Polish Market No. 12 (184) 2011 by Polish Market

Polish Market :: 12/2011

15 years PUBLISHED since 1996 No. 12 (184) 2011 :: www.polishmarket.com.pl

Herbert

wirth

President of the Board of KGHM Polska Miedź S.A.

PEARLS OF THE POLISH ECONOMY 2011

MetLife Amplico a leading provider of life insurance, retirement and employee benefit products © PNTS

Once again MetLife Amplico companies were recognized as “Pearls of the Polish Economy” for their leading position among the most dynamic and effective companies in Poland.

www.metlifeamplico.pl

Contents

12/2011

Pearls of the polish economy

How do we find the Pearls of the Polish Economy? # 14

From The President’s Press Office # 6

From The Government Information Centre # 7

Professor Leszek Jerzy Jasiński, INE PAN: A wreath of Pearls of the Polish Economy # 20

Jan Macieja, PhD, Head of the Business Monitoring Section of the Institute of Economics, Polish Academy of Sciences: The evolution of the “Pearls” # 34

Maciej Proliński: What remains # 35

Xavier Douellou, Managing Director of 3M Poland: 20 years of innovation in Poland rewarded with Large Pearl # 47 Kazimierz nowak, President of the Mazowiecka Spółka Gazownictwa Sp. z o.o.: Tradition and modernity # 48

Our Guest

Bronisław Komorowski, President of the Republic of Poland # 8

Prof. Jerzy Buzek, President of the European Parliament # 10

telecommunication

Bogdan Sadecki, The telecommunications market in Poland is changing # 51

Editorial

Krystyna Woźniak-Trzosek # 12

GAS

Cezary Tomasz Szyjko, PhD, How can we step on the gas? The gas market liberalisation model in Poland in 2012 # 54

With warm and friendly wishes for a Merry Christmas and a Bright and Happy New Year we would like to thank you for doing business together this past year and we look forward to working with you again in the New Year. Happy holidays! Polish Market 2 :: polish market :: 12/2011

Contents FOREIGN INVESTMENTS

LAW

Tomasz Wróblewski, Grant Thornton Poland Chief Executive: The World Economy in 2012 – a Rocky Road to Recovery # 56

Invest in Poland # 58

Bogdan Sadecki: We are nowhere near China, but cooperation is proving successful # 59

Significant resources. Priority directions 9th Congress of Polish Exporters # 62

The All-New Rybnik Power Plant # 64

Monika Kowalczyk, Patent attorney, Chałas & Partners Law Firm: How to protect a trademark within EU? # 72

THE BEST OF POLISH MARKET PART 2 # 74 FINANCE

Eugeniusz Śmiłowski, PhD: Polish Payment Card Market # 76

WARSAW INVESTMENTS OPINION

New investments in the Warsaw Tramway are giving a new face to the capital city # 78

Adam Szejnfeld: A Pole is smart before making a mistake # 66

CONSTRUCTION

Prof. Małgorzata Zaleska, Member of the Board of the National Bank of Poland: Foreign investments in Poland # 67 Alexander Konopka, President of the Management Board of Gras Savoye Polska: Polish Insurance Market – Liability Insurance, Strongebut More Expensive? # 68 Adam Kompowski, President of the Board of Bonus Systems Polska S.A.: Keeping incentives up with the times # 69 Piotr Szlenk, PhD, President of the Board of the Polish Society of Actuaries (PSA): A time of stabilization # 70

Joanna Szyman, President of the Board Scanmed Multimedis S.A.: The economic slowdown as an opportunity for Polish private medicine # 71

Polish Market :: 12/2011

15 YEARS PUBLISHED SINCE 1996 No. 12 (184) 2011 :: www.polishmarket.com.pl

Herbert

WIRTH

President of the Board of KGhm Polska miedź s.a.

Pearls Of the POlish eCOnOmy 2011

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Publisher: Oficyna Wydawnicza RYNEK POLSKI Sp. z o.o. (RYNEK POLSKI Publishers Co. Ltd.) President: Krystyna Woźniak-Trzosek Vice-Presidents: Błażej Grabowski, Grażyna Jaskuła Managing Director: Jacek Szczęsny Address: ul. Elektoralna 13, 00-137 Warsaw, Poland Phone (+48 22) 620 31 42, 652 95 77 Fax (+48 22) 620 31 37 E-mail: info@polishmarket.com.pl Editor-in-Chief: Rita Schultz rita.schultz@polishmarket.com.pl Editorial board: Jerzy Bojanowicz, Ewelina Janczylik, Janusz Korzeń, Maciej Proliński, Jan Sosna, Magdalena Szwed, Janusz Turakiewicz, Elżbieta Wojnicka

Patryk Mirecki: Facing the great unknown # 82

Cultural Monitor

Paweł Kruszyński, an outstanding Polish designer, architect, and owner of Peer Design: Value design # 92

A year of culture # 94

Cultural Monitor # 98

Maciej Proliński: History and sensuality # 100

POLISH ECOLOGY

Poland needs a clean environment, it needs leaders! # 104

English Editor: Sylwia Wesołowska-Betkier Translators: Maciej Bańkowski, Sylwia Wesołowska-Betkier, Sandra Wierzbicka Photographers: Jan Balana, Łukasz Giersz Polish Market Online Editor-in-Chief: Wiktoria Grabowska Sales: Phone (+48 22) 620 38 34, 654 95 77 Robert Gołaszewski – Sales Director r.golaszewski@polishmarket.com.pl Natalia Suhoveeva natalia.s@polishmarket.com.pl Ewelina Surma e.surma@polishmarket.com.pl Marek Ślugaj m.slugaj@polishmarket.com.pl PR: Joanna Fijałkowska j_fijalkowska@polishmarket.com.pl

Design and DTP: Foxrabbit Designers Printing: Zakłady Graficzne TAURUS – Roszkowscy Sp. z o. o., www.drukarniataurus.pl Basic circulation: 8,000 Oficyna Wydawnicza RYNEK POLSKI Sp. z o.o. Nr KRS 0000080385, Sąd Rejonowy dla m.st. Warszawy XII Wydział Gospodarczy Kapitał zakładowy 80.000,- zł. REGON 011915685, NIP 526-11-62-572 Published articles represent the authors’ personal views only. The Editor and Publisher disclaim any responsibility or liability for their contents. Unsolicited material will not be returned. The editors reserve the right to edit the material for length and content. The editors accept no responsibility whatsoever for the content of advertising material. Reproduction of any material from this magazine requires prior written permission from the Publisher.

The President on the Prime Minister’s acceptance speech in the Sejm

The President of the Republic of Poland has prolonged the participation of the Polish Military Contingent in operations in the Balkans On November 17, RP President Bronislaw Komorowski prolonged the period of deploying the Polish Military Contingent (PKW) taking part in the military operation of the European Union in Bosnia and Herzegovina and in the Republic of Kosovo and the former Yugoslav Republic of Macedonia, until November 18, 2012. The PKW is part of the European Union Force (EUFOR) carrying out operations code-named ALTHEA, on the basis of the mandate of the United Nations Security Council (UNSC), launched by UNSC Resolution No. 1551 of July 9, 2004, and extended again on November 16 of the current year, by the unanimously-adopted UNSC Resolution No. 2019 (2011). It declares that EUFOR ALTHEA international forces will still play a significant role in Bosnia and Herzegovina, ensuring the safety of the people and fulfilling the tasks specified in the Dayton Agreement of 1995. Pursuant to the Resolution by the RP President, the PKW is to number up to 50 soldiers and army employees. It will operate within Bosnia and Hercegovina, but it may also be used in the Republic of Kosovo and the former Yugoslav Republic of Macedonia. In connection with the gradual transition from the stabilisation character of the mission to a training and advisory one, the main tasks of the PKW will be training and helping to increase the military capabilities of the armed forces of Bosnia and Hercegovina, and monitoring the security situation. The PKW will comprise four Mobile Training Teams (MTT), and two Liaison and Observation Teams. The European Union’s mission, launched in December 2004, replaced the earlier operation of the stabilisation force of the North Atlantic Treaty Organisation (NATO SFOR). ::

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“It was a very powerful acceptance speech. Powerful not only in terms of the form of its presentation, but also on account of its content. Straightforward as it was, it proclaimed the need for in-depth reforms as the only opportunity for the effective protection of Poland against the crisis in Europe,” said President Bronisław Komorowski, who had listened to the programme of the Government’s activities presented by the Prime Minister Donald Tusk in the Sejm. He added that this was the only chance to maintain economic growth, which translates into the financial standing of every citizen. “The speech was also strong due to its explicitness concerning the reforms to the pension system; it was brave and authoritative in terms of its intentions,” the President told the media representatives in the Sejm. He claimed that for many years, not everyone had been able to tell the Polish people that the decisions altering the existing pension system, which had been created in different demographic conditions, were inevitable. The President emphasised that the situation had changed significantly, and thus it was our duty to keep a positive perspective, also concerning the

improvements to the pension system, which involved making decisions that might not always be the most popular. “These words were important, binding, and in my view, honest, since they show two sides of the same coin,” Bronisław Komorowski told the media representatives. “On one hand, there is the need to protect the poverty-stricken, on the other, the necessity to impose restrictions upon privileges, which are often unfair. On one hand, the necessity to extend the working period is indicated, on the other is the perspective for higher pensions in the future,” he added. Bronisław Komorowski believes that, unless the existing system is reformed, sooner or later pensions will become miserly, so it has to be perceived as a difficult, but necessary reform. According to the President, the speech was strong also due to the Prime Minister’s clearly advocating collaboration and consent among the most significant State administration bodies. “I can say that I detected traces of the motto ‘united we stand’. And today, I’d say also that being united we are also reforming, as consent may introduce reforms in a wise and courageous way, and that’s the kind of consent Poland needs,” he stressed. ::

The meeting of the President with representatives of the Innovative Economy Congress Today President Bronisław Komorowski met representatives of the Programme Board and Organising Committee of the 2nd Innovative Economy Congress. The participants in the meeting were, inter alia, Andrzej Arendarski, President of the Polish Chamber of Commerce, Paweł Samecki, Director of the International Department of the National Bank of Poland, Łukasz Turski, President of the Programme Board of the Copernicus Science Centre, and Maciej Witucki, President of Telekomunikacja Polska S.A. Group. Following the obligation adopted on during the Congress, the guests handed over to the President documents, including conclusions, diagnoses, and Congress recommendations. The President of the Republic of Poland, as Patron and Honorary Guest of the Congress, listened to the opinions of the organisers with interest, and he confirmed the opinion, expressed on November 8, 2011 in his speech before the Sejm of the 7th term of office, that “constant economic development means creativity and innovativeness, as well as the ability to effectively compete through interaction and cooperation.” ::

Vote of confidence in the new Government The Sejm of the Republic of Poland has granted a vote of confidence in the new Council of Ministers. 447 deputies took part in the voting, 234 of whom supported Donald Tusk’s Government. Before the actual voting, and the vote of confidence in the new cabinet, Prime Minister Donald Tusk answered deputies’ questions on his acceptance speech. After the deputies’ debate, which was held on Friday, there were over 130 questions to be put to the Prime Minister and his Government. During his presentation, Donald Tusk affirmed that in accordance with good customs and practices, each deputy would be given a written response to their question. “My impression is very positive. Despite numerous harsh reactions, nearly all leaders of opposition groups are ready to work on some of the projects that I have proposed. It is a very good sign, since the undertakings I have offered are hard and demanding,” the Prime Minister said during his presentation. “It is only States where the Government and the opposition manage to reach agreement on the matters essential for the citizens that stand a chance of fighting a crisis. I am deeply grateful that this debate was so much on subject. Even if we had argued, and you had remained critical towards us, it still gave us hope for the future. I cherish this hope, even bigger today than it was yesterday. It will also be the hope of many Polish people,” the Prime Minister concluded. ::

The Prime Minister and the new Government Prime Minister Donald Tusk has presented the new Cabinet to be sworn in at the Sejm tomorrow. “It is a Government empowered by the support of its electors,” the Prime Minister said. The first person who got to know the composition of the Council of Ministers was the President, Bronisław Komorowski.

Beside the Prime Minister, the following 19 persons will be in the Government: :: Waldemar Pawlak - Deputy Prime Minister, Minister of the Economy :: Radosław Sikorski - Minister of International Affairs :: Jacek Rostowski - Minister of Finance :: Bartosz Arłukowicz - Minister of Health :: Krystyna Szumilas - Minister of National Education :: Marek Sawicki - Minister of Agriculture and Rural Development :: Michał Boni - Minister of Administration and Digitalisation :: Mikołaj Budzanowski - Minister of the Treasury :: Sławomir Nowak - Minister of Transport, Construction and the Maritime Economy :: Marcin Korolec - Minister of the Environment :: Bogdan Zdrojewski - Minister of Culture and National Heritage :: Jarosław Gowin - Minister of Justice :: Elżbieta Bieńkowska - Minister of Regional Development :: Władysław Kosiniak-Kamysz – Minister of Labour and Social Policy :: Tomasz Siemoniak - Minister of National Defence :: Joanna Mucha - Minister of Sports and Tourism :: Jacek Cichocki - Minister of Internal Affairs, and of the Supervision of the Security Service :: Barbara Kudrycka - Minister of Science and Higher Education

:: Tomasz Arabski - Head of the Chancellery of the Prime Minister and Chairman of the Council of Ministers The Prime Minister announced that Łukasz Broniewski would become the Head of the Political Cabinet, and Agnieszka Kozłowska-Rajewicz would take the post of Polish Government Representative for Equal Status. Paweł Graś would continue in the post of Government Spokesperson. Donald Tusk asserted that the new Cabinet would demonstrate energy and determination. “The voters’ choice is to be understood as consent to the continuation of the main directions of the Government’s work, but I realise that citizens, institutions, and the economy await acceleration in certain fields,” he emphasised. He also added that change is a good way to create a new energy resource and new, fresh spirit of teamwork. According to the Prime Minister, the four years to come would be a challenge not comparable to previous times. “This time fast and sometimes firm decisions may be required, including personal ones. All to whom I have offered cooperation are aware of that,” he indicated. He added that every person who decided to take up public service in the post of a Minister needed to realise that this was a job in which you needed to focus on specific cases and specific work. “If the task is performed by someone else, or someone would not manage to do it, it is not out of the question that even during this term of office, we would be looking for new energy, and new people,” the Prime Minister explained. Donald Tusk said that the Government that would be sworn in the next day, and the previous Cabinet had constituted the most feminised Councils of Ministers since 1989. He also noted that the newlyformed Cabinet would be the youngest Government of the Third Republic of Poland. “I myself am one of the oldest members in this team,” the Prime Minister joked. :: 12 /2011 :: polish market :: 7

Our Guest

Bronisław Komorowski, President of the Republic of Poland The European Union is no less a political structure as it is an economic one, based on common values and the principle of shared responsibility and the solidarity of its Member States. It is a structure that enables us to solve natural political and economic conflicts by way of negotiations and mutual compromise. It is a structure that has given post-war Europe several decades of peace. This is something to remember, and particularly so in Poland. The establishment of the Euro Area and the common currency inside the EU was another important step on the way to the closer integration of Europe towards an economically-secure Europe, which works on the principle of solidarity and is open to new members and further integration. We should not forget about it in this difficult time. The current Euro Area crisis is undoubtedly a turning point in the history of the entire European Union. It may well be that we are now facing the single most difficult period since the integration process began. The stability of the Euro Area has been upset, exposing the weaknesses in this structure. The global financial crisis has pointed to the deficiencies in the institutional organisation and functioning of the Euro Area, but also of the entire European Union. Some institutional solutions and principles lying at their base are in need of reformulation, others of better observance - and others still - of amendment. Being aware of all the imperfections in the structure of the Euro Area, we should not

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forget that in the context of earlier attempts at integration the currency union is absolutely exceptional. The success of the common currency is not only about the stability of prices. The average inflation rate in the Euro Area in the last 12 years has amounted to 1.97%. Precisely as much as was planned and stated in the inflation target of the European Central Bank as “below but close to 2%” – that is the way it was written, and still is. For such an effective fight against inflation the European Central Bank and its management should be congratulated. The common currency, however, also means additional trade exchange, economic growth, and 14 million new jobs. The Euro Area is also the future of countries which have not become part of it yet, such as Poland. Our plans go beyond passively watching, and waiting until the euro replaces the zloty. We wish to actively participate in reforming the system of the currency union, being part of the Euro-Plus Pact, alongside 5 other countries and actively co-creating the new principles of economic management, which is significant from the point of view of not just our wishes, but also our will to be a player in the currency union of the future. At the same time, we wish to go on with the policy ensuring that Poland meets the requirements for nominal and actual convergence. It is important that the process of the institutional reform of the European Union be open and that it lead the EU to further and more meaningful integration. A greater, joint,

effort will allow us to improve the functioning of the currency union, thereby providing the stability and responsiveness that the EU needs to react to the upcoming changes. A strengthened and extended Euro Area should provide better European integration leading to Europe’s greater global significance. Many a time in the past, crises have acted as catalysts for important, though difficult and delayed, changes. I trust that the European Union and the Euro Area will respond to the current crisis by introducing bold and farsighted measures that will strengthen the foundations of European integration and prove decisive in the success of the common Europe in this dynamically-changing world. It is my profound conviction that an effective response to the crisis is deeper integration within the European Union and tighter cooperation between Member States, as well as solidarity between them. I believe that Europe will not abandon the values that laid the foundations for the contemporary Community. For years we have striven side by side for the solidarity of the European Union, as this is the only way to ensure prosperity and peace for its citizens. ::

Prepared on the basis of the speech at the conference “Towards a More Integrated and Stable Europe: Challenges Ahead of the Euro Area and Central, Eastern and South-Eastern Europe” organised by the National Bank of Poland.

Katowice Special Economic Zone Dear Investors and Entrepreneurs, I wish you that the year 2012 is a period of well-used chances and right investments, successes in investing and running businesses. I wish all of us to look boldly into the future â&#x20AC;&#x201C; in the long-term and not to be become discouraged by momentary failures.

Piotr Wojaczek Prezes KSSE

Our Guest

Prof. Jerzy Buzek, President of the European Parliament No better time could have been chosen for this conference. We are two days ahead of the European Council Summit to decide on the further actions to be taken in the Euro Area and in the entire European Union. It is very important that we discriminate between measures on 3 different levels, so that it is easier for us to go about in a world of difficult decisions. Firstly, we have to undertake short-term actions. We need such in relation to Greece, where we must reduce the burden on the State and make an important decision on how much of this should be borne by private capital. The second important issue in the most immediate period is to channel capital into banks – recapitalisation. This is essential if we want to open a financing avenue for the

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economy, and we should do this jointly, with all the EU Member States deciding to take similar steps. Thirdly, we need to decide how to build a firewall safeguarding us from the potentially expanding crisis that is bringing financial instability and excessive public debt to the Euro Area countries. Without doubt, the European Financial Stability Facility is an appropriate solution here. It is also important that we use it as a lever enabling us to increase the extent of this instrument. These are short-term measures. We are constantly acting towards arriving at mid-term solutions to ensure that the downturn will not come back, and also that there are chances to quickly emerge from this crisis. We refuse to fall back into stagnation, wishing to

counteract the recession in markets and economies. Definitely, the six legislative Acts we have recently passed in the European Parliament, and also in the Council of the European Union, were an important step. This will allow us to avoid a crisis in the future, and it may also improve the competitiveness of the internal EU economy. We will be able to guide the economy in order to cooperate, not only in overcoming and preventing the crisis, but also in supporting rapid growth. What we already know from the descriptions of Euro-Plus Pact is very important. These are structural reforms, without which it will be difficult for the European economy to grow in the long run. A varied set of reforms may serve as a future lever for stable reform. Importantly, EU countries should approach this reform jointly, together. We are also on the threshold of something that may be the crowning achievement of our mid-term actions - the formation of the EU Economic Government. It is still a mid-term action, as we can achieve it within a dozen or so months, perhaps two years, depending on the decisions that we take. We should not divide ourselves into a two-speed Europe in the process, preserving what has been with us since the beginnings of the European Union. Then, Poland could not take advantage of the privileges of being a Member of the Community. But, against numerous threats faced by the EU along the way, it managed to preserve its unity. Although the comparison is not exact, only general, it is important to remember that the Schengen Area does not cover all the EU States. What is for us an obvious and excellent solution is not in force in the United Kingdom and Ireland. This does not, however, stand in the way of the management of, and the coming up with, the most relevant solutions for the Schengen Area and the Schengen Agreement coming from the top of the EU. The countries that refused to enter it agreed and accepted the solutions that the others accepted, even though they are outside this community. I repeat, this is not an exact comparison. I mean only a certain concept, under which we should act in the European Union. Also when speaking of the Euro Area and countries which are outside the Euro Area. This Economic Government should have its limits

Our Guest

there are no other ways. Yesterday in the European Parliament, in the European Commission, there was the first historic meeting of national Parliaments and 3 European Institutions – the Council, the Commission, and the Parliament. The idea came from the European Parliament – we wished to invite national Parliaments to jointly discuss the EU budget for the next seven years. We can say that the budget isn’t everything. That’s true, but the Community budget, similar to the common currency, de facto shapes the European community, as the Euro is not simply a single currency, it is a common one, which should unite, not divide us. Also those countries outside the Euro Area must have their share in influencing the condition of the Euro, the joint management of the currency, and the intermediate European zone. We’re not taking the right away from those who are directly involved in protecting and turning around the Euro Area, the right to take independent, quick decisions, but we have to think in prospect. These are prospects of changing the Treaty and it is us that are responsible for defending such possibilities. We are perfectly aware that the States of Central and Eastern Europe have better economies than, say, 10 or 15 years ago. It’s not that when the Euro Area sneezes, we all come down with a fever. We already have our share in GDP, and although, as regards the European Union, we still have a lot to learn, a lot of hard work ahead of us, but we do matter. Having your own currency policy has certain advantages, but I wish to emphasise that participation in the European Community, which co-decides where you take part in meetings at the highest level, may be decisive for the fate of Europe, including your own country. Over 8-10 years, inflation in the Euro Area was lower than inflation in Germany when the currency was the Deutsche Mark. Financial liquidity was twice spectacular – in 2007 and 2011. ::

and its control naturally in the European Parliament, and the natural carrier of Governmental decisions should perhaps be the European Commission. These decisions are not going to be easy. We know that many of the decisions that await us in the future will be made at the Governmental level, but it is important for us to think of transforming the inter-Governmental plane, which in most cases requires unanimity. That is indeed very important – the unanimity of decisions, so that we could smoothly move on to the Community method, which is in many cases today decided by majority vote. There is also an entire set of propositions regarding the long-term perspective. Today, even though it is not yet the time, nor will it soon be, to introduce them, we have to discuss them. It is a matter of amending the treaty and taking another leap of integration. This time the leap would undoubtedly concern economic cooperation and the formation of an Economic Union. Since World War 2, each successive generation of Europeans have had to make this decision – these are not always easy, and not always do the people of our continent understand what the politicians want and how they plan the development of their own countries and the community. At first, it was a post-war decision in the 1950s on the European Coal and Steel Community, then the Treaty of Rome. It was the first response to the tragedies of war. 30 years later, when the concepts of Schengen and the common market were developed, the Europeans were at a different point – still, they made the hard and resolute decision to further integration. This integrative step has resulted in enormous economic growth, and then the enlargement of the European Union by a further 12 States, and actually 16 States. These enlargements were the fruit of the grand decisions of the 1980’s, which led almost the entire continent into a climate of stabilisation and decent economic growth, disturbed only 2 years ago by the sweeping crisis. Here we stand before a similar challenge. We must not forget it. If the amendment to the Treaty, and I don’t want to define it today, requires a referendum, we should already start discussing this with the people of Europe, whether the perspective is 5, 10, or 15 years. If Europe wants to matter in the world,

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Editorial I would like to thank all “Polish Market” Friends and Readers for attending our Pearls Gala. This year has been special for us, as we are celebrating our 15th anniversary. Thank you for being with us on the 15th birthday of “Polish Market”. Indeed, this anniversary is a double celebration for me, because it coincides with the 20th anniversary of my work as a journalist. Also 20 years ago, in 1991, the first Polish domain –.pl was registered in a computer centre in Copenhagen. This date is commonly regarded as the beginning of Polish internet. When the first issue of “Polish Market” was published in 1996, we were already automatically digitally connected with the whole world, we had links to ATMs, mobile phones, and, of course, the Internet. This was a great civilizational leap. I am greatly satisfied that throughout these years I have been able to share the good news about the Polish economy with you while at the same time not hiding the difficulties which it had to face. Recently there has been a lot of talk that economic growth largely, or perhaps predominantly, depends on human capital. Therefore, the beginning of the Human Age – when talent is crucial to the competitiveness of enterprises – was declared at this year’s Economic Forum in Davos. In reality though, “Polish Market” had announced the coming of Human Age a lot earlier. Therefore, we have been rewarding outstanding, remarkably talented people, who make history – by giving them Honorary Pearls. We have also granted awards to companies, which show great efficiency and dynamics, not just high revenues. Recently, Deputy Prime Minister Waldemar Pawlak said that there are companies, which do not have factories nor great outlays, but they have unique ideas. We try to be such a company, and we reward such companies. Not only during the Pearls Gala, but also during the Economic Forum in Krynica, our Innovation Gala, and other events which our editorial board organizes. The present moment, the time of Poland’s Presidency in the European Union, is a great test for Poland. As a nation we are definitely much better than we admit. We have also

Bogusław Winid (Undersecretary of State at the Ministry of Foreign Affairs) presents the Bene Merito award to Krystyna Woźniak-Trzosek (Polish Market)

become accustomed to the fact that Europe’s economic condition depends on the giants – France, Germany, the UK. Perhaps it is time we included in our mental patterns the knowledge about the role of Poland in the European economy. For example, the fact that Germany’s exports to the countries in the Vysehrad Group, to which Poland belongs, are higher than to the United States, and that Poland buys more Mercedes cars than Russia does. That we are a huge European secondary market for transportation means and construction machines. And our great investments in infrastructure contribute to prosperity in Germany, Sweden and France. The present time – of debates and conferences related to our Presidency is a crucial moment, when the debates may become exceptional and tackle the future of Europe, which needs a new, humanistic perspective. Once, many years ago, this prospect was opened before us by our great countryman – Pope John Paul II who told the world “Do not be afraid”… I would also like to congratulate the new Polish government. I wish it successes and perseverance, as well as courage in making decisions owing to which Poland will take its important and permanent place in the united Europe of the 21st century. Birthdays are also a time of expressing gratitude. Allow me to express my gratitude to those without whom this anniversary would never have happened… the co-founders of “Polish Market”, the editors, photographers, translators, graphic designers, administration staff, numerous organizations and institutions, sponsors… finally – the companies present in our magazine and testifying to the greatness of Poland. It is impossible to mention everyone… Thank you very much! May this hope guide you through 2012 and the years to come! Krystyna Woźniak-Trzosek President Rynek Polski Publishers Co. Ltd.

On 28 November 2011 at the Pearls of the Polish Economy Gala in Teatr Wielki, Krystyna WoźniakTrzosek was awarded the Honorary Badge “Bene Merito.” On behalf of the Minister of Foreign Affairs Radosław Sikorski, the award was presented by Bogusław Winid, Undersecretary of State for Security Policy in the Ministry of Foreign Affairs. The “Bene Merito” badge is an honourable distinction and can be bestowed on Polish citizens, as well as citizens of foreign countries for activities strengthening the position of Poland on the international arena. ::

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Pearls of the Polish Economy

How do we find the Pearls of the Polish Economy? How do we choose the most efficient and successful companies, which achieve the best results, taking advantage of the available labour and capital resources – the true “Pearls of the Polish Economy”?

Institute of Economics Polish Academy of Sciences

Taking up this challenge ten years ago, the researchers at the Institute of Economics of the Polish Academy of Sciences (INE PAN) adopted several basic principles. Firstly, the choice “is made by a computer” based on an algorithm prepared in INE PAN and data sent by companies. This means that this is the only ranking in Poland not based on subjective assessments. Secondly, as we cannot study all the companies active in Poland (about 2 million), we are limiting ourselves only to the ones whose revenue from all economic activities has amounted to PLN100 million or more. Thirdly, as there is no commonly-recognised synthetic measure of all aspects of an enterprise’s activities, the “Pearl of the Polish Economy” goes to a company which fulfils the minimum of all the seven partial criteria of efficiency adopted in international auditing practice. The method for choosing the “Pearls of the Polish Economy” was developed by Jan Macieja, PhD, in cooperation with Michał Zaj fert, PhD.

This minimum to qualify was set at the level of 10% of the average value of every criterion, calculated for companies with a total annual revenue of PLN100 million or more. In relation to the six criteria (the exception is the criterion of debt ratio), the best company is awarded the highest number of points possible (equal to the number of “pearls”), and the worst receives one point.

We have adopted the following efficiency criteria: 1. The percentage increase in sales revenues from all economic activities as a measure of the growth dynamics of the enterprise; 2. Return on sales – this shows what percentage of net sales revenues constitutes income, and what percentage covers expenditure. If not burdened by past financial events, such as extraordinary profits or losses, return on sales is a good indicator of the efficiency of current economic activities; 3. Debt service coverage ratio – for each company there is a ratio of liabilities to assets that is optimal at a given time (too low an indicator shows excessive caution, and too high leads to increased costs). In this criterion points were awarded by means of a predetermined function. The largest number of points were awarded to those companies which had a debt ratio of about 40-60%.

Companies are divided into two groups based on their annual revenues from their economic activities: :: Grand Pearls – annual revenues from all economic activities in 2010 exceeding PLN1 billion :: Large Pearls – annual revenues from all economic activities in 2010 between PLN100 million and PLN1 billion.

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12 /2011

4. Return on assets – the relation of gross profit to assets is a good measure of the social efficiency of using the resources which the company has at its disposal, as it takes into account both the income of the company (the owner) and the income of the State (the amount of tax) from the resources employed; 5. Return on invested capital – it allows the investor to compare the current profitability of invested capital in its various applications; 6. The combined productivity of the human, material, and financial capital – its constant growth is crucial in ensuring longterm economic development; 7. Labour efficiency – as it increases, it not only reduces the ongoing costs of operations and management and improves the company’s competitiveness, but it also prevents downward trends in return on invested capital. The resultant group of the “Pearls of the Polish Economy” was easy to rank according to the number of points awarded in respective criteria. The sum of points awarded for fulfilling all the seven criteria allows a relatively objective choice of the “Pearls of the Polish Economy.” ::

winners Grand Pearls 2011

Large Pearls 2011

1. KGHM Polska Miedź S.A. 2. Grupa Kapitałowa Cyfrowy Polsat S.A. 3. Koksownia Przyjaźń Sp. z o.o.

1. PPUiH Agrobex Sp. z o.o. 2. Avio Polska Sp. z o.o. 3. 3M Poland Sp. z o. o.

Pearls of the Polish Economy

Grand Pearls 2011 No. 1

name of company

based in

KGHM Polska Miedź SA

Lubin

Core business mining and metallurgy

SCORE 1148

Grupa Kapitałowa Cyfrowy Polsat SA

Warsaw

digital multimedia platform

1146

Koksownia Przyjaźń Sp. z o.o.

Dąbrowa Górnicza

coking industry

1084

Elektrownia Rybnik SA

Rybnik

power industry

1061

Mondi Świecie SA

Świecie

paper industry

1055

cosmetics retailer

1054

coking industry

1025

household appliances

1018

Rossmann SDP Sp. z o.o.

Łodź

Kombinat Koksochemiczny Zabrze SA

Zabrze

BSH Sprzęt Gospodarstwa Domowego Sp. z o. o.

Warsaw

International Paper Kwidzyn Sp. z o.o.

Kwidzyn

paper industry

1008

Jastrzębska Spółka Węglowa SA

Jastrzębie Zdrój

coal mining - coking

1004

Provident Polska SA

Warsaw

non-bank cash loans

998

Elektrownia Połaniec SA Grupa GDF Suez Energia Polska

Połaniec

power industry

986

Budimex SA

Warsaw

construction

972

Mazowiecka Spółka Gazownictwa Sp. z o.o.

Warsaw

gas distribution

971

PESA Bydgoszcz SA

Bydgoszcz

manufacture of rolling stock

966

LPP SA

Gdańsk

fashion industry

956

Polkomtel SA

Warsaw

telecom operator

953

ABB Sp. z o.o.

Warsaw

power industry equipment and devices

925

Operator Gazociągów Przesyłowych Gazsystem SA

Warsaw

natural gas transmission

922

Brenntag Polska Sp. z o.o.

Kędzierzyn Koźle

distribution of chemical products

918

Aviva Towarzystwo Ubezpieczeń na Życie SA

Warsaw

insurance

907

Powszechna Kasa Oszczędności Bank Polski SA

Warsaw

banking

898

Solaris Bus & Coach SA

Owińska

manufacture of buses and coaches

897

Polski Koncern Naftowy Orlen SA

Płock

oil processing

886

Amplico Life Pierwsze Amerykańsko-Polskie Towarzystwo Ubezpieczeń na Życie i Reasekuracji SA

Warsaw

insurance

883

Netia SA

Warsaw

telecom operator

873

Getin Noble Bank SA

Warsaw

banking

870

Grupa CanPack SA

Kraków

metal packaging

855

Nordea Bank Polska SA

Gdynia

Impexmetal SA

Warsaw

NG2 SA

Polkowice

Bank Pekao SA

Warsaw

banking

777

Danone Sp. z o.o.

