Renewable Energy Equipment in Poland: A Strategic Reference, 2007 0497823950, 9780497823955, 9781429499446

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Renewable Energy Equipment in Poland: A Strategic Reference, 2007

Edited by

Philip M. Parker, Ph.D. Eli Lilly Chair Professor of Innovation, Business and Society INSEAD (Fontainebleau & Singapore)

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ii COPYRIGHT NOTICE ISBN 0-497-82395-0 All of ICON Group International, Inc. publications are copyrighted. Copying our publications in whole or in part, for whatever reason, is a violation of copyrights laws and can lead to penalties and fines. Should you want to copy tables, graphs, or other materials from our publications, please contact us to request permission. ICON Group International, Inc. often grants permission for very limited reproduction of our publications for internal use, press releases, and academic research. Such reproduction requires, however, confirmed permission from ICON Group International, Inc. Please read the full copyright notice, disclaimer, and user agreement provisions at the end of this report.

IMPORTANT DISCLAIMER

Neither ICON Group International, Inc. nor its employees can be held accountable for the use and subsequent actions of the user of the information provided in this publication. Great efforts have been made to ensure the accuracy of the data, but we cannot guarantee, given the volume of information, accuracy. Since the information given in this report is forward-looking, the reader should read the disclaimer statement and user agreement provisions at the end of this report.

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About Icon Group International, Inc. Icon Group International, Inc.’s primary mission is to assist managers with their international information needs. U.S.-owned and operated, Icon Group has field offices in Paris, Hong Kong, and Lomé, Togo (West Africa). Created in 1994, Icon Group has published hundreds of multi-client databases, and global/regional market data, industry and country publications. Global/Regional Management Studies: Summarizing over 190 countries, management studies are generally organized into regional volumes and cover key management functions. The human resource series covers minimum wages, child labor, unionization and collective bargaining. The international law series covers media control and censorship, search and seizure, and trial justice and punishment. The diversity management series covers a variety of environmental context drivers that effect global operations. These include women’s rights, children’s rights, discrimination/racism, and religious forces and risks. Global strategic planning studies cover economic risk assessments, political risk assessments, foreign direct investment strategy, intellectual property strategy, and export strategies. Financial management studies cover taxes and tariffs. Global marketing studies focus on target segments (e.g. seniors, children, women) and strategic marketing planning. Country Studies: Often managers need an in-depth, yet broad and up-to-date understanding of a country’s strategic market potential and situation before the first field trip or investment proposal. There are over 190 country studies available. Each study consists of analysis, statistics, forecasts, and information of relevance to managers. The studies are continually updated to insure that the reports have the most relevant information available. In addition to raw information, the reports provide relevant analyses which put a more general perspective on a country (seen in the context of relative performance vis-à-vis benchmarks). Industry Studies: Companies are racing to become more international, if not global in their strategies. For over 2000 product/industry categories, these reports give the reader a concise summary of latent market forecasts, pro-forma financials, import competition profiles, contacts, key references and trends across 200 countries of the world. Some reports focus on a particular product and region (up to four regions per product), while others focus on a product within a particular country.

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Table of Contents 1

INTRODUCTION & METHODOLOGY.............................................................................1

1.1

What Does This Report Cover?

1

1.2

How to Strategically Evaluate Poland

1

1.3

Latent Demand and Accessibility in Poland

3

2 2.1

RENEWABLE ENERGY EQUIPMENT IN POLAND ......................................................5 Latent Demand and Accessibility: Background

5

2.2 Latent Demand: Aspects of Interest 5 2.2.1 Market Data................................................................................................................................................ 5 2.2.2 Laws and Regulations ................................................................................................................................ 7 2.3

Latent Demand: Best Prospects

8

2.4 Accessibility: The Structure of Competition 10 2.4.1 Marketing Strategies and Business Practices ........................................................................................... 10 2.4.2 Domestic Production and 3rd Country Imports........................................................................................ 10 2.4.3 Heat Production Equipment ..................................................................................................................... 10 2.4.4 Electricity Production Equipment ............................................................................................................ 11 2.5

Accessibility: U.S. Presence

12

2.6

Latent Demand: Target Buyers

12

2.7 Accessibility: Financing Strategies 13 2.7.1 Local Financial Sources ........................................................................................................................... 14 2.7.2 Grants ....................................................................................................................................................... 15 2.8 Market Issues and Obstacles 15 2.8.1 Customs.................................................................................................................................................... 15 2.8.2 Excise Tax ................................................................................................................................................ 16 2.8.3 VAT.......................................................................................................................................................... 16 2.8.4 Safety Certificates .................................................................................................................................... 16 2.9 Key Contacts 17 2.9.1 Trade Event .............................................................................................................................................. 17 2.9.2 Industry Associations ............................................................................................................................... 17 2.9.3 Financial Institutions ................................................................................................................................ 19

3 FINANCIAL INDICATORS: STEAM, GAS AND HYDRAULIC TURBINES AND TURBINE GENERATOR SET UNITS .....................................................................................20 3.1 Overview 20 3.1.1 Financial Returns and Gaps in Poland...................................................................................................... 21 3.1.2 Labor Productivity Gaps in Poland .......................................................................................................... 24 3.1.3 Limitations and Extensions ...................................................................................................................... 24 3.2

Financial Returns in Poland: Asset Structure Ratios

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Contents 3.2.1 3.2.2 3.2.3 3.2.4 3.2.5

v

Overview .................................................................................................................................................. 25 Assets – Definitions of Terms .................................................................................................................. 25 Asset Structure: Outlook .......................................................................................................................... 26 Large Variances: Assets ........................................................................................................................... 27 Key Percentiles and Rankings .................................................................................................................. 30

3.3 Financial Returns in Poland: Liability Structure Ratios 43 3.3.1 Overview .................................................................................................................................................. 43 3.3.2 Liabilities and Equity – Definitions of Terms .......................................................................................... 43 3.3.3 Liability Structure: Outlook ..................................................................................................................... 45 3.3.4 Large Variances: Liabilities ..................................................................................................................... 46 3.3.5 Key Percentiles and Rankings .................................................................................................................. 49 3.4 Financial Returns in Poland: Income Structure Ratios 60 3.4.1 Overview .................................................................................................................................................. 60 3.4.2 Income Statements – Definitions of Terms .............................................................................................. 60 3.4.3 Income Structure: Outlook ....................................................................................................................... 62 3.4.4 Large Variances: Income.......................................................................................................................... 63 3.4.5 Key Percentiles and Rankings .................................................................................................................. 66 3.5 Financial Returns in Poland: Profitability Ratios 77 3.5.1 Overview .................................................................................................................................................. 77 3.5.2 Ratios – Definitions of Terms .................................................................................................................. 77 3.5.3 Ratio Structure: Outlook .......................................................................................................................... 79 3.5.4 Large Variances: Ratios ........................................................................................................................... 80 3.5.5 Key Percentiles and Rankings .................................................................................................................. 83 3.6 Productivity in Poland: Asset-Labor Ratios 98 3.6.1 Overview .................................................................................................................................................. 98 3.6.2 Asset to Labor: Outlook ........................................................................................................................... 98 3.6.3 Asset to Labor: International Gaps........................................................................................................... 99 3.6.4 Key Percentiles and Rankings ................................................................................................................ 102 3.7 Productivity in Poland: Liability-Labor Ratios 115 3.7.1 Overview ................................................................................................................................................ 115 3.7.2 Liability to Labor: Outlook .................................................................................................................... 115 3.7.3 Liability and Equity to Labor: International Gaps.................................................................................. 116 3.7.4 Key Percentiles and Rankings ................................................................................................................ 119 3.8 Productivity in Poland: Income-Labor Ratios 130 3.8.1 Overview ................................................................................................................................................ 130 3.8.2 Income to Labor: Outlook ...................................................................................................................... 130 3.8.3 Income to Labor: Gaps ........................................................................................................................... 131 3.8.4 Key Percentiles and Rankings ................................................................................................................ 134

4 4.1

MACRO-ACCESSIBILITY IN POLAND........................................................................145 Executive Summary

145

4.2 Economic Fundamentals and Dynamics 145 4.2.1 Government Intervention Risks.............................................................................................................. 145 4.2.2 Balance of Payments Issues ................................................................................................................... 145 4.2.3 Infrastructure Development.................................................................................................................... 146 4.2.4 Regional Economic Integration.............................................................................................................. 146

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Contents 4.2.5

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Economic Relationship with the United States ...................................................................................... 146

