last century, American school inspector Benézet received a very poor and uneducated area into his care. He took the kids under his wings and for the first five years of their studies focused only on languages and left

math by the wayside, only to pick it up at the beginning of sixth grade. At the end of sixth grade, the children under his care were as advanced in math as children who studied the subject from the first grade. Unfortunately, this hasn’t been all too well documented and we can’t really lean on this as a model, but it is a great example of how education can function in a totally different way than we are used to.

Who would today think of starting with mathematics in the sixth grade; it’s always been taught from the first grade, even during my granddad’s time, right?

Can you imagine similar experiments taking place today?

Of course I am not expecting or thinking about any such approaches. If I we to suggest this to parents, nobody would give their child to me, not even the most courageous parents.

Looking at elementary schools, what bothers you the most?

A lot of things bother me. Important is for example the development of social competences. For that, today’s schools are very badly equipped. Age-homogeneous grades are the worst possible environment for such instruction. The world is colourful, at work, in the family, everywhere else but in school. Nowhere else will you all be the same age, with the same level of education, the same competences and the same tasks. The biggest problem of today’s schools is that they give children too little space to make their own decisions and to gradually take responsibility for their decisions. We teach them obedience instead of independence.

ScioCamp teaches children soft skills Today, schools place a lot of emphasis on memorisation.

Even though for a successful life in the 21st century memorised information does not play a decisive role, at least as important are the so-called soft skills. These abilities, i.e. the competence to realise one’s strengths and to work with them, the ability to communicate and to learn in an effective manner are taught at the so-called ScioCamps.

With assistance from experienced instructors and through experiential learning children learn skills they can later put into use both in school and in their day-to-day life.

More information can be found at www.sciocamp.cz.

26 © 2016 KPMG Česká republika, s.r.o., a Czech limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Today’s alternative education The idea to teach pupils in other than traditional way is not a new one. Already at the turn of the 14th and 15th centuries, Vittorino da Feltre founded the House of Joy, a school in a natural environment. John Amos Comenius’ pansophical school in Sárospatak in current-day Hungary is also well known. Here, instruction took the form of games, physical activity and theatre performances. Free upbringing in accord with nature was also promoted by Jean-Jacques Rousseau. What alternatives does today´s educational system offer?

Text: Anna Batistová

Montessori The Montessori kindergarten and elementary schools adhere to the principles of the Italian physician and educator Marie Montessori (1870–1952). In 1907 she opened her House of Children (Casa dei Bambini) for children from poor families. In her work, she noticed how children naturally and easily absorbed knowledge from their immediate surroundings and how they learned among and from each other. This inspired her in her life-long efforts to reform education to have it emanate from the needs of small children. Montessori’s methods offer children freedom within an environment filled with activities. In the Czech Republic, more than 70 kindergartens and 27 elementary schools follow Montessori’s principles.

Dalton The Dalton school system adheres to the Dalton Plan devised by Helen Parkhurst (1886–1973), a student of Marie Montessori who put her revolutionary educational principles into practice in the 20’s of the previous century by founding the Dalton School in New York City. The main idea behind the Dalton Plan is that that students themselves choose their work, determine their own speed and learn how to cooperate with other students. In the Czech Republic, no school adheres fully to the Dalton Plan, but a number of institutions have integrated so-called Dalton blocks into their curriculum.

Waldorf Waldorf education is derived from the anthroposophist anthropology of Rudolf Steiner (1861–1925), which respects certain patterns and principles in the development of children and adolescents. The Waldorf schools regard education as a developmental process and introduce cer-

tain subjects during specific phases in the development of a child’s personality. The school’s curriculum is adjusted according to the individual needs and the gradually developing competencies of each child. In the Czech Republic, Waldorf schools are linked through an association.

Jenaplan The Jenaplan is a teaching approach pioneered by Peter Petersen (1884 - 1952), professor at the Friedrich-Schiller-University in Jena, Germany from 1923 until his death. Peterson devised the Jena School to support learning through community. The school made away with age-based grades and grouped children into mixed core groups which support diversity and cooperation among younger and older children. Classrooms are equipped to appear as “school living rooms” in which the core group aims to create health ways of interaction and influence between children of different ages. The Czech Republic’s first Jena School was founded last year in Hradec Králové.