Warsaw

milk processing

777

Bank Handlowy w Warszawie SA

Warsaw

banking

766

Bank Zachodni WBK SA

Wrocław

banking

766

Grupa Kapitałowa Energa

Gdańsk

Rafako SA

Racibórz

Grupa Lotos SA

Gdańsk

Warbud SA

Grupa Kapitałowa PGE

banking

854

trade in non-ferrous metals

847

footwear production and sales

822

power industry

745

power industry equipment

743

oil processing

739

Warsaw

construction

733

Warsaw

power industry

732

(Revenues from overall business operations in 2010 above PLN 1 billion) 12 /2011 :: polish market :: 15

Pearls of the Polish Economy

Institute of Economics Polish Academy of Sciences

No.

name of company

based in

T.C. Dębica SA

Dębica

Grupa Kęty SA

Kęty

Grupa Kapitałowa PBG

Wysogotowo near Poznań, Przeźmierowo

Fiat Powertrain Polska Sp. z o.o.

Bielsko-Biała

KGHM Metraco SA

Legnica

Zakłady Azotowe w Tarnowie Mościcach SA

Tarnów

Boryszew SA

Sochaczew

Bank Gospodarki Żywnościowej SA

Warsaw

Volkswagen Poznań Sp. z o.o.

Poznań

Tauron Polska Energia SA

Katowice

Core business

SCORE

tyre production

726

aluminum processing

725

construction

712

automotive industry

705

trade in KGHM products

692

chemical industry

688

chemical and metal processing

685

banking

661

automotive industry

642

power industry

635

NFI Empik Media & Fashion SA GK

Warsaw

retail

629

Kredyt Bank SA

Warsaw

banking

626

Bank BPH SA

Kraków

banking

617

Enea SA GK

Poznań

power industry

613

PGNiG SA

Warsaw

gas extraction and distribution

605

Tele-Fonika Kable Sp.z.o.o. Spółka Komandytowo-Akcyjna

Kraków

production and cables and wires

599

Grupa Kapitałowa AB SA

Wrocław

distribution of IT equipment

597

Orlen Gaz Sp. z o.o.

Płock

distribution of liquefied gas

595

MAN Bus Sp. z o. o .

Sady

bus production

573

PKP Energetyka SA

Warsaw

power industry

564

Państwowe Gospodarstwo Leśne Lasy Państwowe

Warsaw

forestry

545

Mostostal Warszawa SA

Warsaw

construction

514

ZAK SA

Kędzierzyn Koźle

chemical industry

512

Telekomunikacja Polska SA

Warsaw

telecom operator

468

pharmaceutical industry

463

chemical industry

432

hypermarket chain

430

chemical industry

423

CF Cefarm SA

Warsaw

Zakłady Chemiczne Police SA

Police

EKO Holding GK

Wrocław

Anwil SA

Włocławek

Polska Grupa Farmaceutyczna SA GK

Łódź

Budmat Bogdan Więcek

Płock

Zakłady Azotowe Puławy SA

Puławy

pharmaceutical industry

416

roofing and siding materials

413

chemical industry

406

Rafineria Trzebinia SA

Trzebinia

oil processing

393

Neuca SA

Toruń

pharmaceuticals

374

CNH Polska Sp. z o.o.

Płock

forestry machines and accessories

368

Grupa Kapitałowa Ciech

Warsaw

chemical industry

353

Grupa Kapitałowa Polimex Mostostal

Warsaw

construction

351

Kopex SA (consolidated data)

Katowice

mining machinery

317

Grupa Kapitałowa Bumar

Warsaw

arms production

315

automotive industry

292

furniture

252

Faurecia Wałbrzych Sp. z o.o.

Wałbrzych

Grupa Kapitałowa Black Red White

Biłgoraj

Source and methodology: INE PAN

The methodology and analysis of the status of companies have been conducted by the Institute of Economics of the Polish Academy of Sciences for Polish Market since 2003.

16 :: polish market ::

12 /2011

Pearls of the Polish Economy

large Pearls 2011 No.

name of company

based in

Core business

SCORE

PPUiH Agrobex Sp. z o.o.

Poznań

real estate developer

Avio Polska Sp. z o.o.

Bielsko-Biała

aircraft components

1076 1041

3M Poland Sp. z o. o.

Nadarzyn

innovation products

1022

aluminum foundries

1016

pension fund

1016

real estate developer

1005

Grupa Alumetal

Kęty

Amplico Powszechne Towarzystwo Emerytalne SA

Warsaw

J.W. Construction Holding SA

Ząbki outside Warsaw

Cronimet PL Sp. z o.o.

Inowrocław

scrap metal processing and sales

973

Atal SA

Cieszyn

real estate developer

963

Atrem SA

Złotniki

industrial automation

961

ZAP Sznajder Batterien SA

Piastów

electrical industry

955

yarn production

943

construction

932

10 11

East West Spinning Sp. z o.o.

Łódź

Przedsiębiorstwo Inżynieryjno-Budowlane Budecon SA

Sosnowiec

Aluprof SA

Bielsko-Biała

First Data Polska SA

Warsaw

INEA SA

Poznań

SERWISTAL

Ełk

aluminum products for construction

932

payment cards

926

telecom operator

911

distribution of metallurgical products

903

Pfizer Polska Sp. z o.o.

Warsaw

pharmaceutical industry

889

Faurecia Fotele Samochodowe Sp. z o. o.

Grójec

automotive industry

889 886

Huta Łabędy SA

Gliwice

rolled steel products

Ronal Polska Sp. z o.o.

Wałbrzych

automotive industry

871

Exide Technologies SA

Poznań

batteries

871

Elektrociepłownie Wybrzeże SA

Gdańsk

Faurecia Gorzów Sp. z o. o.

Gorzów Wlkp.

Compensa Towarzystwo Ubezpieczeń na Życie SA Vienna Insurance Group

Warsaw

insurance

831

Grupa Kapitałowa Deutsche Bank Polska SA

Warsaw

banking

830

construction

830

securities

829

Korporacja Budowlana Doraco Sp. z o.o.

Gdańsk

Polska Wytwórnia Papierów Wartościowych SA

Warsaw

DS Smith Polska SA

Kielce

UNIBEP SA

Bielsk Podlaski

power industry

853

automotive industry

846

cardboard and packaging

826

construction

808 801

BRE Leasing Sp. z o.o.

Warsaw

leasing

Przedsiębiorstwo Agat SA

Koluszki

industrial automation

801

Fabryka Farb i Lakierów Śnieżka SA

Lubzina

paints

796

Górnośląska Spółka Gazownictwa Sp. z o.o.

Zabrze

Apator SA GK

Toruń

Abra SA

Kraków

HJ Heinz Polska SA

Pudliszki

Cereal Partners Poland Toruń Pacific

Toruń

Sarantis Polska SA

Piaseczno

gas distribution

785

measurement equipment

780

furniture retailer

779

fruit and vegetable processing

777

breakfast cereals

776

cosmetics and household chemicals

773

Operator Logistyczny Paliw Płynnych Sp. z o.o.

Płock

ComArch SA

Kraków

transmission of liquid fuels

755

IT software

750

ATM SA

Warsaw

ICT sector

749

Tenneco Automotive Polska Sp. z o.o.

Rybnik

automotive industry

738

gas distribution

715

Karpacka Spółka Gazownictwa Sp. z o.o. w Tarnowie

Tarnów

Elektrobudowa SA

Katowice

construction

711

Famur SA

Katowice

mining machinery

708

Asseco Poland SA GK

Rzeszów

IT software

705

Bilfinger Berger Construction SA

Warsaw

construction

696

JASFBG SA

Katowice

transport and forwarding

685

Osadkowski SA

Bierutów

agricultural supplies

673

Adecco Poland Sp. z o.o.

Warsaw

recruitment agency

668

(Revenues from overall business operations in 2010 from PLN 100 million to PLN1 billion)

12 /2011 :: polish market :: 17

Pearls of the Polish Economy Institute of Economics Polish Academy of Sciences

No.

name of company

based in

Core business

SCORE

Concordia Polska TUW

Poznań

insurance

Nutricia Zakłady Produkcyjne Sp. z o.o.

Opole

baby food

665 662

Przedsiębiorstwo Państwowe Porty Lotnicze

Warsaw

airport services

655

Zarząd Morskiego Portu Gdynia SA

Gdynia

sea ports

651

Exatel SA

Warsaw

telecom operator

644

Grupa Kapitałowa GTC

Warsaw

real estate developer

640

Faurecia Legnica Sp. z o. o.

Legnica

automotive industry

636

Dom Development SA

Warsaw

real estate developer

624

Zakłady Górniczo-Hutnicze Bolesław SA

Bukowno

mining and metallurgy

618

Novol Sp. z o.o.

Komorniki

Europejski Fundusz Leasingowy SA

Wrocław

Albo Sp. z o. o.

Radom

Nowa Itaka Sp. z o.o.

Opole

PROFIm Sp. z o.o.

Turek

Miejskie Przedsiębiorstwo Wodociągów i Kanalizacji SA w Krakowie

Kraków

chemical industry - paints

615

leasing

600

sales of meat products

595

tourist industry

593

chairs

592

municipal infrastructure

590

Sitech Sp. z o. o.

Polkowice

Mostostal Puławy SA

Puławy

car seats

590

construction

585

Petrax Sp. z o.o.

Grupa Kapitałowa Polski Holding Farmaceutyczny SA

Warsaw

petrochemical imports

580

Warsaw

pharmaceutical industry

NAVO Polska Grupa Dystrybucyjna Sp. z o.o.

Tychy

FMCG distribution services

579 576

ATS SA

Toruń

sales of steel products

575

Enesta Sp. z o.o.

Stalowa Wola

power industry

571

Selena FM SA

Wrocław

construction chemicals

564

telecom operator

560

construction

554 554

Grupa Kapitałowa Telefonia Dialog SA

Wrocław

Trasko Inwest Sp. z o.o.

Ostrzeszów

Agora SA

Warsaw

media

Poszukiwania Nafty i Gazu Kraków Sp. z o.o.

Kraków

oil and gas exploration

551

Hochtief Polska SA

Warsaw

construction

551

AMS SA

Warsaw

outdoor advertising

547

Miejskie Przedsiębiorstwo Wodociągów i Kanalizacji m.st. Warszawy SA

Warsaw

municipal infrastructure

529

Echo Investment SA

Kielce

real estate developer

525

BSK Return SA

Zawiercie

Luvena SA

Luboń

trade in scrap steel

521

trade in fertilisers and seeds for farmers

520

Zakład Rolniczo-Przemysłowy Farmutil HS SA

Kaczory

meat processing

519

Bosch Rexroth Sp. z o.o.

Warsaw

industrial hydraulic and pneumatic equipment

502

Hand Prod Sp. z o.o.

Warsaw

SBS Sp. z o.o.

Łódź

pharmaceutical industry

497

sale of sanitary and heating equipment

496

Przedsiębiorstwo Budowy Kopalń PeBeKa SA

Lubin

Zakłady Mięsne Łmeat Łuków SA

Łuków

construction

491

meat processing

488

Cementownia Warta SA w Trębaczewie

Działoszyn

SIPMA SA

Lublin

Regis Sp. z o.o.

Kraków

herbs and food concentrates

462

Grupa Kapitałowa Nowy Styl Sp. z o.o.

Krosno

office furniture

455

cement production

471

agricultural and horticultural machines

466

Polski Ogród Sp. z o.o.

Warsaw

fruit and vegetable processing

452

Miejskie Zakłady Autobusowe Sp. z o.o.

Warsaw

municipal transport

449

Kopalnia Węgla Brunatnego Adamów SA

Turek

brown coal mining

447

Przedsiębiorstwo Spedycyjne Trade Trans Sp.z o.o.

Warsaw

transport and forwarding

445 429

Mennica Polska SA

Warsaw

production of coins and medals

Espersen Polska Sp. z o.o.

Koszalin

fish processing

418

100

Jutrzenka Colian Sp. z o.o.

Opatówek

confectionery production

409

fruit and vegetable processing

409

agricultural tractors and trailers

407

101

Grupa Kapitałowa Hortex Holding SA

Warsaw

102

Pronar Sp. z o.o.

Narew

The methodology and analysis of the status of companies have been conducted by the Institute of Economics of the Polish Academy of Sciences for Polish Market since 2003.

18 :: polish market ::

12 /2011

Pearls of the Polish Economy

large Pearls 2011 No.

name of company

based in

103

BIS Izomar

Warsaw

104

Centrala Zaopatrzenia Hutnictwa SA

Katowice

105

Marbet Sp. z o.o.

Bielsko-Biała

106

Zakłady Chemiczne Alwernia SA

Alwernia

chemical industry

371

107

Metro Warszawskie

Warsaw

municipal transport

364

108

Grupa Kapitałowa Ergis

Warsaw

109

Górnośląskie Przedsiębiorstwo Wodociągów SA w Katowicach

Katowice

110

Tramwaje Warszawskie Sp. z .o.o

Warsaw

111

Zakłady Tworzyw Sztucznych Gamrat SA

Jasło

112

Przedsiębiorstwo Handlowo Produkcyjne Mercus Sp. z o.o.

Polkowice

113

Grupa Kapitałowa Barlinek SA

Kielce

114

Indykpol SA

Olsztyn

Core business

SCORE

construction

392

supplies for steelworks

376

plastic products

372

PVC processing

345

municipal infrastructure

338

municipal transport

305

plastics

279

wires and hydraulic pipes

278

wood flooring

272

meat processing

269

115

Infovide-Matrix SA

Warsaw

IT services

255

116

Grupa Kapitałowa Prochem SA

Warsaw

design and implementation of investment projects

208

117

DFM Zanam Legment Sp. z o.o.

Polkowice

mining machinery

148

Source and methodology: INE PAN

Pearls by sector Manufacturing, extraction, energy and service sector

Banking and insurance sector

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

KGHM Polska Miedź SA Koksownia Przyjaźń Sp. z o.o. PPUiH Agrobex Sp. z o.o. Elektrownia Rybnik SA Mondi Świecie SA Rossmann SDP Sp. z o.o. Avio Polska Sp. z o.o. Kombinat Koksochemiczny Zabrze SA 3M Poland Sp. z o. o. BSH Sprzęt Gospodarstwa Domowego Sp. z o. o.

Infrastructure sector 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Grupa Kapitałowa Cyfrowy Polsat SA Mazowiecka Spółka Gazownictwa Sp. z o.o. Polkomtel SA Operator Gazociągów Przesyłowych Gazsystem SA INEA SA Netia SA Elektrociepłownie Wybrzeże SA Górnośląska Spółka Gazownictwa Sp. z o.o. Operator Logistyczny Paliw Płynnych Sp. z o.o. Grupa Kapitałowa Energa

Amplico Powszechne Towarzystwo Emerytalne SA Provident Polska SA First Data Polska SA Aviva Towarzystwo Ubezpieczeń na Życie SA Powszechna Kasa Oszczędności Bank Polski SA Amplico Life PAP TU na Życie i Reasekuracji SA Getin Noble Bank SA Nordea Bank Polska SA Compensa Towarzystwo Ubezpieczeń na Życie SA VIG Grupa Kapitałowa Deutsche Bank Polska SA Source and methodology: INE PAN

Institute of Economics Polish Academy of Sciences

sponsorS:

Media partnerS:

12 /2011 :: polish market :: 19

Pearls of the Polish Economy

A refreshing wind is blowing from Poland to Europe! Jerzy Buzek, President of the European Parliament, during the “Polish Market” Gala

eight thousand copies of “Polish Market” is very shrewdly aimed at the right people. This is why “Polish Market” is widely known among those who make decisions concerning the future of Europe. 15 years is a time span that we should have a look at today.

15 years ago we dreamt together of being able to listen to Beethoven’s “Ode to Joy” standing up, just as we have just listened to it today. It was 2 years before our membership negotiations began, and “Polish Market” had already been promoting the Polish economy. It was because the correlation between all that’s good that happens in Poland and the state of the Polish economy was obvious to this editorial staff. Thanks to this it was possible to promote Polish science, or maybe, above all, Polish culture! Nowadays, we tend to forget at times, that although we are in crisis smaller or bigger, and we achieve successes - smaller or bigger, in fact in 50 or 100 years the thing that will prevail will be mainly what we produce in the domain of Polish culture.

Therefore, I would like to express my utmost gratitude to the editorial staff of “Polish Market” who, on the basis of promoting the Polish economy, promotes Polish culture. Today we are enjoying our Presidency of the European Union. Today we are a member of NATO. Today Poland is one of a few countries that have resisted the crisis. I have a great honour to represent not only the EU but also Poland within it. Polish companies are now important players determining European well-being, and there is a good, refreshing wind blowing from Poland towards the EU. One of the companies that directs that wind towards international circulation is certainly “Polish Market.” Thank you very much for this award. I am truly touched. ::

A wreath of Pearls of the Polish Economy Professor Leszek Jerzy Jasiński, INE PAN Once again, the Institute of Economics, Polish Academy of Sciences has prepared the ranking of the best companies operating in Poland – the Pearls of the Polish Economy. Why are they the best and in what sense have they left other companies behind? A number of parallel studies of Polish enterprises are conducted by various institutions. They take the form of lists of companies ranging from the best in a given specification to the ones that stand out the least. Generally, the amount of revenue or profit is the ranking criterion and as a result the biggest companies are being looked at. The subject of the analysis of the ranking developed by our Institute, which we have the pleasure to present and publish, thanks to the cooperation with the editors of “Polish Market,” is to find the best ones. Seven criteria illustrating the quality of work by enterprises have been selected,

20 :: polish market ::

12 /2011

namely, the percentage of revenue growth, return on sales, debt levels, return on assets (gross profit to total assets), return on invested capital, total factor productivity and labour efficiency. These well-known indicators of current economic condition of a company also provide the grounds for inferences about their future. On the basis of these partial results, a composite indicator is devised, which helps to determine the companies’ rankings. A separate study is conducted in relation to companies with revenues over PLN1 billion, as well as those with revenues over PLN100 million; this is how Grand and Large Pearls are formed. The success of an enterprise operating in a market economy is not only an individual achievement: it should be perceived as an accomplishment of the whole of society. In fact, an economy is only efficient when the companies operating in it have good economic results. It’s the strongest of them that pull the

others behind them and strengthen the country. Good economic policy, law and economic institutions are not enough - good companies are also needed, because they bring dynamism into the economic system. Therefore, companies that are best in a particular way ought to be seen not only as exemplars, but also as a “locomotives”, capable of pulling other entities behind them. The Institute of Economics, Polish Academy of Sciences has been conducting analyses of Polish enterprises by developing rankings since the first half of the eighties, when the first such list was drawn up. We cooperate with the Ministry of the Economy and keep a ranking of companies which can be regarded as leaders in innovation. In both cases we obtain very interesting results, providing an in-depth study of our economy that is based on statistical analysis. ::

Pearls of the Polish Economy

Prof. Henryk Wojnarowski, Director of the Warsaw Philharmonic Choir: With the Choir, he has for many years given highly-successful performances in prestigious philharmonic centres in Poland and abroad. He comments on being awarded the “Polish Market’s” Honorary Pearl in the category of culture: “There’s no escaping the fact that the leading philharmonic ensembles are always orchestras. Choirs are of secondary importance here. Recognising, discerning the ensemble, which is always somehow in the background, is very precious to us. It gives us the sense that what we are doing is socially accepted. The fact that the jury, with its President, Prof. Jerzy Buzek, gives us this distinction, is a great honour, satisfaction, and joy to us.”

Krystyna Janda, accomplished actress, director, and Manager of the Polonia Theatre in Warsaw: “The Pearl awarded by “Polish Market” is a great surprise and honour to me. Appreciating my work and effort in a field that has been strange to me so far is even more important. I am mainly an actress, and a director from time to time, and since recently I have been involved in creating culture; however I have perceived both culture and myself in quite a selfcentred manner, as befits an artist... My way of thinking, efforts, and energy have gone in another direction just recently, since the launch of the Krystyna Janda Foundation for Culture, whose main statutory goals include running theatres, theatre production, and activities related to all other artistic events created in and for the theatre, as well as broadly understood promotion and dissemination of culture. I have taken up the production of cultural events, culture dissemination and management within our two theatres, which have over 800 seats at their disposal every evening. At the same time, I did not let my professional life and working in my domain slow down. This is an extremely difficult task, particularly since the State is not prepared for such solutions and citizens’ initiatives, neither in terms

of Acts, nor in legal terms. Every single distinction and appreciation of my effort is of great importance and honour to me.”

Jerzy Skolimowski, internationally-recognised director and actor: “It goes without saying that I feel greatly honoured, since after so many years of absence I am now being showered with honours and awards, which are now crowned by the Pearl for Culture. I am used to wearing a crown in my acting part of King Jan Sobieski, which, strangely enough, lacked a Pearl... Now I have it. Thank you!”

Michał Stefanowski, recognised designer, for many years the Chair of the Association of Industrial Designers: “The Honorary Pearl, awarded by a jury of people enjoying huge respect, is a great honour for me. Industrial design, often called simply “design”, that I represent, is a sphere of culture that is closely connected with the economy. In fact, it may have a very positive impact on it, if used appropriately. I do hope that the award of the Honorary Pearl to a person involved in industrial design will contribute to increased cooperation between entrepreneurs and designers in the long run.”

Janusz Sobieraj, President of Radex S.A: “Each award of this kind is very nice in itself. My social activity and helping people was not aimed at bringing me any awards. At my age, and I am 57 years old, quite a bit of this social activity has accrued, starting, in fact, from primary school, to LocalGovernment, and finally to my own company. I just think that if the Lord has let me have a financial standing that, let’s say, exceeds the national average salary, then it simply has to be shared with others. The “Polish Market’s:” Pearl brings me and my team huge satisfaction. It surely acts as a stimulus to keep us going and to expand our activity. And this is such a tangible material. Together with my wife, we have recently set up the Radex for Children Foundation. We receive a lot of

letters, in which we read about a lot of people’s misfortunes. But you have to bear in mind that a lot of things are dealt with secretly. Why? Because the poorer the man, the greater his dignity, as if inversely proportional to his financial status. Therefore, this help needs to be handled in an exceptionally subtle, gentle manner...without making a lot of fuss about it...”

Elżbieta Zającówna, actress – received the prize on behalf of Małgorzata Żak; President of the Polsat Foundation: “The “Polish Market’s” Honorary Pearl is a great privilege and honour to our Foundation, and a great recognition of our activity. It is important for us, since the more this type of work is present in the media, the fuller, and more fruitful the social response may be...”With the Year of Volunteering coming to its end, I can only say that the broadly understood voluntary work is doing very well in Poland. People are aware of the need for voluntary work and of its significance. They are open, they start noticing others and their needs...” It is important to talk about it, to encourage people to participate in this kind of activity, which is, in fact, daily, hard, but tangible work. During its fifteen years of activity, the Polsat Foundation has helped 17 thousand children, and has dedicated PLN160 million to this goal. Thank you for appreciating our work.”

Krzysztof Krystowski, President of Avio Polska: “Polish Market’s” award is a very nice surprise, especially for me, for we are not one of the biggest companies in Poland. The award has at least two positive aspects, for sure. The first is of an internal nature. The award will really help strengthen my employees’ motivation. The other is more external, since the whole idea of awarding the Pearls has a big promotional importance. It lets us believe in ourselves more. Even if I hadn’t won the prize, but rather only participated in the ceremony, I would have probably still got the message saying “We are not weak here in Poland!” Aviation is definitely one of the most globalised fields in the world. I am not denying 12 /2011 :: polish market :: 21

Pearls of the Polish Economy

that 2008 came as a terrible shock to us, the Lehman Brothers problems... However, the end of 2009, and the whole 2010, were a departure from that situation. It was therefore observable that the collapse of our clients, and it has to be said that our clients are mainly aircraft producers, was not that serious. Today, also the cheap zloty (in relation to the dollar and the euro) is a factor that prevents our competitiveness against other aircraft producers from declining. We are on the eve of finalising an investment worth over PLN100 million, which is to construct an entirely new production line in our fully computerised and robotised factory. We are planning to implement welding laser machines, probably the first aircraft company in Central Eastern Europe to do so. We have plenty of assets which ensure safety in these uncertain, turbulent times...”

Dominik Libicki, President of the Management Board of Cyfrowy Polsat S.A.: “We accept every title like this with joy; each of them is very important and precious to us, since they emphasise various areas of our activity. Our company finds it very motivating to be placed on the top of the ranking lists, where it is not only the size of the enterprise measured by total revenue that matters, but, even more significantly, its efficiency, dynamics, and financial liquidity. All distinctions of this kind constitute a reward for the effort put into the development of the company and they reassure us that our strategy and consistency in implementing it are a source of our success. They prove that although the beginnings of Cyfrowy Polsat might not have been the easiest, we have shrewdly satisfied the demand of Polish people for pay TV, and the years of hard work have turned into a huge success.”

Edward Szlęk, President of the Board of Koksownia Przyjaźń Sp. z o.o.: “I accept the prize awarded by “Polish Market” as an endorsement from a panel of leading economists, of this modern company, bearing in mind its position on the European market of coke manufacturers.

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The Koksownia Przyjaźń is part of the Jastrzębska Spółka Węglowa Group, which is at the top of the European manufacturers of quality coke and coal-derivative products lists. A couple of years ago, we made the challenging decision, collaboratively with the owners, to commence a broad-based development strategy for our company. Since 2005 – despite the period of global economic recession – we have been consistently following the plan of the complex modernisation of the company. So far we have spent approx. 1.3 billion to modernize Koksownia Przyjaźń and the majority of this was the company’s own funds. We have carried out several major investment tasks which ensure our maintaining an appropriate level of production while retaining the high quality of our products with the use of the best techniques available. We need to continue the modernisation of the remaining coke oven batteries and an expansion of the power unit. Koksownia Przyjaźń is a modern company adapting to the requirements of the market and competition while being environmentally friendly. Our assets include efficient management based on integrated systems of quality, environment, work safety and energy management, professionally-trained experienced personnel and a clear development vision.

Łukasz Kalinowski, President of Amplico Life: “MetLife Amplico has been present on the Polish market since the 1920’s, that is from the introduction of the free market. During this period we have been awarded with many prestigious prizes for our business accomplishments and dynamic and effective development. However, the distinctions that we find the most significant are the ones awarded by the Institute of Economics of the Polish Academy of Sciences. The companies recognised as the Pearls of the Polish Economy are, in fact, leaders among Polish companies, and their financial standing is subject to in-depth analysis and assessment by the experts of the Institute. Finding ourselves among the most efficient and dynamic enterprises in

Poland constitutes a very precious recognition for MetLife Amplico companies. It is an award showing appreciation of all our employees and agents, and our achievement on the Polish market. It is also a great piece of news for our clients, since it indicates our efficiency and credibility.”

Piotr Wojaczek, President of the Board of the Katowice Special Economic Zone Co.: “The Pearl is a challenge. It is only yet an objective, a dream. Today we have received a diploma. I assume that it was meant to be an incentive for us to make an effort in order to be awarded the Pearl next time. We would be honoured if we had received it, but on the other hand, I will not deny that were we to search for the operators of a similar character as this company (special economic zones), and there are a few dozen of such, it might have turned out that we do deserve the Pearl. I am full of this hope.”

Rafał Mikusiński, General Manager of MetLife Amplico Pension Company: Despite the rapidly changing financial markets, where pension funds invest their assets, we continuously place a high priority on maximizing our customers’ savings and maintaining stable investment results. At the end of September, MetLife Amplico reported – regardless the difficult market conditions – over 18% return on investment during last 5 years, while nearly 139% return over the last 10 years. Our investment strategy assumes long term, stable increase of our customers’ profits with low risk at acceptable level. We aim to maintain leading position in investment performance among financial institutions in Poland One of the major changes that the past year brought is the introduction of a new form of saving for retirement on Individual Pension Security Accounts (IKZE). Our pension company will introduce this product to its offer in 2012. This will allow customers to gather additional resources in order to increase their pension benefits and lower their tax burden. ::

Pearls of the Polish Economy Laureates and Guests of the special Gala of the “Pearls of the Polish Economy” at the Grand Theatre in Warsaw Dear Laureates! Dear Ladies and Gentlemen! I would like to cordially welcome all of you gathered in the Grand Theatre in Warsaw for the special Gala of the “Pearls of the Polish Economy.” This prestigious ranking, which has been maintained for 9 years, provides us with extensive knowledge on the state of the economy and the condition of the largest Polish companies. We owe this to the experts from the Institute of Economics of the Polish Academy of Sciences, developers of the computer methodology which facilitates the objective evaluation of the economic achievements of companies. The “Pearls of the Polish Economy,” selected from among two thousand candidates, are the best-performing Polish enterprises. I would like to heartily congratulate the laureates of this valuable accolade. You have reasons for pride and satisfaction. We are happy to see you succeed, as these are successes of the entire Polish economy – modern, competitive and capable of accepting challenges. My congratulations are also directed to those who have received the “Honorary Pearls.” In various fields – economics, science, culture, the reinforcement of social bonds – you provide outstanding service to Poland and the Polish people. I would like to thank you for your commitment and deep understanding of the common good; for promoting and strengthening the country on the international stage. This year, for the first time, the “Special Honorary Pearl” is being presented. It would be hard to make a better choice. Professor Jerzy Buzek, the President of the European Parliament – a man who with his knowledge and authority contributes so much to Poland being spoken about with the utmost respect – I would like to sincerely congratulate him on this honourable distinction. I would also like to thank the organisers of the ranking. The “Polish Market” monthly is currently celebrating its 15th anniversary. We not only owe to you the idea for and multiannual running of this competition, but also the tremendous work you perform for the promotion of Poland. “Polish Market” is a compendium of knowledge about our country, about the potential of the economy, the wealth of our culture. You have played a significant part in the fact that the image of Poland has become so much more attractive. Our country attracts attention, pleasantly surprises, and matters more and more in the world. I am as delighted with this as you are. I wish to all of you gathered here the satisfaction from our mutual successes and once again give you my best regards. Bronisław Komorowski

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Pearls of the Polish Economy

PEARLS OF THE POLISH ECONOMY Bogusław Winid (Undersecretary of State at the Ministry of Foreign Affairs Republic of Poland) presents the Bene Merito award to Krystyna Woźniak-Trzosek (Polish Market)

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Krystyna Woźniak-Trzosek (Polish Market) presents the Special Honorary Pearl to prof. Jerzy Buzek, President of the European Parliament

Pearls of the Polish Economy

2011 Prof. Jerzy Buzek, President of the European Parliament

Krystyna Woźniak-Trzosek (Polish Market)

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Pearls of the Polish Economy From left: Krystyna Woźniak-Trzosek, Prof. Henryk Skarżyński, Łukasz Białecki (Apart) Ryszard Konwerski (Polish Business Association)

Marek Torzewski

Rafał Szmytke (Polish National Tourist Office) delivers a speech

Krzysztof Przybył (Teraz Polska) delivers a speech

Warsaw Philharmonic Choir

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Pearls of the Polish Economy Jerzy Zieliński (BCC) delivers a speech

From left: Grażyna Jaskuła (Polish Market), Prof. Michał Kleiber, Krystyna Woźniak-Trzosek, Wiesław Rozłucki, Prof. Henryk Skarżyński

Marcin Bronikowski

Prof. Henryk Skarżyński

Janusz Rodziewicz (Association of Butchers and Cold Meat Producers) delivers a speech

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Pearls of the Polish Economy Professor Alicja Chybicka delivers a speech

Winners of the Pearls of the Polish Economy. From left: Herbert Wirth (KGHM), Aneta Jaskólska (Cyfrowy Polsat), Edward Szlęk (Koksownia Przyjaźń), Xavier Douellou (3M), Krzysztof Krystowski (AVIO), Krzysztof Kruszona (Agrobex)

Paweł Krajmas (Polska Ekologia)

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Piotr Wojaczek (President of KSSE)

Maciej Balcerzak (TP SA)

Jerzy Kamiński (Lotos)

Pearls of the Polish Economy From left: Edward Szlęk (Koksownia Przyjaźń), Paweł Antonik and Wojciech Trojanowski (Strabag)

From left: Janusz Steinhoff PhD, former Deputy Prime Minister of Poland, Krystyna Woźniak-Trzosek and Prof. Michał Kleiber

Winners of the Pearls of the Polish Economy and Henryk Opiński (OPEK)

From left: Krzysztof Kruszona (Agrobex), Edward Szlęk (Koksownia Przyjaźń) and Herbert Wirth (KGHM)

From left: Krzysztof Kruszona (Agrobex), Prof. Michał Kleiber and Wojciech Trojanowski (Strabag)

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Pearls of the Polish Economy Laureates of Honorary Pearls

Prof. Krzysztof Matyjaszewski and Marcin Kaszuba

Janusz Sobieraj and Elżbieta Zającówna

Prof. Witold Rużyłło and Prof. Krzysztof Matyjaszewski

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From left: Konrad Pokutycki (BSH), Prof. Henryk Wojnarowski, Janusz Steinhoff PhD, Krystyna Woźniak-Trzosek and Prof. Michał Kleiber

Pearls of the Polish Economy From left: Konrad Pokutycki (BSH), Krystyna Janda, Janusz Steinhoff PhD, Krystyna Woźniak-Trzosek and Prof. Michał Kleiber

From left: Piotr Wojaczek (KSSE), Maciej Balcerzak (TP SA) and Jerzy Kamiński (Lotos)

Jerzy Woźniak – Cursed Soldier

From left: Grażyna Jaskuła, Krystyna Woźniak-Trzosek, Rita Schultz and Błażej Grabowski (Polish Market)

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Pearls of the Polish Economy

The evolution of the “Pearls” “Companies need not be ashamed of their results, as all businesses have their ups and downs. The independent ranking of the Pearls of the Polish Economy, published by “Polish Market”, helps them become more aware of their environment. Knowing your environment is one of the more important ways to improve the efficiency of the company and the economy at large,” says Jan Macieja, PhD, head of the Business Monitoring Section of the Institute of Economics, Polish Academy of Sciences, co-author of the Pearls of the Polish Economy ranking, in conversation with Jerzy Bojanowicz.