4.3 Political Risks 147 4.3.1 Relations between National and Provincial Leaders .............................................................................. 147 4.3.2 The Political System............................................................................................................................... 147 4.4 Marketing Strategies 148 4.4.1 Distribution Channel Options................................................................................................................. 149 4.4.2 Agents and Distributors.......................................................................................................................... 151 4.4.3 Franchising Activities............................................................................................................................. 151 4.4.4 Direct Marketing Options....................................................................................................................... 153 4.4.5 Joint Ventures and Licensing Options.................................................................................................... 154 4.4.6 Creating a Sales Office........................................................................................................................... 154 4.4.7 Selling Strategies.................................................................................................................................... 155 4.4.8 Advertising and Trade Promotion .......................................................................................................... 156 4.4.9 Pricing Issues.......................................................................................................................................... 158 4.4.10 Public Sector Marketing......................................................................................................................... 158 4.4.11 Hiring Local Counsel ............................................................................................................................. 159 4.5 Import and Export Regulation Risks 159 4.5.1 Trade Barriers......................................................................................................................................... 159 4.5.2 Tariff Rates............................................................................................................................................. 161 4.5.3 Licenses Required for Imports ............................................................................................................... 161 4.5.4 Entering Temporary Imports .................................................................................................................. 162 4.5.5 Special Import/Export Requirements and Certifications ........................................................................ 162 4.5.6 Local Standards ...................................................................................................................................... 163 4.5.7 Free Trade Zone Options........................................................................................................................ 164 4.5.8 Adherence to Free Trade Agreements .................................................................................................... 164 4.6 Investment Climate 164 4.6.1 Openness to Foreign Investment ............................................................................................................ 164 4.6.2 Conversion and Transfer Policies........................................................................................................... 167 4.6.3 Expropriation and Compensation ........................................................................................................... 168 4.6.4 Dispute Settlement ................................................................................................................................. 169 4.6.5 Trade-Related Investment Measures (TRIMs) ....................................................................................... 169 4.6.6 Right to Private Ownership and Establishment ...................................................................................... 170 4.6.7 Intellectual Property Risks ..................................................................................................................... 171 4.7 Transparency of the Regulatory System 172 4.7.1 Capital Market Risks .............................................................................................................................. 172 4.7.2 Political Violence ................................................................................................................................... 174 4.7.3 Corruption .............................................................................................................................................. 174 4.7.4 Bilateral Investment Agreements ........................................................................................................... 175 4.7.5 OPIC and Other Investment Insurance................................................................................................... 177 4.7.6 Labor ...................................................................................................................................................... 177 4.7.7 Free Trade Zone Options........................................................................................................................ 178 4.7.8 Foreign Direct Investment...................................................................................................................... 178 4.8 Trade and Project Financing 179 4.8.1 The Banking System .............................................................................................................................. 179 4.8.2 Foreign Exchange Control Risks............................................................................................................ 180 4.8.3 Financing Exports .................................................................................................................................. 180 4.8.4 Import Financing .................................................................................................................................... 180 4.8.5 Export Financing Options ...................................................................................................................... 180

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Contents 4.8.6

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Available Project Financing ................................................................................................................... 182

4.9 Travel Issues 186 4.9.1 Local Business Practices ........................................................................................................................ 186 4.9.2 Security Advisories ................................................................................................................................ 186 4.9.3 Local Holidays Observed ....................................................................................................................... 187 4.9.4 Infrastructure for Conducting Business.................................................................................................. 188 4.9.5 Country Data .......................................................................................................................................... 188 4.10 Key Contacts 189 4.10.1 U.S. Embassy Trade-Related Contacts................................................................................................... 189 4.10.2 Chambers of Commerce and Bilateral Business Councils ..................................................................... 190 4.10.3 Market Research Firms .......................................................................................................................... 192 4.10.4 Commercial Banks ................................................................................................................................. 192 4.10.5 Multilateral Development Bank Offices in Poland ................................................................................ 193 4.10.6 Contacts in the U.S................................................................................................................................. 194 4.10.7 Trade Associations ................................................................................................................................. 194

5

DISCLAIMERS, WARRANTEES, AND USER AGREEMENT PROVISIONS .........197

5.1

Disclaimers & Safe Harbor

197

5.2

Icon Group International, Inc. User Agreement Provisions

198

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1 1.1

INTRODUCTION & METHODOLOGY WHAT DOES THIS REPORT COVER?

The primary audience for this report is managers involved with the highest levels of the strategic planning process and consultants who help their clients with this task. The user will not only benefit from the hundreds of hours that went into the methodology and its application, but also from its alternative perspective on strategic planning relating to renewable energy equipment in Poland. As the editor of this report, I am drawing on a methodology developed at INSEAD, an international business school (www.insead.edu). For any given industry or sector, including renewable energy equipment, the methodology decomposes a country’s strategic potential along four key dimensions: (1) latent demand, (2) micro-accessibility, (3) proxy operating pro-forma financials, and (4) macro-accessibility. A country may have very high latent demand, yet have low accessibility, making it a less attractive market than many smaller potential countries having higher levels of accessibility. With this perspective, this report provides both a micro and a macro strategic profile of renewable energy equipment in Poland. It does so by compiling published information that directly relates to latent demand and accessibility, either at the micro or macro level. The reader new to Poland can quickly understand where Poland fits into a firm’s strategic perspective. In Chapter 2, the report investigates latent demand and micro-accessibility for renewable energy equipment in Poland. In Chapters 3 and 4, the report covers proxy operating pro-forma financials and macroaccessibility in Poland. Macro-accessibility is a general evaluation of investment and business conditions in Poland.

1.2

HOW TO STRATEGICALLY EVALUATE POLAND

Perhaps the most efficient way of evaluating Poland is to consider key dimensions which themselves are composites of multiple factors. Composite portfolio approaches have long been used by strategic planners. The biggest challenge in this approach is to choose the appropriate factors that are the most relevant to international planning. The two measures of greatest relevance to renewable energy equipment are “latent demand” and “market accessibility”. The figure below summarizes the key dimensions and recommendations of such an approach. Using these two composites, one can prioritize all countries of the world. Countries of high latent demand and high relative accessibility (e.g. easier entry for one firm compared to other firms) are given highest priority. The figure below shows two different scenarios. Accessibility is defined as a firm’s ease of entering or supplying from or to a market (the “supply side”), and latent demand is an indicator of the potential in serving from or to the market (the “demand side”).

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Introduction & Methodology

2

Framework for Prioritizing Countries Demand/Market Potential Driven Firm

High

Highest Priority

High Priority Latent Demand

Moderate Priority Low Priority

Low

Lowest Priority Low

High Relative Accessibility

Accessibility/Supply Averse Firm High Highest Priority High Priority Latent Demand

Moderate Priority Low Priority

Lowest Priority Low High

Low Relative Accessibility

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Introduction & Methodology

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In the top figure, the firm is driven by market potential, whereas the bottom figure represents a firm that is driven by costs or by an aversion to difficult markets. This report treats the reader as coming from a “generic firm” approaching the global market – neither a market-driven nor a costdriven company. Planners must therefore augment this report with their own company-specific factors that might change the priorities (e.g. a Canadian firm may have higher accessibility in Canada than a German firm).

1.3

LATENT DEMAND AND ACCESSIBILITY IN POLAND

This report provides a detailed overview of factors driving latent demand and accessibility for renewable energy equipment in Poland. Latent demand is largely driven by economic fundamentals specific to renewable energy equipment. This topic is discussed in Chapter 2 using work carried out in Poland on behalf of American firms and authored by the United States government (typically commercial attachés or similar persons in local offices of the U.S. Department of State). I have included a number of edits to clarify the information provided. Latent demand only represents half of the picture. Chapter 2 also deals with micro-accessibility for renewable energy equipment in Poland. I use the term “micro” since the discussion is focused specifically on renewable energy equipment. Chapter 3 is also a stand-alone report that I have authored. It covers proxy pro-forma financial indicators of firms operating in Poland. I use the word “proxy” because the provided figures only cover a “what if” scenario, based on actual operating results for firms in Poland. The numbers are only indicative of an average firm whose primary activity is in Poland. It covers a vertical analysis of the maximum likelihood balance sheet, income statement, and financial ratios of firms operating in Poland. It does so for a particular Standard Industrial Classification (SIC) code. That code covers “steam, gas and hydraulic turbines and turbine generator set units”, as defined in Chapter 3. Again, while “steam, gas and hydraulic turbines and turbine generator set units” does not exactly equate to “renewable energy equipment”, it nevertheless gives an indicator of how Poland compares to other countries for a proxy adjacent category along various dimensions. Chapter 4 deals with macro-accessibility and covers factors that go beyond renewable energy equipment. A country may at first sight appear to be attractive due to a high latent demand, but it is often less attractive when one considers at the macro level how easy it might be to serve that entire potential and/or general business risks. While accessibility will always vary from one company to another for a given country, the following domains are typically considered when evaluating macro-accessibility in Poland: •

Openness to Trade in Poland

•

Openness to Direct Investment in Poland

•

Local Marketing and Entry Strategy Alternatives

•

Local Human Resources

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Introduction & Methodology •

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Local Risks

Across these domains, a number of not-so-obvious factors can affect accessibility and risk. These are covered in the Chapter 4, which is a general overview of investment and business conditions in Poland. Chapter 4 is also presented from the perspective of an American firm, though is equally applicable to most firms entering Poland. This chapter is also authored by local offices of the U.S. government, as is Chapter 2. Likewise, I have included a number of edits to clarify the provided information as it relates to the general strategic framework mentioned earlier.

