QUESTIONS AND ANSWERS SECTION:
UPDATE DATE -> 04.01.2011
Dear Sirs and Madams,
you are invited to ask questions to the Management Board of the Company POLNA S.A.. You can do it by means of a form available on the site:
Contact or by sending an e-mail to the following address:
biuro@polna.com.pl. This site is updated at least once a month with the newest questions and answers.
The Management Board of "POLNA" S.A. answers:
Complementation of the statement by the President of the Management Board of 24th March.
Advancement of acquisition actions.
I promised to issue information on acquisition actions at the end of the week:
At the end of the first quarter, two entities were chosen which, in the Management Board's opinion, suit the strategy of the Company's development and may help increase its value. There are now being thoroughly analyzed.
I remind you that the major objective is to achieve a long-term, stable increase of the Company's value, based on solid organizational grounds, development plan and transparent strategy.
Taking over another entity is not the objective in itself but action strengthening our value.
Surely the Company which I have been managing for the last 6 months is not going to take acquisition actions driven by risky rush.
Finally, I would like to refer to the last statements on the forum, which I have tried to read once a quarter (up to now). During the General Shareholders Meeting, there will be an opportunity to discuss those statements in a conversation face to face.
Yours faithfully,
Miroslav Kozlovski
President of the Management Board - Managing Director
Question of the month: March 2011
Complementation of the statement by the President of the Management Board of 24th March, including reference to other questions received from shareholders in the period from 1st March to 22nd March 2011:
The questions concerned:
information policy,
the result for the 4th quarter of 2010 and expectations for the 1st quarter of 2011,
expected information on acquisition activity,
the reason for decreasing stock price index of the Company's shares,
considering the decision concerning potential buy-out of Company shares in order to redeem them,
a great difference between share price values (the market value and the book value),
comparing the Company to another firm within the industry,
motivating the President of the Management Board by purchase of Company shares.
Dear President,
I would like to inform you that on 28th February 2011, the Polish Financial Supervision Authority issued a report entitled "Enhancing capital market players protection".
Its objective is to eliminate a certain kind of situations, when some events or lack of information about those events may cause information advantage for certain investors. For shareholders (including "small shareholders") and investors, in turn, respecting their right to information is essential. In particular, information should be made public in such a way as to ensure equal access to it for all market players. Recommendations of the Supervision Authority try to meet those expectations and their aim is to eliminate information gaps.
With regard to the above-mentioned things, I kindly request you to transfer ALL important information concerning the Company's activity to investors SYSTEMATICALLY. As I write 'transfer', I mean official announcements by means of the ESPI system. It is unacceptable, after all, that investors learn about some important issues with delay, once a month or once a quarter. Such issues should be made public immediately as they occur, for example like this: http://www.montazas.pl/pl/pl_naujienos.html.
And then we, POLNA's investors (in other words: people who have entrusted you our money), would learn about those important matters concerning our company - our common property - as early as e.g. on 11th February 2011, not a few weeks later, in March. The same pertains to other potential investors from the WSE, who may not be POLNA's shareholders at the moment but may wish to be ones. Do they follow the "Questions and answers" section updated once a month on the web site? Do they read statements of the Management Board? I doubt it. But they are sure to monitor ESPI dispatches. They do so and if they find information interesting for them, they respond adequately.
Another thing is the results for the 4th quarter of the previous year. I am aware of the rises in prices of materials and raw materials that had occurred but I still cannot understand how you could allow for such a drastic drop in profitability level: from +9.7% according to the results for the 3rd quarter, to (-)2.8% according to the results for the 4th quarter (a drop by 12.5 percentage point within only 3 months!). You must have some economic services, some controlling system, so immediately after the significant rise in material prices, a parallel increase in product prices should have taken place. Did you have to wait with it until 2011? Was the effect of this so difficult to predict? In Zetkama or Aplisens somehow there was no problem with that.
I will tell you straight: I am just disappointed with your assurances about activities directed at improving the operational profitability of the Company, about expenses control etc. You may feel hurt at the moment but both me and my colleagues - POLNA's shareholders - see it that way. We are not part of a charity. I think you understand that we did not invest our capitals in POLNA in order to have losses from it and watch POLNA's stock market rating go tumbling down.
And last but not least, there is the issue of acquisition. The quarter is finishing and you are still silent
Leszek Kamiński - Gdańsk
The Management Board of "POLNA" S.A. answers:
Dear Sirs and Madams,
one effect of experience we have gained over the last 10 years of working in Western world wide concerns is natural transparency of communication and information flow within the organization and, even more so, with regard to shareholders.
Taking that into consideration, the Management Board of the Company is fully aware and absolutely convinced of the necessity of informing the shareholders of the Company's activity on a regular basis. It also concerns strategic and current actions taken. However, the necessity of obeying the rules (Journal of Laws Dz. U. 09.33.259, as amended), which occurs simultaneously, imposes some limitations on issuing public information.
