RFV Plc is one of the most exciting young Central European companies in a dynamic and developing energy sector. The company was established in 2000 by two Hungarian private investors, Csaba Soós and József Makra, as an energy service company. During its 10 years of operation the firm has evolved from a small enterprise into a regional company which finances and executes projects in the range of tens of millions of euros. The management are developing RFV into one of Central Europe’s leading alternative energy suppliers.
Since its foundation, RFV has been focusing on projects to reduce the energy consumption of its customers, resulting in lower expenditures and emissions. Although the company has several experimental projects in the energy sector, its current focus is district heat supply. RFV is modernising outdated and inefficient district heating systems and services as well as providing heat supply on the reconstructed system. Clients include municipalities, public institutions, industrial customers as well as households.
In most East and Central European countries public institutions and municipalities use obsolete and inefficient energy systems, which means a comprehensive upgrade to the latest technology will result in significant energy and cost savings. This encourages larger scale investments and provides excellent returns to investors. RFV’s goal is to play a pioneering role and become a regional market leader by applying world-class technologies and introducing alternative energy systems whenever possible.
“We were easily able to achieve 30 percent energy efficiency improvements in Hungary’s public institutional system during recent years,” says chairman Csaba Soós, adding that other countries in Central and Eastern Europe offer possibilities for even higher efficiency savings and thus a better return on investment.
Genuine sustainability
RFV always adopts a sustainable approach for locally applied energy solutions; the company’s sustainable ethos plays a key role in defining corporate vision and business objectives. The technologies used and RFV’s growth and operational excellence can be steadily maintained only by a sustainable business philosophy with an ongoing interaction with all stakeholders. The company believes that energy solutions must be provided by using an optimal energy mix: the right combination of fossil and renewable energy sources. Renewable and sustainable primary energy sources have been playing an ever growing importance in the company’s investments, whereas leveraging local biomass bases has often been a preferred and feasible option. RFV applies cutting-edge technologies for its modernisation projects, and after completion its long-term energy service contracts ensure a safe supply of energy for clients and an excellent return for investors.
Besides fossil fuel RFV is investigating alternative energy sources and considers biogas, biomass and geothermal energy as having heat services potential in specific regions of Central and Eastern Europe.
In order to maintain sustainable development and the ability to deal with technical, human and financial challenges, the company needs to continuously adapt to changes. Throughout 2010, several young and dynamic leaders have joined the company, who are not only able to keep up with the fast development of the enterprise, but have become the engine of continuous growth. As CEO Ákos Kassai defined the criteria of selecting manpower, “We understand that exceptional people make an exceptional company. In our selection process we rather focus on the personality of the candidates and often make some concession regarding the directional work experience.”
Such different approaches are represented in other corporate decisions as well. While most enterprises reacted to the long-lasting economic crisis by reducing their costs and investments, RFV chose a different path. In 2009 it strengthened its capital base, expanded its range of financing and undertook several large-scale heating modernisation projects, as well as extended its existing investment agreements. The company’s unusual approaches seem to have borne fruit, because by 2009 the company’s group-level revenues increased by 208.8 percent, with EBITDA increasing by 250 percent, and after-tax profit by 281.3 percent.
“Our strategy is to play a keystone role in the alternative energy business,” says Mr Kassai, “linking customers’ needs with locally available energy resources and best suiting technologies. This keystone strategy and transparency as the core of our corporate culture provide us long term competitive advantage to achieve sustainable growth even in time of economic crisis.” Constant renewal, innovation, technical excellence coupled with fast decisions and a unique corporate culture set a new growth path for the company, Mr Soós adds.
RFV has long used the capital market and bank funds to finance its investments. The company had an IPO in 2007 and SPO in 2009 amid the world crisis. In 2010, the growing number and size of projects necessitated a further increase in the number of banks financing the company. In order to make RFV’s liquidity easier to plan, as well as to significantly accelerate the planning and implementation processes for new projects, the company also started a bond programme. The bonds recently issued very successfully by the company are traded on the stock exchange and became a benchmark for its kind through Central Europe. There has not been a corporate bond program of this type on the Hungarian market in 16 years, so RFV again played a pioneering role in this field. The bond programme provides additional flexibility for the financing of RFV’s Romanian heating and district heating supply projects, as well as further diversifying funding sources. RFV’s contracts include long-term operation and maintenance as well, in addition to the modernisation of district heating systems.
On its way to emerging into a leading regional alternative energy company, RFV has recently won contracts for district heating development projects in three Romanian cities –Gheorgheni, Zalau and Tirgu Mures – and has a good chance to win contracts for other Romanian towns as well in future tender processes. But the young Hungarian company thinks even bigger. It considers Romania only a first step in its international map of expansion and plans to enter two more countries in the region in the next three years and then to enter a new market every 12-18 months.