What is the difference between the popular “500’s” presented by various magazines and the “Pearls of the Polish Economy”? In preparing the “Pearls of the Polish Economy” ranking we take advantage of the theory of microeconomic foundations for growth developed in the 1960’s by Prof. Arnold Harberger of Chicago University. On this basis I prepare the “Microeconomic Foundations of the Economy,” used by numerous Government agencies. As the economy in our region may slowly develop or rapidly dwindle, it’s impossible to judge businesses without taking into account the conditions surrounding their foundations. There’s no method allowing the comparison of the state of economic entities across different periods. If the global financial situation is good, and there is no turmoil, then we mainly study their income growth rate and profitability, as well as their return on capital employed and labour costs (efficiency). In contrast, when the global situation is deteriorating, other factors must be added. That is to say, when finances aren’t under threat, it’s enough to study income growth rate and then profitability, which show whether current production is bringing good results. Operating profitability takes into account the company’s history, which doesn’t necessarily interest us, as we wish to assess the here and now. Another very important indicator relates to the asset structure - equity and liabilities. If the financial situation is stable, it is in the interests of the company to increase the share of liabilities in the balance, thanks to which the return on equity grows without an improvement

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in management efficiency. All other things being equal, if the share of equity is high, then the return on equity is lower. In practice the desired share of equity in assets shouldn’t be lower than 30% or higher than 70%. The higher the share of liabilities in the balance, the higher the return on invested capital, but the likelihood that the company will go bankrupt when the capital market becomes turbulent is also higher. With greater turbulence and low share of equity in assets, preventing the downfall of the company is impossible. In Poland, in the first decade of the new century, this share amounted to about 60%, which allowed me to declare in 2008, during the Pearls Gala, that the crisis wouldn’t affect us, as the microeconomic foundations were sound. If a given company fails to fulfil this criterion, it doesn’t make it into our ranking. The debt rate of a company is therefore very important, reaching 30-40% of assets in Poland. In France and Italy it amounts to 60-70%, being even higher in Greece. The “500’s” show the situation from the preceding year, while the “Pearls” let us see forward, providing us with premises for long-term decisions. What are the other differences between these rankings? Every ranking shows return on net assets. I think this makes no sense, as it passes over the profits taken by the State in the form of taxes. That is why we use gross values – how much return on invested capital there is for the State and the investor. Thus, it becomes a measure of the social efficiency of resource use by a company.

When preparing the “Pearls” ranking you use 7 criteria. Are they of equal significance? We send various questionnaires to firms. There are different ones for production enterprises and infrastructural ones, who fill them in based on F-02 forms. Still further questionnaires are received by insurers and banks. Adjusting the data to make their comparison possible isn’t that easy. No economic scientist will be able to do that alone, so we have accountants to help us. There have been no objections to our studies. Now that the economic situation has changed, some criteria that mattered 2 years ago are now less important, such as the asset structure I mentioned. That is why next year we are introducing the criterion of the debt ratio, which we’ll count according to the formula: depreciation + operating profit divided by liabilities. In Polish enterprises this is 13 months on average, so in that time they can meet all their liabilities. In the countries I mentioned before, this is about 30 months. And that already is a problem, as the owner is helpless and can’t change the situation. That is why I suggest calling this indicator the owner helplessness rate. If the economy is stable, performance criteria are the most important, including return on equity. In times of crisis the debt ratio and asset structure become more significant. Still, irrespective of the economic situation in the country, the income growth rate is crucial, but counted without the expenditure on products for sale, as for example a hypermarket has enormous turnover, but its own “contribution” is low. I should add that in our method two criteria can depart 10% from the adopted standard.

Pearls of the Polish Economy And yet the owner has some influence, by incurring liabilities. It’s a different situation now. A company doesn’t live by its past but its future, and I’m interested in what’s in store next year. Companies in Poland may improve their situation within six months, from their own funds, even if a bank doesn’t want to grant a loan. In times of the destabilisation of public finance, which has mainly been caused by speculation on the capital market, including credit ratings, the debt ratio will be one of the most important criteria. Today nobody takes it into account when assessing businesses – it will be a novelty in our ranking. The total factor productivity - of human, material, and financial capital – is also important, as, say, labour efficiency may be enhanced by increasing employment or investing in machinery stock. But it may turn out that the slight increase in efficiency has soaked up enormous capital expenditure (investment), which is not profitable. Have you ever given up a criterion in the nine-year history of the Pearls? At the beginning, there were too many indicators concerning the efficiency and rate of income growth.

How much interest in this ranking is there among enterprises? When preparing the ranking we take into account the selected balance-sheet data which are provided by the interested companies. Some companies, such as the owners of retail chains, do not disclose their data safeguarding them from their competition. They choose to pay... a fine of PLN380. So we have to approach them, ask for the data and so on. There’s no response usually. With the late Prof. Jan Mujżel and Prof. Tadeusz Baczko I prepared the first in our regional “List of 500 Largest Enterprises.” It was very easy back then, as the essential data came from the Central Statistical Office. Now it’s impossible, and that is why in the “500’s” published these days, next to many companies, and in most table cells, we see n/a – not available. The situation is very different in the case of publicly-traded companies, as they are required to disclose their data, informing us only about the volume of employment, which is necessary to calculate the efficiency of labour and total factor productivity. Interest depends on the economic situation – if it’s worse, the results

are worse, so they don’t want to disclose them... - … but it’s a hard time for all! And yet the owners don’t know it. They know that it’s looking pretty bad in their own backyard. On the other hand, companies that cooperate with foreign enterprises, or have their representations abroad, would like to make it to the “Polish Market” ranking. Still, the number of companies in the analysis did not fall, as many of them approach the ranking as prewar actors – good or bad, but the name is correctly mentioned in the credits. It is important how many companies on the basis of the received questionnaires have achieved “Pearl” status. This year it was 90%, while previously usually 60%. I bet that if the state of Polish finances doesn’t deteriorate as a result of further disturbances on the global financial markets, Poland will experience no crisis next year, as the economic foundations are solid, and this isn’t likely to change over a year. Th ank you for the interview.

What remains... “Nowadays, we sometimes tend to forget that whether we are in a crisis, smaller or bigger, and whether we are successful, to a larger or smaller extent, it is mainly what we are creating in the field of culture that will survive 50 or 100 years from now. That is why I extend my thanks to the editors of “Polish Market”, who promote Polish culture by promoting the Polish economy,” Jerzy Buzek, President of the European Parliament, said during our grand Gala event.

A number of performances added splendour to the gala in the National Opera. The performers included the Warsaw Philharmonic Choir, directed by Henryk Wojnarowski, the excellent singers Marek Torzewski and Marcin Bronikowski, children from the Pro-Omnibus Foundation, Angela Wawrzyk and Szymon Borkowski,

and Piotr Salaber, who played the piano. Behind the scenes, the promotion of the novel “Dog’s Planet” by Alicja Wolniewicz took place. The author is only 12 years old! We celebrated, as always, not forgetting about culture... Henryk Wojnarowski - Director of the Warsaw Philharmonic Choir (Pearl of Culture of PM 2011)

He has for many years given highly-successful performances with leading Polish and other European symphony orchestras. He has collaborated with the most prominent contemporary conductors such as Zubin Mehta, Helmuth Rilling, Bohdan Wodiczko, Jerzy Maksymiuk, Krzysztof Penderecki, and Antoni Wit. 12 /2011 :: polish market :: 35

Pearls of the Polish Economy Together with the Warsaw Philharmonic Choir he has performed, all the oratorio and a capella works of Krzysztof Penderecki. Henryk Wojnarowski has received six nominations for the most prestigious music record industry prize, that is the Grammy Award. Apart from that, he has participated in numerous Polish and world premieres. “Being the Director of the Warsaw Philharmonic Choir is an important experience, and a huge adventure. Absolutely, all the time. Someone has to be the engine in this complicated, complex work. And for sure, such a person cannot do the conventional nine-to-five job... One has to be constantly exposed to great world literature, new pieces of art, and creative and performing individualities. It is undeniably extremely interesting, even fascinating. I always say, that these 70 years have to be spent somehow in an interesting way, and if it is possible to do it longer, then it is definitely not right to be bored!” he declared in the interview for “Polish Market.” Marek Torzewski – opera singer – tenor, since 1986 he has lived permanently in Belgium. He has sung in Teatro alla Scala in Milan, directed by Claudio Abbado. He sings in great football stadiums, but does not avoid singing more ordinary songs. A turning point in his life was the Jan Kiepura Vocal Competition, since just a while after that contest, important international offers followed. What did these all journeys through Europe give to him? “The occupation of an artist is closely connected with constant travelling. It means facing challenges all the time... New circumstances, new environments... In that time, the competition and proposals connected with it opened new opportunities, and entirely new horizons for me... Then, each appearance of an artist from Poland, especially in places so prestigious as the opera theatre, was a kind of a surprise, and a new sensation. I experienced something amazing, when I was 24, and I went abroad to work for La Scala for the first time. In that time, such figures as Ruggero Raimondi, Katia Ricciarelli, and Claudio Abbado all performed there! And there, next to these superstars, appeared a 24-year old man from Poland. As far as operatic art is concerned, this is

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still a child, a kindergartener... What endeared me, was that these stars did not let me feel that “you’re younger, you know less than we do”, not for a single moment. And there wasn’t one moment, when I would feel this way,” Marek Torzewski emphasises. Another strong voice who appeared, also not a novice at our Gala event, was Marcin Bronikowski (Pearl of Culture PM 2010) - baritone, whose singing may be admired practically in the whole world... “I think that Polish culture has a lot of greatness, not only artists. This elite is, in fact, Poland’s best showpiece in the world. Performing almost exclusively outside Poland, I still try to promote Poland as much as I can, including music culture. On every occasion, for instance, during the conferences before the premieres, I always try to emphasise that one of the main roles is played by a singer from Poland. Let me remind you that I received the “Polish Market’s” Pearl in the year of special importance to culture, that is Chopin Year. This year has surely brought the modern image of Poland and our tradition closer to the symbol of excellence that Chopin is,” he emphasised in the last year’s interview with “Polish Market.” The artists were accompanied by Piotr Salaber - composer, pianist and conductor; a graduate of the Academy of Music in Bydgoszcz, firstly of the Department of Choir Conducting and Music Education, and then of Composition and the Theory of Music, with a PhD in music as a conductor. He also has for many years, together with Marek Czekała’s Orchestra, accompanied the young singers from the Pro Omnibus Foundation during the Song Festival of Young Disabled People in Ciechocinek. During the “Polish Market” Gala, he also accompanied the children in the Pro-Omnibus Foundation - Angela Wawrzyk and Szymon Borkow ski. “I have the impression, that we are one big family here, and I’m saying this without any exaggeration. These young people, many a time, are ahead of the “able-bodied” performers in terms of professionalism. What is interesting, they choose a very difficult repertoire, which definitely proves their emotional maturity and sensitivity, but it surely is a

result of everyday problems that they encounter in their lives on a daily basis,” Piotr Salaber conclude. “During the Gala event, we found ourselves in fairy-tale scenery... We felt extraordinarily. The Foundation is designed to give, and awards like this simply make us happy. At the Gala event, the young singers, who won awards at the latest Song Festival of Young Disabled People performed. They sang beautifully. Also Piotr Salaber’s accompaniment proved that we pursue quality. These were just amazing duets. Mirosław Satora - President of the Pro Omnibus Foundation (winner of the PM Honorary Pearl for disseminating social values 2007) The summer festival organised in Ciechocinek by Pro Omnibus is the biggest event of its kind in Europe. It has been arousing interest among not only young artists, but it is also an attraction for patients, tourists, and residents who are there during the summer for many years. It has its faithful audience, which by applauding supports sick children in the competition struggles. Each year, Polish Market is the patron of the event. This year, Oficyna Wydawnicza Rynek Polski Sp. z o.o. published Alicja Wolniewicz’s literary debut - “Dog’s Planet”. In her novel, 12year old Alicja describes the adventures of a young girl, who happened to be on a planet inhabited by the four-legged. Together with her favourite dog Theodore, she experiences blood-chilling adventures on the planet... In her book, the young author draws from the best models, from Jan Brzechwa. During the “Polish Market” Gala event, it was possible to get Alicja’s book and autograph. In fact, just a week earlier, the author was placed among the excellent circle of Polish artists at the “Róże Gali” (Gala’s Roses) 2011 ceremony, organised by “Gala” biweekly magazine. Alicja was nominated in the category “Debut”. She may not have won the award, but the fact itself of her being among those who did receive prizes is of no small importance (the title was awarded in 6 categories, and among the prize winners were Krystyna Janda, Robert Więckiewicz, and Aga Zaryan.)... and I think that is no mean promise. ::

Beauty and elegance Marek Biczak is the initiator and author of the Pearls statuettes awarded during the Pearls of the Polish Economy Gala.

BIMART 40-239 Katowice ul. Racławicka 11 T/F +48 (0) 32 355 24 80 w w w.bimar t-g.com

Present on the Polish market for fifteen years, Bimart engages in the importing, wholesaling and retailing of high-quality daily-use decorative, artistic and promotional items. We also design and produce statuettes, prizes and special medals, such as the Pearls of the Polish Economy and the medals for the Cent for Future competition. Moreover, Bimart has marketed such brands as Veronese and Forchino in Poland. Veronese are thematically-varied bronze-plated figurines. Each item has its own and unique signature proving its authenticity. Bimart is the official importer and distributor of Veronese items, with a certificate of protection of the Patent Office of the Republic of Poland. Forchino, in turn, are satirical figures by the French graphic artist Gilermo Forchino that are used for promotion and decoration purposes. Bimart’s clients include both Polish and foreign companies, wholesalers, retailers and entities from the advertising industry.

We pride ourselves on the titles of “Trader of the Year 2006 in Śląsk” (“Śląski Kupiec Roku 2006’’) and “Polish Trader of the Year 2006” (“Polski Kupiec Roku 2006’’) granted by the Jury of the competition of the Eugeniusz Kwiatkowski Association (Kapituła Konkursu Stowarzyszenia im. Eugeniusza Kwiatkowskiego) of the Poznań International Fair (Miedzynarodowe Targi Poznańskie) and the World Trade Centre in Poznań. These attest both to the high quality of our products and our professionalism. Apart from the ones mentioned above, the company has been awarded many other prizes. Its reliability has also been verified by numerous certificates, including the certificate of the Regional Chamber of Commerce in Katowice (Regionalna Izba Gospodarcza w Katowicach). Upcoming fairs where Bimart’s products will be presented include RemaDays Europe in Nuremberg, 9 to 11 January 2012, and RemaDays Warszawa, 1 to 3 February 2012.

Pearls of the Polish Economy From left: Prof. Jerzy Buzek, Olgierd Dziekoński (Minister in the President’s Office), Jerzy Wenderlich (Deputy Speaker of the Parliament) with wife and Adam Szejnfeld (MP)

Prof. Jerzy Buzek and Prof. Michał Kleiber

From left: Janusz Steinhoff PhD, Edward Trzosek, Prof. Jerzy Buzek, Olgierd Dziekoński (Minister in the President’s Office), Jerzy Wenderlich (Deputy Speaker of the Parliament) singing the EU hymn “Ode to joy”

Sławomir Majman (PAIiIZ)

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Prof. Jerzy Buzek and Jerzy Woźniak

Jan Pietrzak, Maria and Henryk Lewiński – President of IsraelPoland Chamber of Commerce

ZAK S.A. â&#x20AC;&#x201C; one of the biggest producers in the chemical sector of Poland, EU and globally. The companyâ&#x20AC;&#x2122;s business focuses on production of nitrogen fertilizers, plasticizers, OXO alcohols and other chemicals for many sectors of the economy. The main sponsor of extra-league volleyball

team ZAKSA, patron of culture, science and arts. The winner of many awards and honourable mentions. Since 2010 ZAK S.A. has been a member of the Capital Group of Azoty Tarnow, a Polish chemical concern that competes successfully in international markets.

Pearls of the Polish Economy

Olgierd Dziekoński (Minister in the President’s Office), Anna Nehrebecka and Iwo Byszewski

From left: Ilona Łepkowska, Czesław Bielecki, Włodzimierz Grudziński and Edward Trzosek

Angela Wawrzyk

Szymon Borkowski

Jerzy Wenderlich (Deputy Speaker of the Parliament) and Prof. Jerzy Buzek

Krystyna Woźniak-Trzosek and Edward Trzosek

From left: Jacek Socha, Krzysztof Krystowski (AVIO), Marek Pol with wife, Alicja Adamczak (Patent Office of the Republic of Poland) and Jacek Piechota

Roman Nowicki with wife and Krystyna Woźniak-Trzosek

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Pearls of the Polish Economy

From right: Leszek and Anna Wolniewicz with daughters Ala and Ola

Gala guests

From left: Mirosław Satora, Andrzej Frajnd, Szymon Borkowski, Krystyna Woźniak-Trzosek, Angela Wawrzyk, Anna Pietrzak, Ludwika Zamojska and Bronisław Kornaus

Ala Wolniewicz signs her book

Jan Pietrzak, Błażej Grabowski and Krystyna Woźniak-Trzosek

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Pearls of the Polish Economy

From left: Barbara Pasymowska, Krystyna Woźniak-Trzosek, Janusz and Magdalena Frączkowski and Jacek Drzewicki

Izabela Trojanowska

Mariusz Pujszo

Agnieszka and Krzysztof Jagodzińki (Oferia.pl) Marek and Barbara Torzewski and Piotr Salaber

From left: Rita Schultz (Polish Market), Alicja Wiecka (SAS Institute) and Stanisława Missala (Quality)

Błażej Grabowski and Krystyna Woźniak-Trzosek (Polish Market) Elżbieta Leszczyńska and Krystyna Woźniak-Trzosek

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Photos: Łukasz Giersz, Andrzej Smoliński, Hanna Smolińska and Wojciech Wojciechowski (Fotokultura.pl)

Dishes made with Polish products in Kresowiak restaurant in Warsaw Warieniki 1 kg potatoes · 1 kg small white beans · 2 onions 100 ml oil · 1 kg wheat flour · 250 ml cold water salt, pepper to taste Boil potatoes until tender and leave till the next day – soak beans for 24 hours before cooking. After cooking the potatoes and beans, mince them in a mincing-machine and mix seasoning with salt and pepper. Cut onions into small cubes and fry until golden and add to the potatoes and beans stuffing.

Dough Mix 1 kg of flour with 250 ml of cold water, add a pinch of salt. Knead until the dough is elastic. Form balls from the stuffing and fill the dough shaping it into dumplings. Cook or steam the warieniki. Serve with onion or crackling gravy.

Kartacze 1 kg potatoes · 200 g potato starch · 1.5 kg beef and pork meat 1 large onion · salt and pepper to taste · 3 allspice seeds · 3 laurel leaves Boil half of the potatoes. Fine grate the other half, remove water by pressing through gauze and add the remaining starch to the potatoes. Mince the boiled potatoes in a mincing-machine. Mix all potatoes adding salt, pepper, finegrated onion and potato starch. Knead until the dough is formed. Mince the meat and simmer it in a pot adding laurel leaves, allspice and fried onion. Stuff the potato dough with meat forming an oval shape. Cook the kartacze in salted water and serve with onion or crackling gravy.

Veal cutlets: 300 gram veal cutlets · 150 gram spinach · 150 gram potatoes 5 gram cranberries · 50 ml milk · 100 gram butter · 50 ml sour cream 2 garlic cloves · 3 sprigs of thyme · 10 ml of sunflower oil · Salt and pepper Press the spinach, chop and fry with garlic, season with salt and pepper, add sour cream. Puree: cook potatoes, rub through a sieve, add butter, milk, salt, pepper and stir to form a puree. Clean the veal cutlets and fry from both sides until golden brown. In a separate pot or directly in the pan, make béchamel sauce from milk, butter, salt, pepper and mix adding cranberries. Add cutlets and simmer until tender. Put on a plate in layers: puree, spinach and cutlets.

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Pearls of the Polish Economy

20 years of innovation in Poland rewarded with Large Pearl Andrzej Gac interviews Xavier Douellou, Managing Director of 3M Poland — a Polish branch of an American innovation giant who was awarded the Large Pearl this year.

1600 people in Poland. We have as many as 9 plants as well as a new Research and Development Center where Polish engineers develop new 3M products. And we are not planning to slow down. Last year only, we opened two new manufacturing plants in Wrocław and invested further 83 million dollars. Our ambition is for Poland to become a key market for 3M, from where 70% of our products exported to Central Eastern European countries will come.

3M Poland celebrates its 20th anniversary this year. The results of this year’s edition of the “Pearls of Polish Economy” contest and the Large Pearl for 3M indicate that these were two highly successful decades. How do you assess the investment in Poland? From the very beginning, we have seen investing in Poland as a road to success. Poland impresses with economic and political stability, especially in recent time of global slowdown. For over 20 years, we have invested here over 350 million dollars. We have also trained hundreds of thousands of Polish specialists and familiarized them with the latest technologies. 3M’s strength is the unique combination of people’s cooperation and ideas with the latest technologies. Now, we are employing

When summarizing these 20 years, what is in your opinion the greatest 3M success in Poland? We get the greatest satisfaction from innovative solutions and products offered by 3M, because these solutions and products significantly changed the face of Poland, and, most importantly, improved the quality of life for the Polish people. Combining the imagination of our best people with the latest technologies, we can now offer our customers over 10,000 innovative products. Scotchlite™ tapes and films and the Municipal Information System in Warsaw and Łódź improved safety on main roads, and new work safety technologies in face protection products or Speedglas™ welding shields ensured the safety of Polish workers. Medical and dental solutions such as Littmann® stethoscopes and Lava Chairside Oral Scanner have introduced Polish healthcare into the 21st century. 3M industrial tapes and glues have largely eliminated screws and nails. Popular Post-it® notes, Scotch® tapes, Viscoplast dressings and Prima® cleaning sponges can be found in any household or office. Our advertising films help to create the image of the biggest companies and banks. 3M’s solutions for energy and telecommunications sector improve and ensure the safety of energy and information flow.

3M pays much attention to sustainable development. How does it look in practice? When we design new products, we feel responsible both for their high quality and for respecting the social and environmental aspects. Our company’s ambition is to use alternative, renewable energy sources as much as possible. We do our best to make the technologies we use more environmentally friendly and consume less energy or water. The most prominent example of our activities is the Viscoplast plant in Wrocław, purchased by 3M in 2001. Consistent activities based on the 3P principle (Pollution Prevention Pays) turned Viscoplast into an environmental market leader. The plant managed to reduce its waste by 20% and energy and water consumption by more than 20%. This is one of the best results among all of 3M departments worldwide. 3M also raises ecological awareness among its workforce and in its nearest surrounding, and promotes new eco-lifestyle habits. From the very beginning we have been involved in social and charity projects. We actively support road safety promotion by endorsing projects aimed at road safety of the youngest and at reduction of road accidents. For many years, the company has been also supporting the social care home for children and youth in Wrocław, and during Christmas, the company aids many charity foundations. We also sponsor various cultural and sport events. For 15 years we have been supporting the champions of Poland and of the world in wheelchair fencing associated in the Integrative Sports Club in Warsaw. We also support youth mountain bike section in Rabka. Our goal is to support positive change, build dialogue and understanding with all interested parties, and to fulfill the role of a responsible neighbor. ::

Please visit www.3m.pl to find out more about 3M Poland.

12 /2011 :: polish market :: 47

Tradition and modernity Kazimierz Nowak, President of the Mazowiecka Spółka Gazownictwa Sp. z o.o. gas distribution company, talks to “Polish Market’s” Ewelina Janczylik.

The Mazowiecka Spółka Gazow nictwa - gas distribution company has been awarded the Pearl of the Polish Economy in the infrastructure category. You have come high – in second place - having met very strict criteria. It is a pleasant surprise to me. I have to admit that I have not expected this award. Any distinction for our company is a very nice thing, especially when it is received in such a good company as Prof. Jerzy Buzek, Jerzy Woźniak, Krystyna Janda, Je rzy Skolimowski, KGHM, Lotos and Polkomtel. However, we do not rest on our laurels. Just the contrary, awards

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of this kind give us motivation to further effort. The history of the gas company dates back to 1856. How has its activity changed over these years? What is the scope of operations of Mazowiecka Spółka Gazownictwa now? Indeed, Mazowiecka Spółka Gazownictwa has a long history, being one of the “heirs” of the former gasworks in Warsaw (Gazownia Warszawska), although other cities, like Szczecin and Wrocław, got their gasworks earlier than Warsaw. In those days the local gas distribution business was based on gas produced of

coal. Much has changed over these years. First of all, the gas distribution systems are now integrated and dependent on each other, although they are managed by independent operators, like our company. The company has undergone many changes. The most recent period in its history started in 2003 – at that time the company dealt with both selling and transporting gas via a network of its pipelines. In 2007 the company’s division dealing with gas sales became part of the PGNiG company while Mazowiecka Spółka Gazownictwa focused on transporting gas. At present, our core business is the distribution of natural gas and the operation of the

distribution system. We modernize and expand it, and connect new customers to the system. The company is increasingly aware of its market position and of what it is able to achieve. Much depends on the company’s staff – on their creativity and openness to change. A lot has changed in the company in the past several years, but I think the changes produced favourable results. A company’s staff is one of the factors determining its strength. This is why we have undertaken two kinds of measures to secure wellqualified staff for the company. Firstly, we set up a Gas Systems Management Technical College in the city of Łódź to educate people for the needs of the gas industry. Initially, it provided only day courses but a year later it started to offer also extramural courses, which enjoy much interest from workers employed by our company and other gas distribution companies who want to raise their qualifications. Next year the school’s first students will take their school-leaving exams and will become gas technicians. In 2010, thanks to our efforts, the Ministry of Education re-entered the occupation into the list of occupations provided by the vocational school system while the Ministry of Labour and Social Policy entered it into the list of occupations and specialties for the needs of the labour market. One can say that the results of our efforts associated with the school surpassed our expectations. Secondly, we want to ensure conditions for the intensive development of our staff through a well-thoughout HR policy, including an extensive system of training courses, some of them funded from European Union sources. W hy did you take the efforts to raise occupational qualifications? Was there a shortage of specialists? Yes, from the formal point of view this occupation did not exist. Consequently, there was the risk there would be no one to replace old specialists going into retirement. Although it is still difficult for us to find specialists, the change on the labour market and interest from students in the new course of study is already visible,

which is partly thanks to the measures we have taken. We try to make education in the technical school attractive for the students. We offer them workshops, the ability to watch work in the field, cooperate with our teams and get familiar with new gas industry technologies. Luckily, we managed to win over the Łódź local government and educational authorities for this idea. We had to cope with such problems as providing the school with modern equipment and employing suitable teachers. But we succeeded. Would the prospective extraction of shale gas in the future slow or accelerate the company’s expansion? Shale gas offers a chance for the big economic success of Poland, and the expansion of the gas market and companies which operate on it. We also pin our great hopes on this method of extracting natural gas. As a distribution company, we can transport natural gas irrespective of the source of its origin. Therefore, shale gas offers a big chance for expansion for us as well. Mazowiecka Spółka Gazownic twa distributes natural gas. How do you protect the natural environment? Natural gas is friendly to the natural environment and our business is to deliver environment-friendly fuel. Gas transmission is certainly not harmful to the natural environment. We take care of the environment in our activity as the operator. First of all, we have a proper waste management system. Another important issue is uncontrolled leaks from the network – we set aside a lot of money for the modernization and repair of our gas pipelines to improve their technical condition and prevent such incidents. Our gas pipelines are constantly monitored, which enables us to quickly detect leaks. We have adopted standards which the companies we hire to carry out our investment projects have to apply. They reduce the risk of failures and gas leaks. Do you take precautions to prevent gas theft? Yes, of course. It is very important from the point of view of gas consumers and safety. Our website provides

an opportunity to report such incidents as gas theft. It is an innovative solution. So far we have received several reports of this kind. In the future, we would like to install prepaid meters for consumers who pose a risk of default. Unfortunately, there are also more sophisticated methods of gas theft. We try to make our customers and local communities aware that interference with gas distribution equipment is very dangerous. Is there another sphere where the company’s development is well visible? In recent years the company has made much progress not only in terms of the operation, modernisation and expansion of its gas distribution system but also in terms of IT and new technologies. The company faces new challenges and this gives us motivation to work. W hat are your plans for the near future? We base our success on rapid expansion and meeting the growth expectations of our customers. We are one of the largest gas distribution system operators in Poland in terms of revenue and the volume of gas transported. It was our goal in the past and it still is our goal. We want to expand our distribution system using liquefied natural gas (LNG) technology to cover the areas to which gas has not been supplied yet. Our plans are in keeping with the conditions that will appear once LNG deliveries are launched to the terminal in Świnoujście. Gas from the terminal may be delivered to our system in liquefied form. The company has experience in building facilities for turning natural gas from liquefied to gaseous form. Two facilities were put into operation in 2011 – one in Ostrołęka and the other in Pisz. The latter enables the use of liquefied natural gas instead of propane-butane. In the next several years the company plans to build more facilities converting LNG into a gaseous state as a source of gas for our distribution networks. In this way, we want to deliver gas to consumers to whom it cannot be supplied in a conventional way. To sum up, we are planning steady expansion, cost and resource optimisation, and the consistent development of our staff. :: 12 /2011 :: polish market :: 49

KGHM Polska Miedź S.A. The year 2011 is the year of the 50th anniversary of the creation/ establishment of KGHM – the largest producer of mine copper in Europe and the 3rd largest producer of silver in the world. Furthermore, KGHM Ecoren, a company functioning within the framework of the KGHM Group, is the only European producer of rhenium from its own resources.

Activity and products The main activities of KGHM are focused on the production of copper and silver. KGHM annually produces about 530 thousand tons of electrolytic copper and 1,200 tons of silver. Production results ranked the company in the world’s top producers of both metals. KGHM is the 10th-largest producer of copper and the 3rdlargest producer of silver in the world. The copper produced by KGHM in the form of cathodes is registered by the London Metal Exchange and the Shanghai Metal Exchange. KGHM’s silver is certified by the stock exchanges in London, Dubai and New York. The basic operations of the Company are primarily focused on: :: copper ore mining, :: copper production, and :: the production of precious metals and other non-ferrous metals. Moreover, the range of products offered by KGHM is broadened by a range of by-products that constitute added value in the revenues of the company. These include gold and lead, and recently rhenium. KGHM Ecoren – a company functioning within the framework of the KGHM Group – is the only European producer of rhenium from its own resources. The company is the world’s third-largest global producer of this rare metal.

The resource base KGHM possesses its own copper ore deposit and its own integrated production structure. The resource base for KGHM is the largest in Europe and covers one of the largest copper ore deposits in the world. Its area is nearly 468 km2. Currently, the underground mines operate at depths varying from 600 to 1200 meters. The

production structure of KGHM comprises three mines, two copper smelters, a wire rod plant and auxiliary units supporting the core business. Our facilities employ over 18 000 people, while in the subsidiaries which comprise the KGHM Group, another 10 000 people are employed. Apart from exploring the domestic deposit, KGHM plans to develop its resource base abroad. In 2010, for USD 37 million, KGHM purchased a 51% stake in a joint venture to develop the Afton-Ajax copper-gold project in British Columbia, Canada with a Canadian partner, Abacus Mining & Exploration Corp. KGHM also owns an exploration license in the area of Weisswasser in Saxony, Germany at the border between Germany and Poland. The concession covers a part of the Kupferschiefer Copper Belt that extends from the existing mines of KGHM in Poland to the north-west.

KGHM – one of the largest Polish exporters The Company generates enormous profits, and holds a strategic interest for the Polish economy. The year 2010 saw excellent results in the production of electrolytic copper – 547 100 t, and of metallic silver – 1 161 t, and above all a record profit – nearly PLN 4.57 billion and a future promising steady growth and an increase in the value of the Company. KGHM is one of the largest Polish exporters, the largest employer in Lower Silesia, and a significant part of the WIG20 index, being a winner of many prestigious statuettes and distinctions.

Taking care of the environment KGHM cares about the natural environment. Enormous financial outlays, model technology and methods

guarantee that the most stringent EU requirements and standards as respects environmental protection are met. KGHM is currently a Leader of Polish Ecology and an Environmentally Friendly Company, and has been honored as an Ecological Laureate of the Polish Chamber of Ecology.