Khan Academy The Khan Academy offers an alternative to traditional education and is becoming increasingly popular in the Czech Republic. It relies on simple internet videos which allow students to learn at their own pace. Students cannot advance to higher level lessons unless they have understood the previous material. The freely accessible videos show a virtual black board, written and drawn upon by the founder of the project, Salman Khan. Khan started out teaching his family members in this manner, then shared the videos on YouTube. His classes have gained unexpected world-wide acclaim. Actor Saša Rašilov provides the Czech voice-over to the videos.

27 © 2016 KPMG Česká republika, s.r.o., a Czech limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

CSR

The face of modern CSR An ever-growing number of firms have understood that CSR is no longer just a cost item or a certain form of marketing but instead an investment into the successful future of the company itself.

Text: Zdeněk Mihalco

Distribute money among non-profits, create a catchy banner, have your picture taken as you hand over the donation cheque and hold a press conference. That still is some companies’ CSR (i.e. corporate social responsibility) But times are changing. Banners no longer have much of an impact, not many media outlets will publish a photo of a cheque presenting ceremony and fewer and fewer journalists bother with attending press conferences.

CSR is an investment into a company’s future Companies are gradually discovering that having CSR only as a promotional tool is neither the best not the most effective way to spend their money and are beginning to approach corporate responsibility on a much more comprehensive level.

On a global level, a shift has taken place away from an emphasis on charity towards the importance of sustainability. CSR is becoming one of the tools to assure the current and future success of the firm. This approach may be summed up as social investments, which means that investments are undertaken in such a way as to assure the best possible return not only for the company but for society as a whole.

So, what does this look like in real life? A number of excellent examples exist both in the Czech Republic as well as abroad, with firms that have developed a comprehensive CSR strategy giving due consideration to sustainability.

As an example we can mention IBM, whose CSR strategy includes the support of technical education supplemented with soft skills development, as the company will look towards employing people with exactly that kind of background. IBM supports the development of soft skills also because currently, technically educated people lack just those types of skills. As another example, the Plzeňský Prazdroj brewery’s future depends on quality water, ingredients and soil. Hence, the CSR of the brewery focuses on environmental protection.

A well-adjusted CSR strategy can help alleviate the biggest risks which in the future may endanger the sustainability of the given business. Hence, KPMG’s CSR strategy has also been set to do just that, by developing the competencies

of its employees through mentoring programmes. It also offers pro bono services to non-profit organisations and social businesses, helping to cultivate the Czech business environment by spreading its ideas on sustainable entrepreneurship. By supporting diversity, KPMG gains new talented employees. The firm also works hard to lower its carbon footprint primarily caused through client business trips, which form a significant part of its business.

It’s important to try to measure the actual impact How to make sure that a company’s CSR strategy is having the desired effect? “It is extremely difficult to measure a CSR strategy’s impact, but one should always try to do so. We should measure the benefits for all parties involved – for the recipients of support as well as for the firm providing the support”, Ivana Ježková, KPMG’s CSR supervisor, sums up.

On a global level, KPMG has come up with the True Value method, whose goal is just this measuring of the impact of a firm’s business and corporate responsibility activities on the economy, society and the environment. The newly devised method helps to optimise both a firm’s CSR strategy as well as the resources invested. KPMG follows this strategy and also shares it with its clients.

28 © 2016 KPMG Česká republika, s.r.o., a Czech limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

CSR

How to combine philanthropy with the future of a firm?

Both internationally as well as locally we can find a number of firms which have been able to fine-tune their CSR policy to serve society as a whole and to increase the chances of remaining among successful companies also in the days ahead. We provide some examples below.

Microsoft

Ford

What does it do?

“We educate for the future“– this is the motto of Microsoft’s main CSR aspect. In the Czech Republic it conducts a number of activities which educate in the modern technology area. It trains both students and teachers, organises competitions and provides non-profits with its software for a fraction of its market price. The company also actively tries to recruit women into the IT field, allows its employees to telecommute and attempts to accommodate people with disabilities and other disadvantaged groups of society.

What does it do?

Ford closely monitors its supply chain. It makes sure that none of its suppliers take advantage of child labour and that all respect the environment. At the same time, it instructs its suppliers in ethics as well as ecological topics.