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2

RENEWABLE ENERGY EQUIPMENT IN POLAND

2.1

LATENT DEMAND AND ACCESSIBILITY: BACKGROUND

This report focuses on the market for renewable energy sources and its utilization and potential in Poland. The report also lists examples of renewable energy installations in Poland. This report also aims at providing insights to U.S. businesses that might be interested in investment or joint-venture cooperation within this industry sub-sector. Poland has very favorable technical and economical factors for renewable energy. Poland has begun to experience a shift and political and public support away from traditional fossil fuels and toward the development of renewable energy resources. Poland has established a target of 10.4% of energy production from renewable sources by 2010, and to continue with this target till 2014. These targets were set forth in Ministry of Economy regulation of November 3rd, 2006. Utilities are required to purchase electricity from renewable sources, and prices are regulated by tariffs. Producers of green energy can apply for green certificates that are tradable on global energy stock exchange markets. Biomass and wind appear to be the most promising renewable energy resources for development in Poland, with an estimated potential of about 4,000 MWe each. Both liquid and solid biomass are considered to be the main sources of renewable energy in Poland, for both electricity and thermal energy production. Biomass technologies and supply sources are relatively mature, and the investment costs are lower than for other maturing renewable energy technologies. Poland also has some of the best documented wind resources in Central and Eastern Europe with areas reaching up to 1,000 W/m2 in power density.

2.2 2.2.1

LATENT DEMAND: ASPECTS OF INTEREST Market Data

Political, legal and financial aspects of renewable energy source utilization in Poland have been adjusted according to what the country committed when signing EU accession treaty. The technical potential of renewable energy sources in Poland is estimated at 3,850 PJ per year, meaning that almost 90% of primary energy consumption can be covered by RES in Poland. Geothermal, solar and biomass energy has the highest technical potential (respectively: 1,512 PJ, 1,340 PJ, 619 PJ per year). Resources of water and wind energy are much lower (technical potential, respectively, 43 PJ and 36 PJ per year). Wave and tidal potential energy has not been fully assessed. In 2005 production of energy from RES was estimated at 3,760,301 MWh: •

2,175,559 MWh generated from water energy.

•

467,975 MWh of thermal and electric energy generated from biomass (heat from wood, straw and biogas energy, power from biogas and landfill gas energy).

•

135,291 MWh from wind mills.

•

104,465 MWh from biogas.

•

877,009 MWh from co-firing installations.*

* Registered by Energy Regulation Office URE on August 8, 2006.

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Renewable Energy Equipment

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According to the European Bank for Reconstruction and Development Poland is one of the most promising wind energy markets in Europe. The country possesses many potentially profitable locations and great development possibilities. Much of Poland has favorable conditions for wind energy production where the average wind speed varies between 5.5 and 7.0 m/s at a height of 50 meters. Assessed productivity of one 2MW turbine may be equal to as much as 5 thousand MWH per year. A country wide wind atlas is available which indicates that an area in the north-west has wind speeds above 6m/s at 10 m. The Baltic coast, one large central area and an area to the north have wind speed of 5m/s. There is currently only 108 MW of wind energy capacity installed in Poland.

Wind Speeds

Source: Wind Atlas of Poland Biomass is the most promising source of renewable energy in Poland. The technical potential of biomass amounts to 755 PJ/year, and the greatest opportunities for biomass technology implementation are in the forestry, wood processing and agriculture sectors. The majority of current biomass use is as heat for and small and medium scale boilers in industrial settings and the most common fuel are wood pieces, sawdust, and wood shavings. Combined heat and power (CHP) plants using organic waste from pulp and paper operations, and straw and wood fired heating plants are also in operation. Biogas production from landfill gas and municipal waste is also available. In 2002 there were approximately 25 landfill gas installations producing 22.3 GWh of electricity and 100 TJ of heat. Biogas production from municipal waste resulted in about 38 GWh of electricity and 450 TJ of heat. About 47% of the land area of Poland, about 14 million ha, consists of arable and agricultural lands. Nearly 9 million ha is forested, approximately 28%. It is estimated that the total forest cover in Poland will reach 32% in the next 15 years. There are very good opportunities for biomass development in Poland. The areas with the most potential for biomass/biogas projects are those in the northern and western regions, rural and mountainous regions, as well as the eastern border of Belarus. Solar radiation intensity in Poland heavily favors the spring and summer months, with approximately 80% of the annual insulation falling during this period. The installed solar photovoltaic capacity amounts only 300 kW where only 70kW is connected to the grid. Some liquid and air solar heat collectors are used in Poland. Air units are primarily used for grain drying, while liquid units are generally employed for space and hot water heating in homes and other buildings. One potential of solar energy in the country is estimated as 370 PJ/yr. The technical potential for solar energy according to the EC BREC’s studies of the year 2000 gives an annual technical potential energy as 1340 PJ/yr. This number varies greatly in different studies. It is obvious that a country wide extensive research on the technical and economical feasibility of solar energy is needed. Poland has a sizable reserve of geothermal energy that is rich in low enthalpy resources, although there is little in the form of naturally occurring thermal springs or outflows. The country is characterized by large-scale low enthalpy resources which are contained in 3 sedimentary provinces which cover approximately 80% of the total land area.

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Currently the country utilizes the resources mainly for space heating and therapeutic purposes, although there are experimental projects regarding fish farming, timber-drying and greenhouse heating. Current installed capacity is approximately 69 MWt, of which 26 MWt is from heat pumps, which collectively generate 274 TJ of energy on an annual basis. The Polish Geothermal Association (PGA) has been pushing for an increase in the use and awareness of the country’s resources. While Poland has set aggressive goals concerning renewable energy to be met in 2010 and 2020 respectively, it is viewed that the majority of the renewable energy development will be in the biomass sector.

Geothermic Plants

Source: Polish Geothermal Association Hydro power will probably remain the second largest renewable energy source with limited possibilities of further growth. The Polish hydro power resource is small due to the limited and unfavorable distributed rainfall, high soil permeability and relative flatness of the country. The total installed capacity of large hydro-electric power stations is approximately 340 MW and 185 MW of small hydro. The total technical potential of hydro energy is equal to 49 PJ/year, of that, 6 PJ/year is from small hydro. As for the small hydro plants, approximately 1,000 plants could be built with a total capacity of 200 MW and estimated electric energy production 1,000 GWH/year. Due to limited water resources in Poland, the installed power of most of the small hydro plants is below 100 kW. Such power stations offer a chance of improving the very poor runoff coefficient, particularly on small rivers. What is also important is the local retention of water. Small hydro takes advantage of the local potential for electricity generation thus providing a source of income to a group of people, usually in areas with a high unemployment rate. The power output of existing hydro-electric power stations may be increased by 20-30% through modernization of the generators.

2.2.2

Laws and Regulations

Poland’s RES market is regulated by the Energy Law issued on April 1997 and published in the Journal of Law Dz.U. 1997 No 54 and its amendment from March 4th, 2005. This law was modified with the regulation issued by the Ministry of Economy on November 3, 2006. This regulation sets targets of green energy to be produced until 2014.

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According to the Energy Law, all entities dealing with the trade of heat and electrical energy are obligated to purchase offered green energy from the producers based in Poland. The amount of this energy is determined by regulation and is as follows: 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

3.1% 3.6% 5.1% 7% 8.7% 10.4% 10.4% 10.4% 10.4% 10.4%

In case these entities do not comply with the regulation, the Energy Regulation Office will be entitled to impose a special charge of $80/MWh for each missing MW of green energy in the total energy balance of the entity. Green energy production and purchase are confirmed by green certificates referred to as “certificates of origin.” These certificates are issued by the Energy Regulation Office URE and are tradable accordingly to the Commodities Market Law of October 26, 2000. The current price of green certificate amounts to approximately $80.

2.3

LATENT DEMAND: BEST PROSPECTS

At the moment, utilization of RES is very low and according to the official statistics is about 2.8% of the primary energy consumption. Till now, the only relatively “popular” renewable energy sources have been wood and hydropower. However, utilization of other renewable energy sources has been dynamically developing in the last few years, especially as far as straw, wind, landfill gas and geothermal energy are concerned. In 2005, total direct consumption of final energy (heat, electricity, fuels, etc) in Poland was 708,261 GWh. Based on official data regarding existing renewable energy installations, final consumption of energy derived from RES reached 17,706 GWh, which was about 2.5% of the total consumption in 2005.