Responsibility to society Since its founding, KGHM has been the leader of economic development for the region. Along with other companies closely connected to it, KGHM serves as a stabilizing factor and a source of social safety for a large part of the region where it operates. KGHM employs over 18 thousand people, with another 10 thousand in the KGHM Group. Adding in employment in companies which work with KGHM, it may be said that KGHM ensures the livelihoods of 100 thousand people. The communities of the Copper Belt are among the wealthiest in Poland. In addition, KGHM is not only a company with a rich 50-year long experience in the metal sector, but also a company with great mining and smelting traditions and a representative of a socially responsible business, focused on promoting culture, arts and sport in the region where it operates, as well as support for health services and valuable community initiatives. ::

Contact: KGHM Polska Miedź S.A. ul. M. Skłodowskiej-Curie 48 59-301 Lubin Poland tel. +48 76 74 78 200, 74 78 800 fax + 48 76 74 78 500, 74 78 809 www.kghm.pl

Telecom

The telecommunications market in Poland is changing According to the Office of Electronic Communications, the main trends in the Polish telecommunications market last year included falling prices and at the same time growing availability of services. The year 2010 marked a further decline in the value of fixed telephone services. The revenues in the industry were determined by profound changes in the structure of consumption and the modes of services’ provision. Bogdan Sadecki Telecommunications services have been liberalised in Poland, and the market is now to a large extent free. After the political changes in Poland initiated in the 1990s, the telecommunications market is still undergoing profound transformations, moving away from the monopolistic activity of Telekomunikacja Polska (TPSA) and enabling service and infrastructure providers to fully compete with it. Telecommunications activity in Poland is regulated by the telecommunications law. It was passed with the Act of 16 July 2004 (Journal of Laws, No.171, item 1800 with later amendments). The Act lays down the rules for implementing and

monitoring the business of providing telecommunications services and telecommunications networks. The state agency appointed for controlling, regulating and promoting the development of telecommunications in Poland is the Office of Electronic Communications (UKE). This institution manages radio frequency resources, and orbital and numbering resources available to Poland, and monitors compliance with the requirements for the electromagnetic compatibility of telecommunications equipment. It also supports competition for the provision of telecommunications networks and licensing companies which operate in

Structural operators :: T-Mobile (operator: Polska Telefonia Cyfrowa), commercial launch 16 September 1996; :: Orange Poland (operator: PTK Centertel), commercial launch 18 September 1997; :: Play (operator: P4), commercial launch 16 March 2007 (as Netia Mobile), in the process of building its network (currently it uses partly the Polkomtels’ network); :: Plus (operator: Polkomtel), commercial launch 1 October 1996; :: CenterNet (operator: CenterNet), commercial launch 30 May 2009. :: Mobyland :: Aero2

The number of users :: The number of active mobile phones: 47.15 million (after the fourth quarter of 2010) The number of mobile phone users (broken down by operators): :: Polska Telefonia Komórkowa Centertel [Orange] – 14.33 million :: Polkomtel [Plus]– 13.74 million :: Polska Telefonia Cyfrowa [T-Mobile] – 13.26 million :: P4 [Play] – 5.16 million :: Other – 0.66 million

:: The number of fixed phones: 9.22 million (at the end of 2008) Source: http: //pl.wikipedia.org

the telecommunications business. The Ministry of Infrastructure directly supervises the activities of UKE. Until around 2000, the market for fixed telephone services and infrastructure was monopolised by Telekomunikacja Polska. Later, the market was opened to other operators to allow them to use TP’s telecommunications infrastructure on the basis of Third-Party Access. Currently, there are dozens of operators on the market that offer a variety of services. In recent years, the electronic communications sector has changed beyond recognition in all fields, starting from competitiveness, quality, the scope and prices of services rendered to the consumer, and the involvement of local governments. When analysing the Polish telecommunications market one can conclude that prices are dropping, while the availability of services is growing. According to the Office of Electronic Communications’ report on the Polish telecommunications market last year, which was published in June, these were the main trends on the Polish telecommunications market in 2010. The value of the Polish telecom market was PLN 42.8 billion in 2010, measured by sales revenues, and was 1.9% higher than in 2009. Retail sales in the three main sectors of the market – fixed and mobile telephony and Internet access – exceeded PLN 29.3 billion, an increase of 0.8% in 12/2011 :: polish market :: 51

Telecom The telecommunications market in Poland in 2010 Conclusions concerning individual clients The findings of a survey conducted for UKE indicate a high degree of saturation in telecommunications services. A telephone, irrespective of the technology used for this purpose, is owned by the vast majority of respondents (94.4%). 32.6% of respondents own both mobile and landline phones. Slightly more than half the respondents use only their mobile phone. One in 10 persons owns only a landline phone. Only 5.6% of respondents have not got any telephone.

The fixed telephone market :: In 2010, 43.1% of Poles claimed to have a landline phone in their household. :: The highest indication of spontaneous brand recall among fixed-line operators was noted for Telekomunikacja Polska (94.2%). The second best-known operator is Netia, mentioned by over half the respondents (53.1%). Another recognisable provider is Telefonia Dialog, indicated by approximately one-quarter of the respondents (24.2%). :: The first place, as far as the number of subscribers is concerned, belongs to Telekomunikacja Polska, which is the primary operator for 67.9% of respondents owning a landline phone. None of the other operators exceeds the threshold of 13%. :: The survey results indicate relatively high consumer satisfaction with services provided by fixed telephone operators. Average ratings are: TP: 3.9 and Dialog and Netia 4.0 each (on a 5-degree scale of satisfaction). :: The main reason for not having a landline phone was using a mobile phone (70.0%). Among other reasons there was also the price factor: 28.3% of respondents who do not have a landline phone claim that it is too expensive. :: The average monthly charge for a fixed-line phone in a household is around PLN 65.7. The largest group of landline phone owners is people paying bills ranging from PLN 51 to 100 a month (45.4%)

The mobile telephone market :: 84.0% of Poles say they own a mobile phone. The saturation of the individual telecommunications market with mobile telephone services is thus 43% higher than the fixed telephone services saturation. :: Spontaneous brand awareness of the three leading mobile telephone brands is at a similar level: Era (82.8%), Orange (81,.1%) and Plus (77.7%). Over half the respondents are familiar with the network operator Play (61.2%)

comparison to 2009 (the report published on the UKE’s website). Favourable conditions in the Internet access sector helped

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:: Respondents using the services of the Orange network operator make up 36.7% of respondents. A large percentage of respondents have cell phones that use the Era (22.6%) and Plus (26.3%) networks. :: Voice calls are the most commonly used form of mobile phone communication. 85.2% of respondents mention them in the first place. A popular way of communication used by mobile phone owners is sending SMS’s. 16.3% of respondents mention them in the first place. MMS and data transmission still continue to attract low interest, as only 0.8% of the respondents declare using these services. :: The total average monthly charge for using a mobile phone is much higher in the case of post-paid subscribers (PLN 75) than in case of users of prepaid cards (PLN 41) or mixed (PLN 45).

The Internet market :: Most families (61.5%) claim to own a computer in their households. Furthermore, 86.1% families owning a computer have access to the Internet. :: The majority of Poles used the Internet in the month before the survey (56.3%), and most people were connected to the Internet at home (87%) or at work (39.5%). :: Polish Internet users who used it in the month before the survey, declared a high frequency for using this medium – 71.4% use the Internet every day. :: The vast majority of people who use the Internet at home, have fixed, mostly broadband, access. 1/4 of respondents (25.4%) have a 1 Mb/s to 1.99 Mb/s Internet access and 27% use 2 to 5.99 Mb/s connection. :: Gadu-Gadu (86.7%) is the most widely used means of communication on the IM market, while in the group of voice messaging applications the most popular is Skype (71.8%).

The television market :: Over a third of respondents (34.8%) use cable television and 33.1% have satellite TV. One third (31.0%) watch analogue television using traditional terrestrial antenna, other respondents use digital terrestrial television. :: The average monthly charge for using television is PLN 45. :: Two thirds of respondents (72.1%) report satisfaction with their TV provider. Source: “The Telecommunications Market in Poland in 2010. Individual and Institutional Clients”; www.uke.gov.pl

entrepreneurs to generate higher revenues on the market. On the other hand, the revenues from fixed telephone services, decreasing for

another year in a row, did not allow improvements in the value of whole telecom sector. The revenues in the industry were determined by profound changes in the structure of consumption and the modes of service provision. The expansion of data transmission services was also significant. The average price of a voice call with the mobile operators was about 25% lower than a year before, while an SMS was 5% cheaper. On the other hand, total average call duration per user was longer by about 200 minutes. Mobile operators competed with each other, offering promotional minutes and SMS message packages. The volumes of all mobile services were growing and the largest increase in popularity (by as much as 103%) was reported by mobile data transmission in the country. Roaming service prices were then higher than their national counterparts by between a few times (in the case of voice calls and SMSs) to more than 10 times. This, however, was not reflected in the volume of traffic. Internet providers were successful by increasing bandwidth, while simultaneously reducing the duration of contracts – the number of connections of over 2 Mbit/s increased by more than 33%. TVK operators sparked the drop in Internet access prices by offering their subscribers more attractive prices than the xDSL service providers. An important trend in this period was the “bundling” of services, which allowed the meeting of consumer demand comprehensively and at much lower prices. The value of the Internet access market increased by PLN 0.7 billion, and the number of broadband services’ customers increased by 1.6 million. The market for mobile access was dynamically developing. 2G/3G modems were the most popular access solutions among Internet users. The number of cable TV modems was steadily growing. The bandwidth offered was growing and thus, narrow-band connections accounted only for 0.11% of the whole. According to the Office, the statistics concerning Poland versus the European Union fill you with optimism. Charges for selected speed ranges were around the EU average, and the 20 Mbit/s bandwidth was cheaper than most of the comparative rates of the

Telecom The telecommunications market in Poland in 2010 Conclusions concerning institutional clients Survey results show that the vast majority of firms surveyed (60.3%) use both landline and mobile phones. A significantly lower percentage of businesses use only landline phones (8.3%) or mobile phones (31.5%)

The fixed telephone market :: The fixed telephone operator whose services most firms use is TP – mentioned by nearly four fifths (79.6%) of the surveyed firms. A significant market share is noted by Netia, whose services are used by 10.9% of the surveyed companies. Telefonia Dialog has a negligible share – 2.9%. :: The average monthly bill for using the phones of all operators surveyed is approximately PLN 181. The average monthly bill for using the phones of TP is almost the same at PLN 180. :: The level of satisfaction with the two operators (TP and Netia), which were assessed by respondents, is high. 88.5% of respondents assesses TP as being “good” or “very good.” In the case of Netia 86.7% of respondents assess it in a similar way.

The mobile telephone market :: Among firms which use the services provided by mobile telephone operators are Orange (44.1% of those surveyed use it) and Era (30.8%), while Plus and Play are used by 22.3% and 10.1% of firms respectively. :: The surveyed businesses most often use one or two mobile phones. One telephone is used by 4049% of them, while two are used by 28-33% of firms (depending on the operator whose services

a given company uses). Three telephones are used by 11-15% of firms. Era and Orange clients, (11.5%) and (9.3%) respectively, most often used many mobile phones (4 or more). The highest average number of mobile phones (2.26) is owned by Era customers. :: The average monthly bill for mobile operators’ services varied: Orange’s business clients pay an average monthly bill of PLN 264.5, Plus PLN 215.1, Era PLN 199.6 and Play PLN 179. :: The level of satisfaction with mobile operator services is high – in all dimensions they are given over 4.0 on a 5-grade scale of satisfaction.

The Internet market :: In more than half (59%) of the surveyed businesses, employees use desktop computers. In 42% of businesses employees use portable computers (laptops). :: 91.1% of firms with computers also have Internet access. In 80.1% of cases they have fixed Internet access. Fixed mobile Internet access is used by 15% of businesses. They use mainly two types of speed connections: from 1 to 1.99 Mb/s (34.3% indicated) and from 2 to 5.99 Mb/s (35.3% indicated). :: Average monthly spending on the Internet amounts to PLN 97. :: The vast majority of clients (88.8%) described their satisfaction with their Internet service providers as high or very high. Source: “The Telecommunications Market in Poland in 2010. Individual and Institutional Clients”; www.uke.gov.pl

Member States. Poles were interested in double-play services, usually combining cable television with Internet access, and as stated by UKE, more than 2.5 million people were using them. In 2010 around 47 million SIM cards for mobile phones were used (123% of the Polish population), but the growth rate in the number of service users slowed down. The year 2010 marked a further decline in the value of fixed telephone services – by PLN 1.7 billion – and in the number of subscribers by 1.2 million. UKE also found a significant slowdown in the growth of VoIP services (Voice over Internet Protocol – Internet telephony), which, according to the Office, shows that the development of the segment has slowed. In contrast to the telecom market as a whole, fixed telephone services

market did not grow. Statistics on the number of subscribers and traffic volumes from year to year display increasingly weak results. The overall level of investment (about PLN 6.3 billion) did not change compared to 2009; however, in all market segments declines in spending were reported. Nonetheless, Telekomunikacja Polska and new players in the mobile market (P4, Aero2 and CenterNet) improved this situation.

“The Telecommunications Market in Poland in 2010. Individual and Institutional Customers” - a report from consumer research commissioned by the Office of Electronic Communications. In their report on the telecom industry in Central and Eastern Europe, Erste Group analysts project that the

average annual growth rate in the telecommunications sector in Poland in the years 2010-2012 should be 0.3%. This will be the result of growth in the field of mobile data transmission, as well as in pay television and fixed broadband connections. “Results in 2011 indicate that the sector has still not experienced an upturn. Most of the major players in the region of Central and Eastern Europe, such as Telefónica O2 CR, Telekom Austria, TPSA and Magyar Telekom, showed a decrease in the growth rate in the level of revenues in the second quarter of 2011, compared to previous quarters. Despite disappointing operating results recorded in the telecommunications sector in the CEE region, the results of the valuation of the telecom services sector are well above expectations,” said analyst Vera Sutedja. The main problem for the sector remains the low level of revenues from mobile telephone services and voice services offering a fixed rate. This is due to the displacement of fixed telephony by mobile telephony, migration to VoIP, the lower prices of service packages, and the lower prices of paid services such as mobile terminated, roaming services and competition from other operators. “The next step towards a full rebound would therefore be a more dynamic growth in individual consumption. Labour markets in the region reported no significant improvement and the consolidation of budgets in the public sector also restricts spending. The Erste Group analysts expect that next year in this field there will be a definite improvement. Therefore, regulatory pressure remains the problem,” reads the report. Erste analysts indicate in the report that the European Commission has recommended a reduction in the Mobile Termination Rate to 1.5–3 cents per minute by the end of 2012. This year or next Hungary, Croatia and the Czech Republic can expect a strong reduction in the Mobile Termination Rate. The market is exhibiting fierce competition and the only change is the focus on the promotion of mobile data transfer. :: 12/2011 :: polish market :: 53

Gas

How can we step on the gas? The gas market liberalisation model in Poland in 2012 The obligation to include in the Polish legal system the so-called third liberalisation package of the European Union, and the directive on promoting the use of energy from renewable sources, have made it necessary to develop new legislative solutions for the energy sector in Poland. The solutions provided in the said package are intended to foster the liberalisation of the gas market in Europe. Has Poland sufficiently demonstrated its capability to advance the work towards establishing a single gas market in the EU, having assumed the Presidency of the EU on 1 July 2011? What is the alternative to drafting a separate Polish law for the gas sector? Cezary Tomasz Szyjko

The liberalisation of the EU market Gas is one of the most strategic energy carriers, which ensures security to each country. It raises many economic controversies, which are caused by the extremely complex geopolitical structure related to this raw material. Gas deposits in Poland satisfy around 30% of domestic needs while the remaining 70% is fulfilled through imports. Poland is currently in the middle of an international dialogue, with a view to ensuring the higher diversification of both the transfer and supply of this crucial material. The implementation of the EU Third Energy Package in Poland, which aims to ensure the energy security of Europe, has been in progress since 3 March 2011. Its provisions seek

Legal documents related to the Third Energy Package: :: Regulation (EC) No. 713/2009 of 13 July 2009 establishing the Agency for the Cooperation of Energy Regulators (ACER); :: Regulation (EC) No. 714/2009 of 13 July 2009 on the conditions for access to the network for cross-border exchanges in electricity; :: Regulation (EC) No. 715/2009 of 13 July 2009 conditions for access to the natural gas transmission networks; :: Directive No. 2009/72/EC of 13 July 2009 concerning common rules for the internal market in electricity; :: Directive No. 2009/73/EC of 13 July 2009 concerning common rules for the internal market in natural gas. Source: own study

54 :: polish market ::

12 /2011

to increase competition on the European market. The internal natural gas market, which has been gradually developed in the entire European Community since 1999, seeks to guarantee a real choice to all EU consumers, whether citizens or enterprises, to create new economic opportunities, as well as to increase the level of cross-border trade, in order to achieve higher efficiency, competitive prices and better standards, and to contribute to the security of supply and stability. Legal regulations on the gas market constitute a form of combatting the adverse influence of strongly-dominated markets, and their principal objectives focus on management efficiency and the protection of consumer interests. According to Prof. Maciej Kaliski, PhD, Deputy Minister of the Economy, EU pressure will force us to give express signs of market liberalisation, reflected in the so-called gas release programme (GRP), i.e. a voluntary ceding of the market, as regards both the transfer and storage capacity. Based on the recommendations approved by the Governmental Group for the Natural Gas Market Liberalisation, the President of the Energy Regulatory Office is developing the GRP. A detailed (8page) questionnaire can be downloaded from the website of the Energy Regulatory Office. According to the Minister

of the Economy, the gas industry will soon receive a set of legislative solutions, including a new gas law and related regulations, which will foster development in this sector.

Amendments to the law Poland’s accession to the EU and, in consequence, the necessity to consolidate the functional conditions of the Polish energy market, as part of a wider European market, have triggered a dramatic change in the conditions under which gas companies operate on the domestic market. In order not only to survive, but also to successfully pursue their activities in different conditions, they will have to face new challenges, arising from the new realities of the competitive market and from a more diversified choice of gas suppliers provided to all gas recipients. This will act as an incentive to reorienting development policies and to introducing modern actions and measures, as well as strategies commonly applied on mature gas markets. The current legal basis which governs the functioning of the gas market in Poland is provided by the Energy Law Act, enacted by the Sejm of the Republic of Poland on 10 April 1997, together with related secondary legislation (regulations), including especially regulations by the Minister of the Economy and the Minister of the Environment. The reference Act defines the principles of the development of State energy policy, the principles and terms of supply and the use of fuels and energy, and the operation of energy enterprises. Article 3, Point 16 of the Act stipulates that energy security is “the condition of the economy which enables full coverage of the ongoing and prospective customer demand for fuels and energy in a technically and economically justified manner, with the observance of environmental protection requirements.” The Energy Law Act was enacted 10 years ago. It was developed primarily with the aim of adjusting the Polish energy sector to market economy

Gas requirements. Upon Poland’s accession to the European Union, Polish legislation on the energy market was adjusted to European law, including especially the EU Directive on the principles of the common electricity market. For obvious reasons, EU Directives became the basis for creating the national legal regulations concerning the energy market. For several years, the Polish law has undergone numerous changes. This year, we are facing yet another amendment. The provisions of Polish Energy Law reveal the lack of clarity of the current legislative solutions and the necessity to adjust them to geopolitical dynamics. The amendment planned will seek to implement the new EU solutions concerning the functioning of the internal natural gas market, and to exclude the gas-related provisions from the current Act. Such a solution is aimed at transposing the EU directives, at ordering and simplifying the provisions, and at adjusting the current regulations in line with the EU ones. The proposed solution will entail, inter alia, developing two separate draft Acts, i.e. the Energy Law Act, regulating the issues of electrical power engineering and heat engineering, as well as the Gas Law Act, containing the provisions applicable to the natural gas sector. Such a division is justified by the presence of separate laws for the gas industry in the vast majority of EU countries.

The new Gas Law A significant change introduced by the new Polish gas law should be reflected in limiting the scope of its application only to the natural gas which is, or can be, pumped into the gas system. Natural gas, according to the new definition, is high-methane or high-nitrogen natural gas, including liquefied, supplied through the gas network. Other types of flammable gas, including agricultural biogas, are considered natural gas, within the meaning of the Act, to the extent that their entry to, and transport through, the gas system is possible. Therefore, the regulation of propane and butane gas has been abandoned, as it is a petroleum derivative with different chemical properties that cannot enter the gas system. The amended definition will result in decreasing the burden on gas enterprises, connected with the regulation of a narrow market segment. To this

end, liquefied natural gas trade regulation should also be abandoned, unless it is transferred through the gas system. Natural gas will also remain beyond the scope of the reference Act, as its trading and transport does not involve a gas infrastructure. The Gas Law Act should specifically regulate the principles of conducting business activities by gas system operators, paying special attention to gassystem security. Defining the precise service provision conditions should have a positive impact on the competition between gas enterprises, as it creates a transparent legal situation, in which the rights and obligations of each entrepreneur are expressly specified. Gas law will also determine the principles of cooperation between gas enterprises. The major obligations of gas entrepreneurs, connected with providing the services related to infrastructure access, system connections, etc., will remain unchanged with regard to the Energy Law Act. The above raises the question about the future of the Energy Law Act: will it disappear entirely or will it only exclude the provisions concerning gas and renewable energy sources? Should it be re-edited so as to provide a collection of principles which govern certain general issues, such as the “framework” regulation of the energy sector? Or will it perhaps remain in force as a residual Act, retaining the provisions which cannot be allocated to any of the sectoral laws?

Conclusion Without the effective separation of the network from the production and supply activity (“an effective division”), there is a risk of discrimination, not only in the field of network operation, but also as regards the measures encouraging vertically-integrated enterprises, to make appropriate investments in their networks. Such an effective division may only be ensured through eliminating incentives for such enterprises to apply discriminatory practices towards their competitors, as regards network access and investments. The property division, which should be understood as appointing the network owner to act as the system operator, and as preserving their independence of any supply and production-related affairs, clearly appears to be an efficient and stable

The current legal status in the gas sector: :: Act of 10 April 1997 – Energy Law, :: Act of 16 February 2007 on stocks of crude oil, petroleum products and natural gas, and on the code of conduct in the event of a threat to the fuel security of the State and the disruption of the petroleum market, :: Regulation of the Minister of the Economy of 2 July 2010 on detailed conditions for the functioning of the gas system, :: Regulation of the Minister of the Economy of 6 February 2008 on the detailed rules on the structuring and calculating of tariffs and settlements in the trading of fuel gas, :: Regulation of the Minister of the Economy of 30 July 2001 on the technical conditions to be met by gas networks. Source: own study

means to solve the intrinsic conflict of interests and to ensure security of supplies. Under the principles of property division, Member States should be obliged to ensure that the same person (or persons) is not (or are not) simultaneously authorised to control an enterprise producing or supplying gas, and to supervise the execution of any rights with respect to the transfer system operator. Each division should effectively eliminate any conflicts of interest between producers, suppliers and transfer system operators, in order to foster necessary investments, and to ensure access to all market entrants, as part of a transparent and efficient regulatory system. It should also avoid creating an excessively expensive regulatory framework for the domestic regulatory bodies, related to supplies and production. The amendments to the regulations on the functioning of the market should be prompt, in order to secure the changes occurring on this market. To sum up, the liberalisation of the Polish natural gas market will be extremely difficult, except for a prompt enactment of the gas law (at the beginning of the office term of the new Parliament), preferably combined with a new Act on reserves and with the simultaneous adoption of the key regulations on tariffs and systems, followed by the promptly-amended “instructions on transfer and network utilisation.” The analysed draft Acts on energy law are merely an attempt at outlining the whole of the changes continually occurring in the Polish gas sector. They are bound, on the one hand, by the necessity to adjust Polish legislation to the EU and, on the other hand, by the complex structural changes. :: 12 /2011 :: polish market :: 55

The World Economy in 2012: a Rocky Road to Recovery After the release of the report „The World Economy in 2012: a Rocky Road to Recovery” we are analyzing with Grant Thornton Poland Chief Executive Tomasz Wróblewski whether the current economic crisis is coming to an end, what type of companies are performing better in unstable times and what will be Poland’s position on the post-crisis economic map.

bring positive results to their company, which does not exclude further economic turmoil in the world. Nevertheless, the sum of microeconomic opinions allows us to shape some predictions concerning the broader economic picture. If the number of optimists within the private sector grows we can assume that their expectations towards world economic recovery are also growing.

Tomasz Wróblewski, Grant Thornton Poland Chief Executive

A surprising 40% of companies from around the globe interviewed by Grant Thornton have declared that they take optimistic view on their prospects in the next 12 months. Does that mean that contrary to what media say we are about to witness the end of the crisis?

Interviewed entrepreneurs take into consideration microeconomic indicators concerning only their own company, thus their answers do not reflect their opinion on the economy as a whole. Grant Thornton research indicates that two out of five businesses believe that the next year will

What type of companies do well in such a volatile and instable times? First of all we need to understand what the volatile economy means to a company. Above all, it is fragility of assumptions. Normally, a business assumes scenarios about the future, invests money according to these predictions and then, all of the sudden, it proves that the reality is different from our original scenario. So, the ultimate winners are the firms whose top management has a good insight into market developments and is capable of taking quickly some brave decisions. Sometimes it means abandoning of unfinished projects, in other cases it may mean just convincing the team that the way of doing things which gave us success yesterday equally well may bring the firm into trouble tomorrow. As changes rooted in worsening market conditions may come without any warning, it is particularly important that the company works as a single united team where each member watches the key determinants of company’s success, and examines them in a critical way. What about Polish private sector – can it be perceived as that flexible and integral? Performance of the Polish economy, particularly put against other European

economies, allow to state that Polish entrepreneurs cope with the difficulties exceptionally well. The main obstacle which prevents Polish companies to react even better to this volatile environment is the red tape. Undisputable majority of our entrepreneurs indicates this factor as the main constraint for their growth. The importance of this phenomenon has been emphasized by the recent OECD research. According to calculations of this organisation, lowering of administrative barriers may bring an increase in efficiency of the Polish economy as high as 14% over the next ten years. And that, along with improvement of infrastructure, should be a priority for our government in the upcoming years. Lack of infrastructure and excessive administration is also a problem in developing countries. Despite this fact, it is firms operating in these countries who are the engine of growth of the global economy. Forecast for these countries is really impressive. As much as 74% of Indian companies are planning to increase their headcount over the next 12 months and in Vietnam this proportion is 71%. The macroeconomic landscape of the world is subject to rapid changes. Latin America and Asia are growing from strength to strength. According to forecasts for BRIC economies (Brazil, Russia, India & China), 61.3% of global economic growth is going to come from there, whereas G7 economies will contribute only 12.8% to this growth. Looking for the reasons behind the new economic order, it is worth to look into the economy which has reported particularly impressive growth. Recent forecasts indicate that the continental China will generate the largest nominal GDP in the world. However, from the point of view of the purchasing power parity, China will overtake the U.S. in 2017. With business restrictions disappearing for foreigners and trade volumes skyrocketing, China is becoming a promised land for investors. During the last decade of XX century the average value of direct investments in China was around 30 billion dollars. The data from United Nations Conference on Trade and Development indicates that this number hit 108 billion already in 2009. It is estimated that a quarter of the top one million

multinational companies conduct their business also in China and as much as 480 out of Fortune’s Top 500 is present in this country. What is the reason for this increasing presence of international companies in China? Nowadays doing business in China is not a matter of choice but a necessity. To retain high profit margins and market share, the supply chain must include China. Companies may decide to manufacture goods there either through outsourcing or to run their own manufacturing plants but in both cases these actions will be taken in China. In Grant Thornton we like to call this paradigm shift a “new normality”. One of the most evident consequences of new normality is the transfer of economic power from West to East. Businesses that know how to benefit from new normality and will find their niche in the global supply chain are the most likely to succeed. The ability of developed countries to accommodate themselves to the “new normality” does vary. On the one hand we can see solid performance of economies in Germany and Sweden, on the other hand sluggish growth in Great Britain and Italy. Discrepancies result from various health of particular economies as well as their specific features such as the importance of the foreign trade or composition of the key trading partners. Consequently even in a seemingly homogenous group like developed nations we will see a diverse performance response to new normality. This has been confirmed by the developments in the Eurozone where, despite monetary union, differences remain colossal. What are the prospects for Poland in these circumstances? Is our economy closer to ponderous Western economies or to the dynamic emerging markets? Although, the optimism indicators in Poland are still considerably lower than record highs, the trend is very promising. At the end of Q3, the percentage of entrepreneurs expecting the improvement of revenue, prices, exports, profitability and investments indicators has grown significantly. Especially declarations concerning capital expenditure volumes are relevant to

the analysis of economic prospects because they reflect the belief of managers that the money invested will bring satisfactory ROI rate. Entrepreneurs assess that the operating environment is not deteriorating in the context of barriers such as demand limitations, availability & cost of capital, bureaucracy, availability of qualified work force. In summary, one can say that the outlook for Polish companies in the eyes of their managers is cautiously optimistic. Hence, it is likely that we will find ourselves somewhere in the middle between the two extremes. And what is your view on the next year’s optimism indicators? I am of the opinion that in uncertain times, one should shorten planning perspectives. It is difficult to predict what the situation is going to look like in a quarter, so, making bets on indices with a one year perspective is even more difficult. I think that the main lesson from the past few years should be humility. Tens of thousands of well-educated and well paid analysts with sophisticated statistical methods at hand have not been able to predict the rainy days. However, as an optimist by heart, I would like to close with the quote from Dire Straits’ song: There is always sunshine after rain. ::

Four investors in the Łódź zone Indesit, ABB, Serioplast and Eko-Kartex are companies which have recently obtained permits to conduct activity in the Łódź Special Economic Zone. They are planning to invest over PLN200 million and create 379 new jobs. The Indesit Company will build two factories – manufacturing cooker hoods and plastic components. The investor seeks to create over 250 new jobs, though this number may be even twice as high. The investment value will exceed PLN100 million. The current employment in this company amounts to approximately 3500 persons, and the total investment value has reached approximately PLN1 billion, which makes Indesit the largest international employer in the region, and one of the major employers countrywide. The new investment implemented by ABB, with a value of PLN52.5 million, will give rise to 35 new jobs. ABB is planning to expand its electrical engines factory in Aleksandrów Łódzki. The new space will serve the purpose of manufacturing modern high-efficiency engines. In the last four years, ABB has built two factories in Aleksandrów Łódzki, investing a total of PLN150 million and creating 222 new jobs. Serioplast Poland in the Kutno Sub-Zone is planning to construct a production plant manufacturing plastic packaging for the pharmaceutical, chemical, detergent, cosmetic and food industries. This will be the 17th production plant included in the Serioplast Group. The total expenditure on this investment is likely to exceed PLN36 million, and new jobs will be provided for at least 66 persons. In the Radomsko Sub-Zone, Eko-Kartex intends to construct production halls and purchase the necessary technological lines to produce cardboard packaging. This project will cost PLN4 million, and new jobs will be provided for at least 10 persons. Since the beginning of this year, permits to conduct economic activity in the Łódź Special Economic Zone have been granted to 16 companies, which are planning to invest nearly PLN687 million and create 825 new jobs.

A investor fosters employment Ericpol Telecom, a company operating in the Kraków Special Economic Zone, is about to launch a recruitment process. In the coming months, the company is planning to employ another 250 persons. The company has already employed over 200 engineers this year, but the demand for new staff is rapidly growing. By the end of 2012, the Ericpol staff will be formed by experienced programmers, analysts, and testers, and graduates from telecommunications, electronics and IT studies. Considering the necessity to work in multinational teams, a communicative command of English, openness and teamwork ability will be the crucial skills required from any future employee.

58 :: polish market :: 12/2011

Ericpol, the major Polish exporter in the IT sector, renders outsourcing and consulting services, and provides tailored solutions in the fields of telecommunications, medicine and business. The Ericpol Group has its production centres in Belarus, Ukraine and Sweden. So far the company has hired over 1200 employees.

New investments in the Mielec Zone Contenur Polska and Concrete Leżajsk are going to invest over PLN21 million in the Special Economic Zone Euro-Park Mielec, giving new jobs to at least 44 persons. Contenur Polska Sp. z o.o. with its seat in Mielec, is a limited-liability company established by Contenur SL, which manufactures plastic-waste containers, garden furniture and playground equipment. In Euro-Park Mielec , Contenur Polska intends to produce large-capacity municipal-waste containers. The investor is planning to hire at least 30 employees and incur investment outlays of PLN18.9 million. Concrete Leżajsk Sp. z o.o. is planning to construct a production plant manufacturing concrete and prefabricated construction components. The company will invest over PLN2.7 million and hire at least 14 new employees. Since the outset of 2011, 15 permits have already been granted in Euro-Park Mielec. The total investment outlays on which exceed PLN151 million, and employment has reached 341 new jobs.

Two permits in Zator The Zator Sub-Zone of the Kraków Technological Park has attracted new investments. Argo-Hytos Polska and Ekowafel obtained another two permits issued in this Sub-Zone. Zator is one of the most recent sub-zones in the Kraków Special Economic Zone. It was established on 14 April 2009, with a view to targeting small and medium-sized enterprises. As a result of the recent changes in the sub-zone borders, its area has been expanded from 4.9 ha to 28.5 ha. Argo-Hytos combines new solutions in the area of hydraulic and lubricating systems filtration. The products offered by the company are used both in stationary industrial systems and in mobile hydraulics. The company is planning to invest over PLN4.6 million, increasing its employment by at least 5 new specialists. Ekowafel has operated on the confectionery market. This company is about to invest over PLN2 million in Zator and to hire at least 5 new employees. ::

Foreign Investment

We are nowhere near China, but cooperation is proving successful Currently, the Chinese economy, together with the United States’, are the most dynamically-developing economies in the world. Exports to the Far East are becoming a more and more significant element, constituting the basis for the development plans of numerous enterprises. Entering this market is still a difficult challenge for Polish enterprises, but Poland still strives to be a Chinese business gateway to Europe. Bogdan Sadecki

Table 1: Basic macroeconomic indicators for China

However, it is not only the large corporations and international companies that succeed in the export of goods to China. Following the market giants, the large and medium-sized enterprises are also dynamically entering the Chinese market with their products. In many cases, they compete effectively, both with local Chinese companies and with international corporations. In the case of consumer goods, what matters is the interesting range of products offered, affordable prices, and, what is probably the most important - good quality. As far as industrial goods are concerned, unique technology and usefulness are highly

China’s dynamic development and its economic growth have made it a very attractive market for exporters of industrial and consumer goods. Cooperation with this distant country is becoming an important strategic element in the development plans of more and more companies. International companies discovered the opportunities and huge potential of Chinese enterprises and consumers a long time ago. Their effective marketing policy and development strategies have ensured their presence on this market. Each year, the export of foreign goods delivered to China by international corporations increases progressively. Indicators

Nominal GDP (bn USD) Real GDP growth rate (%) GDP (per capita in USD, as purchasing power parity, PPP) CPI inflation - consumer price index (%) Unemployment rate (%) Exports (bn USD)

2008

2009

2010

4222

4814

5745

9.8

8.7%

10.3

6100

6600

6.0

- 0.8

3.3

4.2 *

4.3*

4.1* 1506

1465

1194

Exports growth rate (%)

20.3

-16.8

Imports (bn USD)

1156

921.5

1307

Imports growth rate (%)

20.9

-14.2

Balance (bn USD)

+309

+ 272.5

+199

Turnover (bn USD)

2621

2115.5

2813

Foreign trade growth (%)

20.6

-15.7

27.4

Aggregate value of foreign investment in China (bn USD)

576

655.5

Aggregate value of China’s investments abroad (bn USD)

184

227.3

278.9

Foreign debt

400.6

347.1

406.6

Reserves of foreign exchange and gold (bn USD)

1995

2206

2622

*China provides only unemployment data from cities. Total unemployment in China is estimated at 9.0% Sources: The National Bureau of Statistics of the People’s Republic of China, World Bank, Ministry of Trade of the PRC.

desirable, which fact enables foreign enterprises to appear on the Chinese market and to expand profitable exports to China, where quality matters.

