08. January 2010.

Dear Reader,

Having left the loving Christmas holidays behind us, I respectfully welcome you on these initial days of the year 2010. We have begun a new year. Diligent days at work shall follow and we begin the year ahead with a sense of optimism, full of plans.

Let us recall that a year ago the entire world was full of anxiety at the commencement of 2009, all were worried about the potential impact of the initially financial, then economic crisis upon their lives and business.

We saw that domestically and abroad, in the immediate and broader geographic neighbourhood, lines of factories had closed their doors, declared bankruptcy, tens of thousands have become unemployed, consumer habits suddenly shifted, consumption turned into restrictions on the same, all have restrained their spending, unsold inventories were accumulated, requirements for bank loans were heightened and taking loans were made more expensive, while economic theories that formerly showed a way out had fallen one after another and former support pillars had disappeared. In the year 2009 it has become apparent to all that continuous development that has been ongoing for many decades is no longer sustainable. Economic difficulties are/were coupled with a change in lifestyle, a disappearance of the honour of one's given word, forgetting the ethical imperative of the past according to which a person's freedom is limited to the extent of not inhibiting the freedom of another.

It was in this external environment that the nearly two hundred years old Herend Porcelain Manufactory had to maintain itself. As a preview, let me just say that we were successful in taking on 2009!

If someone has both the desire and the opportunity to study the history of the Manufactory, he/she can see that in total the growth of Herend is unbroken and successful. Why, though? When this question is posed, we can always respond by stating that a single word or sentence is insufficient to answer. It is the combined result of many factors and circumstances that the international reputation of Herend is so outstanding.

The dedication, the loyalty to our property, the desire for self-actualisation, the professional know-how that has accumulated within Herend’s masters from generation to generation, the inventiveness, the no-compromise attitude, the creative atmosphere within the manufactory, the spirit of facing up to challenges, the excellent quality of our porcelain, its reputation and unique nature – all of these are factors through which Herend can become the world's largest porcelain manufactory.

These are the factors that are capable of ensuring the Manufactory’s present and future in any economic environment. These provide the intellectual heritage and responsibility that was left to us by our predecessors and these are the values we must convey to future generations, thereby ensuring a bridge between past and future, arching through the present.

At this time one customarily accounts for the results of the past year; in spite of the restrictive external economic environment, what we could implement of our plans in the year 2009. Our results, mentioning only the most important ones:

- We had implemented our cultural strategy with the objective of nurturing and preserving Hungarian and European artistic traditions and carrying them forward for future generations. Our Herend in the Castle exhibition series, still ongoing in Hungary, was extremely successful. The series of our international exhibitions was enriched with an exhibition in the Kremlin in Moscow. The value and prestige of this exhibition is emphasised by the fact that never had another Hungarian brand manage to be included within the historical walls of the Kremlin as an exhibitor. Over and above our exhibitions, we were also present at state, social, cultural, sporting and tourism events, generating numerous accolades.
- We can say that the Herend brand remained vivid in the minds of the public in 2009, both in Hungary and abroad, and it remains renowned to this day.
- We were able to maintain our ownership structure, unique in Hungary for a company of this size.
- We are glad that in spite of the raging world-wide crisis we did not have to lay off employees in 2009 – we are still employing nearly a thousand people at the Manufactory. In this the state subsidy to preserve jobs was a significant help.
- We were able to adapt to our economic environment, we could operate successfully even when other companies had fallen by the wayside.
- In spite of the restrictive economic environment the 2009 year will conclude with a profit; this is the rock upon which the entire Manufactory is built, the foundation for the livelihood of the Herend Community.
- The economic and financial operations of the Manufactory were stable, a need for an external source of funding essentially disappeared; this is the first time this can be said for the past eight years.

Let us hope for wonderful results in the year 2010 as well, let us hope for God’s grace, the centuries of know-how of our colleagues, giving us a secure foundation.

I trust that we will be able to meet you in person directly or indirectly at our events in Hungary or abroad, at our brand stores or even via the Herend Porcelain objects in your homes. Our goal is to serve you to the best of our abilities and to have Herend Porcelain communicate beauty, comfort and a solid value.

On the starting days of 2010, wishing you health, happiness and good cheer, respectfully yours,

Dr. Attila Simon
Chief Executive Officer

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• Ákos Tamás