With regard to a Lithuanian business partner with whom a trade cooperation agreement has been signed, I want to inform you that at the present stage it does not meet the requirements of a material agreement. That is why that information can only be found on the Company's website. At the same time, I want to emphasize that on our Lithuanian business partner's website there is an outstanding mistake. The mistake will be corrected today.
Tomorrow (on Friday) I will respond to the other questions and reservations, which absolutely need to be explained.
Complementation of the statement by the President of the Management Board of 24th March, including reference to other questions received from shareholders in the period from 1st March to 22nd March 2011:
Dear Shareholders,
I have thoroughly read the questions I received. I emphasize once again that I treat seriously this possibility to communicate with all the shareholders and I hope to receive more questions. Launching a new website will also allow for the development of other means of communication. I am open to any suggestions. At the same time, I emphasize that developing sound and transparent relations within the Company and relations with its environment, virtually from scratch, is a long-term process.
A few months ago I undertook the task of managing the Company, despite clear potential difficulties in creating a profitable and developing organization. After the first month I already knew that we could not cultivate any more the visible disproportion between maximum use of the Company's resources (with the stress of the current result) and reduced expenditure on their maintenance and development.
The tasks and objectives assumed by the new Management Board were reflected in the Company's mission, concept and strategy and were materialized in the form of money values within the framework of the accepted (currently valid) operational plan for the year 2011. In the letter to Shareholders, included in the annual report, I indicated that the year 2011 would be a difficult year, because it necessitates double effort due to planned developmental (also acquisition) actions and parallel restructuring actions, whose introduction is absolutely essential. Let me remind you the issues:
1) fixed assets management policy,
2) the condition of Company infrastructure,
3) the level of computerization and IT development,
4) human resources policy.
It is not my intention to assess the previous Management Board's mistakes or decisions having a negative impact on the Company's activity. I concentrate on introducing actions aimed at realization of the adopted objectives. It requires time, determination and a great deal of work on the part of the Management Board and our team.
Trust should naturally emerge from evaluation of profit from the core activity, fulfillment of promises, clarity of strategies, communication with investors and other factors. I cannot imagine working in a company without the Shareholders trusting the President of the Management Board. That is why our meeting during the nearest General Shareholders Meeting should explain it beyond doubt.
Results for the 4th quarter, results for 2010
The economic and financial standing of the Company, as well as its organizational condition, is stable. However, in order to secure long-term profit, a number of actions need to be taken in the areas I mentioned before. In the 4th quarter, the value of product sales increased in comparison to the previous quarters. The value of remuneration increased simultaneously, including PLN 260,000 due to creation of employee reserves on the basis of actuarial valuation for the end of 2010. I also emphasize that in the year 2009, a reserve amounting to PLN 310,000 was released. Material consumption, including power consumption in the heating period, had a great influence on the profit (loss) level of sales. As for the profit (loss) from operational activity, the value of PLN 185,760 (loss from disposal of non-financial fixed assets) had a significant impact. As for net profit (loss), it was greatly affected by the adjustment of deferred tax value, calculated after the first half of the year.
Acquisition - purchase of shares.
This week I am going to share with you information on the actions taken and their advancement level. I think speculations and rush are not necessary in an issue that is so important for the Company.
As for price index of shares - it is commonly known that the index is affected by a number of factors, including speculations. I would rather refer to financial standing, development potential and book value of shares.
In one of the questions, the Company was compared to another company within the industry. Indeed, I confirm that a long-term strategy and consistency in its implementation are important for a company's value.
My level of conviction and motivation for providing of effective management of the Company is very high. Purchase of shares has no impact on that. I do not exclude making a purchase in future.
Yours faithfully,
Miroslav Kozlovski
President of the Management Board - Managing Director
Question of the month: February 2011
Dear sirs,
I have 3 questions to you:
1) Is it true (according to comments to the article on the payments condition in Polna, published in local press) that Polna has increased its payroll, among others, by 3 specialists? What kind of specialists are they and what role are they going to play in the company? How has the general staff number in the company risen? I'm interested in positions for 30/09/2010 and 31/01/2011.
2) How is the company going to clear the "gratuity" for the ex-president, Mr Zakonek? Is it going to be a single book entry charging the expenses and result of the year 2010 or is the company going to divide the expenses in another way?
3) Recently we've heard a lot about skyrocketing inflation, rising costs of fuel, transport and non-ferrous metals etc. How is Polna going to deal with that problem? Has the company increased the prices of its products recently? If so, when was it and by how much approximately (in percentage terms)?
I wish all of you many successes at work and in personal life.
The Management Board of "POLNA" S.A. answers:
Qualified and specialized staff is one of the basic elements of every company's foundations.
Expectations towards the Company concerning quality, technologies, designing, production and, generally, all spheres of the company's activity, are shaped by the market. That translates into the necessity of continuous costs reduction and development.