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Growing Role of Biomass in Renewable Energy, 2005

Source: Institute for Renewable Energy, Warsaw

Technical Potential for Renewable Energy Sources (RES) vs. Market Penetration (GWh) RES Wind Hydropower Solar Wood Straw, etc. Solid Waste Biogas Liquid Biofuels Geothermal

Current Utilization 8 2,500 7 1,000 50 0 75 1,500 900

Technical Potential 10,000 10,000 500,000 200,000 75,000 50,000 20,000 10,000 500,000

Source: EC Baltic Renewable Energy Center/IBMER, Warsaw

Best Selling Prospects with Harmonized System Codes 8402 8402 8402 841919 8418 8407 854140 841280 841011

Wood-fired boilers Fluidized-bed boilers Straw-fired boilers Solar water thermal collectors Geothermal heating pumps Spark ignition engines generating electricity from biogas at wastewater treatment plants and landfill gas Photovoltaic cells Wind turbines Hydro-power plants turbines

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Renewable Energy Equipment

2.4 2.4.1

10

ACCESSIBILITY: THE STRUCTURE OF COMPETITION Marketing Strategies and Business Practices

Foreign technology companies have many competitive advantages over local ones, typically offering newest technology, more experience and greater organizational capabilities. They also have access to leading international experts that domestic firms do not. Most successful foreign companies on the Polish market have representative offices in Poland. They participate in major trade events and actively cooperate with Polish Environmental Institutes. If a company is not yet ready to establish its own office in Poland, we suggest finding a local Polish partner. In this manner American know-how will be augmented by local awareness of the market, regulations, habits, and “informal procedures.” U.S. presence in showcase projects is highly recommended and may create substantial interest for U.S. products and services in the market. U.S. companies interested in expanding into the Polish market should spend time and effort promoting their services and technology. American firms should participate in Polish trade shows, establish contacts with Polish companies and institutions, and advertise in local trade publications. Important factors for Polish companies and officials include post-sale maintenance, equipment service and spare parts accessibility. U.S. companies should convince their Polish partners and possible investors that they are ready to provide this. For equipment manufacturers another option is to contact a Polish company specializing in import and distribution only. They usually sell the equipment to the investors.

2.4.2

Domestic Production and 3rd Country Imports

The Polish market offers investors domestic and imported RES technologies and equipment. The number of Polish companies include: 23 producers of biomass-to-heat equipment, 10 producers of small hydro turbines, 2 producers of biogas-to-power engines, 7 producers of solar panels, and 2 producers of wind turbines. The local market is dominated by domestic companies and companies from neighboring countries, specifically from those offering financial assistance and those having a strong interest in establishing a presence in Central and Eastern Europe. This applies to foreign companies offering technical assistance, technologies, and equipment. Poland’s accession to the European Union offered companies from the European economic area enormous possibilities of financing their RE projects here. Since May 1st, 2004 when Poland acceded to the EU, all structural funds prospects are open to bidders worldwide.

2.4.3

Heat Production Equipment

Wood At present there are at least 7 local manufacturers and 5 importers of wood-fired boilers with capacities from 20 to 150 kW in Poland. One local company specializes in small-scale fluidized-bed boilers (0.5-2.5 MW) adjusted to the use of wood chips. 16 producers and importers offer technologies with capacities larger than 150 kW (up to 10 MW). Small-scale installations are capable for individual houses, farms and small firms; larger ones are capable for local heating plants.

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European Union technologies are mainly imported from Denmark, Finland, Germany, Austria and France. Both local and EU boilers offered currently on the Polish market represent a wide range of products ranging from manually operated low-tech technologies to high automatic and computerized systems. However, only a few manufacturers/suppliers offer full turn-key solutions. There are no manufacturers and suppliers of small-scale cogeneration units based on the use of biomass fuel.

Straw Currently on the Polish market there are at least five manufacturers and several importers of straw-fired boilers offering equipment with a capacity range from 30 kW to 3.5 MW. Small-scale technologies are suitable for individual houses and farms; larger ones are suitable for local heating plants. Most of the Polish designs for strawfired DHP are low- and medium-tech though relatively inexpensive. However, most existing straw-fired DHP implemented up until now use Danish technologies, which are typically high-tech, fully automatic systems.

Anaerobic Digestion Poland does not have a dedicated industry to manufacture installations for anaerobic digestion of animal manure, sewage sludge or organic effluents from food-processing. However, there are several workshops, producing and installing installations mainly at wastewater treatment plants. Biogas from animal manure up till now has been typically used only for heat production.

Solar Thermal Approximately 20 suppliers of solar water thermal collectors offer essential components in Poland. Four manufacture solar equipment using their own designs. Such collectors typically use selective absorbers coated by black chromium and water tubes made of copper. Other suppliers usually offer equipment made in the EU and/or North America. However, at the moment there are no major manufacturers of solar air heaters. Only a few small Polish companies manufacture and install air solar collectors that are used for additional heating of rooms and for crop drying.

Geothermal Heat At present, Poland has 3 major geothermal DHP. Installations for the extraction of geothermal waters are usually made by companies working for the mining industry. Many of the bore-holes that are used today were made during geological surveys searching for oil, gas and other mining ordered by the Ministry of Environmental Protection, Natural Resources and Forestry. Currently, there are several companies specializing in identifying geothermal resources, design, construction, operation and maintenance of geothermal plants. There are also suppliers of heat exchangers resistant to high salinity hot waters as well as manufacturers of other equipment.

2.4.4

Electricity Production Equipment

Biomass and Biogas At the moment, there are only two major manufacturers of spark ignition engines, which are designed to generate electricity from biogas at waste water treatment plants and from landfill gas. Due to simple design and relatively low price, most of the installations for electricity generation from biogas/ landfill gas in Poland are equipped with such engines. However there are no manufacturers of complete small-scale CHP units designed for such fuels as biomass or biogas.

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2007 Icon Group International, Inc.

Renewable Energy Equipment

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PV Conversion Attempts supported by the Committee for Scientific Research, scientific societies and electronic industry are being made to commence industrial production of photovoltaic cells in Poland. Regretfully, Poland lagged in the development of photovoltaics, which took place mainly in the United States, in Japan and in European Union countries in the 1990’s. Generally most of PV modules today are imported from Germany, Italy and the U.S.

Wind Power There are now two Polish manufacturers of modern grid-connected wind turbines: NOWOMAG and KOMAG. One of them manufactures 160 kW units, and other small 30 kW units. Both manufacturers are located in southern Poland close to the Tatra mountains. Apart from these, there are several dozen other companies which manufacture wind turbine components such as wind turbine towers, nacelles, gear boxes, generators and the like. The companies collaborate both with Polish manufacturers and suppliers for EU wind turbines.

Small Hydro Poland is relatively low-lying country and as a result, turbines used most often have small heads: Kaplan, Francis, Banki-Michell and derivatives. At present, in Poland there are at least 10 domestic manufacturers of small hydro turbines and equipment for small hydro plants, as well as several representatives of larger EU companies, mainly from Scandinavia and France. Apart from these, there is also over 15-20 local firms providing specialized advise and expertise related to the localization, design, supervision and construction small hydro plants.

2.5

ACCESSIBILITY: U.S. PRESENCE

U.S. equipment producers are not present in the Polish market. Some firms like wind turbine producers: Bergey Windpower Co., Inc. and Southwest Windpower Co., Inc. are represented by Polish companies with dealership agreements. GE Wind has been present on the Polish market since 1995. Some U.S. firms have shown strong interest in investment such as Invenergy LLC, which invested in the 50MW wind park. U.S. market share in the Polish renewable energy sources market could be considerably higher, since the U.S. is the strongest and the largest producer of equipment used in alternative energy production. Higher U.S. market share in Poland could be achieved by establishing cooperation with Polish firms present in this market or in establishing representative offices or branches in Poland.

2.6

LATENT DEMAND: TARGET BUYERS

End-users for environmental consulting services represent a very wide spectrum of different buyers like: •

Municipalities, Gminas, and Powiats (local authorities).

•

State-owned companies.

•

Private local companies.

•

Foreign companies investing in Poland.

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2007 Icon Group International, Inc.

Renewable Energy Equipment

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Renewable energy sources end users are gaining in importance since the Polish power industry faces very difficult problems with structural changes. Poland needs to increase its consumption of hydrocarbon fuels and renewable energy sources and reduce the consumption of coals. However electric energy production increases need to be balanced with a reduction in pollution volume. Moreover, many heat-generating power stations are outdated, inefficient, and should be modernized in the short-term. Also, the cost of production of Polish electric energy may overstep the European level as a result of the modernization needs. The production of electric energy based on brown coal is significantly cheaper, (less than from other sources), but it seriously affects the environment. The government has set air protection as its environmental priority. Poland is a signatory to Kyoto Protocol, what obligates the Polish government to a considerable reduction of its level of CO2 emission. The application of alternative sources of energy was pinpointed as one of Poland’s most important projects to achieve the EU standards, among modernization of technological processes, modernization of industrial boilers, changing fuels to gas and oil and wider use of coal gasification processes, installation of dust and gaseous emissions reduction mechanisms (especially for sulfur dioxide, dust particles, nitrogen monoxides, carbon dioxides), and construction of central (district) heating systems in urban areas. Although the Polish market is extremely price sensitive, clients are willing to pay a substantial premium for the quality and suitability of services offered. Four factors that would have a bearing on the decision making process are: •

Price: Price is an important decision making factor in Poland. The common apprehension about any imported product or service is that it is very expensive. This issue must be managed carefully through a strategy that offers a package of services, rather than an individual service and that stresses the non-engineering aspects of the project such as capital maintenance cost or efficiency ratio.