Investment-capital cooperation (source: the Ministry of the Economy) Recently, cooperation in the mining, pharmaceutical, and construction chemicals sectors has increased in the field of Polish investment in China. According to the assessment by the Ministry of the Economy, the total value of Polish investment in China reached approximately EUR 150 million by the end of 2010. Over the course of years, Chinese investment in Poland was not visible, but in the years 2007-2008, a dramatic change for the better took place. According to the estimates by the Ministry, by the end of 2009 the total value of Chinese investment reached approximately EUR 236 million. Among other forms of cooperation, financial cooperation also has to be mentioned. The Governmental loan supporting Polish exports constitutes its main component (it has functioned since 2000). The loan agreement will be effective until the end of January 2013. Within the loan, the implementation of new projects in the mining, construction, and environmental protection industries has been launched. The goods were contracted for the amount of USD 235 million. Recently, the structure of exports to China has deteriorated slightly. The share of highly-processed goods (machines, vehicles, precise products) has fallen from 32.2% to 30.2%. Semi-finished products made of non-precious metals have the biggest share (41%), followed by machines (22%), and chemical industry products (14%). Taking into consideration the top-ten products, the lists comprises copper, chemicals, vehicle parts, aeroplanes, specialist mechanical equipment, aliphatic alcohols, computer parts, furniture, electrical switches, wires, and cables. 12 /2011 :: polish market :: 59

Foreign Investments In the case of imports, (product sectors) mechanical and electrical engineering products account for over half (56%). Also textile products (13%) and various goods (6%) play a significant role here. Among the most significant products in terms of imports from China to Poland in 2010 were parts for television and radiotelephone equipment, computer devices, parts for computers, cable telephony, transformers, clothes sets, toys, printing machines, suitcases and bags, and blouses and jumpers. Trade between Poland and China keeps on flourishing. However, there is a big disproportion between imports and exports in the mutual turnover. China sends products worth USD 9.5 billion to Poland, and Polish exports to China amount to USD 1.7 billion. The Chinese market is powerful and it opens up a lot of opportunities for Poland, so finding Chinese customers for Polish products should not be problematic.

Access to the market Entering the Chinese market still poses a big challenge for Polish companies. The access to the Chinese market is hindered by non-tariff barriers to trade. China has striven to develop domestic production for 30 years, but, as a matter of fact, it has tried to

Growth 2009=100

12121

10934

13845

867

1051

121

1229

117

Imports from China

11254

9983

12615

124

Balance

-10387

-8932

Sales Exports to China

124

-11386

Source: Ministry of the Economy of the Republic of Poland

do so using foreign technologies, resources, and capital. In the so-called priority industries, such as the car industry, foreign investors cannot be in possession of the majority of the capital. In the construction industry, many years of experience on the market are required to apply for project implementation. When establishing a trading company with foreign capital, the lengthy approval procedure and timeconsuming process of industrial product certification have to be dealt with. There are restrictions on imports of a number of agricultural and food products. Considering the proportions in exports of products to and from China (about 1500 companies) and the number of importers of goods from the country to our market (nearly 19 thousand companies), it has to be admitted that, in fact, China possesses a substantially bigger and comparatively inexpensive range of products to be exported.

The People’s Republic of China was established on 1 October 1949. The President is the Head of State. Executive power is exercised by the Government, led by the Prime Minister. The legislative authority is the National People’s Congress. China covers an area of 9 597 thousand square kilometres. It is, after Russia and Canada, the world’s third largest country. As at July 2010 its population was estimated at 1339.1 million. The country exercises jurisdiction over 22 provinces, five autonomous regions, four directly controlled municipalities (Beijing, Shanghai, Tianjin, and Chongqing), and two mostly self-governing special administrative regions (Hong Kong and Macau). Its capital city is Beijing and its currency is the yuan (internationally- CNY, in China- RMB). The average exchange rate as at the end of 2010 was 1USD=6.7852 RMB. The value of China’s international trade in 2010 was about USD 2813 billion with USD 1506 billion in exports and USD 1307 billion in imports. Its trade surplus amounted to USD 199 billion.

EU States are China’s largest trade partner Many estimates for the whole of 2010 concerning China’s trade with different countries and territories show that its largest partners were: in China’s exports: the United States (20%), Hongkong (as one of China’s special administrative regions with its own currency, 12%), Japan (8.3%), the Republic of Korea (4.6%), and Germany (4.3%); in China’s imports: Japan (12.3%), Hongkong (10.1%), the Republic of Korea (9%), the United States (7.7%), Taiwan (6.8%), and Germany (5.5%).

12 /2011

2010

2009

Basic information on the economic situation in China

60 :: polish market ::

Growth 2008=100

2008

Among the non-tariff barriers to access to the Chinese market there have to be mentioned the financial requirements for foreign investors, sums and licences, opaque legal regulations, protective anti-dumping measures, and the rules regulating standardisation, certification, and technical norms; as well as the high costs of canvassing and advertising, and the language and culture-based limitations.

Table 2: China’s trade with Poland (EUR million)

Roadblocks for EU to access the Chinese market EU companies have experienced a decline in business opportunities in China despite firm declarations of the latter on the country’s involvement in further economic reforms. Some aspects of Chinese trade policy still remain complex, ambiguous and difficult to comprehend. Due to its complexity, costs and time-consuming procedures, the China’s Compulsory Certification Scheme

The aggregate value of Foreign Direct Investment (FDI) in China at the end of 2010 amounted to USD 655.5 billion, although the country’s foreign investments amounted only to USD 278.9 billion. China has the world’s largest foreign exchange reserves, totalling over USD 2.6 trillion in 2010. A significant part of China’s reserves is held in US securities. During the first months of the global financial crisis, China has probed the possibility of strengthening the international position of its own currency through inviting some countries to make bilateral settlements in their own currencies, as opposed to through USD. Throughout the past 3 years the Chinese economy has experienced the largest hardship since 2000. The earthquake in Wenchuan in 2008 and in Yushu in 2010 killed over 100 thousand people and caused an economic loss of over USD 120 billion. From the international point of view the largest toll on the economy was taken by the global economic crisis. External demand has decreased, which has caused difficulties for many Chinese companies, particularly in the small and medium-sized enterprises sector. Since the beginning of 2009 about 20 million migrant workers have been forced to leave the municipalities and return to the countryside. They constitute about 15% of total migrant workforce in China. China is the only large economy that has managed to sustain import growths during the crisis. While the world’s trade decreased by 12.9%, China’s imports increased by 2.8%, which made the country the world’s second largest importer. Source: The Ministry of the Economy

Foreign Investment Trade between Poland and China in 2010 According to Chinese data, the mutual exchange in 2010 was as following: :: Exports from Poland to China: USD 1 695.745 million, 13% growth. :: Imports from China to Poland: USD 9 439.398 million, 25% growth :: Total trade turnover: USD 11 135.143 million, 23% growth, yearover-year :: Deficit: USD 7,743.653 million. According to Polish data, the mutual exchange was as following: :: Exports from Poland to China: USD 1 630.75 million, 10.96% growth; :: Imports from China to Poland: USD 16 460.48 million, 18.3% growth; :: Total trade turnover: USD 18 091.23 million, 17.6% growth; :: Deficit: USD 14,829.73 million. Exports to China constitute 1.05% of Polish total exports. On the other hand, imports from China account for 9.48% of total imports to Poland. As regards turnover, the share of China in Poland’s foreign trade amounts to 5.49% (5.3% in 2009). China is the second, after Turkey, export market in Asia, and the biggest partner in imports from Asia, and third in total imports. Trade with Poland constitutes a small percentage of China’s foreign trade. In 2010, Poland’s share in Chinese total trade was as follows (according to Chinese data): :: Exports from Poland to China: 0.12%; :: Imports from China to Poland: 0.60%; :: Trade turnover: 0.37%. Source: http: //shanghai.trade.gov.pl/

(CCC) remains a serious obstacle for foreign exporters. The European Union hopes that China will screen the CCC plan against the compliance assessment (of foreign products against Chinese norms) based on risk. The EU wants China to take more action towards levelling Chinese standards with international regulations and to stop applying the country’s specific standards where international standards are in place. Currently only 47% of Chinese standards comply with the international rules. The EU was happy to hear the Chinese declaration on its willingness to join the GPA and the promise to present a suitable proposal this year in July. It is expected that the Chinese scenario will to a significant degree include public procurement at the central, provincial and lower levels. The EU (including Poland) is still worried by the export obstacles. It is believed that there is no reason for China to resort to such measures in order to reduce export quotes, taxes and VAT refunds which protect the essential sectors of industry and corrupt the access to resources.

The problem in trade relations is that the Chinese trade system remains overcomplicated and contains a lot of non-tariff barriers and bothersome regulations. Poland’s trading relationship with China shows multiple opportunities to be taken (it is evidenced in the data on this year’s trade), although the short fall on the Polish side is clear. Data for eight months of 2011: exports to China reached USD 800 million, and imports from China amounted to as much as USD 8 billion. Therefore, it can be seen that the situation for Poland is far behind the balance the Chinese foreign trade has reached with other countries. Polish exports to China constitutes barely over 1% of our exports in total. Imports from China account for 9.48% of Poland’s total imports. Trade between the two countries is for China only a small part, totalling a fraction of one percent of its international trade. Polish exports and imports are, respectively, 0.12% and 0.60% of China’s exports and imports in general (data for the previous year). ::

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Foreign Investments

Significant resources. Priority directions 9th Congress of Polish Exporters On 24 November 2011 the 9th Congress of Polish Exporters was held. It was organised by the Association of Polish Exporters, under the honorary patronage of Waldemar Pawlak, Deputy Prime Minister and Minister of the Economy, Marek Sawicki, Minister of Agriculture, and speakers of Provincial Assemblies. The objectives of the Congress included discussions on the opportunities and chances of transforming the Polish economy into a pro-export and pro-innovation one, as well as a presentation and tasting of apples from Sandomierz. The account of the Congress is given by Maciej Proliński.

Krystyna Woźniak-Trzosek holding the 2011 Economic Journalist of the Year award

This year’s edition of the Congress of Polish Exporters gathered 200 participants, including over 150 exporters representing all branches of industry regions. Among the honourable guests were Bogdan Borusewicz, speaker of the Senate of the Republic of Poland, Prof. Jerzy Osiatyński, PhD, adviser to the President of the Republic of Poland, and Rafał Baniak, Under-Secretary of State in the Ministry of the Economy.

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”It is worth noting that the current situation on the foreign markets, due to the world economic crisis, requires the consistent implementation of strategies for the Pro-Export development of the Polish economy. Consequently, a coherent Pro-Export policy, as the main driving force of the economy’s development, should be introduced. Poland has substantial opportunities to remain at a slightly higher level of economic development than other countries, since it possesses significant reserves, including especially those concerning professional, scientific, and intellectual potential, as well as young and highly-educated human resources,” emphasised Mieczysław Twaróg, President of the Association of Polish Exporters. ”The strategy of the Pro-Export development of the Polish economy” for selected branches of industry, brands, and foreign markets, was prepared by the Association in 2008, and it specifies the targets and tasks in the area of export growth up to 2015, and of increased Polish participation in the international division of labour. In order to meet the expectations of the real sector of exporters, the 9th Congress of Polish Exporters paid particular attention to the need to implement effective instruments supporting Polish entrepreneurs. The body which plays an important role in exports is the Export Development Council, operating at the Ministry of the Economy, as a forum

for programming, coordinating, and monitoring the policy of the pro-export development of the economy. Other significant bodies are the Export Development Agency, responsible for creating the image of the economy and exports, international marketing, counselling, and information and promotion, and BRE Bank, ensuring the full financial servicing of exports (i.a., credit, insurance, warranties, and counselling in the field of financial services for export transactions.) The Association also advocated the concentration on the promotion of industries on the markets which have the biggest potential for Polish export growth (including the automotive, furniture, electronics, aircraft, and food industries) and the promotion of exports on the priority foreign markets (including the Eastern markets, such as Russia, Ukraine, Kazakhstan, and Belarus). The opportunities and chances for Polish exports, including those on the Eastern markets, were presented by Rafał Baniak. “First of all, acting on behalf of the Minister of the Economy, I’d like to express great respect for you for the economic growth. It is all owing to Polish entrepreneurs, including exporters. Thank you for your activity. The high growth of Polish exports in the years 2000-2010 prove the importance of exports as a key factor in the development of the Polish economy. In those years, Polish exports increased 3.5 times, and in 2010 their value reached EUR 120 billion. This pace constitutes, to a large extent, a result of the modernisation of the structure of Polish exports. There has been a transformation from the traditional model to one substantially more advanced, based on knowledge, and one not neglecting the Eastern markets. This year, the value of Polish exports to Customs Union countries will amount to approximately USD 11 billion,” the Deputy Minister Rafał Baniak said. He added that this accounted for almost 70% of shipments to our Eastern neighbouring countries. “Therefore, we proved

Foreign Investments that Poland is a stable and trustworthy trading partner,” he emphasised. According to the latest projections by the European Commission, in the year 2012 our country will be one of the fastestdeveloping States in the EU. According to Deputy Minister Rafał Baniak, next year’s formation of the Common Economic Space of Russia, Belarus, and Kazakhstan will facilitate the expansion of economic cooperation between Poland and these countries. “We are also glad that the many years of accession negotiations of Russia to the World Trade Organisation have finally been concluded,” the Deputy Minister said. During the panel section of the 9th Congress of Polish Exporters the exporters also took the floor. In their speeches, they focussed on the promotion of exports and systemic solutions, including those directed at overcoming the crisis phenomena in Poland. They also referred to the strategy of pro-export development of the Polish economy, especially opportunities for opening new foreign markets and the activities of exporters on world markets. In the discussions, the following people took part, among others - Andrzej Aleksy, Deputy President of the Board of the International Association of Polish Entrepreneurs in Ukraine, Ludmiła Zafirowa, Director of Inter Business ”91” LTD from Bulgaria, Michał Motylewski, Dean of the Polish Community Corpus of Exporters, Henryk Kobierowski, adviser to the Deputy Prime Minister, Marek Sawicki, Minister of the Economy, and Jerzy Broda, Main Specialist of the Support Instruments Department of the Ministry of the Economy. In the second part of the 9th Congress, the Finale Gala of the Contests “The Outstanding Exporter of the Year 2011” and ”Business Journalist of the Year 2011” took place. During the Gala the Congratulatory Letters, Titles, and Cups of the Association of Polish Exporters were awarded to a few dozen significant Polish exporters (among the hits of our exports, there were Sandomierski Ogrodniczy Rynek Hurtowy S.A., Zakłady Azotowe in TarnówMościce S.A., Kopex S.A. in Katowice, Black Red White S.A. in Biłgoraj, and SuperDrob S.A. Poultry & Meat Plant in Karczew) and 10 outstanding business journalists. Once again, Krystyna Woźniak-Trzosek, President of the Board of ”Polish Market” was among the latter. ::

Winners of the Outstanding Exporter of the Year 2011 award

Winners of the 2011 Economic Journalist of the Year award

Winners of the Outstanding Exporter of the Year 2011 award

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The All-New Rybnik Power Plant EDF is to invest EUR1.8 billion in Poland. The French energy group has earmarked this sum to build a power unit in Rybnik. “The EDF Group announces the construction of a 900 MW supercritical coalfired power plant in the area of Elektrownia Rybnik”, declares the French company in its official release. The plan is to replace the four power units already there with a single, more efficient one. According to EDF’s estimates the works will take 6 years, creating demand for 2 thousand new jobs. “The New Elektrownia Rybnik will be using the most advanced technology and the impact on the environment will be substantially reduced” stressed Gérard Roth, Head of Continental Europe, EDF. Maciej Proliński EDF Group – the third player in the Polish energy sector: EDF Group has been in Poland for 12 years EDF is the largest foreign investor in the energy sector :: Revenues in 2010: €1.2 billion :: 3,650 employees :: Over 3000 MW of installed energy capacity and close to 4000 MW of thermal capacity :: 10% of national electrical energy production – net electrical energy production in 2010: ~15 TWh :: 15% of national production of district heat – the production of heat in 2010:~10 TWh :: The second biggest coal purchaser in Poland – 7 million tonnes of coal annually :: 1 million tonnes of biomass consumed annually :: All the generating companies hold the ISO 14001 certificate

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The investment will be 100% financed by the EDF group and about 50% implemented by Alstom, including Polish subcontractors, with the other 50% probably completed by a contractor from Poland. “This major 1.8-billion euro project consists of replacing the four oldest power units of the Rybnik power plant with a single, more effective one. This will result in increasing energy production by 15% on the Polish market, which is growing by 3% annually. The new unit will also improve the group’s profitability,” declared Gérard Roth. He moves on to say that the construction is set to start in the spring of 2013, and the unit is expected to launch in early 2018. The new unit, co-firing biomass and coal, will boast one of the highest efficiencies

– 45%, which will allow the generation of up to 10% green energy and a 30% reduction in CO2 emissions in relation to traditional coal-fired units. The investment fits in well with the financial plans of EDF for 2011-2015 and fulfils the new investment criteria announced on 29 July 2011. The construction of a supercritical coal-fired plant in Rybnik gives EDF the opportunity to boost the development of its construction projects using state-ofthe-art technologies for power units internationally. For Philippe Castanet, President of EDF Polska, “the new plant will also contribute to satisfying the growth in demand for energy in Poland which amounts at about 3% a year, in the context of the need to shut down the oldest generation units after

2016, following new EU Environmental Directives.” The technology used in the construction of a new power unit in the Rybnik power plant will allow more competitive energy production from local coal, with a simultaneous reduction in the Group’s CO2 emissions by a million tonnes per year, at the same production volume” continues Philippe Castanet. For the residents of Rybnik and local enterprises, the most important is the 2 thousand new jobs required for the construction. The supplier of equipment for the new plant – the boiler and the engine room – will be Alstom. It was as early as this summer that the authorities of Rybnik (population 140,000), where the plant ranks as one of the most important employers, became convinced of the nearing implementation of the project, which had been planned for several years. In July 2011 the councillors decided to exempt investors who fulfil certain criteria from property tax. In accordance with the public assistance principles set out in the Resolution, investments over PLN1 billion completed before the end of 2018 can receive a 9-year tax exemption. The Mayor of Rybnik Adam Fudali explained that it is this part of the programme that concerns the new power unit in Elektrownia Rybnik. “It is an incredible investment,” underlined Adam Fudali, straight after the official announcement of the decision to develop Elektrownia Rybnik. What is important is

that Mayor Fudali is also speaking of a 9-year-long exemption from property tax for the Rybnik power plant. In return, EDF will be repairing local roads. For 12 years, the EDF Group has been the largest investor and foreign energy producer in Poland, with revenues exceeding EUR1 billion and installed energy capacity of 3.1 GW. EDF generates about 10% of the electrical energy consumed in Poland and 15% of district heating. For its purposes in Poland, EDF buys 7 million tonnes of coal every year, which makes it one of the most important clients of Polish mines. EDF is also the Polish leader in the use of biomass for energy. In 2010 it produced 1.3 TWh of electrical energy, burning nearly 900 thousand tonnes of biomass. Last year EDF launched the Kraków based Shared Services Centre. It provides the standardisation and integration of many operational functions, which were previously performed independently in the various companies of the Group (Elektrownia Rybnik, Elektrociepłownia Wybrzeże, Elektrociepłownia Kraków, Zespół Elektrociepłowni Wrocławskich Kogeneracja, Elektrociepłownia Zielona Góra, Toruńska Energetyka Cergia, Przedsiębiorstwo Energetyki Cieplnej w Tarnobrzegu, Everen, Energokrak and EDF Polska). The centre provides services to the companies, inter alia, in the fields of financing, the short-term management of financial

Key dates in EDF Group’s development in Poland: 1998 – the purchase of Elektrociepłownia Kraków 1999 – the establishment of the Energokrak company based in Kraków, the integration of coal and biomass purchasing for the Polish companies of the Group

2001–2002 – the purchase of further energy companies: Elektrociepłownia Wybrzeże in Gdańsk in 2001, and its subsidiary Cergia in Toruń in 2002. Elektrownia Rybnik and Zespół Elektrociepłowni Wrocławskich Kogeneracja in 2001, and Elektrociepłownia Zielona Góra (a subsidiary of Kogeneracja) in 2002.

2004 – the establishment of Everen, based in Rybnik, the integration of the turnover of energy generated by the Polish companies in the Group

2008–2009 – the purchase of minority stakes held by the State Treasury in Elektrociepłownia Wybrzeże in 2008 and Elektrociepłownia Kraków in 2009. 2010 – the establishment of the Kraków based Shared Services Centre for the EDF Group’s companies in Poland, integrating the support functions (engineering, purchase, finance, IT)

2011 – starting the process of merging Elektrociepłownia Kraków, Elektrociepłownia Wybrzeże, and EDF Polska

resources, accounting, controlling, developing IT systems, the purchase of hardware and software, the choice of suppliers, contract management, inventory management, and engineering process management. ::

Jerzy Chachuła, CEO of EL Rybnik, Philippe Castanet, CEO of EDF Polska, Gérard Roth, Head of Continental Europe, EDF, Adam Fudali, Mayor of Rybnik

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Opinion

A Pole is smart before making a mistake Almost two months after the parliamentary elections some of the Polish politicians still dream of Poland becoming another Budapest. Let’s hope that this dream will not come true, especially now, as Hungary is in quite a predicament. Note that one of the credit rating agencies has downgraded Hungary’s credit rating to junk status. With this in mind, it seems that Hungary is yet another country with a downhill trajectory in the crisis.... Adam Szejnfeld Hopefully, Poles, contrary to what one of our right-wing politicians has said, refuse to have another Budapest and say a resolute “No!” to the crisis! The Recent International Buy Nothing Day was peculiarly celebrated in Poland. How? Customers, at odds with global trends, flocked to shops, malls and market places and willingly spent money. Our national shopping enthusiasm is mirrored in the statistics – according to the Central Statistical Office (GUS) retail sales in October rose 11.2% on a year-to-year basis and 4.1% compared with September. To keep this positive outlook our economy needs further development. This is why the Prime Minister in his policy statement talked about the reinforcement of public finances, discipline, deregulation, continuation of pension-scheme reform and changes regarding tax concessions, among other things. Reducing the most striking social disparities is also on the list of planned reforms. These reforms should not provoke a backlash, at least not among those whom these reforms concern. The reforms I am thinking about principally involve miners’ privileges, raising the retirement age for uniformed services and the inclusion of clergy in the pension scheme. There are, however, certain reforms which could cause social doubts, such as raising the pension age and equalising the retirement age for women and men. Another crucial issue will be to make investment projects free from bureaucracy. To ensure better, faster and more efficient development, we need to make some alterations, inter

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alia, in laws on spatial planning, construction and the environment. In his policy speech, Prime Minister Donald Tusk suggested the shortening of the time for getting building permits to 100 days in the case of large-scale projects and to 60 days for smaller ones. The next problem to tackle is the labour market. There is a need for work flexibility and anti-crisis resolutions should be considered to be introduced in the law in force. Equally important and awaited are alterations in the tax law introducing more clarity and transparency in these Acts. The great challenge is taking up legislative initiatives which narrow down the harmfulness of emerging payment gridlocks in the economy. Fighting the grey market is going beyond fostering fair competition, also becoming a step in fighting the effects of the economic crisis. For both entrepreneurs and ordinary people, the Prime Minster’s statement concerning shortening the time of legal proceedings and enforcements of due payments is relevant. To ensure the general good condition of Poland, a pivotal element could be a breakthrough in deregulation. A positive outcome emanates not solely from alterations in legal regulations but also in the work of public administration clerks. That is why forming the new Ministry of Administration and Digitalisation is a positive step in this direction. Even the best regulations, without good and effective employees embracing new technologies, lose their efficacy. Introducing emergent technologies and communication

tools to transmit data shall be equally imperative. Poles do not follow adverse global trends. While the world is facing economic crisis and slowdown, new challenging developments are blossoming in Poland. We have exceptionally ambitious plans, yet fitting our capabilities. If we succeed, chances are that Poland would become a country which is modern and developed despite difficult times. I do hope that Polish persistence will last a long time. “A Pole is smart before making a mistake” – that should be a new national mantra. I also believe that people notice the importance of the implementation of these new regulations rather than irrational disputes among our pseudo-politicians. Then future needs and common sense will win. ::

www.szejnfeld.pl www.kobiecastronazycia.pl

Opinion

Foreign investments in Poland Capital is constantly on the lookout for a space to get anchored in and multiply. In this time of globalisation, state borders are no barrier to investment, though conditions vary from country to country. Some significant factors that influence the scale of trans border investment include safety and risk, as well as return on investment. In the current turbulent times, it is more and more difficult to find a safe haven, with periods of unrest increasingly contributing to the losses incurred by some and the profits gained by others. Prof. Małgorzata Zaleska

The author is a Member of the Board of the National Bank of Poland, a Professor at the Department of Banking of the Warsaw School of Economics, and a Member of the Presidium of The Committee on Financial Sciences of the Polish Academy of Sciences.

Against this background, foreign investments in Poland have been both relatively safe and profitable. They are significant, exceeding 100% of Polish GDP. At the same time, foreign investments by Polish enterprises are much smaller, constituting less than 40% of GDP. It follows from the above that many more foreign enterprises invest in Poland than the other way round. From the point of view of investors and the country involved, what is important is the nature of the investment. The main components making up foreign investments in Poland are direct investments (primarily in companies), and portfolio investments (mainly in the securities of the Polish Government). Direct investments are more stable, i.e. it is more difficult to withdraw from them than from portfolio investments. In the latter case, it is enough to make an order and the employed capital may in the twinkling of an eye return to the source country or be transferred to another. Analysing foreign investments in Poland, we should notice that the share of portfolio investments in relation to direct investments is significant. Portfolio investments constitute about two thirds of direct investments. The biggest direct investments in Poland come from EU countries (nearly EUR130 billion by the end of 2010), including the Netherlands (nearly EUR27 billion), Germany (more than EUR20 billion), and France (nearly EUR19 billion). Enterprises from these countries also make significant profits on their investments in Poland. In 2010 this was over EUR2.2 billion for the Netherlands, more than EUR1.7

billion for Germany, and over EUR1 billion for France. The reinvestment by these enterprises of their significant revenue generated in Poland is also important. For example, enterprises from Germany reinvested in Poland 45% of their profits for 2010, and those from the Netherlands 27%, while the EU average was 34%. In this context, it is interesting to take a look at the behaviour of investors coming from tax havens, who reinvested 96% of their profits for 2010 in Poland. The return on investment from tax havens was also impressive – nearly 25% for 2010, while the average for investments from EU Member States reached 7.4%. As for countries which employed at least EUR1 billion in Poland, a higher-than-average return on investment was achieved by investments from Sweden (11.2%), Denmark (9.0%), and Belgium (8.9%). The high return on investment in the case of tax havens is somewhat understandable, as this group also includes investments from Polish entities, carried out through companies located in the said tax havens. The investments of this group of entities, however, account for less than 1% of all foreign investments in Poland, so they are far from significant. It is also worth stressing that the return on Polish direct investment abroad was 1.5% in 2010, being much lower than the return on foreign investment in Poland. The latter should also be compared to the returns achieved by Polish enterprises. The said return on investment was on average 10% in 2010, ranging from 5% (in the transport sector) to 15% (in the construction industry). The

results achieved by foreign investors in Poland may therefore be considered satisfactory, though generally not record breaking. The conclusion is that foreign investments in Poland in 2010, in the context of other forms of involvement, were profitable. Foreign direct investors achieved over EUR11 billion in profits, which were about EUR2 billion lower than in the record year 2008. Moreover, foreign direct investments yield measurable results for the Polish economy. The size of the investment is not the only thing that matters, but also the transfer of new organisational culture, technologies, and the creation of competitive pressure on Polish-funded entities. At the same time, it should be emphasised that profitable enterprises funded by foreign capital pay Polish taxes and create jobs in Poland. The future mode of development of foreign investments in Poland will mainly be a function of the general situation and the stability of the Polish economy and the global economic conditions. The anticipated inhibition in economic growth, also in Poland, may contribute to lower profits by foreign direct investors in Poland, and also influence the level of such investments. ::

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Opinion

Polish Insurance Market

– Liability Insurance, Stronger but More Expensive? The Polish insurance market is incessantly approaching the Western European market, but it still does not yet mirror trends existing in the old Europe. Until 11 September 2001 Polish prices of corporate insurance were higher than in Western Europe. Upon attack on WTC and the series of natural disasters that skipped Poland at that time, the global insurance market was forced to increase insurance prices, and European rates outran significantly Polish insurance rates which, after 2000, experienced a progressive decrease in price, characteristic of the soft market, for a few years. Alexander Konopka

The author is President of the Management Board of Gras Savoye Polska

The change occurred only when prices reached minimum profitability and, in addition, when Poland was afflicted by its own series of natural disasters – floods, hail storms and harsh winters – which was followed by a general increase in the loss ratio. In the period of natural disasters Polish insurers were unable to keep pace with the declaration and payment of claims. The increase in the loss ratio triggered losses for insurers and, as a consequence, a rise in prices that almost reached several hundred percent in the most risk exposed economic sectors. Insurers were forced to improve unsatisfactory financial results and both raised prices and approached risk more selectively. Insurers started to make more detailed analyses while considering customers’ applications, and rejected a higher proportion than ever before. The reasons usually were the same – too high a risk exposure due to the nature of activity carried on by the customer or location and/ or too high a loss ratio. A phenomenon called portfolio cleaning occurred in the insurance companies. In most cases, the decision was not dictated by the financial market, but was often imposed by an inability to find insurance coverage on reinsurance markets. In 2011 we have been observing a significant increase of rates in property damage insurance and, in this regard, the Polish market has probably reached optimal level and insurers have recovered the losses that were the outcome of the heightened

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level of loss ratio. Next year, however, we should prepare for an increase in rates in liability insurance, particularly in the motor insurance sector. This increase stems firstly from changes within Polish legislation and, secondly, from a continuing increase in insurance awareness. With regard to the insurance motor liability, for instance, the number and value of reported personal losses is constantly growing. Between 2006 and 2009 the value of paid personal losses for motor vehicle insurance increased by PLN 400 million. Those changes were imposed by legal regulations. Some amendments were implemented through legislation, inter alia, in a Civil Code institution called “redress” which was brought into existence (Article 446, paragraph 4), on the basis of which the family of the victim of an accident may solicit for cash compensation for suffered damage. Another material legal change consisted of the implementation of the opportunity to submit a class action that would make it easier for citizens to assert their rights, including claims for personal losses. We can also observe the phenomenon on renegotiations of already granted personal compensations. Persons who have already obtained the right to a pension are more frequently applying for an increase of guaranteed benefits proving more extensive health consequences of a loss event than initially stated. The transposition of EU regulation is another reason for an increase in prices. In 2012 the sum insured in

motor liability will be increased in connection with the adoption of the EU 5th Motor Directive, which will be the last step leading to alignment of Polish regulations to European directives within obligatory insurance. In the light of the transposition of this directive, in June 2011, the sum insured increased to EUR 5 million for personal losses and EUR 1 million for economic losses. Such an increase may seem spectacular, but there is still a gap between us and Western European countries, where the compulsory sums insured are considerably higher than those imposed by EU legislation, and the insured themselves are often interested in obtaining higher sums insured, even to the extent of unlimited sums insured in the case of personal losses. Another reason for increase of the prices in liability insurance arises from the fact that Poland, at present, still has one of the lowest rates in Europe, while still chasing the old Europe. An increase in rates should be somewhat levelled by an increased sale of liability insurance. Luckily, growth of insurance awareness is not only manifested by claims declaration but also by insurance products’ sales’ increase, which is particularly noticeable in liability insurance. Admittedly, liability insurance is compulsory for vehicle owners, and changes should not be expected in this area but, within products such as liability in private life or Directors and Officers liability insurance, growing interest is observed. ::

Opinion

Keeping incentives up with the times In the age of the Internet and social media, and the rapid development of new technologies in Poland, we tend to depart from the standard employee benefits package. Those employers, who care not only for a loyal and well-motivated staff, but also about cost efficiency, opt for flexible and diversified solutions, which are tailored to the individual needs of various employee groups, including the youngest generation, who is conversant with the latest technological trends. Adam Kompowski

The author is President of the Board of Bonus Systems Polska S.A., which operates, inter alia, incentive systems based on pre-paid cards and gift cards

Flexible fringe benefits which comprise pre-paid card programmes provide a very effective incentive that allows individual employees to decide, at their own discretion, on what, how much and where they should spend their money. Related discounts and tax benefits make the pre-paid cards extremely popular. This solution considerably simplifies and automates the corporate cash transfer system, thereby allowing the corporate bodies to save time and resources, as well as to earn the title of “modern employers.”