Ford also watches over what regions its resources come from and whether they are not traded on the black market in war-torn areas. The close monitoring of the supply chain is only one part of the ecologically and socially beneficial aspects of the company’s CSR strategy.

How does it invest in its future?

With its support of education, the company contributes to technical learning and digitalisation, which does not only support the prosperity of Czech society but also increases the number of its potential customers. But trying to recruit more women to the IT sector and supporting disadvantaged citizens’ groups Microsoft expands the number of talented people who may in the future become employees of IT companies including Microsoft itself.

Plzeňský Prazdroj What does it do?

Water management, food quality assurance, clean air and efforts to limit food wastage. Plzeňský Prazdroj’s CSR concentrates on areas which directly impact its business. One of its projects for example points out the dangers of under-age alcohol consumption or of drinking while driving. In locations surrounding its breweries, the company further supports small firms in its region and non-profits whose goals are in accord with its own CSR strategy.

How does it invest in its future?

With a bit of exaggeration, Plzeňský Prazdroj sums it up on its webpages: „Without water, there’d be neither life nor beer“. To be able to continue to produce beer even in 20 years, it needs to maintain quality sources of drinking water, unpolluted soil and reliable suppliers of valuable raw materials, whose development it supports.

How does it invest in its future?

Investments into green technologies, the mitigation of the effects of climactic changes but also teaching drivers how to drive while respecting the environment. The sustainability strategy has but one goal: thanks to its regard for ecological and social effects it contributes to the sustainability of the entire automotive sector of which the company is part.

KPMG What does it do?

“We help through our know-how“ - that’s one of the main mottos of the firm’s CSR strategy. KPMG’s employees help non-profit organisations to function more effectively by offering their expert knowledge and skills. KPMG also organises a School of Responsible Entrepreneurship for university students. Here, the firm’s experts introduce students to the social business concept and provide them with real-life examples.

How does it invest in its future?

By providing expert help to the non-profit sector KPMG helps to broaden the professional horizons of its employees and to hone their soft skills. With the cultivation of the Czech entrepreneurial environment it creates space and demand for its services on the market. By supporting the education of young people in the CSR area, aiding in the development of the non-profit sector and financing other worthwhile projects it invests into the viability and vitality of the Czech business sector and into the overall stability of society, as the future of the firm depends on it.

29 © 2016 KPMG Česká republika, s.r.o., a Czech limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

coffee break

Cycling – more than a sport The pink bikes of the Rekola association have been zipping through Prague and several other Czech towns for three years. In this time, the bike sharing project has made a number of friends, many of whom travel to work by bike or have found out that it is much easier to get around town on two rather than four wheels. With the new season, KPMG has joined the ranks of Rekola’s supporters, by offering its employees the bike sharing service at a discount and by providing a thousand students of the University of Economics in Prague with a paid subscription to the service for one season. We talked about the Rekola project with its founder, Vítek Ježek.

Text: Pavla Čechová, Photos: Barbora Mráčková

What makes bike sharing so attractive for you?

Personally, I am a long distance cyclist and have travelled by bike for example to Paris and Istanbul. During my trips to Western Europe I couldn’t help but notice how many people ride their bikes in the cities and how well cycling works as a supplement to regular transportation, especially thanks to bike sharing. At one TEDx conference, I also listened to a talk by members of the Žijeme tady [we live here; trans. note] association, who were the first to come up with the bikes painted pink. I really liked the idea and the first thing that came to my mind was a mobile app which would provide information about the bikes.

At the start, did you believe that the interest in bike sharing in the Czech Republic would be sufficient?

We did some research. First we thought that our target group would be foreign tourists. So I set out for the main train station where I talked to them. It turned out that they weren’t interested in our service because they wouldn’t be able to transport their luggage on the bikes. Often, they didn’t even have smartphones, so they wouldn’t even have been able to download our app. So then, we decided to focus on students and it quickly became clear that there was a lot of potential there. In interviews, students told us that if during the day they didn’t have to rely only on mass transit, they would be saving a lot of time and could also increase their action radius. In the next phase of the project we began with its realisation.