•

Quality: Products or services that are perceived as qualitatively better are well received and at times easily acceptable at a premium over existing competition, however the decision makers need to be aware of the benefits of the foreign technology offered in a particular bid.

•

Applicability: It is critical that the service or product offered be molded to suit Polish conditions and the technical ability of the workers at the shop-floor level.

•

Continued Support: Important factors for Polish companies and officials include post-sale maintenance, equipment service and spare parts accessibility. U.S. companies should convince their Polish partners and possible investors that they are ready to provide this.

2.7

ACCESSIBILITY: FINANCING STRATEGIES

Financing for RES investments will come from state and local government budgets, various environmental funds , EU structural funds and individual investors and entrepreneurs. When Poland joined the European Community, it gained access to the following assistance funds for the years 2004-2006: 2 billion EUR from Cohesion Funds, 8.3 billion EUR from Structural funds, (European Regional Development Fund); and about 700 million EUR annually from funds for development of rural areas. These funds are still available. Starting from January 2007 Poland gained access to 67 billion Euro from EU structural funds. The Polish government prepared the National Development Plan, NDP, that describes priorities for project financing till 2013. Among these projects are also projects that will benefit from operational programs included in the NDP.

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Renewable Energy Equipment

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Projects and Operational Programs (Euro Millions) Operational Program “Infrastructure and Environment”

Projects Types (Above 5 Million Euro) Biomass electricity up to 10 Mwe, biomass and geothermal CHP, green heat production, biofuels production, RES equipment production facilities.

“Innovative Economy”

Research and Technical Development RTD, development and implementation of know-how, investment in modern research and innovation, investment support for industrial and private R&D centers.

Available Funds (EU/National/Private) 334.2/59/219

2,838/425/0

Source: Institute for Renewable Energy, Warsaw Projects financed with EU Structural and Cohesion Funds do not require equipment to be of EU origin (i.e., equipment of U.S. origin are allowed), nor do they apply to the rule of nationality for suppliers of products and services. U.S.-based companies are eligible to participate as partners in projects funded by EU funds. The EU does not set minimum percentages for consortium or partnership participation. The only requirement is that fund beneficiaries establish an account in a bank situated in a EU member state. The notion of “partnership” is central in particular for Structural Fund projects. U.S.-based companies are strongly advised to find a suitable European partner that will act as a key player with local regional authorities. Including development agencies or academic organizations in the consortium will increase the chances of forming a winning team. U.S. subsidiaries located in the EU and legally registered are considered to be “European firms” and are eligible as such.

2.7.1

Local Financial Sources

In the case of financing options for renewable energy projects, a number of local financial sources are available from various financial institutions. These include:

National Fund Poland’s National Fund for Environmental Protection and Water Management, worth around 100 million EURO per year. The Fund mainly supports projects recommended by regional authorities (Voivods). The most common form of support consists of soft loans at interest rates ranging from 0.3 to 0.8 of the refinancing rate, depending on the size of anticipated environmental benefits arising from the project.

Voivodship Fund Voivodship Funds for Environmental Protection and Water Management operate on the regional level. Conditions for obtaining financial support from the 16 voivodship funds differ from region to region since each fund defines its own priorities for regional environmental problems. Usually, these funds provide soft loans of up to 50% of the investment cost with no particular preferences given to public investors.

Bank of Environmental Protection Fund This organization offers suitable preferential credits for investments in waste processing projects.

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Renewable Energy Equipment

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The World Bank The World Bank also offers project funding.

2.7.2

Grants

Local environmental funds on the levels of county (“powiat”) and community (“gmina”) levels typically provide some grants, although priorities for funding differ depending on local development strategies. They mainly support environmental activities of local authorities. Money for the funds comes mainly from the collection of fees for the economic use of the environment and from fines for non-compliance with environmental standards. In general, the distribution of money among these funds is as follows: National Fund (20%), regional funds (50%), county funds (10%) and community funds (20%). The EcoFund is an organization of the Ministry of Finance and its financial resources are based upon bilateral agreements with countries including the U.S., France, Italy, Switzerland and Norway. Under these agreements, termed “debt for environmental swaps,” foreign donor countries forgive debt on the condition that the funds are used instead to support activities for improving the environment within Poland. The EcoFund provides grants for renewable energy projects, typically between 10% and 30% of the investment costs. The recommended payment method for imported goods and services is an irrevocable Letter of Credit (L/C). Polish banks require the importer to deposit funds prior to issuance of an L/C and they are opened for the period covering production, shipment and installation of the goods, or as otherwise set forth in contracts. Payments should be directed through a banks whose guaranties are reliable. There are several international lines of credit available: •

The International Finance Corporation (IFC): The Export Development Bank in Warsaw services credits for small to medium sized companies. For bigger projects the IFC forms consortia with other financial institutions.

•

The Export-Import Bank of the United States (Eximbank): Supports the export of U.S. goods and services through a variety of loans, guarantees and insurance programs.

For additional information, please contact: Mr. Craig O’Connor Environmental Liaison Officer Export-Import Bank of the United States 811 Vermont Ave. NW Washington D.C. 20571 Tel: (202) 565-3939 Fax: (202) 565-3932

2.8 2.8.1

MARKET ISSUES AND OBSTACLES Customs

As a member of the EU, tariffs on U.S. produced equipment imported into Poland reflect EU levels. In order to check the tariff and VAT level for particular products, we recommend that importers visit the Polish Ministry of Finance Web site, which has a tariff browser. The Tariff Browser (module of Integrated Tariff System – ISZTAR) provides www.icongrouponline.com

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Renewable Energy Equipment

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information on goods in international trade to customs administrators and importers. The Tariff Browser also presents data from the TARIC system (goods nomenclature, duty rates, restrictions, tariff quotas, tariff ceilings, suspensions) and national data (VAT, excise tax, restrictions and non-tariff measures). All information on the TARIC system is presented in four languages: English, French, German and Polish. Please see: isztar.mf.gov.pl:7080/taryfa_celna/web/main_PL. Renewable energy equipment from EU, EFTA countries and the U.S. enjoys 0% duty rates.

2.8.2

Excise Tax

There is no excise tax for imported waste processing equipment.

2.8.3

VAT

A 22% VAT is calculated on the CIF price and is increased by customs duty and excise tax (if applicable).

2.8.4

Safety Certificates

As of May 1, 2004, when Poland joined the EU, the EU product certification system was introduced. All electrical products are required to comply with EU directives 73/23, 89/336 and 98/37. The CE marking issued by the EU confirms product conformity with the requirements of EU directives. When certified for the EU, a product does not need separate certification in Poland, but must be registered with the Polish certification authority before being introduced in Poland. The certification requires a manufacturer’s statement of product safety. If a product is newly introduced to the EU and its first destination is Poland, certification must first be conducted by the Polskie Centrum Badan i Certyfikacji (the Polish Center for Research and Certification or PCBC). Polish Center for Research and Certification Polskie Centrum Badan i Certyfikacji ul. Klobucka 23a, 02-699 Warszawa Tel: (48)(22) 857-99-16 Fax: (48)(22) 847-12-22 Web site: www.pcbc.gov.pl/ang/index1.htm According to the Public Procurement Law, all contracts within the municipal sector must be awarded in a fair and competitive manner. Typically, contracts are awarded to the lowest bidder (in the case of standard goods) or to the lowest evaluated bidder (in the case of equipment, services, custom-designed goods, etc.). Ideally, the best way to enter the market is to establish direct contact with the end-user. Participation in major fairs, seminars and tradeshows is strongly recommended. The procurement of goods and services financed with foreign assistance follow the specific requirements dictated by the respective IFI, International Financing Institution, (i.e. the World Bank, European bank for Reconstruction and Development, PHARE program) or relevant donor government. The restrictions of IFIs or donor governments limit the eligibility of products and producers.

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2007 Icon Group International, Inc.