Dynamic market development The programmes based on pre-paid cards, e.g. electronic gift cards, are a wonderful way to address the needs of the young generation, while the “antiquarian” solutions, such as paper gift cards, are becoming obsolete, being replaced by innovative benefit forms that give employees the freedom of choice. Development on this market is being fostered by the current tax law, which favours employees and companies, attractive discount clubs, and the huge, yet still expanding, Visa and MasterCard network, which now comprises over 250 thousand points of sale, greatly outnumbering the stores which accept paper cards. The pre-paid cards market in Poland has displayed rapid growth. At the end of June 2011, the number of active Visa pre-paid cards exceeded 970 thousand. A year before, it was 810 thousand, and two years earlier just over 560 thousand. These electronic cards now account for approximately 80% of sales in Bonus Systems,

while paper cards for as little as 20%. It is estimated that the pre-paid cards market will continue to grow at a rate of 10-15% per annum. Our share in the B2B segment of the pre-paid cards market is around 60%. We hope that the coming years will generate Bonus Systems growth of 20-25% per annum, both in terms of the number of cards issued, and in terms of turnover.

Diversified use Pre-paid cards, offering a multicharge opportunity, are mainly used in employee incentive and bonus programmes and in loyalty programmes, as well as to pay financial awards in the bonus system, or to meet the costs of business trips. They are also used by companies and institutions to transfer financial resources, e.g. to pay fringe benefits, such as social allowances, scholarships, seasonal employee remuneration, and remuneration paid to employees who do not hold a bank account. They are enjoying growing popularity, as they let you cut the costs of financial services by eliminating cash payments, e.g. in transferring remuneration or business trip benefits. They allow you to save time and reduce taxes – gift cards, provided as a reward to your employee, are exempt from income tax, contrary to coupons or in-kind prizes. Individual clients use pre-paid cards as pocket money paid to teenagers, as a safe online shopping solution, or as a convenient mode of providing a certain amount of money as a gift, with the opportunity to easily re-charge the card by transfer or cash.

Prospects for 2012 New prospects are emerging, both for our company and for the entire market. We project a further growth in services. In Bonus Systems Polska, we are constantly focused on innovation and dedicated services provided to companies and retail clients. In the nearest future, i.e. the 1st quarter of 2012, we are planning to launch a brand new product on the Polish market. This will be a discretionary and dedicated to HR departments “cafeteria programme,” which will allow our clients to implement a far more flexible employee benefits system. This solution will be based on a user-friendly online interface, ensuring the desired flexibility to choose benefits and to spend money allocated for this purpose, thereby also unburdening personnel departments. As part of “the cafeteria programme,” we will provide a wide array of attractive benefits, combined with an opportunity to diversify the company’s current package and to control the budget in an effective way. Your employees will be free to choose, from among different pre-paid cards, such as the bonus+ card, the lunch+ card, the holiday+ card, and the culture+ card, as well as other gift cards and fringe benefits. ::

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Opinion

A time of stabilisation The passing year 2011 has not abounded in events of historic, fundamental significance to the development of the insurance market in Poland. Certainly, though, it cannot be said that not much happened on it. The fact that changes on the market are of a cosmetic and evolutionary nature demonstrates the stability of the market. And stability is, after all, of key significance in the context of insurance. Piotr Szlenk, PhD

The author is President of the Board of the Polish Society of Actuaries (PSA)

From the point of view of consumers the most important event in 2011 was definitely the lifting of so-called double Third Party Insurance as the Sejm has amended the Act on Compulsory Insurance, the Insurance Guarantee Fund and the Polish Motor Insurers’ Bureau, crowning three years of work. Also modified was the method of operation of the rule arising from the so-called prolongation clause in the compulsory Third Party Insurance. This occurred due to strong pressure to level the effects of so-called double insurance on the consumer’s side. This is why the possibility of double Third Party Insurance in relation to the insurance of the owners of motor vehicles, farmers and farm buildings has been statutorily liquidated. Another event which was intended to support the position of a consumer was the statement of the Court of Justice of the European Union. It was decided that from 21 December 2012 it will not be possible to differentiate insurance premiums depending on the gender of the clients. Unfortunately, the decision of the CJEU violates the principle, universal in insurance for hundreds of years, and by all means logical, that risk needs to be calculated on the basis of all information significant from the point of view of insurance. The decision of the Court met with opposition from the whole European insurance community. Contrary to the justification of the ruling of the CJEU, differentiating insurance premiums depending on gender is not an act of discrimination, only an expression of the care of the insurers for the best possible risk assessment, which allows them to offer products customised in the best way possible to the needs of the clients. For the insurers only differentiate the premiums when actuarial calculations irrefutably prove the dependence of insurance-related risks incident to gender or other traits.

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The ruling of the CJEU deprives clients of the possibility of acquiring insurance products for which the risk, and as a result also the price, are customised exactly according to the needs of the client. A glaring example here is life insurance, in the case of which statistics explicitly indicate a lower mortality rate for women than that of men of almost every age. The ruling of the CJEU in that latter case will introduce a lot of confusion into the legislation currently in force. Although it is fairly easy to imagine the enforcement of the prohibition of differentiating insurance premiums depending on gender, the methodology of creating life insurance reserves has not been considered. The latter should be created individually, with consideration of all factors which influence the insurance risk for a client. Such a situation creates inconsistency between the assumptions for the calculation of premiums and the assumptions for the calculation of reserves. This in turn will have an influence on the financial policy of insurance companies, as income cannot, as a rule, be commensurate with costs with an unfavourable distribution of gender among the insured clients. From the point of view of the insurance market in 2011, the continuing works on the conforming of Polish law, including insurance law, with the requirements of the Solvency II Directive, were also highly important. This is undoubtedly one of the largest legislation projects of the recent years in the whole European Union. This directive, except for the introduction of a new system of solvency for insurance companies and reinsurance companies, also comprises the codification of the current functioning of as many as 13 insurance directives. It contains many entries which have already been introduced to Polish law. Some of them however need to be implemented. This in fact means that the Act on insurance needs to be written anew.

Furthermore, as many as 100 alterations to other national Acts and ordinances, i.a. the Acts on accounting, on insurance mediation, and on the supervision of the financial market, should be effected. The new regulations should enter into force as of 1 January 2014 (recently this was moved from 1 January 2013). Therefore it should be expected that the year 2012 will especially be a period of intensified work in this field. When summarising 2011, it is impossible not to mention the initiative of the actuarial community, which particularly in 2011 acquired real shape. It postulates the forming of the Actuarial Chamber as the institution for industry self-regulation. The establishment of the Chamber is meant to form a response to the increasingly heavy demands made on the actuarial community by the entities operating on the Polish financial market, as well as by the international actuarial community. This is where one should mention such areas of activity as actuarial standards, common educational requirements compliant with the requirements of the international actuarial associations, and finally the requirements of the Solvency II Directive and regulations concerning the payment of pensions from Open Pension Funds (and in a wider sense, the rules for the calculation of the liabilities of the State for future pension benefits). The Chamber will safeguard the public interest by taking actions which serve the proper practice of the profession by the actuaries. It will ensure the adopting of uniform and cohesive standards for practising the profession, guaranteeing the security of the functioning of the financial sector in Poland. As can be seen, the passing year, did not abound in conspicuous events but the ones which took place were mainly related to the stable evolution of this sector. ::

Opinion

The economic slowdown as an opportunity for Polish private medicine The private medical services market is relatively less susceptible to market fluctuations. It quotes increases even during an economic slowdown. And even if it does get smaller during a serious crisis, it usually contract at a slower pace than other sectors. On the other hand during the times of economic recovery, the market grows more dynamically than the wider economy. Joanna Szyman

The author is President of the Board, Scanmed Multimedis SA

This feature is well depicted by the changes in the value of the Polish private health care market during the recent 2 years. In 2010, the value of the market amounted to nearly PLN 29 billion, which represented a growth rate of around 4% when compared to 2009. This growth, which was substantially lower than in the previous years, was the postponed effect of the financial crisis of 2008-2009. However, in 2011 the market grew by 7%, that is more than the wider economy. Due to the wide diversification of the segment, from expenditure on drugs and equipment, to health insurance, treatment, diagnostics and rehabilitation, the general economic situation has a relatively weaker impact on the medical services market. On the one hand, the unsatisfactory access to the public health service and the comparatively low quality of these services are conducive to the development of the private medical sector. On the other, however, long waiting periods for the specialist services induce people to purchase commercial services or insurance packages facilitating access to these kinds of services. Other factors include significant demographic changes, which exert an influence on the development of the medical sector. These mainly include population ageing, and thus the increasing demand for medical care for more and more seniors, and in fact healthcare is particularly intensive and complex in these age groups. The double-digit growth is quite systematically measured by the value of health insurance and medical packages, commonly known as subscriptions. Although their share in the total expenditure on private medical services is still relatively low (it accounts for 6%) it is getting bigger quite rapidly.

This is so mainly owing to employers, who eagerly use medical packages as a way to motivate employees and attracte new, well-qualified human resources. The job market has shown that offering such packages to specialists is already standard practice, since 1.5 million Poles used them in 2010. It is also worth noting that they are being gradually expanded, and they do not only cover basic services, but they are also becoming more and more comprehensive. Regardless of factors stabilising the private medical services market, we are facing broader issues. Recent research conducted by Deloitte and published in the “2011 Survey of Health Care Consumers” report indicate that expenditure on medical treatment is becoming a more and more palpable burden for households. It is due to the increasing costs of healthcare on the one hand, and on the other, to the uncertainty concerning the development of the economic situation in the most immediate future, and the stability of employment. Consumers have to limit their expenditure in order to finance treatment, often being forced to make difficult sacrifices. That is why, among other things, the reforms and changes in the publicly-funded health care system are indispensable. The care itself should definitely be more effective and accessible, especially to those in need, who do not have the appropriate means at their disposal, which would enable them to use private medical services. The Polish healthcare system may be significantly influenced by the changes in the current law at the level of laws or executive acts, as well as implementation of optimisation within the already-existing system. The basic issues here are the improvement in the effectiveness of the healthcare system

management, effective drug policy, and the development and dissemination of additional health insurance. The next year is to bring the continuation of expanding the medical infrastructure, which will also be away from the biggest urban agglomerations. We can also see greater openness of medical companies in cooperating with insurers. The medical health service provider appears now, not only as the provider of services as such, but it also takes on the role of a kind of an insurance intermediary. Facing limited public financing and increasing pressure on limiting main costs, the transformation of the private sector into a private health-insurance-based model, and, even more importantly, the introduction of competition between the public fund and private funds, currently constitute healthcare’s biggest challenges. Polish medical companies strive to reap potential profits from a relatively new channel of sales, that is the medical tourism, and dentistry and plastic surgery, as well as sanatorium procedures, are most frequently chosen from among the services. The value of this market is estimated at PLN 800 million. This infrastructure, which is getting better, more advanced, with intensive promotional efforts and the incorporation of the directive on treatment within the area of the EU (“Patients’ Rights in Cross-Border Healthcare”) which consistently makes medical centres in Poland more and more attractive. On account of the existing big differences in prices between Poland and Germany, it may turn out that the economic crisis will further strengthen the tendency to purchase services in Poland, where the prices of medical care are significantly lower. Paradoxically, the Polish private medical services market may benefit from the global crisis. :: 12 /2011 :: polish market :: 71

Law&Taxes

How to protect a trademark within EU? A community trademark (CTM) may be obtained by way of registration in the Office for Harmonization in the Internal Market (OIHM) in the city of Alicante, Spain. The application may be filed directly in Alicante or in the central office for intellectual property protection in a particular member country of the European Union or in the Intellectual Property Office of the countries of Benelux. From 1 October, 2004, protection within the whole EU territory may also be granted through the international registration system due to joining the Madrid Protocol system for international trademark protection by the European Community. On this, the international trademark registration system has been combined with the community trademark system. Monika Kowalczyk trademark protection is granted for ten years and is renewable for further 10-year periods. A trademark registration in the office of Alicante offers substantial cost efficiency compared to the costs which one shall incur in case of filing application for a national registration. Such costs amount to EUR 1050 or EUR 900 in case of on-line application (for 3 classes in the classification of goods). An entrepreneur intending to check where a trademark similar to the one he owns has already been registered in any of the EU countries may buy optional national search reports for the price of EUR 132. A trademark registration fee has been cancelled.

CTM owner Each natural person or legal entity, including public law entities, has a right to own a CTM. The trademark protection may also be obtained by entities, which are not EU members. Generally, there are no provisions, under which any person shall be obliged to have a duly authorized representative in proceedings before the Office. Natural persons or legal entities, however, which do not have permanent place of residence, a main place of business or a real industrial or commercial enterprise in EC are obliged to be duly represented in all proceedings, except filing application for a community trademark. Natural persons or legal entities with permanent place of residence, a main place of business or a real industrial or commercial enterprise on the territory of the EC may be represented in proceedings before the office by their employees.

The same effect within entire EU territory A CTM may be registered, assigned or otherwise waived. The owner’s rights to a trademark may also expire or be annulled by virtue

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of a decision of the office, and as a consequence, the use of a trademark may be prohibited exclusively within entire EC territory. One of the strong advantages of CTM is, among others, the ability to maintain a registered extension of protection within entire EU territory by using a trademark within the territory of one country only. In the case when obtaining protection of a particular trademark as a CTM is not possible, one may apply for a trademark protection in those EU countries, on the territory of which there are no limitation in this respect, on the basis of a conversion, i. e. by way of transformation of a CTM application into a national trademark registration, with the same date of filing the application.

A common legal system The CTM applications are submitted by filing an official form. The registration procedure before the office is conducted in one language (from among 27 languages used in the EU). The applicant is simultaneously obliged to determine another language from among other office procedural languages, which are, in particular, English, French, German, Spanish and Italian, if needed for possible proceedings before the office. The application is examined by the office in terms of procedural correctness on a first place. This stage covers, above all, a verification of the list of goods and services as well as payment of a relevant fee. The next stage includes the examination of the application’s content, in particular, to find whether there are any prerequisites for rejecting the application for registration. For example, trademarks with no distinctive character as well as trademarks comprising exclusively designations or indications used in trading for marking the type, quality, quantity, purpose,

value, place of origin, date of production of goods or performance of services or other characteristics of the goods and services are not subject to registration. In the case when a trademark may not be registered in regard of certain or all goods or services included into the CTM application, the application for these goods or services is rejected. Each natural person or legal entity as well as each group or authority acting in the name of manufacturers, producers, contractors, entrepreneurs or consumers may, after publishing the application for CTM registration, submit to the office written commentary on the reasons for rejecting the trademark registration application. Within three months from the date of publication, the appeal on CTM registration may be lodged by the owners of similar trademarks. The owner of the previous trademark, who lodged an appeal should prove that his trademark has been used on the territory of the EU towards the goods and services included in the registration within five years preceding the publication of the application, if demanded by the applicant. Each decision made by the experts, Appeal Divisions, Trademark Administration Divisions as well as Invalidation Division may be appealed against by each party of the proceedings within two months from the date of delivery of the decision to which the appeal refers as well as submit an appeal to the Chamber of Appeal. The appeals against the Chamber of Appeal’s decisions may be lodged with the EU Court of Justice based in Luxembourg within two months from the date of delivery of the Chamber’s decision. ::

Monika Kowalczyk, Patent attorney, Chałas & Partners Law Firm

Opening of the event: (R) Chancellor Eugeniusz Budniok, Governor of Śląskie Province Zygmunt Łukaszczyk, MEP Małgorzata Handzlik and Vice-Governor of Śląskie Province Mariusz Kleszczewski surrounded by Santa Clauses

Children making Christmas decorations

The 8th edition of BCc for Children For 15 years the members of the Katowice Lodge of Business Centre Club (BCC) have been promoting the idea of corporate social responsibility. On the initiative of its Chancellor, Eugeniusz Budniok, the organisation of the event known as “BCC for Children” has become a permanent element in the schedule of the Lodge’s activities. Thanks to the engagement of our partners we can invite not only young residents from care and educational facilities, but also those from community and integration centres, including disabled children. Katarzyna B. Fulbiszewska Eugeniusz Budniok: “For a dozen-or-so years I have been inviting Silesian entrepreneurs to support social assistance, to show in practice what responsibility and social solidarity are about, and to develop strong relationships between business and local community”. The previous editions of “BCC for Children” were received very well by the regional community. The generosity of donors helped in carrying out renovations, supplementing and replacing basic appliances, providing clothes, toys, furniture, sports equipment, etc. Since January 2004, the value of all material and financial donations given to the residents and their guardians has exceeded PLN800,000. Eugeniusz Budniok: “Our efforts have been appreciated by the governer of Śląskie province, who last year presented us with an award in the contest “Śląskie na 5” (“Silesia gets an A”)

in the charity category. The Lodge was honoured for “the consistent implementation of projects in the field of corporate social responsibility in Śląskie province”. The final of the 8th edition of “BCC for Children” was held on 9 December in the Expo Silesia Trade and Exhibition Centre in Sosnowiec. Among the organisers were the Mayors of Sosnowiec, Dąbrowa Górnicza, Będzin, Gliwice, Chorzów, and Ruda Śląska; the Board of the Expo Silesia Trade and Exhibition Centre in Sosnowiec; Province Military Staff and the Province Police Department in Katowice. The event took place under the honorary auspices of Governor of Śląskie province, Zygmunt Łukaszczyk, and Chairman of Śląskie province, Adam Matusiewicz. In store for children were numerous educational attractions. Thanks to the involvement of the Internal Military Service (WSW),

a mini-field was set up, featuring specialist equipment and a military transporter. The police amusement park enjoyed much popularity, just as did the activities for children, run by a team from WOPR (the Aquatic Volunteer Emergency Corps). This year, the organisers were joined by the Sled Dog Association under the leadership of Grzegorz Burzyński (European Champion in sled dog racing in winter conditions, a member of the Polish National Team) and the Knights Brotherhood from Będzin. During the event, an art contest was adjudicated, “Who will I be in 20 years?”, announced by the Upper Silesian Aviation Group S.A., Pyrzowice International Airport. The awar-winning, works will be displayed at a special exhibition at the Airport. The guests could also enjoy musical performances, and a demonstration of Irish dance, as well as contests and educational games. Thanks to the help of several dozen Silesian companies, 1600 children from 55 facilities invited to the event received Christmas packages with sweets, toys, school equipment, and books. This year’s edition – the 8th - was the largest of all organised so far. Eugeniusz Budniok: “I believe that our joint efforts have once again allowed us to take the children away from their humdrum everyday reality. They experience a lot of hardships any way, having to grow up faster and deal with very adult problems.” A photo report from the event is available on http:// www.exposilesia.pl/bcc/pl/

12 /2011 :: polish market :: 73

Photos by: Grzegorz Wolniak

18th Airborne Battalion from Bielsko-Biała

the best of polish market

The Best of Polish Market Part 2

This is another in the series of presentations of the best Polish managers selected by their colleagues. Each voter was to indicate those in the management sector who, in his or her opinion, are the most versatile and worth following, and would do equally well in any industry.

In this issue we present ten managers from the list of the TOP 50 – The Best of Polish Market. It is not about making some kind of ranking here, but rather showing the fifty best of the best, who are there on our market, contributing their knowledge, skills, and experience, which allow them to brilliantly manage their companies, develop them, make them more efficient, introduce them to new markets, list them on the stock exchange, expand their share of the market, take over other companies, build strong brands, and care about the future of these entities. We start with the personalities presented in our magazine this year.

Jacek Glinka, President of the Board, Polpharma He began his professional career with Deloitte & Touche in the strategic consulting department; then he was VicePresident of the strategic consulting company A.T. Kearney. In 2004-2006 he was President of the Board of Polpharma SA and Polpharma Biuro Handlowe Sp. z o. o. He is the President of the Supervisory Board of Lubelskie Zakłady Farmaceutyczne POLFA S.A., AOA Akrikhin, Vice-President of Herbapol-Lublin S.A. and Zakłady Tłuszczowe Kruszwica S.A. From 2006 he was Member of the Supervisory Board of ZF Polpharma S.A., and in 2009 he returned to the position of President of the Board of Polpharma SA. In 2010 he was also appointed President of Biuro Handlowe Polpharma Sp. z o. o.

Mirosław Godlewski, President of the Board of Netia Before engaging with Netia he was President of the Board of Opoczno SA, a leading European ceramic tiles manufacturer (from January 2006). In 20032005 he was President of the Board of Dec Sp. z o.o. (GATX subsidiary company). In 1999-2003 he was employed

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by Pepsi-Cola General Bottlers Poland Sp. z o. o. as Director General (20002003) and Sales Director (1999-2000). Between 1993 and 1999 he worked for PepsiCo Trading Sp. z o. o., holding various management positions. Between 1991 and 1993 he was Retail Audit Manager for Polskie Biuro Badań Marketingowych Sp. z o. o. Mr Godlewski graduated from the Warsaw University of Technology, obtaining the title of MSc Eng. in industrial management. He is also an MBA holder, which he obtained at Ashridge Management College, UK.

Zbigniew Jagiełło, President of the Board of PKO BP SA He graduated from the Faculty of Computer Science and Management at the Wrocław University of Technology and completed an Executive MBA course run by the Gdańsk Foundation for Management Development, the University of Gdańsk, and the Rotterdam School of Management, Erasmus University. Since 1995 his professional pursuits have been linked to the Polish financial market. He began his career in Pioneer Pierwsze Polskie Towarzystwo Funduszy Inwestycyjnych S.A., managing the regional bureau in Wrocław. By the end of 1996 he moved to Warsaw, where, first as the Sales and Distribution Director, and then from 1998 as the Vice-President of the Board, he co-created PKO/Credit Suisse TFI S.A. Within four years he had created within the PKO BP Bank the first Polish banking network for distributing investment funds. In July 2000 he took the position of President of the Board of Pekao/Alliance Towarzystwo Funduszy Inwestycyjnych S.A., which, in mid-2001, as a result of a merger with Pioneer Pierwsze Polskie Towarzystwo

Funduszy Inwestycyjnych S.A, finally changed its name to Pioneer Pekao Towarzystwo Funduszy Inwestycyjnych S.A. At the same time, from 2005 he was President of the Board of Pioneer Pekao Investment Management S.A. and President of the Supervisory Board of Pekao Financial Services Sp. z o.o. In the global structure of Pioneer Investments he was Head of Distribution for Central and Eastern Europe, supervising distribution, marketing, relations with institutional clients, and product development.

Andrzej Klesyk, President of the Board of PZU SA From May 2003 Partner and Managing Director of the Boston Consulting Group in Warsaw, where he cooperated with PZU in implementing insurance projects. Founder and head of Inteligo, a pioneer Internet banking project jointly with Bankgesellschaft Berlin Polska. Before that, he headed a team that created Handlobank, the retail branch of Bank Handlowy w Warszawie SA. In 1989-1990 he worked in the Ministry of Ownership Transformation. In 1991 he moved to the US, where he worked at Kidder, Peabody, and Coopers & Lybrand in New York. In the years 19932000 he was employed in the London branch of McKinsey & Co. He graduated in economics from the Catholic University of Lublin (Faculty of Social Sciences). He was one of the first Poles to complete the two-year Harvard Business School in the US, obtaining an MBA.

Dariusz Mańko, President of the Board and DirectorGeneral, Grupa Kęty He graduated from the Agricultural Academy in Poznań (now Poznań University of Life Sciences), in postgraduate studies in enterprise financial management at the University of Economics in Katowice, and numerous specialist training courses both home and abroad in the fields of management, marketing, and economics. Between 1993 and 1996 he worked in SAPA POLAND, which

the best of polish market belonged to the Swedish concern SAPA, first as a Sales Representative, and then as Marketing and Development Director. Since 1996 his professional life has been linked with Kęty. Between 1996 and 1999 he was Director of the Metal Stamping Plant of ZML Kęty SA. From 1999 to 2005 he was President of the Board and Director-General of Aluprof SA. Between 2000 and 2005 he was also Member of the Board of Grupa Kęty SA. Since 3 August 2005 he has been President of the Board.

Paweł Olechnowicz, President of the Board, DirectorGeneral, Lotos He graduated from the Faculty of Foundry Engineering at the AGH University of Science and Technology in Kraków, completed postgraduate studies at the Gdańsk University of Technology in organisation, economics, and management of industry, and the MBA INSEAD, Fontainebleau, as well as many specialist training courses in management at home and abroad. In 1977 he began his professional career in Zakłady Mechaniczne “Zamech” Elbląg (since 1990 ABB Zamech Sp. z o. o.). Between 1990 and 1996 he was President of the Board and Director-General of ABB Zamech Ltd. The next two years he worked at the head office of ABB Ltd. in Zurich as Vice-President for Central and Eastern Europe. Between 1999 and 2000 he was Vice-President and Deputy Director-General of ZML Kęty S.A. From 2001 he ran his own consulting company Paweł Olechnowicz – Consulting. Since 12 March 2002 he has been President of the Board of Grupa Lotos.

Zbigniew Rapciak, President of the Board of Polskie LNG SA A graduate of the Kraków University of Economics. He completed postgraduate studies in management and finance at the Warsaw School of Economics. He also completed specialist internships in the field of management in Milan.

Until March 2009 he was Undersecretary of State at the Ministry of Infrastructure. In the years 20022008 he worked as head of the Kraków Branch of the General Directorate for National Roads and Motorways. Previously he was Vice-President of the Agency for Motorway Construction and Operation in Warsaw and Director of the South-Eastern Branch of the General Directorate for National Roads in Kraków.

Wojciech Sobieraj, President of the Board of Alior Bank Wojciech Sobieraj from 2002 to 2006 was Vice-President of the Board of Bank BPH SA, where he was responsible for the retail banking division. During his time at Bank BPH SA he also performed the functions of President of the Supervisory Boards of Górnośląski Bank Gospodarczy SA and BPH Bank Hipoteczny SA. Before that, in the years 1994-2002, he was an employee, manager, and partner of the Boston Consulting Group (BCG) in Boston, London, and Warsaw. He was one of the founders of the BCG office in Warsaw, one of its directors and the first Polepartner of BCG. He was the head of the financial services division of BCG in Eastern Europe, and an expert in acquisitions and mergers, as well as the banking payment market. In the years 1991-1994 Wojciech Sobieraj was the owner of Central European Financial Group (an analysis of the capital markets in Eastern Europe), he became a licensed stockbroker on Wall Street and worked as an assistant in the department of finance and operations at the New York University.

Cezary Stypułkowski, President of the Board and Director General of BRE Bank He studied at the University of Warsaw, where he obtained the title of a Doctor of Legal Sciences. In the late 1980s, as a Fulbright Scholar, he studied at the Business School of the Columbia

University in New York. For thirteen years he was President of the Board of Bank Handlowy S.A. In that period, along with his team, he transformed this institution into a leader of corporate and investment banking in Poland, and took the bank successfully public. In 2003 he was appointed President of the Board of Grupa PZU. Along with his co-workers he effectively managed the organisation for three years, tripling its net turnover and appraisal. In 2006 he became the Managing Director of the investment bank J.P. Morgan for Central and Eastern Europe. He was also a member of the International Advisory Council of the Board of Deutsche Bank, the INSEAD International Advisory Council, member of the Council of the Institute of International Finance in Washington, and member of Geneva Association.

Piotr Śliwicki, Founder of Grupa Ergo Hestia and President of the Boards of two companies: Sopockie Towarzystwo Ubezpieczeń Ergo Hestia SA (second on the property insurance market) and Sopockie Towarzystwo Ubezpieczeń na Życie Ergo Hestia SA He sits on the Council of Good Practices of the Polish Chamber of Insurance as its Chairman. For establishing the second-largest insurance group, Piotr Śliwicki was honoured with the titles of “Man of the Decade in Polish Insurance,” and “Man of the Last Fifteen Years in Polish Insurance.” For his contribution to the growth of the Polish insurance market, he received the Gold Cross of Merit and the Officer’s Cross of the Order of Polonia Restituta. He has been the only Pole in history to be invited to the elite Rendez-Vous de Septembre Association in Monte Carlo – the organiser of the global forum of the insurance-reinsurance industry. He has been Member of the Board of the Polish German Chamber of Industry and Commerce since 2007, and in 2010 he was elected its President. ::

The following people took part in the vote comprising the entire list of managers, of which we picked the TOP50 – the Best of Polish Market: Mariusz Apelski (April Ogb), Paweł Bochn iarz (PricewaterhouseCoopers), Maciej Brysławski (Superfund TFI), Paweł Dangel (Allianz), Jarosław Dąbrowski (Dąbrowski Finance), Magdalena Dulczewska (FM Bank), Anna Horsecka (PTE Polsat), Grażyna Jaskuła (Oficyna Wydawnicza Rynek Polski), Krzysztof Kalicki, PhD (Deutsche Bank Polska), Ada Kostrz-Kostecka, PhD, Mirosław Kowalski (Limra Europe), Zbigniew Kowalski (Zbigniew Kowalski&Partnerzy), Andrzej Krzemiński (EFL), Daniel Lewczuk (Executive Network), Jerzy Lisiecki, PhD (IRCA), Piotr Majcherkiewicz (Gruper.pl), Ewa Małyszko (PKO BP Bankowy PTE), Adam Mokrysz (Mokate), Agnieszka Nogajczyk-Simeonow (PTE Allianz), Krzysztof Przybył (Teraz Polska), Romana Rucińska (TFI), Anna Rulkiewicz (Lux Med), Krzysztof Rybiński, PhD (Vistula University), Marek Skała, PhD, Anna Streżyńska (Urząd Komunikacji Elektronicznej), Elżbieta Wanat-Połeć (Ubezpieczeniowy Fundusz Gwarancyjny), and Alicja Wiecka (SAS Institute). 12 /2011 :: polish market :: 75

Finance

Polish Payment Card Market Eugeniusz Śmiłowski, PhD

Eugeniusz Śmiłowski PhD, Member of the Statistical Council

Payment cards first appeared in Poland in the 1960s. They were used by foreign tourists, who were offered an opportunity to make non-cash payments at hotels and restaurants operated by the national tourist and hotel enterprise Orbis. In 1990 the PolCard company was spun off from Orbis to deal with accepting payment cards. In 1991 the Polska Kasa Opieki SA bank (Bank Pekao SA) issued an ATM card intended for retail clients. The card was associated with the client’s savings account. In July of the same year Bank I nicjatyw Gospodarczych SA (BIG SA) issued Poland’s first internationally-accepted Visa Business card. Two years later, in July 1993, the same bank in conjunction with PolCard issued a national payment card. At the same time, Pekao SA issued a Visa Classic card for retail clients. It was the first international double-currency card in Eastern Europe. In 1995 Pekao SA issued the Partner card with the Europay logo. It is considered to be Poland’s first credit card, although

No.

1996

1 Number of payment cards issued (in thousands)

2001

2006

the Expres M card, issued in 1993 by the Expres M company and Bank Powierniczo-Depozytowy Glob, also aspires to being called the pioneer in this field.

Growth of the card market In 1991–1994 Visa cards were the only payment cards issued in Poland. Around 200 such cards were issued in 1991, 700 in 1992, 8,500 in 1993 and 22,500 in 1994. In 1995, apart from 79,800 Visa cards, there were also 49,300 Europay and 15,600 Polcard cards issued in Poland. The number of newly issued cards crossed the 0.5 million mark (539,600) in 1996 and the 1 million mark (1,253,300) in 1997. Almost 2.5 million payment cards were issued in 1998–1.2 million Europay cards, 1.1 million Visa cards and 0.2 million PolCard cards. Additionally, banks issued a record number of ATM cards (3.8 million), which in later years were successively replaced with international payment cards, mainly Visas. The total number of payment cards in circulation exceeded 10 million in 2000, 20 million in 2005 and 30 million in 2008. 2007

2008

2009

2010

Structural changes

539

14,388.3

23,848.0

26,496.2

30,275.5

33,212.7

31,983.8

601.1

6,354.2

7,812.5

9,404.6

10,858.4

8,901.3

3 Number of payment cards per head

0.014

0.38

0.63

0.70

0.79

0.87

0.84

4 Number of payment card transactions (in millions)

2.05

395.2

910.4

1,075.7

1,232.3

1,394.6

1,549.5

5 Number of payment card transactions per head

0.05

2.34

9.28

12.11

15.13

18.45

6 Value of payment card transactions (in PLN millions)

751

88,494.9

218,939.5

265,158.9

304,289.4

330,450.5

353,822.0

38.9%

43.0%

46.8%

50.6%

56.6%

523

6,472

9,938

11,542

13,575

15,883

16,902

169

261

303

356

416

442

27.9

112.9

136.3

135.2

153.1

175.6

188.4

11 Number of POS terminals/ imprinters (in thousands)

176.5

185.6

212.3

230.6

251.8

12 Number of POS terminals/ imprinters per 1 million population

2,951

4,628

4,896

5,571

6,043

6,592

of which credit cards

7 Share of non-cash transactions in the total number of card transactions 8 Number of ATMs 9 Number of ATMs per 1 million population 10 Number of retail and service outlets accepting payment cards (in thousands)

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It took banks almost 10 years to issue the first 10 million cards, five years to issue another 10 million cards and only three years to issue yet another 10 million. In the year 2003 and 2010 there was a year-on-year drop in the number of cards in circulation. At the end of 2010 there were almost 32 million payment cards in circulation, 1.1 million less than a year earlier. In the middle of the 1990s, the number of payment cards per head stood below 0.1. It rose to 0.38 in 2005 and 0.84 in 2010, when it was slightly down from the 0.87 recorded in the previous year. Poland still has one of the lowest per-capita indicators for payment cards. According to European Central Bank (ECB) data, in 2009 the European Union average was 1.45. Poland, with its per-capita indicator at 0.87, was ahead only of Romania. Between 2001 and 2009 the average indicator for the EU increased by 20%, from 1.20 to 1.45, while the average indicator for Poland more than doubled, rising from 0.38 to 0.87. The gap between Poland and the EU in terms of card numbers per capita narrowed significantly in this period – from 0.82 cards in 2001 to 0.58 in 2009.