You were successful shortly afterwards thanks to the crowd funding platform Hithit…

Yes, that was one way how to predict the success of the project, as the preliminary research had only shown that people would be interested in the service. Whether they

30 © 2016 KPMG Česká republika, s.r.o., a Czech limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

coffee break

For our photo shoot, Pavlína and Vítek of Rekola.cz dressed in outfits from Free Circle, a brand combining city fashion flair with functional materials allowing for active movement. For her pilot collection Monika Drápalová in 2013 received Czech Grand Design’s top award. You can buy her spring/summer 2016 collection at www.freecircle.cz.

would be willing to pay for it was something that we wanted to find out through the crowd funding platform.

Within a very short time we were able to collect the entire amount we had targeted for and the Vodafone foundation doubled it. We hence were able to start in the same season.

You took care of the bikes yourselves in the beginning?

Yes. At the beginning, it was a sort of ‘punk’ community project. We got help from friends, acquaintances. We overhauled the bikes we got and painted them as part of a workshop. Today, things have moved on, the bikes are of a standardised quality as we let professionals restore and sandblast them. This June, we would like to get up to 300 bikes.

How can one rent one of your bikes? Can you explain how your Repoints work?

Our bikes all are equipped with a numerical lock and we use a mobile app, the web and sms messages. Every bike has a number, so the app knows if a bike is available in the vicinity of a user, who is then given the key to the

numerical lock. For a long time, we tried to figure out how to avoid having a bike not being rented for a while become vandalised. Eventually, aside from using only bike stands, we were able to convince some cafes and libraries to become partner locations. The Repoint is a virtual stand fitted with a transmitter and it knows which bikes are parked in its vicinity.

KPMG started to cooperate with you and currently you are also talking to other firms. Why do you think they became interested?

It’s a pleasant benefit for their employees who this way can ride to work, for example. Progressive companies are becoming aware that this is something extra they can offer their employees – if you are only traveling by car or mass transit, you’re missing a lot of stimuli that are out there. A bike ride is a completely different experience, a new way of looking at your surroundings. It has been proven by medical research that people who regularly ride bikes call in sick half less often than others.

So what’s keeping city cycling from becoming as popular here as it is abroad?

In other cities and towns, riding bikes is much more common, only Prague is different. It’s a mind-set, certain thought patterns of perception. In Prague, the model cyclist is a sports fan, who goes to sweat it out on the bike on the weekends, hence, we consider cycling to be only a sports discipline. In towns like Hradec Králové, Pardubice or Uherské Hradiště cyclists are just people who consider the bicycle nothing more than a mode of transport. Another mind-set says that Prague is too hilly for cyclists. When you look at Zurich in comparison, you’ll see that this is really not such an obstacle, and that this even hillier city has more cyclists than Prague.

31 © 2016 KPMG Česká republika, s.r.o., a Czech limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

european cultural highlights

The best of culture when you’re traveling Planning a business trip to Germany in May? A visit to the Dresden Music Festival would surely make it more enjoyable. Or plan an outing to the Upper Lusatian town of Bad Muskau. Only 120 kilometres away from Dresden, visitors can marvel at the largest English landscape park in Central Europe. In 2004, Muskau Park was added to the list of UNESCO World Heritage Sites and its New Castle currently houses an extraordinary exhibition.

Text: Anna Batistová

Stars of classical music

Exhibition in honour of Goethe

Just like every year, the greats of classical music aim to dazzle audiences at the Dresden Music Festival in Germany’s Saxony. The topic permeating all performances of this year’s festival – which is celebrating its 39th anniversary – will be time.

At various venues throughout the city, worldrenowned ensembles like the Boston Symphonic Orchestra or the Israel Philharmonic and of course the Dresden Philharmonic will perform, in addition to some of the best performing artists of our time, e.g. Leonidas Kavakos, David Garrett, Kristine Opolais, Pierre-Laurent Aimard, Till Brönner, Sergei Nakariakov and Daniel Hope.

The largest Central European English landscape park alone makes the Upper Lusatian spa town of Bad Muskau worth a visit. Currently, the park’s New Castle is hosting an extraordinary exhibit, titled Romanticism’s Italian Landscape and showing masterpieces from the collection of the Neue Meister gallery in Dresden. The exhibit commemorates the 200th anniversary of the first edition of Goethe’s Italian Journey. Alongside works of a wide spectre of German artists who painted Italy in the first half of the 19th century (J. Hackert, C. Blechen, L. Richter, E. F. Oehme, et all.) the exhibit also displays a number of significant literary travel reports (not only by Goethe, but also others, e.g. H. Heine).