In December 2010, I presented to all of you the spheres which absolutely have to be improved. The Management Board is not going to continue the conservative manner of managing the Company and concentrating only on current financial results. The Management Board also takes into consideration the quality of strategy and organization, transparent relations within the Company, creating management staff that would be motivated and aware of the targets to achieve, motivating and engaging the whole personnel, continuous development, readiness to make changes and implement the best practices. Combining those important factors needs time and devotion. Those actions also result from established missions, visions, strategic targets and assumed values.
Therefore, the information about employment should be interpreted against the background of the above-mentioned arguments. As regards the areas where specialists have been engaged, these include: production planning, logistics and purchases, production (department manager) and sales. Besides, the levels of competence of the other specialists working for the Company are being assessed.
Prices of materials have indeed risen. A significant reduction of sales prices at the turn of 2009 and 2010, aimed at retaining customers, must also be taken into consideration. Increasing prices in 2011 cannot compensate for that difference. That is why currently we are working on reasonable reduction of expenses.
The issue of gratuities is regulated by the policy of creating reserves in advance and early enough.
Additional information:
In February 2011, further agreements for commercial cooperation were signed, including an agreement with a company from Eastern Europe. That company specializes, among other things, in designing and supplying industrial installations with the use of fittings.
The new website: In February, the Management Board decided to broaden the scope of works to do. Completion of the works has been confirmed for April 2011, in accordance with an agreement currently in force.
Yours faithfully,
Miroslav Kozlovski
President of the Management Board - Managing Director
Question of the month: January 2011
Is the Company going to conduct a kind of inventory of value of its assets after the appointment of the new CEO and can we expect any write-offs due to that?
The Management Board of "POLNA" S.A. answers:
The accounting policy concerning company assets management, adopted in the Company, has not changed. Only operational management of fixed assets (machines and equipment) is about to be improved. Potential effects following that will be included in periodical statements.
Yours faithfully,
Miroslav Kozlovski
President of the Management Board - Managing Director
Question of the month: January 2011
Dear President,
with regard to the improvement of the Company's PR announced by you, as a minor shareholder I would have a few questions / suggestions:
1. Is the Company planning to publish monthly sales information as is done e.g. by Elstaroil, Lentex etc.? In my opinion, this would greatly improve the Company's image and shareholders would not learn about the improvement announced by you only from periodical reports.
2. Could you provide EUR and USD exchange rates adopted for preparing the budget for 2011 and what is the assumed share of export in goods sales?
3. How advanced are works on obtaining long-term contracts aimed at stabilizing or enhancing the level of sales (e.g. with Orlen)?
4. What about the issue of pursuing compensation from ING (pertaining to currency options)? Has the Company finished that pursuit completely and is not going to try to regain that money?
5. Does the Company secure currency risk and raw material risk in any way?
6. When will the website be updated? E.g. in the 'News' section, the latest entry is of 26th July 2010.
I would like to ask you to answer on your website and I wish you many successes in managing the Company.
The Management Board of "POLNA" S.A. answers:
The Company does not publish forecasts. However, I do not exclude that in the future, making it conditional, to a significant extent, on long-term orders portfolio. As for that, currently we are focusing on activities in Poland and in the East. The Management Board is sure to share the information on the results of those activities with the Shareholders of the Company.
The Company is not conducting any activities concerning compensation for currency options. The effects achieved by other companies interested in receiving such a compensation are not satisfactory.
Currency risk is secured as the needs arise by forward transactions. Information concerning that is included in periodical reports, when discussing financial instruments.
The appearance and content of our website is one of important elements of the Company's image and an effective marketing instrument.
Beginning on 1st March 2011, a new website is about to be launched. There is also a person responsible for current updating of our website.
Yours faithfully,
Miroslav Kozlovski
President of the Management Board - Managing Director
Question of the month: December 2010
Dear Sir, I would like to know what the Company is going to do with the money gained from issuance of shares and from retained profits. It's commonly known that keeping cash when assets are relatively cheap on the market is pure waste. The Company can do the following with the profits and retained cash: 1. paying the dividend - is this considered? 2. buying out own shares, 3. paying off debt (but there is virtually no debt), 4. developing the business by means of investing in production capacities, 5. M&A, that is, mergers and takeovers, but the Company has recently withdrawn from a takeover. So my question is: how is the Company going to compensate the Shareholders for devoting money for the latest issuance and time wasted on investing in its shares.
The Management Board of "POLNA" S.A. answers:
The Company is going to assign funds for a takeover and/or merger, aiming at the development of the firm by means of increasing market force, diversification and long-term orders (at least some of them). Increasing the goodwill of the Company by means of development is one of the most important goals with which we are guided so as to fulfill one of the key elements of our determined Mission.
I would also like the Shareholders to be fully aware that it is absolutely necessary to continue structural changes facilitating organization within the Company. I mean particularly research and development of new construction and technology solutions, increase qualifications and awareness among the staff concerning up-to-date methods of process management, modernization of the IT aspects of management, development of more aggressive marketing activity, as well as shaping and improving organizational culture.
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