Renewable Energy Equipment

2.9 2.9.1

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KEY CONTACTS Trade Event

International Environmental Fair POLEKO November 20-23, 2007 International Poznan Fair ul. Glogowska 14, 60-734 Poznan Tel: (+48-61) 869-2554 Fax: (+48-61) 866-5827 Contact: Ms. Agata Dutka, Project Manager E-mail: [email protected] Web site: poleko.mtp.pl/

2.9.2

Industry Associations

Ministry of Environment Ministerstwo Srodowiska 00-922 Warszawa, ul. Wawelska 52/54 Tel: (+48-22)579-2404 ext. 404 Fax: (+48-22)579-2280 Contact: Ms. Agnieszka Bolesta, Undersecretary of State Web site: www.mos.gov.pl Main Inspectorate for Environmental Protection Glowny Inspektorat Ochrony Srodowiska ul. Wawelska 52/54, 00-922 Warszawa Tel/Fax: (+48-22) 579-2900 Contact: Mr. Krzysztof Zaremba, Chief Inspector E-mail: [email protected] Web site: www.gios.gov.pl EC BREC European Center for Renewable Energy ul.Jagiellońska 55 bud. 6, 03-301 Warszawa Tel: (+48 22) 5100-200 Fax: (+48 22) 5100-245 Contact: Ms. Magdalena Rogulska, President E-mail: [email protected] Web site: www.ecbrec.pl/ Institute for Renewable Energy ul. Mokotowska 4/6, 00-641 Warszawa Tel: (+48 22) 825 46 52 Fax: (+48 22) 875 86 78 Contact: Mr. Grzegorz Wisniewski, President E-mail: [email protected] Web site: www.ieo.pl/

www.icongrouponline.com

2007 Icon Group International, Inc.

Renewable Energy Equipment

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Polish Chamber of Commerce for Renewable Energy Polska Izba Gospodarcza Energii Odnawialnej ul. Gotarda 9, 02-683 Warszawa Tel: (+48 22) 548-4999 Fax: (+48 22) 548-4998 Contact: Mr. Piotr Wisniewski, President E-mail: [email protected] Web site: www.pigeo.org.pl/ Polish Biomass Chamber Polska Izba Biomasy ul. Smocza 27, 01-048 Warszawa Tel: (+48 22) 498-6009 Contact: Mr. Ryszard Gajewski, President E-mail: [email protected] Web site: www.biomasa.org.pl Polish Wind Energy Association Polskie Stwoarzyszenie Energetyki Wiatrowej Al. Wojska Polskiego 154, 71-324 Szczecin Tel: (+48 91) 487-7535 Fax: (+48 91) 487-5014 Contact: Ms. Anna Paslwaska, Director E-mail: [email protected] Web site: www.psew.org.pl/ Polish Geothermal Association Polska Geotermalna Asocjacja ul. J. Wybickiego 7, 30-261 Krakow Tel/Fax: (+48 12) 617-3413 Contact: Professor Stanislaw Ostaficzuk, Chairman E-mail: [email protected] Web site: www.pga.org.pl Polish Solar Energy Association Polskie Towarzystwo Energetyki Slonecznej ul. Swietokrzyska 21, 00-049 Warszawa Tel/Fax: (+48 22) 660-5227 Contact: Ms. Dorota Chwieduk, Chairman E-mail: [email protected] Web site: ptes-ises.ippt.gov.pl/ Polish Photovoltaics Center Centrum Fotowoltaiki Politechnika Warszawska Wydzial Elektroniki i Technik Informacyjnych ul. Koszykowa 75, 00-662 Warszawa Tel: (+48-22) 234-7782, 234-7530, 234-5759 Fax: (+48-22)234-7782 Contact: Mr. Stanislaw Pietruszko, Chairman E-mail: [email protected], [email protected] Web site: www.pv.pl

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2007 Icon Group International, Inc.

Renewable Energy Equipment

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Association for Small Hydro Power Plants Development Towarzystwo Rozwoju Malych Elektrowni Wiatrowych ul. Krolowej Jadwigi 1, 86-300 Grudziadz Tel: (+48 56) 464-9644 Fax: (+48 56) 464-9643 Contact: Mr. Kuba Puchowski, President E-mail: [email protected] Web site: www.trmew.pl

2.9.3

Financial Institutions

National Fund for Environmental Protection and Water Management Narodowy Fundusz Ochrony Srodowiska i Gospodarki Wodnej ul. Konstruktorska 3a, 02-673 Warszawa Tel: (48-22) 849-00-80, 849-38-46 Fax: (48-22) 849-20-98 Contact: Mr. Kazimierz Kujda, President Web site: www.nfosigw.gov.pl Ecofund Polish Dept for Environment Swap ul. Bracka 4, 00-502 Warszawa Tel: (48-22) 628-5085 Fax: (48-22) 628-5081 Contact: Mr. Janusz Ostapiuk, Vice President Web site: www.ekofundusz.org.pl Bank for Environmental Protection S.A. Bank Ochrony Środowiska BOS S.A. Al. Jana Pawla II 12, 00-950 Warszawa Tel: (48-22) 850-8805 Fax: (48-22) 850-8895 Contact: Mr. Piotr Wiesiolek, Deputy President Web site: www.bosbank.pl/ Polish Agency for Information and Foreign Investment (PAIIZ) Al. Roz 2, 00-559 Warszawa Tel: (48)(22) 621-62-61 Fax: (48)(22) 621-84-27 Contact: Mr. Andrzej Kanthak, President Web site: www.paiiz.gov.pl

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2007 Icon Group International, Inc.

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3

3.1

FINANCIAL INDICATORS: STEAM, GAS AND HYDRAULIC TURBINES AND TURBINE GENERATOR SET UNITS OVERVIEW

Is Poland competitive? With the globalization of markets, the increased mobility of corporate assets, and the need for productive human resources, this question has become all the more complex to answer. The financial indicators section was prepared to tackle this question by focusing on certain fundamentals: financial performance and labor productivity. Rather than focus on the economy as a whole, the analysis presented here considers only one sector: steam, gas and hydraulic turbines and turbine generator set units. We are essentially interested in the degree to which firms operating in Poland have fundamentally different financial structures and performance compared to firms located elsewhere. With respect to this view of competitiveness, if one were to invest or operate in Poland, how would the firm’s asset structure likely vary compared to a firm operating in some other country in Europe or average location in the world? In Poland, do firms typically hold more cash and other short term assets, or do they concentrate their assets in physical plant and equipment? On the liability side, do firms operating in Poland have a higher percent of payables compared to other firms operating in Europe, or do they hold a higher concentration of long term debt? The structure of the income statement is also telling. Do firms operating in Poland have relatively higher costs of goods sold, operating costs, or income taxes compared to firms located elsewhere in the region or the world in general? Are returns on equity higher in Poland? Are profit margins greater? Are inventories held longer? The financial indicators section was designed to answer these and similar questions that naturally affect one’s decision to invest or operate in Poland. Again, we are particularly interested in steam, gas and hydraulic turbines and turbine generator set units, and not the economy as a whole. In many instances, people make all the difference. In addition to financial competitiveness, we consider the extent to which labor deployment and productivity in Poland differs from regional and global benchmarks. In this case, we are interested in the amount of labor required to operate a typical business in Poland and the likely returns on this human investment. What is the typical ratio of short-term and long-term assets to employee (employed in steam, gas and hydraulic turbines and turbine generator set units operations)? What are typical capital-labor ratios? How different are these ratios to those in Europe in general and the world as a whole? What are the average sales and net profits per employee in Poland compared to regional benchmarks? The goal of this section is to assist managers in gauging the competitive performance of Poland at the global level for steam, gas and hydraulic turbines and turbine generator set units. With the globalization of markets, greater foreign competition, and the reduction of entry barriers, it becomes all the more important to benchmark Poland against other countries on a worldwide basis. Doing so, however, is not an obvious task. This report generates international benchmarks and measures gaps that might be revealed from such an exercise. First, data is collected from companies across all regions of the world. For each of these firms, data are standardized into comparable categories (assets, liabilities, income and ratios), by country, region and on a worldwide basis. From there, we eliminate all currency effects by standardizing within each category. Global benchmarks are then compared to those estimated for steam, gas and hydraulic turbines and turbine generator set units in Poland. Though we heavily rely on historical performance, the figures reported are not historical but are forecasts and projections for the coming fiscal year.

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2007 Icon Group International, Inc.

Financial Indicators

3.1.1

21

Financial Returns and Gaps in Poland

The approach used in this report to evaluate operating performance for steam, gas and hydraulic turbines and turbine generator set units in Poland is called "vertical analysis." For those unfamiliar with this type of analysis, frequently taught in graduate schools of business, the reader is recommended Jae K. Shim and Joel G. Siegel’s recent book titled Financial Management.1 In their discussion of financial statement analysis and ratios, Skim and Siegel (p. 4243), describe common-size statement (vertical analysis) as follows: A common-size statement is one that shows each item in percentage terms. Preparation of common-size statements is known as vertical analysis, in which a material financial statement item is used as a base value and all other accounts on the financial statement are compared to it. In the balance sheet, for example, total assets equal 100 percent, and each individual asset is stated as a percentage of total assets. Similarly, total liabilities and stockholders’ equity are assigned a value of 100 percent and each liability or equity account is then stated as a percentage of total liabilities and stockholders’ equity, respectively. … For the income statement, a value of 100 percent is assigned to net sales, and all other revenues and expense accounts are related to it. It is possible to see at a glance how each dollar of sales is distributed among various costs, expenses, and profits. The authors suggest that vertical analyses involve industry-based comparisons. Such a comparison “allows you to answer the question, ‘How does a business fare in the industry?’ You must compare the company’s ratios to… industry norms.” (p. 43-44) This approach is extended to country competitiveness (in this case Poland) for a particular sector (in this case steam, gas and hydraulic turbines and turbine generator set units). This involves calculating country, regional and global norms. This introduction will describe the seven-stage methodology used to perform this analysis. Each stage should be seen as a working assumption behind the numbers presented in later chapters. Stage 1. Industry Classification. This stage begins by classifying the company into an industry. For this, we have relied on a combination of the North American Industry Classification System (NAICS pronounced “Nakes”), a relatively new system for classifying business establishments, and the older Standard Industrial Classification (SIC) system. Adopted in 1997, NAICS codes are the new industry classification codes used by statistical agencies of the United States. NAICS was developed jointly by the U.S., Canada, and Mexico to provide comparability in statistics about business activity across North America. After 60 years of service, the outdated SIC system was retired on October 1, 2000, leaving only the NAICS codes for official use. The NAICS classification system adds some 350 new industries and represents a revision to over 60% of the previous SIC industries. Despite its official retirement, the SIC system is still commonly used (and often reported in firm’s financial statements). For most companies in the world, classification within either the new NAICS or older SIC systems is a rather straight forward exercise. For some, however, it can be problematic. This is true for several reasons. The first being that the SIC or NAICS classification systems are rather broad for many product and industry categories (a firm’s products or services may be only a minor aspect of the classification’s definition). The second is that some firms’ activities span multiple codes. Finally, it is possible that a firm is classified by one source using its SIC code, and by another using its NAICS code, and by a third using both. Furthermore, some sources do not report either code, but instead use qualitative statements of the firm’s activities. Nevertheless, if one wishes to pursue a vertical analysis, some classification needs to take place which selects a peer group. In making this classification, one can rely on a number of sources. In some countries, firms must “self” classify in official periodic reports (e.g. annular reports, 10Ks, etc.) to public authorities (such as the Securities and Exchange Commission). These reports are then open for public scrutiny (e.g. EDGAR filings). In other cases, commercial data vendors or private research firms provide SIC/NAICS codes for specific companies. These include: •