For the past 20 years debit cards have had the largest share in the payment card market in Poland. By 2003 their share ranged from 86% to 89% to decrease gradually in the next years to 71% at the end of 2010. The share of charge cards has been decreasing consistently – it fell from 9–11% in 1998–2000 to 1% at the end of 2010. The share of credit cards was rising sharply and steadily until 2009. They accounted for a mere 2% of all cards in circulation at the end of the 1990s and as much as 31% in 2009. However, in 2010 the number of credit cards dropped by almost 2 million as banks tightened their criteria for issuing the cards. As a result, their share dropped to 27.8%. In 2010 there were around 2 million proximity, or contactless, cards in circulation. Until 2004 almost all cards – 99.5% - issued in Poland were magnetic stripe cards. The large-scale

Wishing you a warm, peaceful and joyful Christmas and prosperity and success in the New Year

Finance

50%

43%

40% 30%

20%

10%

Małopolskie (1,400), Wielkopolskie (1,300), Dolnośląskie (1,300), Pomorskie (1,200) and Łódzkie (1,000). In 1996 there were 14 cash machines per 1 million population in Poland. Their number increased to 261 in 2006 and 442 in 2010. Despite this rapid growth, the indicator is still low for Poland as the country ranks 25th in this respect among EU countries ahead only of Sweden and the Czech Republic. According to ECB, in 2009 Poland had 414 cash machines per 1 million population. The number was two times smaller than the EU average of 867.

ATMs Poland’s first cash machine was installed in the 1980s by Pekao SA. In late 1993 and early 1994 the number of ATMs came to 100 to exceed 1,000 in 1997 and 10,000 in 2007. At the end of 2010 there were around 16,900 ATMs available for payment card users. Twenty nine financial institutions, most of them banks, have ATMs in Poland. Euronet/Bankomat 24 and PKO Bank Polski have the largest number of cash machines - 15.2% and 15.1% respectively. Cooperative banks making up the Bank Polsk iej Spółdzielczości group, Pekao SA and Bank Zachodni WBK each had over 1,000 ATMs. Their share in the total number of cash machines was respectively 12.1%, 11% and 6.4%. The five institutions mentioned above owned almost 60% of all cash machines in Poland. Geographically, the largest number of ATMs was installed in Mazowieckie and Śląskie provinces – respectively 3,000, of which 1,700 in Poland’s capital Warsaw, and 2,000. More than 1,000 cash machines were installed in the provinces of

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Card-accepting outlets and devices In 1995 less than 20,000 retail and service outlets accepted payment cards. In 2001 the number of accepting outlets exceeded 100,000. At the end of 2010 consumers could pay with cards in 188,400 outlets provided with almost 252,000 accepting devices, mainly POS terminals. In 1999 only one in three retail and service outlets had POS terminals. The remaining outlets used card imprinters. In Poland, the number of devices – POS terminals and imprinters - accepting electronic payment instruments per 1 million population is much lower than the EU average. Comparative data from the ECB show that in 2009 the average for the EU was 17,099 accepting devices per 1 million population. Meanwhile, the indicator for Poland was almost three times lower – 6,043. In this league table, Poland was in the last but one position, ahead only of Romania. It is worth noting, however, that in 2001 the EU average was four times higher than the indicator for Poland while in 2009 it was

higher less than three times. In the period from 2001 to 2009 the number of POS terminals and imprinters doubled in Poland while the average for EU countries rose by only 36%. This does not change the fact that the gap between Poland and the EU persists. In 2009 there were 9,600 more POS terminals and card imprinters per 1 million population in the EU than in Poland. In 2009 the difference increased to 11,100.

Card transactions In 2010 around 1.6 billion cash and cashless transactions were conducted in Poland using payment cards. The total value of the transactions exceeded PLN353.8 billion. Five acquirers CKC Pekao (1991), First Data (former PolCard, 1991), Elavon (former Card Point, 1998), eService (1999) and Polbank (2008) – provide complete payment card services in Poland. They deliver terminals and offer complete authorisation and settlement services. Cash transactions had the largest share (75%) in the total value of payment card transactions in 2010. Their share in the total number of payment card transactions was smaller – 43%. The average value of a single payment card transaction was around PLN230, with the average value of a cash transaction at almost PLN400 and the average value of a non-cash transaction at slightly above PLN100. In 2001–2010 a fourfold increase was recorded in both the number and value of payment card transactions. However, the average figures for the European Union are still much higher. The number of cashless payment card transactions per head is relatively small in Poland. In 2009 it amounted

2010

2009

2008

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2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

0% 1993

migration towards cards containing a magnetic stripe and microprocessor started in 2005. In the first quarter of 2011 the share of such cards reached 56.3% and was for the first time higher than the share of magnetic stripe cards (43.3%). Since its inception the Polish payment card market has been dominated by two systems – Visa and MasterCard (Europay). The first to enter the market was Visa. Until 1994 it had no competition. In the following years Europay cards gained an equal share of the market and in the period from 1996 to 1998 their share was even slightly higher than that of Visa cards. Since 1999 Visa has gained and maintained a clear advantage on the card market. PolCard, which aspired to create a uniform national payment system, has failed to put up an effective fight for the Polish market. American Express and Diners Club cards also failed to achieve success on the Polish market. At the end of 2010 Visa cards accounted for 65% of payment cards in Poland, the share of MasterCard cards was two times smaller (32%) while the remaining market participants held only 3% of the market between them.

Payment card users in 1993-2010 Payment card holders in Poland aged 15 and over Source: Pentor RI Audyt Bankowości Detalicznej, 20002010

Finance 100

80 60 40

2000

2001

withdrawals from ATMs

Use of bank cards Source: Pentor RI Audyt Bankowości Detalicznej, 20002010

2002

2003

2004

purchases from stores

to 18.5 compared to the EU average of 63. But in the case of this indicator, Poland is narrowing the gap to the EU average much faster than in the case of other indicators. In 2001 the EU average was 16 times higher than the figure for Poland – 37.3 transactions per head against a mere 2.34 transactions. By 2009 the EU average doubled while the figure for Poland increased sevenfold. As a result, it was 3.5 times lower, although in absolute figures the difference increased from around 35 to 44 transactions per head. In terms of the number of transactions per head, Poland is ahead of Hungary, the Czech Republic, Greece, Romania and Bulgaria. Another indicator showing how often payment cards are used is the number of cashless transactions per card. Poland, with almost 21 transactions per card a year, is below the EU average of 41 but ahead of 10 other countries, including Germany. The situation looks even better when it comes to the use of POS terminals. In 2009 the number of cashless payment card transactions per POS terminal was only slightly lower in Poland than the EU average – 2,978 versus 3,496. In 2004 the number of transactions per POS terminal was by 1,752 lower in Poland than the EU average. In 2009 the difference was three times smaller and amounted to 518. In the period from 2004 to 2009 the number of transactions per POS terminal rose by 216% in Poland compared to an increase of 12% in the EU as a whole.

Behaviour of payment card users According to surveys conducted by Pentor, in the mid-1990s 4% of Polish people aged over 15 said they held a payment card. This share increased

2005 petrol stations

2006

2007

services

11 times to 43% in 2010. The debit cards to be found in the wallets of those surveyed most frequently were those issued by PKO Bank Polski (28%), Pekao (11%), ING Bank (10%), BZ WBK (10%), mBank (7%) and cooperative banks (6%). As regards credit cards, most popular were those of PKO Bank Polski (15%), Pekao (12%), BZ WBK (12%), mBank (10%), ING Bank (7%) and Lukas Bank (7%). Visa cards account for 77% of debit cards and 73% of credit cards. The share of cards with the Mastercard and Maestro logo is respectively 23% and 27%. An overwhelming majority of the cards that are in circulation in Poland (91%) are authorised by a PIN code rather than a signature (9%). Debit card holders are very satisfied with them (31%) or quite satisfied (64%). The satisfaction of credit card holders is lower – respectively 27% and 62%. Polish card holders have a high opinion about the Visa and Mastercard organisations – 77% and 72%. In the 1990s Polish people used payment cards almost exclusively to withdraw cash from ATMs. In the past 10 years the behaviour of credit card holders has been gradually changing and cards are increasingly used for cashless transactions. In 2010 around 83% of card holders, compared to 46% in 2000, used plastic to pay for purchases in shops, purchases at petrol stations (49% versus 29%), for services at hotels and restaurants (30% versus 13%) and for other services (34% versus 26%). Last year 12% of card holders used them abroad while in 2000 such instances were isolated. Payment cards are strongly embedded in the consciousness of Poles as an important financial instrument. In 2000, asked what it meant to use bank services, only one in five Poles

2008

2009

hotels, restaurants

2010 use of cards abroad

answered “holding/using a payment card.” Today, one in three Poles gives this answer. Only personal accounts and loans rank higher in the public perception of banking activity – respectively 79% and 53%. However, there are still mental barriers hindering payment card expansion. Asked why they do not have or use a payment card, those surveyed usually answer “I do not have a need to do so,” or “I do not have money.” But this is not the only reason behind the relatively low penetration of payment cards in Poland. Still widespread are stereotypes and views that “it is easier and faster to pay with cash,” “you can pay with cash everywhere,” “I spend only as much as I have in my wallet,” “I have no temptation to get indebted and live on credit.” There are also barriers to credit card expansion on the banks’ side. During the crisis they tightened criteria and thresholds for entrance to the financial services network. Macroeconomic conditions are also of no small importance – it is the main reason behind the financial exclusion of almost one fifth of Polish people. ::

12 /2011 :: polish market :: 79

Warsaw Investments

New investments carried out by Warsaw Tramways Ltd. are changing the image of the capital city Warsaw Tramways Ltd. is currently implementing a number of investments, aimed at enhancing the comfort of travelling by public transport. The company invests in both the rolling stock and the infrastructure. The effects of these investments are already visible in the city of Warsaw.

By the end of 2011, the roofing of the integrated bus and tram stops, such as Metro Ratusz Arsenał and Park Praski will have been finished. Their structure resembles the W-Z (East-West) route architecture as well as the historic architecture of this part of the city. The shelters built on the W-Z route are steel constructions fitted with glass roofing, lighting, and display cabinets. For the first time in Warsaw tram stop roofing will be equipped with the LED type backlight, that will bring out the form of the objects. The integrated bus and tram stops are prepared for the installation of the Passenger Information System (SIP). For the first time SIP boards will not be installed separately on the poster pillar but will be integrated with the construction of the stop roofing. The installation of the SIP will have been completed by the end of April 2012, not only on the W-Z route, but also on the Wileński Station – National Stadium – Washington Roundabout route.

New rolling stock The first of the 186 trams of 120Na class (called SWING), manufactured by Polish company PESA in Bydgoszcz began his service on 12th June 2010. This class

Warsaw Investments

of tram is going to replace the most utilised vehicles, and in 2013 they will make up approximately 43% of the total number of trams in Warsaw. The trams called â&#x20AC;&#x153;SWINGâ&#x20AC;? are modern, 5-unit, low-floor and constructed in compliance with European standards regarding strength and crashworthiness requirements for rail vehicles. Moreover the above mentioned trams have spacious interior with a large number of doors, an automatic platform for wheelchairs, and are equipped not only with passenger buttons adapted to the needs of the sightless passengers, internal tram air conditioning, upholstered seats with a seat cover pattern reflecting the symbols of the city of Warsaw, a modern passenger information system including voice announcement and LCD displays, but also ticket machines and internal tram monitoring. To conclude, the interior of these trams is comfortable for passengers, including the disabled ones. Furthermore, the trams are fitted with an on-line diagnostic system, allowing the remote assessment of the emergency state of the equipment by the technical service and traffic control centre, so information

and instructions may be transmitted through the communication system to the tram driver. Additionally, 40 trams are equipped with a passenger counting system. Each tram driver who operates this class of a tram undergoes additional training on its operation. The technicians are also trained. Currently, the trams are under the manufacturerâ&#x20AC;&#x2122;s warranty. ::

Construction

Facing the great unknown Polish construction companies, at least those listed on the stock market, were still in pretty good condition in 2011, although the performance of their stocks on the trading floor, like those of other companies on the Warsaw Stock Exchange (WSE), was worse than in 2010. Unfortunately, the next few months presage a slump in the industry. Patryk Mirecki In the years 2012-2013 EU funding allocated to Poland will be running out. It is now the main source of financing for large infrastructure projects such as roads and highways, sewage treatment plants, stadiums, railway stations, railway lines, etc.

Apart from the deteriorating situation of the sector there are dark forecasts related to the crisis in the euro area and the global financial system. An analysis of the basic financial results after the first three quarters of 2011 of 25 leading construction

companies included in the WIG-Budownictwo stock market index shows that generally they generated higher revenues than last year. In addition, several of them forecast an increase in revenues in 2011 compared to 2010. The situation was worse in terms of net profit generated in the first three quarters. Only half of them were able to improve it.

Budimex on top Budimex Group tops the league tables of the largest WSE-listed companies in terms of both revenue and net profit generated in the first three quarters of this year. In this period

The largest WSE-listed construction companies by net sales in Q1-Q3 2011 Rank

Company name – President of the Board

Net sales, Q1-Q3 2011 (PLN thousand)

Net sales, Q1-Q3 2010 (PLN thousand)

Net profit Q1-Q3 2011 (PLN thousand)

Net profit Q1-Q3 2010 (PLN thousand)

Budimex – Dariusz Blocher

3 822 674

3 160 709

193 891

Polimex-Mostostal – Konrad Jaskóła

3 467 844

2 978 650

41 309

207 314 67 763

PBG – Jerzy Wiśniewski

2 380 498

1 905 054

179 878

114 077

Mostostal Warszawa – Jarosław Popiołek

2 366 754

1 888 623

-16 037

58 831

Trakcja-Tiltra – Maciej Radziwiłł

1 394 841

273 472

14 778

19 540

Hydrobudowa Polska – Jerzy Ciechanowski

1 241 700

1 211 000

34 700

36 500

Erbud – Members of the Board: Dariusz Grzeszczak, Józef A. Zubelewicz

1 109 369

837 813

12 290

78 700

Mostostal Zabrze Holding – Leszek Juchniewicz

676 101

606 327

46 942

10 872

Unibep – Jan Mikołuszko

639 422

471 824

10 162

14 994

Elektrobudowa – Jacek Faltynowicz

612 556

500 145

23 468

32 651

GK Pol-Aqua and P.R.I. Pol-Aqua – Piotr Chełkowski

515 453

1 016 968

22 648

-149 485

ZUE – Wiesław Nowak

389 742

237 196

11 186

7 061

Mirbud – Halina Miros

358 964

201 479

20 631

20 322

Energomontaż-Południe – Krzysztof Jan Diduch

232 040

224 060

-11 657

-13 078

Instal Kraków – Piotr Juszczyk

191 450

177 122

6 588

11 497

GK Tesgas – Włodzimierz Kocik

130 986

101 812

7672

8.547

Budopol Wrocław - Mirosław Motyka

121 372

81 196

12 661

4 160

P.A. Nova – Ewa Bobkowska

121 289

100 382

15 614

10 076 -10 549

Projprzem – Piotr Babsta

106 531

66 573

-996

Gastel Żurawie – Grzegorz Żółcik

83 406

60 629

7 195

Bipromet – Tadeusz Baj

78 869

25 308

3 820

-206

Mostostal Płock – Wiktor Guzek

71 620

115 881

-6 632

4 662

Energopol-Południe – Jacek Taźbirek

70 117

73 657

1 198

3 923

Interbud-Lublin – Krzysztof Jaworski

69 286

70 351

3 636

7 309

Mostostal Export – acting President of the Board Katarzyna Kozłowska

42 946

43 517

-19 369

-15 924

82 :: polish market ::

12 /2011

Construction

it generated over PLN3.8 billion in revenue and almost PLN194 million in net profit. Its revenue in the first three quarters of 2011 is comparable to the full-year 2010 revenue of its main rival, Skanska Polska (not listed on WSE). President of Budimex Dariusz Blocher notes that revenue generated by Budimex Group from January to September this year showed an increase of 21% compared to a year earlier. This increase was due to a significant increase in sales (by almost 36%) in the construction sector of the Budimex Group, which offset the decrease in sales (by 54%) in the developer sector, resulting from the sale of a substantial part of the stock of finished flats by Budimex Nieruchomości last year. This company books revenue from sales at the moment of signing a notarial deed of sale.

The second company on our list, Polimex-Mostostal, generated nearly PLN3.5 billion in revenue in the first three quarters of this year (at that time its net profit was much lower than the net profit of the leader, i.e. PLN41.3 million). In total, the top seven companies on our list generated more than PLN1 billion in revenue in the first three quarters of this year. The other companies were PBG (2.38 billion), Mostostal Warszawa (2.36 billion), Traction-Tiltra (1.39 billion), Hydrobudowa Polska (1.24 billion), and Erbud (1.11 billion). Thus, all companies generated a higher revenue than in the first three quarters of last year.

Lower net profit However, net profits proved to be not so good. Out of the top seven companies only PBG - ranked third in terms of revenue - recorded a higher level

of net profit (PLN179.9 million) than a year earlier (PLN114.1 million). The remaining six companies recorded worse results in this respect. In this group, Mostostal Warszawa performed the worst. In the first three quarters of this year it recorded a net loss of over PLN16 million. Apart from Budimex and PBG all the remaining 23 construction companies recorded a net profit of below PLN50 million in the analysed period. As many as five of them recorded a net loss, including the largest loss (PLN -19.4 million), by Mostostal Export, the company apparently experiencing a bad period, classified by us also as the last in terms of revenue generated (PLN42.9 million). Its long-time President, Michał Skipietrow, was suspended, and since recently Katarzyna Kozłowska, acting as President, has been managing the company.

The largest WSE-listed construction companies by net profit in Q1-Q3 2011 Rank

Company name – President of the Board

Net sales, Q1-Q3 2011 (PLN thousand)

Net sales, Q1-Q3 2010 (PLN thousand)

Net profit Q1-Q3 2011 (PLN thousand)

Net profit Q1-Q3 2010 (PLN thousand)

Budimex – Dariusz Blocher

3 822 674

3 160 709

193 891

207 314

PBG – Jerzy Wiśniewski

2 380 498

1 905 054

179 878

114 077

Mostostal Zabrze Holding – Leszek Juchniewicz

676 101

606 327

46 942

10 872

Polimex-Mostostal – Konrad Jaskóła

3 467 844

2 978 650

41 309

67 763

Hydrobudowa Polska – Jerzy Ciechanowski

1 241 700

1 211 000

34 700

36 500

Elektrobudowa – Jacek Faltynowicz

612 556

500 145

23 468

32 651

GK Pol-Aqua and P.R.I. Pol-Aqua – Piotr Chełkowski

515 453

1 016 968

22 648

-149 485

Mirbud – Halina Miros

358 964

201 479

20 631

20 322

P.A. Nova – Ewa Bobkowska

121 289

100 382

15 614

10 076

1 394 841

273 472

14 778

19 540

Trakcja-Tiltra – Maciej Radziwiłł

Budopol Wrocław - Mirosław Motyka

Erbud – Memebers of the Board: Dariusz Grzeszczak, Józef A. Zubelewicz

121 372

81 196

12 661

4 160

1 109 369

837 813

12 290

78 700

ZUE – Wiesław Nowak

389 742

237 196

11 186

7 061

Unibep – Jan Mikołuszko

639 422

471 824

10 162

14 994

GK Tesgas – Włodzimierz Kocik

130 986

101 812

7 672

8.547

Gastel Żurawie – Grzegorz Żółcik

Instal Kraków – Piotr Juszczyk

83 406

60 629

7 195

191 450

177 122

6 588

11 497

Bipromet – Tadeusz Baj

78 869

25 308

3 820

-206 7 309

Interbud-Lublin – Krzysztof Jaworski

69 286

70 351

3 636

Energopol-Południe – Jacek Taźbirek

70 117

73 657

1 198

3 923

Projprzem – Piotr Babsta

106 531

66 573

-996

-10 549

Mostostal Płock – Wiktor Guzek

Energomontaż-Południe – Krzysztof Jan Diduch

Mostostal Warszawa – Jarosław Popiołek

Mostostal Export – acting President of the Board Katarzyna Kozłowska

84 :: polish market ::

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71 620

115 881

-6 632

4 662

232 040

224 060

-11 657

-13 078

2 366 754

1 888 623

-16 037

58 831

42 946

43 517

-19 369

-15 924

Engineering and Construction Company BUDECON S.A. has been operating on the Polish construction market since 1995. We have built: • o ver 800 000 m2 of retail space including: PORT ŁÓDŹ Shopping Centre, RAWA Retail Park, TARGÓWEK Shopping Centre, HYPERNOVA Zamość, BIEDRONKA Shopping Pavilions and many other sites • a bout 2 000 000 m2 of storage spaces for i.e.: Kęty S.A. Group – Storage, Anodising Centre and Sewage Treatment Plant, line for casting ingots from heavy alloy; for TP S.A. – Printing and Enveloping Centre • 3 00 000 m2 of industrial spaces for i.e.: UNILEVER Polska S.A., TCHIBO Manufacturing Poland Sp. z o.o., ISOVER Gliwice, MECALUX Sp. z o.o. • A pproximately 1 500 000 m2 of roads and parking lots for i.e.: Huta Będzin S.A., roads, squares, small architecture forms in Łagisza S.A. Power plant, roads, parking lots, pavements and sewers in the former steel mill Huta Cedler S.A. and steel mill Huta Ferrum S.A. and many other. • Family houses residential estate on Zegrzyński Reservoir in Wieliszew.

P.I.B. BUDECON S.A. ul. Braci Mieroszewskich 126B 41-219 Sosnowiec tel./fax.: 032 299 55 95 www.budecon.pl

Construction

turnover (in PLN million) of WIG-Budownictwo. In the first three quarters of this year companies from this index recorded more than PLN3.2 billion in turnover, which represented 1.637% of all turnover on the Warsaw Stock Exchange. In the same period last year the turnover had reached PLN4.04 billion, or 2.7% of the total turnover. In September this year alone the turnover of WIG-Construction index companies amounted to PLN287 million, and was lower than a month earlier (PLN326 million), and - of course - lower than in September last year (PLN460 million). According to consulting company Home Broker, in 2011 only construction companies have performed worse than developers on the stock market. In both cases, investors’ losses exceed 40%.

Increased competition, currency fluctuations

A downward slide on the stock market The overall condition of construction companies, especially the largest ones, is reflected not only in their revenue or net profit. Their stock market position in also important. In 2011, especially since September, it has been a reflection of the general situation on the trading floor, where all indices slid downward at that time as a result of reports on the crisis in the euro area in Greece and Italy. Therefore, it is hardly surprising that at the end of September this year WIG-Budownictwo Index fell to 2393.1 points. It is worth remembering that at the end of August this year it was 2987.9 points, while at the end of September last year it was as high as 5839.3 points. The situation was similar in relation to the level of

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The coming months also do not look too optimistic for construction companies. The Board of one of the analysed companies (ZUE) notes that now the projected financial results are mainly influenced by: - the increase in the variability of the market factors, on which previous forecasts were based; - the increase in key prices for the activities of the ZUE Group in raw materials, materials and liquid fuels above the originally-projected values; - fluctuations in the euro/zloty exchange rate (indirectly, through the prices of suppliers and subcontractors); - a growing competitive struggle at the stage of project acquisition.

A decrease in margins The company in question (ZUE) explains this situation with the four factors listed. “They caused increased costs of operations and limited the possibility of price negotiations with suppliers and subcontractors. The consequence of this is the observed decrease in margins - mainly on projects implemented in the rail sector (...) and in the area of road and paving works (...).” The same phenomenon, relating to almost the entire construction sector, is also noted, inter alia, by the management of Hydrobudowa Polska. Commenting

on its financial position after the third quarter of this year, the company points out that “the observed decrease in profitability has resulted from such factors as the change in revenue structure, i.e. a significant increase in the share in revenue of lower margin contracts for the construction of roads and highways, and the gradual erosion of margins in general construction, which is, inter alia, the result of intense competition on the domestic construction market.” Also, other companies complain about low margins. “The results obtained have been largely affected by the currently significant share in the sales of infrastructure contracts (these contracts are characterised by low margins), and generally very strong price competition in tenders,” says Konrad Jaskóła, President of Polimex-Mostostal S.A. The board of another company, Unibep, completes the list of negative factors affecting the company’s own condition by the less-than-expected expenditures of the public investors (State and Local Governments) on road infrastructure. Moreover, the company is relatively highly dependent on residential, office and industrial construction, including housing construction. Additional problems are being caused by the early stage of development of new businesses (light structures, road engineering), which brings about difficulties in achieving a projected profitability. Unibep has also recorded a decrease in the profitability of one of its main businesses, namely general contracting in this country.

A family no longer in their own home In the opinion of the board of the same company, its situation has also been significantly affected by legal changes and restrictions on the availability of foreign-currency loans, causing a decrease in the demand for homes. According to earlier announcements, the Government has begun to withdraw from the “Family In Their Own Home” (“Rodzina na swoim”) Programme, through which for the first eight years the State paid interest on loans taken out by customers for the purchase of their (first)

Construction

homes. Announcing the withdrawal from the programme resulted in increased demand from customers for apartments built and sold in 2011, although still far from the expectations of developers. But from the beginning of 2012 this demand will continue to decrease. Furthermore, as expected by Home Broker, the cost of building apartments by developers may increase by a few to 10% after the entry into force of the Act on the protection of property buyers. For customers, in the current market situation, however, this should not lead to higher prices - such conclusions can be drawn from the debate held in October 2011 by Home Broker. According to HB “neither lawyers nor developers doubt that the new Act significantly reduces the risks associated with the purchase of flats in the primary market, particularly those that are still under construction.” According to one of this year’s reports from the NBP, in the coming months, due to declining birth rates, lower income growth and higher interest rates, the level of housing demand will decrease. As a result, the prices of appartments and their output should be reduced. Moreover, “some companies, particularly smaller ones, in the face of insufficient information on demand, directed by high prices, are increasing their production. We estimate that in the long term this will force further price adjustments,” say the authors of the NBP report.

Payment gridlocks The management of one of the WIGBudownictwo index companies (ZUE) notes one of the most significant problems afflicting the construction industry recently, namely delays in payments from business partners. The level of the consolidated net profit of the company was affected by the need to take out unexpected loans “due to delays in payments by contracting entities (the impact on the level of financial costs).” In the latest sixteenth edition of the report published by BIG InfoMonitor SA on the level of security of running businesses, a special part was dedicated to the construction industry. It turns out to be more exposed to the risk of late payments than other industries.

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Nearly 45% of respondents in the construction industry estimated that the current fluctuations in financial markets would be significantly reflected in their businesses, being a serious problem for the entire sector of construction services. Therefore, this group is demonstrating some concerns associated with the signals from the environment. Unfortunately, as many as 90% of respondents believe that running businesses in the construction sector is significantly hampered due to payment gridlocks, of which up to 60% estimate that this is one of the main factors constituting a serious obstacle in conducting their businesses. Thus, this problem is much more serious among builders than among providers of financial services, mass services, or entrepreneurs. “It is particularly disturbing that such a negative assessment of timeliness in the construction industry has not prompted more frequent verification of financial credibility before the start of cooperation,” says Marcin Ledworowski, Vice-President of BIG InfoMonitor SA. According to Ledworowski the large number of unreliable partners and delays in the repayment of debts puts the entire industry in a negative light.

Our chances are Euro 2012 and… a nuclear power plant Dark clouds gathering in the near future over the construction sector (and some other sectors) can, however, be at least partially dispersed through investments related to the Euro 2012 European Football Championship. In addition to the construction of stadiums and highways, Polish construction companies have been involved in the implementation of other projects associated with the event. For example, Mostostal Warszawa has recently concluded a contract for the construction of one of the three strategic hospitals for Euro 2012 in Gdańsk. The new part of the Pomeranian Traumatology Centre will be erected in May 2012. The consortium with the Block Company will modernise two hospital buildings for nearly PLN21 million. The Pomeranian Traumatology Centre is one of three hospitals selected for the time of European Football Championship as a safeguard for patients

from the Fan Zone and the whole area of the main city of Gdańsk. Every day the hospital receives about 250 patients. It is estimated that the number will increase by an additional 50 during the tournament. In October 2011, Jacek Faltyno wicz, CEO of Elektrobudowa, participated in the conference Suppliers Day organised by the French energy company AREVA. This event was directed at Polish companies, which could participate in the process of building the first nuclear power plant in Poland. AREVA is one of the potential bidders for the supply of technology to the Polish nuclear power plant. The construction would start in 2016, and the launch of the first reactor has been planned for 2020. “We are committed to the further development of cooperation with the Polish industrial sector,” said Thorsten Kammerzell from AREVA.

EU funding for investment p rojects will decrease The next few months will be decisive for the future of the construction industry. However, the NBP has no illusions on this matter. In its inflation projection published in November, it expects that financing projects will be reduced in the next two years: “In 2012, the absorption of EU funds and the public finance sector expenditure on its co-funding will be at a level similar to this year’s level, while in 2013 it will decrease. As a result, in 2012-2013 there will be a substantial decrease in public investment growth. An argument for this scenario is Government plans presented in the 2012 Budget Bill and the National Road Construction Programme for 2011-2015, and the possible reduction of capital expenditure by Local-Government units, due to the increase in their debt and fiscal rules in force.” Somehow, as a consolation, the NBP adds in the same document that in 2012-2013, “growth in housing projects (...) will be slightly higher than the growth rate in consumption, which will be facilitated, in addition to relatively low real interest rates, by a high rate of return on projects carried out by developers given the current relationship of apartment prices to the cost of their construction.” ::

Cultural Monitor

Poland needs a clean environment, it needs leaders! Janusz Zaleski, Undersecretary of State in the Ministry of the Environment has conferred 15 titles of The Leader of Polish Ecology 2011. The gala event was held on November 15 in the Capitol Theatre in Warsaw. The Leader of Polish Ecology title is awarded by the Minister of the Environment to all those who contribute to the preservation and enhancement of the condition of the Polish environment, and by doing so, improve the quality of life for Polish people and generations to come. The objective of this activity is to seek and single out the most interesting and innovative initiatives.

The Leader of Polish Ecology 2011 Category – Local Government Unit Subcategory – Urban Commune :: Gdańsk, Pomorskie Province – for “comprehensive actions in the field of environmental protection” Subcategory – Urban-Rural Commune :: Karlino Commune, Zachodniopomorskie Province for “the implementation of pro-environment measures in the commune” Subcategory – Rural Commune :: Duszniki Commune, Wielkopolskie Province – for “active environmental protection in Duszniki Commune” :: Rewal Commune, Zachodniopomorskie Province– for “activities for environmental protection” Subcategory – Union of Communes :: Union of Communes of the Basin of Wisłoka River in Jasło, Podkarpackie Province - for “a programme for the increased cleanness of the basin of Wisłoka river”

Category – Enterprise Subcategory – Manufacturing Enterprise :: Tauron Wytwarzanie Spółka Akcyjna - Power Station Jaworzno III Department in Jaworzno, Śląskie Province – for “the modernisation of the flue gas desulphurisation plant, the construction of the third flue gas desulphurisation unit for generating units No. 3 and 4 and the construction of a cinder settling tank” Subcategory – Services Company :: Sarpi Dąbrowa Górnicza Sp z o.o. in Dąbrowa Górnicza, Śląskie Province – for “the development and modernisation of hazardous and industrial waste thermal treatment plant” Subcategory – Municipal Services Company :: Kom-Eko S.A. in Lublin, Lubelskie Province – for the undertaking “to regain a clean Lublin”

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:: the Regional Centre of Water and Wastewater Management S.A. in Tychy, Śląskie Province – for “the modernisation of the sewage treatment plant in Tychy-Urbanowice” Subcategory – Forest, Agricultural, Environmental, Company :: The Lower Silesia Office of Landscape Parks in Wrocław, Dolnośląskie Province – for “environmental protection within environmental use areas as an element of the sustainable development of the region”

Category – Products Subcategory – Technologies :: Biuro Projektów Koksoprojekt Sp. z o.o. in Zabrze, Śląskie Province – for “the modern technology of coal gas purification, using innovative and environmentally-effective solutions” :: Bytnica Forest District Office, Lubuskie Province – for “enriching biodiversity in the forests of the Bytnica Forest District Office by using the Sobański Method” Subcategory – Devices :: Apator S.A. in Toruń, Kujawsko-Pomorskie Province – for “devices creating advance-payment and credit-based measurement systems”

Category – Associations and Foundations :: The Great Masurian Lakes Foundation in Giżycko, Warmińsko-Mazurskie Province – for the activities “in the care of the natural environment of the Great Masurian Lakes District” :: Count Stefania Raczyńska Friends’ Association of Żarki Letnisko in Żarki Letnisko, Śląskie Province – for the “Clean forest, clean summer resort” campaign.