� Dresden � from 5 May to 5 June 2016

� Bad Muskau � from 11 May to 21 August 2016

Paul Strand retrospective � London � until 3 July 2016

Unitl 3 July 2016, London’s Victoria & Albert Museum is putting on a huge retrospective exhibition of photographs by Paul Strand. Paul Strand (1890– 1976) was a highly noted American photographer and cinematographer of Czech origin. His works helped to define both artistic as well as documentary photography of the 20th century. Strand’s photographs and films map his travels through America, Europe, Africa and the Near East. Strand is considered a representative of direct photography but also experimented with photographic abstraction.

32 © 2016 KPMG Česká republika, s.r.o., a Czech limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

european cultural highlights

Normandy Impressionist Festival

Prague Design Week

For the third Normandy Impressionist Festival, four different museums have banded together and prepared four large exhibits which will introduce four different aspects of impressionism. In Rouen, visitors can take a look at Scenes of Impressionist Life; in Honfluer, the exhibit Being Young at the Time of the Impressionists (1860–1910) awaits, in Le Harvre, the Musée d‘art moderne André Malraux is putting on a retrospective devoted to E. Boudin.

Finally, the Musee des Beaux Arts in Caen will attempt to explain the influence of Norwegian landscapist Frits Thaulow on French Impressionism. Visitors may board special trains which will take them from Paris to Rouen in little more than an hour.

This year marks the third edition of the designer showcase Prague Design Week. Just like last year, it takes place at Kafka’s House near Old Town Square in Prague. For seven days, selected designers, jewellery makers, fashion designers, creative artists as well as studios, schools and individual companies show off their creations. Prague Design Week focuses especially on telling the story of design and wants to show the resulting products as a process, from the first idea to sketches, prototypes all the way to the finished product.

� Rouen, Honfleur, Le Havre, Caen � until 26 September 2016

� Prague � from 2 to 8 May 2016

Salman Rushdie’s new novel out in Czech � Czech Republic � Spring/summer 2016

PJ Harvey’s new album � Czech Republic � 15 April 2016

In the middle of April British rock-star PJ Harvey brought out her ninth album. The long awaited record titled The Hope Six Demolition was recorded in London in front of a live audience. The recording process was part of the Recording in Progress project, which took place in the beginning of the year at the Somerset House studios. PJ Harvey collaborated on the album containing 11 songs with producers Flood and John Parish, who has been working with the singer for many years.

Money Monster

� in cinemas across the Czech Republic � Czech premiere on 16 June 2016 The film Money Monster, coming to Czech cinemas on 16 June 2016, was directed by Jodie Foster, well-known since a young age for her role in Martin Scorsese’s Taxi Driver. The main characters of Money Monster, centring around a Wall Street guru who advises TV viewers on their investments, are portrayed by George Clooney and Julia Roberts. The fast-paced drama begins when an disgruntled viewer/investor takes the TV star hostage.

Paseka publishing house is set to bring out the Czech translation of the latest novel by the author of The Satanic Verses and Midnight’s Children, Salman Rushdie. Its title - Two Years Eight Months and Twenty-Eight Nights - makes reference to the 1,001 nights Scheherazade spent telling stories in the Arabian Nights fairy tales. New York is hit by a catastrophic storm which wreaks havoc on the city and the lives of its inhabitants. It is also the beginning of a wave of strange occurrences which changes the face of the entire planet and turns it into a battle zone of supernatural powers. Within the subsequent one thousand and one nights good and evil and light and darkness battle for the ultimate victory.

Book World Prague – Northern edition � Prague � from 12 to 15 May 2016

The 22nd international book and literary fair Book World Prague will be dominated by oversized design booth of this year’s honorary guests, the Nordic countries (Denmark, Finland, Iceland, Norway and Sweden) which will bear the name #ReadNordic. A total of 17 Nordic authors are expected at the fair, which traditionally takes place at the Prague fair grounds in Holešovice. This year’s biggest stars will be Finish writer Katja Kettu and Norwegian author Jostein Gaarder.