Bloomberg - www.bloomberg.com

1

Skim and Siegel (2000), Financial Management published by Barron’s Educational Series, Inc. (BARON’S BUSINESS LIBRARY Series), ISBN: 0-7641-1402-6. www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators •

Datastream (Thomson Financial) - www.datastream.com

•

Dun & Bradstreet - www.dnb.com

•

Hoovers - www.hoovers.com

•

HarrisInfoSource - www.HarrisInfo.com

•

InfoUSA - www.infousa.com

•

Investext (Thomson Financial) - www.investext.com

•

Kompass International Neuenschwander SA. - www.kompass.com

•

Moody's Investors Service - www.moodys.com

•

Primark (Thomson Financial) - www.primark.com

•

Profound (The Dialog Corporation – A Thomson Company) - www.profound.com

•

Reuters - www.reuters.com

•

Standard & Poor's - www.standardandpoors.com

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It is interesting to note that commercial vendors often report different qualitative descriptions and industrial classifications from one to another. These descriptions and classifications may also be different from those reported by the firm itself. Anyone hoping to perform a benchmarking study, therefore, has to make a judgment call across these various sources in order to determine a reasonable classification. In this report, we have decided a metaanalytic process, by combining various sources (including linking a classification’s keywords to qualitative descriptions of the firm’s product line). In cases of inconsistency, the most recent or globally comparable available is chosen. Again, the overall goal is to classify firms, which either produce similar products, offer similar services, or are in the same stage of the value chain for a particular industrial classification. In the case of this report, the SIC code selected is: 3511 which is defined as “steam, gas and hydraulic turbines and turbine generator set units”. This classification should be seen as a working assumption. In order to obtain a more detailed discussion of this classification, the reader is referred to the Web sites developed by the U.S. Census Bureau: http://www.census.gov/epcd/www/naics.html. Basic definitions and descriptions are provided at: http://www.census.gov/epcd/www/drnaics.htm#q1. A full correspondence table between SIC and NAICS codes, and detailed definitions are given at http://www.census.gov/epcd/www/naicstab.htm. Stage 2. Firm-Level Data Collection. A global search was conducted across over 20,000 companies in over 40 major economies, including Poland, for those that report financials (balance sheet and income statements) and that are involved in steam, gas and hydraulic turbines and turbine generator set units. It should be noted that the publicdomain financials can be either historic or projections. It should also be noted that even historic figures can be modified in the future and often represent “estimates” of performance. Stage 3. Standardization. Once collected, public domain financial figures of firms identified in Stage 2 are standardize into comparable categories (assets, liabilities, and income). Again, these are limited to firms involved in some aspect of steam, gas and hydraulic turbines and turbine generator set units (i.e. are members of the value chain). From there, we eliminate all currency effects by standardizing within each category (creating ratios). In order to maintain comparability over time and across countries, vertical analysis is used. In the case of a firm’s assets, we treat the total assets as equaling 100, irrespective of the value of the local currency. All other assets are then calculated as a percent of total assets. In this way, the structure of the firm’s assets can be easily interpreted and compared with international benchmarks. For liabilities, total liabilities and equity are indexed to equal to 100. For the income statement, total revenue is indexed to equal 100, and all other figures are calculated as a percent of these figures. Stage 4. Filtering. Not all the firms selected in Stage 2 or the ratios calculated in Stage 3 are used for the country, regional or global benchmarks, as a number of companies are purposely dropped from the analysis. This is justified by the “outlier” phenomenon that plagues such analysis. The problem lies in that any given company in the benchmarking pool may be facing some exceptional event or may be organized in an exceptional way so as to make

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2007 Icon Group International, Inc.

Financial Indicators

23

its ratios vastly different from the norm. By including such firms, the global benchmarks can be overly skewed. In many countries, firms are organized into holding groups. These groups nominally have very few employees (e.g. 4 to 25 employees), but have extremely large assets, liabilities, or revenues. As such, the inclusion or exclusion of firms having this form of management can affect the ratios and benchmarks reported. Likewise, some firms have no net sales, no assets, no liabilities, or ratios. Others have ratios that appear implausible for a normal or viable company. In order to not allow these firms to affect the global benchmarks, only those firms with reasonable financials have been chosen. Finally, in some countries, detailed financials are not available or are not comparable to either the company in question or the global norm (e.g. various forms of depreciation). In this case, only those which exist and are comparable are reported. The details, therefore, that comprise a given ratio or set of ratios may not be reported. This may lead to the addition of several ratios, not summing to the whole. Stage 5. Calculation of Global Norms. Once the filtering process has eliminated outliers, a final list of companies included is compiled. Based on this list, the ratios discussed in Stage 3 are calculated for every firm, and then averaged to create country, regional and global benchmarks. The world average is calculated using each country’s population as a weight. Stage 6. Projection of Deviations. The goal of this report is not only to estimate raw ratios or averages, but also to present the difference between Poland and projected global averages for that same ratio. Furthermore, it can be insightful to know the location of each ratio within the distribution of the countries represented in Stage 5. These deviations, in fact, can be seen as projections or likely scenarios for the future. This is often true for two reasons. First, while a company’s financials change from year to year, its ratios are often stable. This is especially true for the country, regional and global benchmarks which represent averages across companies. From a purely Bayesian sense, the difference between the company’s recent ratios and the benchmarks are a reasonable prior for future deviations. This is true, even if the entire industry is hit by an external or exogenous shock, such as an oil crisis or economic slowdown. In other words, we assume that the structure of the variance in the industry’s financials remains stable. Second, many of the data are based on preliminary reports that might be changed in future filings. As forecasts, therefore, the numbers derived from these are also forecasts of past and future performance (with associated uncertainties). The calculation of the difference between a country’s ratios and the global benchmarks is meant to yield roughly approximate forecasts, or "useful measures". Within Europe, the reliability of estimates varies from one country to another for those ratios given in tables that report national averages. This is true because reliable source statistics are not available for all countries in Europe. Countries with the highest reliability, or sample sizes after filtering in Stage 4, include Denmark, France, Germany, and Netherlands. Others are generally econometrically extrapolated using models that use country characteristics (e.g. income per capita) as independent variables (i.e. countries having similar economic structures are assumed to have similar operating ratios). Again, the forecasts are based on the assumption of relative stability. This assumption has proven extremely robust in previous applications of this methodology (i.e. today’s weather is a good predictor of tomorrow’s weather, but not the weather three years from now). The results reported should be viewed as those for a “proto-typical” firm operating in Poland whose primary activity is steam, gas and hydraulic turbines and turbine generator set units. Stage 7. Projection of Ranks and Percentiles. Based on the calculation of deviations, relative ranks and percentiles are calculated across the firms used in the benchmarks. The percentile estimates the percent of a representative sample of countries in the world having values of the ratio lower than Poland. It is important to note that a percentile being high (or low) does not mean good (or bad) past, present or future financial performance. The reader must draw this conclusion on their own. The estimates provided were created to provide managerial insight, and not a recommendation with respect to particular investments within any country. We graphically report, for each part of the financial statement, the larger structural differences between Poland and the regional and global benchmarks, and provide a summary table of ranks and percentiles. These are estimates for firm which would be involved in steam, gas and hydraulic turbines and turbine generator set units. A deviation from the global norm need not be a bad sign. Rather, it is simply a substantial difference that might merit further attention or perhaps signal a country's relative strength or weakness for the coming fiscal year.