80 units took part in this year’s edition, under the honorary patronage of the President of the Republic of Poland, Bronisław Komorowski. 35 communes, unions of communes and districts, 42 enterprises, and three NGOs competed for the prize. During the assessment of the applications submitted, independent experts and the Programme Board paid particular attention to the implementation of the most effective solutions in terms of their environmental and economic aspects. For the inspection, which is the final stage of the assessment, the Board selected 23 undertakings, 15 of which were the winners of this year’s edition statuettes and The Leader of Polish Ecology 2011 titles. The prizes went to 8 representatives of enterprises, 5 Local Government units, and 3 representatives of environmental NGOs. “The standards for the contest participants, competing for The Leader of Polish Ecology title have been raised high. Still, to select the best ones, the Leaders, was not a simple task, since every undertaking submitted deserves recognition,“ admitted Janusz Zaleski, Undersecretary of State in the Ministry of the Environment, and the President of the Programme Board of the Contest. The contest has been held each year since 1996. This year’s edition was the 13th. The qualification procedure involves private companies, foundations, and associations “engaged in the implementation of sustainable development.” Taking all editions into account, 1434 undertakings have been submitted so far, and The Leader of Polish Ecology title has been awarded 133 times. The winners receive diplomas and special statuettes. They also gain the right to use The Leader of Polish Ecology title in corporate literature and advertising materials. Receiving the title provides enterprises with the opportunity to take part in the preliminaries to the European Business Awards for the Environment. ::

Cultural Monitor

A year of culture “We have completed a journey, whose starting point was a reflection on culture - the most important part of the capital of modern Europe, a foundation on which we can build our prospects for the future, the foundation of social and economic changes,” said Minister of Culture and National Heritage Bogdan Zdrojewski during the European Congress of Culture. The year 2011 abounded in many significant cultural projects. Maciej Proliński summarised some of them.

A cultural Presidency… The Foreign Cultural Programme of the Polish Presidency of the EU Council, implemented under the programme “I, Culture”, until now has been the most extensive programme for promoting Polish culture abroad. From July to December 2011 there have been over 400 events held, not only within the EU but also outside its boundaries – altogether in 10 capitals worldwide. “For years I have been insisting that the strongest and most opinion-making Polish brand as far as the world elites are concerned is culture. Our programme has been implemented by over 159 diplomatic posts, including 21 institutes around the world!” said Paweł Potoroczyn, the head of the Adam Mickiewicz Institute. Polish projects have been presented in the best galleries, scenes, clubs and festivals in Brussels, Paris, London, Berlin, Madrid, Moscow, Kiev, Minsk, Beijing and Tokyo. Our foreign presentation relied on six mainstays, including the promotion of the outputs of Karol Szymanowski, Stanisław Lem and Czesław Miłosz. “Attention culture!” – was the motto of the National Cultural Programme for the Polish

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EU Presidency 2011. This programme consists of over 1000 artistic programmes, implemented in cooperation with 170 partner organisations! The event that welcomed nongovernmental organisations the most was The European Congress of Culture, which took place in September in Wrocław. The intellectual framework of the Congress has been established in the book entitled “Culture in Liquid Modernity” by the special guest Professor Zygmunt Bauman. This nestor of Polish philosophy also gave an inaugural speech in which he placed culture in the centre of the greatest achievements of modern times. “One of the main challenges that Europe is confronting is the crisis of the European ideal, and Europe without an ideal and vision ceases to be Europe,” said Professor Bauman. “It is high time to restore in the collective memory the fact that not only a non-confrontational but also a mutually-beneficial coexistence of different cultures was for a long time the norm, and east of Łaba it has lasted until our days,” he said. Altogether in Wrocław 13 debates and over 100 interdisciplinary projects have been organised. The artistic programme was co-authored by 550 custodians and artists. Three early compositions of Krzysztof Penderecki from the 1960s: “Threnody to the victims of Hiroshima”, “Canon” and “Polymorphia” crowned the meeting. 50 years have passed from the creation of the last composition, yet it is still being regarded as an important source of inspiration for the composers of rock or electronic music. During the concert, Johnny Greenwood from Radiohead and the techno guru Aphex Twin presented their versions of the compositions of the greatest composer of modern music, Krzysztof Penderecki. It was an unprecedented event.

The Year of Czesław Miłosz, the Year of Komeda In 2011, 100 years have passed from the year Czesław Miłosz was born, and 80 years from the year Krzysztof “Komeda” Trzciński was born. A great tribute to Czesław Miłosz (19112004), the Nobel Prize Winner (1980), was a long-anticipated book by Andrzej Franaszek “Miłosz. The Biography”. It is not only a vivid portrait of the greatest artists of the 20th Century, but also a history of the past century with its cruel totalitarian rules and our spurts of independence. When reading Franaszek’s book we start to hope that we would understand the phenomenon of talent and the meanders of Miłosz’s personality, that we will understand what shaped his mentality, imaginativeness and poetic sensitivity…

BuSINeSS CeNTre CluB

WIelka gala

lIderOW pOlSkIegO

BIZNeSu 21 STYCZNIa 2012

Teatr Wielki – Opera Narodowa

Więcej informacji na www.bcc.org.pl

Cultural Monitor Digital reconstructions of our classics

Another, this time a musical, tribute to Czesław Miłosz, is Aga Zaryan’s album “A Book Of Luminous Things”. Zaryan, one of the best Polish jazz singers, has once again surprised the public with her music. With the participation of the Polish Radio Orchestra and some great instrumentalists, she has created a classic album. The 12 musical compositions to the texts of Czesław Miłosz’s poetry and the poems of his favourite poetesses, Anna Świrszczyńska, Jane Hirshfield and Denise Levertov, appears to be the greatest work in Zarayan’s output so far. All tracks in the album are polished and endowed with great musical culture. The masterful balancing of elements of ballad, jazz, and sometimes blues, and Aga Zarayan’s and Michał Tokaj’s (a sensitive pianist and composer of all the songs in the album) hint of individuality, give rise to music characterised by exceptional light. The music of Krzysztof “Komeda” Trzciński (1931-1969), prematurely deceased pianist and composer, reflected the development of this kind of music in our country and echoed various trends and tendencies in world jazz. Undoubtedly, the greatest creative tribute to Komeda in the Year of Komeda was the album of Leszek Możdżer – “Komeda”. The work of this superb Polish pianist (who wants his way to be “total”) is a beautiful, “not exaggerated” and nobly raw tribute paid to Komeda. “Komeda Możdżera” is a solo music album which intrigues with its creative interpretation of the output of the best Polish jazzman of all time. In this album we will find everything that I just adore about art. It is great when artists pay tribute to their idols, and without copying them they continue their icons’ ideas, but in their own way. There is no need to convince anybody about Komeda and Możdżer. Great music simply flows here. Możdżer’s piano playing (more subdued than in previous albums) will outshine many a pianist. Even for a listener acquainted with Komeda’s musical compositions it will be an experience full of surprises. It will certainly capture even the non-jazz listener!

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The new Polish films of 2011 were not as successful as Jerzy Skolimowski’s production of last year. However, we have something to pride ourselves on. The 20-volume collection from Agora SA, consisting of digitally-renewed, unforgettable classic films of our cinematography, was this year’s most important publishing event. The releases, consisting of a book and an attached DVD, featured mainly directors and actors, showing the phenomenon of Polish film through its most significant creators. The series opened with a book on Andrzej Wajda, with his masterpiece – “Ashes and Diamonds.” The second volume included a DVD - for which the lovers of great film art have been waiting for years – a refreshed ver-

sion of “The Saragossa Manuscript”, directed by Wojciech Jerzy Has. Successive volumes of the collection presented a whole array of Polish cinema stars, including Lucyna Winnicka, Elżbieta Czyżewska, Jan Machulski, Jan Nowicki, directors Tadeusz Konwicki, Jerzy Kawalerowicz, Janusz Morgenstern and Juliusz Machulski. The collection included such productions as “Night Train” directed by Kawalerowicz, “The Hourglass Sanatorium” directed by Has (for the first time in the DVD version on the Polish market!), “To Kill This Love” directed by Morgenstern, and “Vabank”, directed by Machulski.

“Stygian Vortex”… An extremely sad event that took place in 2011 was the death of Janusz “Kuba” Morgenstern, film producer and director. Morgenstern was 89 and until the end had a great appetite for life. He created such television hits as “Stakes Larger Than Life” and “Polish Roads.” Moreover, he directed beautiful films depicting the feelings of successive generations of young Poles (“Goodbye, Till Tomorrow”, “Jowita”, “To Kill This Love”). His films depicted such a great love that “it strove just to happen”… In my memory Janusz Morgenstern will remain a kind and benevolent “passer-by met on the streets of Żoliborz…” There were more

such Polish artists, who made us laugh and cry, and who passed on last year. Irena Kwiatkowska, Ewa Szumańska, Krzysztof Kolberger, Edward Żentara – these are just some of the names…

Więckiewicz’s face… It is impossible not to notice “the face of Robert Więckiewicz” in the films produced in 2011. Zbigniew Cybulski, Daniel Olbrychski and Zbigniew Zamachowski also had their time. Undoubtedly, in recent years Więckiewicz also joined this respected group. His heyday probably began with “All Will Be Well” – a beautiful film about faith, directed by Tomasz Wiszniewski in 2007. In 2011 we could admire Więckiewicz in a new, ironic film directed by Marek Koterski “Women Are Somehow Different” and a touching film directed by Greg Zgliński “Courage”. The latest film by Agnieszka Holland “In Darkness”, a Polish candidate for an Academy Award, will be screened in cinemas in January. The main character (another great Więckiewicz screen character) resembles Oscar Schindler, and his story – unique and very dramatic – illustrates the transformation of the unrepentant anti-Semite into a “guardian angel.” The shooting for the latest film by Andrzej Wajda – “Wałęsa” began on 1 December 2011. Robert Więckiewicz plays the role of Lech Wałęsa. The time of the action of the film is 20 years of Lech Wałęsa’s life, from December 1970 to 15 November 1989 (the day when he spoke to the U.S. Congress “We, the people!”), with all its turmoil and pitfalls. I do not conceal that I wish Robert Więckiewicz another success. Not only on the big screen, but also in various interviews, he shows that he is a perfect actor and a wise man. ::

Event

The customer-friendly insurance company 2011

As in previous years, the contest organised by “Gazeta Bankowa” was highly appreciated by its participants, who many times expressed their gratitude for the editorial board’s initiative, which is particularly addressed to the insurance sector. The President of TUiR Allianz Polska, Paweł Dangel, stressed “‘Gazeta Bankowa” had been trying to direct media attention to issues essential to all insured people. It is for those people that we are working,” Mr Dangel said. “Also the insurance sector itself, after twenty years of development, deserves a little prestige and appreciation. Being the organiser of this unique gala, “Gazeta Bankowa” is glad that it has garnered so much interest, which is growing year by year. Once again, the awards ceremony was attended by the presidents of insurance companies and of regulatory bodies of the insurance sector in Poland, as well as independent experts in the field, and scientists. The contest aims at singling out those insurance companies that implement strategies pursuing the best-possible quality of customer service – during the insurance period, claims settlement, and payment of compensation. As Maciej Goniszewski emphasised at the Gala – by organising the Customer-Friendly Insurance Company 2011 contest the monthly’s editorial board wished not only to honour those business entities that truly put their customers first, but also to send out a message that insurance companies in Poland make every effort to make insured people feel, and be, safe. The contest’s methodology was prepared by PwC, an independent jury and the editorial board of “Gazeta Bankowa”. The calculation of data and weighting criteria to obtain the final result was carried out by PwC, a company fully independent of the jury, but a content partner in the contest. The input data comes from three sources: the Polish Insurance Ombudsman, weighting 45%; the insurers, weighting

35%; and the independent assessment of the jury, weighting 20%. The weights for the respective indicators were set by the jury beforehand. The prizes and honourable mentions were awarded in two categories - I - Life insurance and II – Property insurance. The most customer-friendly insurers of 2011, who received the prestigious “Gazeta Bankowa” statuette were: in the life insurance category – ING TUnŻ, and in the property insurance category – TuiR Allianz Polska. Second place in Category I went to Nordea Polska TUnŻ, while BZ WBK Aviva TUnŻ was placed third. In Category II, Concordia TUW was ranked second, and TU Uniqa third. Honourable mentions for “open communication with the market” went to all insurance companies that took part in the contest and responded to the survey of “Gazeta Bankowa.” A special award went to the Polish Chamber of Insurance. The primary sponsor of the CustomerFriendly Insurance Company 2011 contest was IT Blue Services. The content partners were the Polish Chamber of Compensation and the Polish Insurance Ombudsman. The media patrons included: TVP INFO, Mediarun.pl, Manager, Puls Biznesu, “Polish Market”, Ubezpieczenie.com. pl, Bankier.pl, Investment Tribune, IPO.pl, and GB.pl. ::

Award for “Gazeta Bankowa”: Editor-in-Chief Maciej Goniszewski and Vice-President of the Polish Chamber of Compensation Andrzej Kesling

Winners in the property insurance category: Sylwia Mikiel, director of the Marketing and PR Department at Uniqa SA, Piotr Narloch, president of Concordia Polska TUW, and Paweł Dangel, President of Allianz Polska SA

Winners in the life insurance category: Krzysztof Charchuła, president of BZ WBK Aviva TU na Życie, Leszek Pielacha, member of the Board at Nordea Polska TUnŻ, and Tomasz Bławat, president of ING TU na Życie

Photos: Katarzyna Rainka

The editorial board of “Gazeta Bankowa” has granted awards in the Customer-Friendly Insurance Company 2011 contest, which was concluded with an official gala on 21 November in the Primate’s Palace in Warsaw. As the organiser, “Gazeta Bankowa” received a special award from the Polish Chamber of Compensation. The award was accepted by the editor-in-chief, Maciej Goniszewski, who thanked for the distinction and invited insurers to participate in next year’s contest.

Applauding winners of honourable mentions

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Cultural Monitor

Compiled by Maciej Proliński

An important biennial and a competition for a poster commemorating Henryk Górecki

Human rights in film On 8 December, Warsaw is hosting the 11th International Film Festival Watch Docs, Human Rights in Film, the world’s second-largest festival of this kind. During the 10-day festival, over 90 films from all over the world will be screened, in which the issue of human rights is woven into the art of film-making. The festival films will be shown in the Ujazdow ski Castle Centre for Contemporary Art, the Muranów Cinema, the Kultura Cinema, and the Former Library of Warsaw University. This year, the Marek Nowicki prize, awarded to documentary filmmakers for outstanding achievement in presenting human rights in film, went to Zhao Liang, a Chinese director, whose output includes such documentaries as “Crime and Punishment,” and “Petition.” The latter earned acclaim at the festival, since it was named the film of the decade by film critics. Zhao Liang will be a guest at the 11th edition of the festival during which all his movies will be presented. ::

Handing over the Presidency of the Council of the EU A year ago, a competition was concluded for the best art concept for an exhibition pavilion that will accompany the ceremony of the handing over of the Presidency in December 2011. The jury, led by Mirosław Bałka, considered the project by Studio Olafur Eliasson the best one. The handing over of the Presidency to another State, in accordance with EU practice, is held in a rather small circle. The National Audiovisual Institute and the Modern Art Museum in Warsaw offer a continuation of this tradition by way of creating an artistic project, which would become a lasting contribution of the Presidency programme to the Polish cultural landscape. The pavilion is intended to be a facility dedicated to art, and a location for arts presentations, educational activities, and meetings. Its mobile character, and ease of installation and transportation, enable it to be presented in numerous locations, also outside Poland. ::

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The Biennial of Polish Poster in Katowice is the oldest poster art competition. First organised in 1965, the event made the BWA Contemporary Art Gallery in Katowice an influential culture-forming institution. The competition will be followed by an exhibition presenting works by both recognised artists, and younger novices. The objective of the 22nd Biennial of Polish Poster is to provide an overview of poster output from the period 2009–2011. The post-competition exhibition is scheduled to open in December 2011 in the BWA Contemporary Art Gallery. This event will also feature a competition for the poster commemorating Henryk Mikołaj Górecki, whose music was a singular phenomenon of the sec- 1st prize in the competition for a poster ond half of the 20th Century. The compe- in memory of Henryk Mikołaj Górecki; designed by Jacek Staniszewki tition aims to form a collection of the best art works exhibited within the Biennial, in such places as the Academy of Music galleries in Katowice, academic centres, musical schools, community centres, and culture centres, both in Poland and abroad. ::

Young Polish Jazz in competitions The 35th International Contest of Young Jazz Groups – Jazz Juniors – will be held on 1-3 December in the Rotunda in Kraków. The theme of this year’s edition will be the integration of tradition and modernity. The first day of the festival will feature a performance by the Woj ciech Mazolewski Quintet. The second day will be an evening of film music, screened to the accompaniment of artistes with many years of experience on the jazz music scene, including Janusz Muniak and Wojciech Groborz. The last day of the festival will be the finalé concert, and at the same time, a tribute to the 35 years of jazz music on the stage of the Rotunda in Kraków. However, Jazz Juniors is, first of all, a competition. That is why it was in Kraków that during the last 30 years such leading Polish jazzmen as Leszek Możdżer and Marcin and Mateusz Pospieszalski began their careers. Each year it helps young jazz talents emerge, and go on to perform on Polish and European jazz stages. It has been more than ten years since the festival became international. ::

Cultural Monitor

“Divine Comedy”, the first Polish theatre “showcase” On 8-17 December, Kraków will also be the scene for the Divine Comedy Festival, the first genuine “showcase” of its kind in Poland. It consists of three parts, namely Inferno - a Polish competition, Paradiso - young directors and new performances, and Purgatorio - accompanying events and plays. The Inferno section, which is the competition of the best Polish performances of the previous season, will see the masters of the Polish theatre and their students compete for the Divine Comedian statuette. The audience will also see, among other works, Jerzy Jarocki’s “Tango” from the National Theatre in Warsaw and the famous second part of the “Persona. Simone’s body” trilogy by Krystian Lupa. The Paradiso part will include the theatre show “Dynasty. Sclerosis multiplex” directed by Natalia Korczakowska from the Jerzy Szaniawski Theatre in Wałbrzych, a theatrical response to the 1990’s popular TV series. The Purgatorio circle also holds a wide variety of attractions. The legendary “Description of Customs” produced in the 1980s in the STU Theatre, had a continuation, and then, the third part. “I came to Widawa at midnight, or The Description of Customs III” directed by Mikołaj Grabowski of the Imka Theatre in Warsaw, is not only the return of the outstanding theatre director to the memoirs of Father Kitowicz, but also a discussion on what it is to be Polish started anew. This section will also feature the newest performance of the Warsaw New Theatre “The End” directed by Krzysztof Warlikowski. ::

The most beautiful Nativity scenes in Kraków At Christmas time, the Main Market Square in Kraków will host the 69th Christmas Cribs Competition. Each year, the event starts on the first Thursday of December. The competition participants present their works under the monument to Adam Mickiewicz, and after the bugle call from the tower of St. Mary’s Basilica, they form a colourful procession and proceed to the Historical Museum of the City of Kraków, where the jury deliberates. The museum also organises the competition. ::

The mysterious Princess...

Refined music

Katarzyna Groniec is deservedly considered one of the most prominent sung poetry performers in Poland, having earned this reputation in the 1990s. On 8 November, her seventh album was released through EMI Music Poland. The album “Pin-up Princess” is to a large extent the result of cooperation with the leader of Voo Voo. Wojtek Waglewski wrote 6 compositions here, but the album sounds as if he composed and musically created the whole of it... for “Pin-up Princess” is stylistically varied, but at the same time coherent, and consistently created. What may be noticed in this “new diary” are the traces leading to the past, that is to the ballads with which we very readily associate Groniec. The pieces drifting somewhere in between blues, folk, and psychedelic rock, are surely a novelty here. The literary quality, the sense of humour, and even mockery, are also nicely combined here, conveying a deeper message about the world (both the intimate and the surrounding) of a mature woman. A slightly nonchalant vocal manner, as well as the rendition, connected with the freshness of composing and arranging ideas, locate the album up there with the most interesting publications of this year. ::

For a few years already, we have hosted at Christmas time in Poland the sensational Glenn Miller Orchestra, whose songs put us in a cheerful, family-Christmas mood. Although the beginnings of the Orchestra date back to the 1930s, it is the indisputable leader of the big-band formation until today, and it remains the most in-demand swing band in the world.

Humour, grace and style on DVD On 17 November Wydawnictwo Telewizji Kino Polska is releasing its latest compilation – a box of films directed by Jerzy Stefan Stawiński. The box includes three movies made in the 1960s, including his directorial debut. Stawiński (1921-2010) was a remarkable writer and screenwriter and one of the major founders of the “Polish Film School” (“Canal”, “Eroica”, “Bad Luck”). Also a director, he developed his own style, which was different from that of his scriptwriting. He portrayed his characters yearning for love, living in a world of their own dreams and ideals, and at the same time possessing immense imagination, and a sense of humour about themselves. ”No more divorces,” “Penguin,” and “Evening Before Christmas,” all the works collected in this compilation are charming films about pursuing sense and perfect love. These are warm, poetic portrayals of people with their weaknesses and fears, but still ready to go to great lengths to get nearer to their desires and catch happiness. The authentic Warsaw life from the beginning of the 1960s forms a lively background of the characters’ actions, and they themselves are neither mysterious nor rebellious. They are just normal, which makes them seem even more familiar to the audience, who can perceive them as people with similar problems, hopes, and experiences to their own. ::

As soon as this December, Polish fans will have the opportunity to listen to such pieces as “Moonlight Serenade”, and “Chattanooga Choo Choo” during the extraordinary concerts of the Glenn Miller Orchestra conducted by Wil Salden. Come and see! (Concerts: December 8 – Poznań, The Hall of Adam Mickiewicz; December 9 – Zabrze, The House of Music and Dance; December 10 – Łódź, Wytwórnia Club; December 11 – Warsaw, The Congress Hall). ::

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Cultural Monitor

History and sensuality In the New Year, as part of the experimental cycle of the National Opera, “Territories,” we will have the opportunity to see “Senso” by Marco Tutino – an Italian composer who, though contemporary, draws inspiration from the great operatic tradition in his melodies. The Polish premiere is scheduled for 26 February 2012 in Teatr Wielki – Polish National Opera. This will be a co-production of Teatro Comunale di Bologna and Teatro Massimo di Palermo. Maciej Proliński

Photos by Teatro Massimo di Palermo

Marco Tutino’s “Senso” is an opera created on commission from the Teatro Massimo in Palermo, which was first performed there at the season opening in January 2011. Half a century before, Luchino Visconti made the famous film of the same title – a painterly historical feature set in the Italian-Austrian war of unification in the 19th Century. His “Senso” remains one of the best examples of historical melodrama. Both works were inspired by Camillo Boito’s 1883 novella. Set in the Venice of 1866, it is the story of the affair of an Italian Countess, Livia and an Austrian Officer, Mahler, which broke not just the moral, but also the patriotic norms of the time (Italy was occupied by Austria). The passion, which slowly makes the Countess mad with love, which strips her of her sense, will come to an extremely dramatic end, as becomes true melodrama... The operatic performance was created by Hugo de Hana – who acts as director, stage and costume designer in his work.

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The Orchestra of Teatr Wielki – Polish National Opera will be conducted by Gerd Schaller, a German conductor, and musical director at Theater Magdeburg. He has cooperated with the Polish National Opera since 2007. His projects in Warsaw have included Berg’s “Wozzeck,” and Verdi’s “Rigoletto.” The cast includes Nicola Beller Carbone (Countess L ivia Serpieri), Luciano Mastro (Officer Hans Büchner) and an outstanding Polish baritone, Adam Kruszewski (Count Serpieri). “The performance will be part of our ‘Territories’ cycle, to which we invite innovative artists, calling up associations as-yetunknown to audiences, under which we would like to present less-known works and provide opportunities for young Polish artists. In this cycle we are presenting the most important works of contemporary music, besides debuting Polish composers, and completely unknown work, as well as avant-garde classics, and the debuts of Polish directors with the cream of

the crop of European opera. Opera is alive and well, leering at us with the cybernetic eye of the Phoenix,” announced Waldemar Dąbrowski, General Director of Teatr Wielki – Polish National Opera. “Territories” is a regular cycle, already a fixture in the calendar of the Warsaw Opera’s small stage. It presents the 19th-century operas and ballets which have been almost absent from the Polish stages, which are modern, sophisticated, and reaching for extreme, sometimes borderline, emotional states. These works were frequently inspired by great literary works. Obviously, they are not for everyone. “Senso” also includes bold scenes featuring Countess Livia wearing sensual underwear and her half-naked lover, which may be shocking to some opera purists. It is, however, certainly a must-see performance for all lovers of opera and its dramas. Also, I suspect not from such peripheral territories as one would assume. ::

Cultural Monitor

Value design Interview with Paweł Kruszyński, an outstanding Polish designer, architect, and owner of Peer Design, involved in the patriotic social campaign Independence Rock

Paweł Kruszyński – a prominent Polish designer, architect, and owner of Peer Design. He has designed this year’s Independence Rock guitar and the Independence Rock furniture line

Entrepreneur, designer, patriot – who are you? A bit of each, and a fair bit, too. An entrepreneur who develops and is an honest taxpayer, is a patriot in his country, as the growth of his company contributes to his homeland’s prosperity. I’m an entrepreneur, because I made up my mind that to further develop as a designer I have to decide about the directions of my progress myself, and running my own business allows this more than any employment. I’m a patriot largely because I’m an entrepreneur, and I’m an entrepreneur because I’m a designer. Thus, all is combined in a coherent whole. How can you convey national values in design? There was a time when patriotism in art manifested itself in national symbols or allusions to Poland and its tradition that were placed by artists in their works, irrespective of the form. I believe that nowadays, in the new reality of the last twenty years, patriotism is expressed in the pursuit of success by Polish creators, to present a coherent but idiosyncratic style to create a nationally and globally recognisable brand of Polish design. Good examples of that are Italian and German design. It’s enough to just look at a car to see if it was designed by an Italian or a German.

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This should also be the case with Polish design – it should have this indefinable common denominator. To achieve this we cannot draw on global design, but we should be faithful to our own nature, and Poles as a nation do have their strong and unique character. I believe that, as years go by with more and more successes from Polish designers, a European and global brand of Polish design will emerge. A re our national colours – beautiful, but simple – a challenge for a designer? Yes, and no. Beautiful things tend to be simple, and vice versa. In design however, there’s a very thin line between the simple and the simplistic. The lack of that designer’s “feel” and artistry may trivialise even the best of ideas. Using powerful, unambiguous primary colours, such as white and red, may be a simple way to make the design expressive, but when the design itself is poor and inappropriate for those colours, what we get is only a travesty of the original intention. Do you know any examples of patriotism in design similar to your involvement in Independence Rock? My contribution to preparing Independence Rock is but a drop in the ocean of creativity, hard work, and patriotism displayed

by the organisers. I would be vain if I considered my work an extraordinary display of patriotism. I merely responded to a need. If you’re looking for examples of similar actions, it’s hard not to mention Tomasz Bagiński and his “Animated History of Poland,” or the “Karabińczyki” project – a gadget promoting Polish culture abroad by Jan Jaworski, Magda Kryńska, and Grzegorz Sławiński. There are many such examples, but what’s important is the fact that such projects promote Polish personalities and design abroad, creating what I’ve already mentioned – the Polish brand. Still, not everyone gets the message of modern design. Above all, design should be useful and aesthetically pleasing. The latter is indeed a little concealed, but, I believe, intuitively felt by its users. Obviously I am speaking of the aesthetic value of design. Design is an applied art which combines, or at least should combine, the utilitarian and the artistic. Hence, I think, the great and ever-increasing popularity of such designer items as furniture, interiors, architecture and everyday objects. That’s why I’m convinced that users do understand the message of contemporary design, be it intuitively or consciously. You’ve spoken about design, but what is patriotism for you, generally? At one point in my life I reflected that the values I professed actually defined patriotism. I’m thinking of, on the one hand, the pride of my lineage to the Wielkopolska nobility, on the other, something much more important, the care for and dedication to my family and friends. I think that it is the care for your loved ones, the efforts to provide them, and all people, with the best possible conditions of life, that is the essence of patriotism, as it gives strength to our homeland. I believe a similar factor is honesty, as I think that you just can’t think of yourself as a patriot if you are dishonest, either in business or towards people, but also towards yourself. To sum it up, patriotism to me is the daily work and care for such values as family, the wise cultivation of traditions, and honesty.

Interview by Małgorzata Zakrzewska of SunriseART

www.peerdesign.com.pl www.pawelkruszynski.com

Cultural Monitor Harley Rock Independence Parade – it’s organizer Małgorzata Zakrzewska - SunriseART Sp z o o

Poland - The first to rock The Rock of Independence, a joyous celebration of Polish Independence Day, is a patriotic social campaign organised by young people in Warsaw. It addresses such important aspects of patriotism as entrepreneurship and the progress of science, culture, and art. It’s the second year that Polish Market has taken the event under its auspices. On 11 November 2011, the roar of Harley Davidson bikes, combined with a guitar big beat, gave this day an unforgettable atmosphere. Astonishing lights, along with a multimedia presentation on the 2nd Republic of Poland, were a unique introduction as well as a narration to music bands such as Sandalles, Night Rider, Magnetar – an emerging star - and the legendary Lombard, heroes of the Martial Law. The Rock of Independence campaign shows that modern patriotism is not just about martyrdom, but about the sheer joy of successes achieved, a look into the future, and responsibility. ::

Young people

Concert of Lombard

Independence Rock concert

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Polish Ecology

Food from the land of storks The best indicators of a healthy agricultural environment are birds, especially storks. And it is they that show the nature of Polish agriculture. The German version of Wikipedia reads “Poland is the land of storks. In 2004 one counted there 52 500 pairs of storks.” That is the largest number of storks in the world! Waldemar Sadowski This is a reason to be optimistic, but Wikipedia also warns: “It is of concern how the number of Polish storks will be affected by the agrarian policies of the European Union, under which one should expect the intensification of cultivation.” Will storks, along with a clean agricultural environment, survive? Maybe so. In recent years the modern industry of organic food processing involving such a unique background has grown. It is hoped that the development of this sector will save Polish storks, and thus also the clean agricultural environment, unpolluted by industrial crops. Paweł Krajmas, President of the Polish Ecology Association, which brings together organic food producers, said: “the Polish processing of organic food has got the best grounds for development in Europe. In 2010 we had over 20 thousand organic farms. That is a lot, but still we do not fully make use of our potential.” This rapidly-developing sector operates within a modern legal framework: the European system of inspection and certification. Inspections of production processes conducted on farms and in shops are performed by ten independent certification bodies. Answering the question of how organic food should be defined, President Kraj mas says: “First, it is food with organic agriculture certification. Only those farms and processing plants which

The Polish organic food sector welcomes co-operation The Polish Ecology Association

14 Miodowa Street 00-246 Warsaw www.polskaekologia.org e-mail info@polskaekologia.org

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undergo strict inspection by the certification bodies have the right to place the name and logo “eco” or “bio” on their packages.” Owing to this, the consumer can easily recognise organic food. Thus, the Polish organic food industry has a great, natural resources base and a verified control system. But the hope for the development of this sector, and thus for the survival of Polish storks, are small food processing plants. The most important of them belong to the Polish Ecology Association. For many years, the organic food sector was considered a too-small, insignificant niche. However, doubledigit sales increases in recent years show that we are dealing with a constant trend. Its culmination was the invitation to the Polish Ecology food processors to organise the catering for the Gala of Pearls of the Polish Economy in the Grand Theatre. Serving organic food to over a thousand prominent guests from the world of business and politics at the most prestigious event means that this sector ceases to be niche, and this occasion provides an insignia, which stands for the highest quality of products manufactured by the Polish Ecology’s food processors. The food for the discerning guests, among whom was President of the European Parliament Professor Jerzy Buzek, was provided by several companies. Delicious Polish dumplings were prepared by the Bracia Rudziks company; the flour for bread and dumplings was provided by Ekomega, a company known for its brand “Water Mills”; meat and meat products for the distinguished guests were served by a family business Jasiołka; crunchy biscuits made of amaranth were supplied by Ekoprodukt; many delicatessens were delivered by the oldest trading company in the ecology

sector – Biofuturo; the participants could also taste organic sweetmeats supplied by Bio Planet; and delicious cakes and juice were delivered by Symbio, the largest exporter of organic agricultural products. The meals were cooked by top chefs Marcin Suchanek - the Hotel Hyat chef, Ernest Jagodziński – the Intercontinental Hotel chef and Maciej Fabisiak – the 99 Restaurant chef. The dishes were tasty and the catering well-organised. Not only did organic food in Poland come out of its niche, but also reached a prestigious peak of recognition. Paweł Krajmas is the President of the Association, but he also runs a family business – a cold meats manufacturing company, and hence is familiar with the market. “Sales are not impressive yet,” he says, “but each year we record such increases that other sectors can only dream about. In 2010 the organic food industry in Poland recorded a 50% increase.” To the question of where this trend comes from, President Krajmas replied: “This is mainly due to the loss of consumer confidence in food produced with industrial methods, and because of concern for their own health. Taste is also important. Nature simply tastes better than chemistry.” The belief that organic food has higher nutritional and health values is driving the development of this sector worldwide. And this is confirmed by the results of scientific research. For example, the data collected by Professor Ewa Rembiałkowska of Warsaw University of Life Sciences (SGGW) show that organic vegetables contain on average 35% more vitamin C and 71% more polyphenols (anti-cancer substances). Similar examples are many. People are starting to notice the connection between health and food. Therefore, the world will be turning to organic food, and Poland has a chance to become the European leader in this field. Paweł Krajmas said: “The Association is also striving to achieve this goal. For the sake of consumers and Nature… Perhaps thanks to us, Poland will continue to be regarded as the land of storks.” ::

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