The main themes of this year’s event will be the detective story as a phenomenon and the city as a literary back-drop.

33 © 2016 KPMG Česká republika, s.r.o., a Czech limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

business lunch

Catering is a B2B business Even though he runs a highly successful food business, which most people would find immensely stressful, he’s happy. Sanjiv Suri founded and runs Zátiší Group. Not all by himself – in all the years, he has learned to delegate and to devote his time to doing good. As a stand-in for all his charitable activities we mention the time when he - a herniated disc no obstacle - travelled 850 kilometres by bike across India alongside the president of Doctors without Borders.

Text: Eva Samšuková, Photos: Barbora Mráčková

You started your first restaurant here 25 years ago, now you run four more and a catering firm. Where did this impulse start? Did it develop naturally?

This was definitely not a strategy I thought up 25 years ago, but a combination of my understanding of the needs of my patrons and clients and the reaction to them and a huge dose of good luck. That I have to emphasise, because we were really very lucky with the team that we started out with. Many of the folks who began with us more than 20 years ago are still with us today. Some of them will celebrate their 25th anniversary at Zátiší this year or the next.

You often talk about entrepreneurial luck. Do you ever worry about the future or about the rightness of your decisions or do you have an all-powerful recipe for success?

Definitely not. But there isn’t an event in life that I could be unhappy about. Happiness is an inner state, and even if external factors influence 10-15% of it, I will never be able to change those factors in any significant manner. I strongly believe that if we’re able to remain grateful and positive, then we can be happy under any circumstances. Every event in life is then an opportunity at the same time. Hurray!

But that’s exactly it. They enjoy luxury food and send money to the poorest of the poor instead. Some of them knowingly, some don’t have a clue. Well, isn’t that wonderful?

Currently, 40 percent of your efforts are devoted to your catering business, 40 percent to your restaurants and 20 percent to catering to schools. What do you think, how will this distribution change in the future?

Fresh & Tasty is our fastest growing division. I can thus easily imagine that by 2018 each division will take up a third of my time – catering, the restaurants and the provision of company and school cafeteria services.

Do client relationships differ when it comes to running a restaurant and providing catering services?

Restaurants are mostly B2C businesses, where guests themselves decide where they want to go to have dinner, whereas catering is usually a B2B business with customers deciding based on the parameters of catering events, e.g. who will be able to serve 300, 500 or 2 000 guests.

In the events you cater, you try to use the latest components and trendy ingredients. Where do you get your inspiration?

The team collects inspiration from all over the world and all ideas come directly from them. I do have to admit, however, that not all of our ideas are totally original, sometimes they are just new for Prague and the Czech Republic.

An important role in both your life as well as your business undertakings is philanthropy. Are you able to get your employees onto the same wavelength?

That’s actually not a very easy question and sometimes it does happen that we don’t agree. They quite naturally want to see more charity projects that are aimed at the Czech Republic, whereas I feel that one gets a much higher value out of investments into charity projects that target the poorest of the poor. I’ll give you an example. In India or Africa it is possible to buy lunch for one pupil for every school day of the year for less than CZK 300.

At the end of last year the media started to report that you were trying to expand to Germany, Austria or Switzerland. What is the current status of this?

The catering division tried to expand to Austria, Hungary and Germany, but we got burned and withdrew. Now we are preparing for round two, which we will start around 2017/2018 with expansion into Germany. In my opinion we have to start with a restaurant, then we could follow that with catering and then also with Fresh & Tasty, but of course it depends on the opportunities.

In your restaurants, guests spend fairly significant sums on luxury food and services. Doesn’t that contradict your enthusiasm for charity? They could be sending what they spend to the needy instead.

The company came into existence in 1991 and currently runs four restaurants in Prague (V Zátiší, Bellevue, Mlýnec and Žofín Garden) as well as Zátiší Catering, the exclusive catering partner for the Congress centre Prague and lately also the preferred catering partner of the Rudolfinum. Since 2009 the Zátiší Group also includes the innovative Fresh & Tasty division.

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The Zátiší Group

© 2016 KPMG Česká republika, s.r.o., a Czech limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

business lunch

Our photographs were taken in the Café Rudolfinum, whose opening guests can look forward to this year.

35 © 2016 KPMG Česká republika, s.r.o., a Czech limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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