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Financial Indicators

3.1.2

24

Labor Productivity Gaps in Poland

In the case of labor productivity measures, this report maintains comparability over time and across countries by using a common currency (the US dollar) and relates each measure to a “per employee basis”. Ratios are projected using raw financial statistics and, as ratios, are therefore comparable. Given a country’s human resource ratios, the resulting figures are benchmarked across regional and global averages. The seven stage approach given above is used in a similar manner. We then report, for each part of the financial statement, the larger labor productivity gaps that Poland has vis-à-vis the worldwide average (for steam, gas and hydraulic turbines and turbine generator set units). Again, a gap need not be a bad sign. Rather, it is simply a substantial difference that might merit further attention or signal a firm’s relative incentive to invest locally. All figures are projections, so due caution is required.

3.1.3

Limitations and Extensions

Shim and Siegal (p. 60) stress that “while ratio analysis is an effective tool for assessing a company’s financial condition,” operating Poland or any other country, “its limitations must be recognized.” They find that (p. 59) “no single ratio or group of ratios is adequate for assessing all aspects of a company’s financial condition” operating in a particular country. The authors note the following limitations associated with ratio analyses which apply to the global benchmarking and vertical analysis presented here (p.60): •

Accounting standards or policies may limit useful comparisons across companies

•

Management accounting practices across companies and countries may not be performed in the same style

•

Ratios are static and do not reveal future trends

•

Ratios do not indicate the quality of the components used to calculate the ratios (i.e. ratios have ambiguous interpretations)

•

Reported ratios may not reflect real values

•

Companies may be highly diversified, limiting the comparability of their ratios to others

•

Industry averages or norms are approximate; finer industry definitions may be required for certain interpretations or comparisons

•

Financial statements and resulting ratios often mean different things to different people depending on their points of view or motivations.

Again, all figures reported here are estimates, so due caution is required. The above caveats, and the fact that statements made in this report are forward-looking, requires that this point be emphasized. A number of intervening factors can have material effect on the ratios and variances forecasted. These include changes in a company's management style, exchange rate volatility, changes in accounting standards, the lack of oversight or comparability in accounting standards, changes in economic conditions, changes in competition, changes in the global economy, changes in source data quality, and similar factors.

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Financial Indicators

3.2 3.2.1

25

FINANCIAL RETURNS IN POLAND: ASSET STRUCTURE RATIOS Overview

In this chapter we consider the asset structure of companies involved in steam, gas and hydraulic turbines and turbine generator set units operating in Poland benchmarked against global averages. The chapter begins by defining relevant terms. A common-size statement, or vertical analysis of assets is then presented for companies operating in Poland and the average global benchmarks (total assets = 100 percent). For ratios where there are large deviations between Poland and the benchmarks, graphics are provided (sometimes referred to as a financial “gap” analysis). Then the distribution of ratios is presented in the form of ranks and percentiles. Certain key vertical analysis asset ratios are highlighted across countries in the comparison group.

3.2.2

Assets – Definitions of Terms

The following definitions are provided for those less familiar with the asset-side of financial statement analysis. As this chapter deals with the vertical analysis and global benchmarking of assets, only definitions covering certain terms used in this chapter’s tables and graphs are provided here. The glossary below reflects commonly accepted definitions across various countries and official sources. •

Cash. Cash is typically defined as money on hand, on deposit with chartered bank, or held in the form of eligible securities.

•

Current Assets. Current assets are generally defined to be resources which are available, or can readily be made available, to meet the cost of operations or to pay current liabilities.

•

Intangible Other Assets. Intangible assets are generally understood to be nonphysical assets such as legal rights (patents and trademarks) recorded at their historical cost then reduced by systematic amortization.

•

Property Plant and Equipment - Net. Net PP&E equals the original cost of property, plant, and equipment (PP&E), less accumulated depreciation, depletion and amortization (DD&A).

•

Receivables (Net). Net receivables are defined as the net amount due to the company from private persons, businesses, agencies, funds, or governmental units which is expected to be collected in the form of moneys, goods, and/or services.

•

Short Term Investments. Short-term investments are investments which can be typically liquidated in less than one year.

•

Total Assets. Total assets are defined as the financial representation of economic resources, the beneficial interest in which is legally or equitably secured to a particular organization as a result of a past transaction or event.

•

Total Inventories. Total inventories are defined as the total amount of goods on hand.

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Financial Indicators

3.2.3

26

Asset Structure: Outlook

Using the methodology described in the introduction, the following table summarizes asset structure benchmarks for firms involved in steam, gas and hydraulic turbines and turbine generator set units in Poland. To allow comparable benchmarking, a common index of Total Assets = 100 is used. All figures are current-year projections for companies operating in Poland based on latest financial results available. Asset Structure Poland Europe World Avg. _________________________________________________________________________________________________________

Cash & Short Term Investments Receivables (Net) Total Inventories Current Assets - Total Property Plant and Equipment - Net Other Assets Intangible Other Assets Total Assets

3.68 15.60 12.49 31.77 49.74 0.27 0.27 100.00

9.00 28.55 17.79 56.47 24.97 5.54 4.31 100.00

11.41 27.15 16.97 57.46 25.30 4.21 2.24 100.00

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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Financial Indicators

3.2.4

27

Large Variances: Assets

The following graphics summarize for steam, gas and hydraulic turbines and turbine generator set units the large asset structure gaps between firms operating in Poland and the world average. A gap cannot necessarily be interpreted as a positive or negative reflection on performance. Gaps may signal areas of specialization, market focus, or expertise. More contextual information is required to fully interpret these gaps. The gaps highlighted here are simply those that are large.

Gap: Cash & Short Term Investments 15 9

10 5

11.41

3.68

0 -5 -7.73

-10 Poland

Europe

World Average

Gap

Gap: Receivables (Net) 28.55

30 20

27.15

15.6

10 0 -10

-11.55

-20 Poland

Europe

World Average

Gap

Gap: Total Inventories 17.79

20 15

16.97

12.49

10 5 0 -5 Poland

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Europe

World Average

-4.48 Gap

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Gap: Current Assets - Total 56.47

60 40

57.46

31.77

20 0 -20

-25.69

-40 Poland

Europe

World Average

Gap

Gap: Property Plant and Equipment - Net 50

49.74

40 24.97

30

25.3

24.44

20 10 0 Poland

Europe

World Average

Gap

Gap: Other Assets 5.54

6

4.21

4 2

0.27

0 -2 -4 Poland

Europe

World Average

-3.94 Gap

Gap: Intangible Other Assets 6 4.31 4 2.24 2 0.27 0 -2 Poland

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Europe

World Average

-1.97 Gap

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29

Gap: Total Assets 100

100

100

100 80 60 40 20

0

0 Poland

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Europe

World Average

Gap

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Financial Indicators

3.2.5

30

Key Percentiles and Rankings

We now consider the distribution of asset ratios for steam, gas and hydraulic turbines and turbine generator set units using ranks and percentiles. What percent of countries have a value lower or higher than Poland (what is the ratio's rank or percentile)? The table below answers this question with respect to the vertical analysis of asset structure. The ranks and percentiles indicate, from highest to lowest, where a value falls within the distribution of all countries considered in the global benchmark (the number of countries in the benchmark per line item may vary, as indicated in the Rank). Again, a high or low figure does not necessarily indicate good or bad performance. After the summary table below, a few key vertical asset ratios are highlighted in additional tables. Asset Structure

Poland

Rank of Total

Percentile

Cash & Short Term Investments Receivables (Net) Total Inventories Current Assets - Total Property Plant and Equipment - Net Other Assets Intangible Other Assets Total Assets

3.68 15.60 12.49 31.77 49.74 0.27 0.27 100.00

45 of 53 51 of 53 45 of 53 53 of 53 2 of 53 51 of 53 40 of 43

15.09 3.77 15.09 0.00 96.23 3.77 6.98

_________________________________________________________________________________________________________

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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31

Cash & Short Term Investments Countries

Value (total assets = 100)

Rank

Percentile

22.46 22.29 22.10 20.17 19.72 19.10 18.47 17.20 16.72 16.48 16.28 15.53 15.50 14.82 14.36 14.17 12.80 12.66 12.64 12.39 11.85 11.41 11.40 11.25 10.76 10.72 10.48 9.83 9.66 9.45 9.31 8.53 6.36 6.27 5.03 4.50 4.42 3.68 3.02 2.94 0.74 0.70 0.50 0.50 0.40

1 2 3 4 5 6 8 9 10 11 12 14 15 16 17 19 20 21 22 23 24 25 26 27 28 29 31 32 33 34 35 37 38 39 41 43 44 45 46 47 48 49 50 51 53

98.11 96.23 94.34 92.45 90.57 88.68 84.91 83.02 81.13 79.25 77.36 73.58 71.70 69.81 67.92 64.15 62.26 60.38 58.49 56.60 54.72 52.83 50.94 49.06 47.17 45.28 41.51 39.62 37.74 35.85 33.96 30.19 28.30 26.42 22.64 18.87 16.98 15.09 13.21 11.32 9.43 7.55 5.66 3.77 0.00

Region

_________________________________________________________________________________________________________

Hong Kong Israel Ireland South Africa Indonesia Australia China South Korea Norway Singapore Japan USA Russia Canada Spain France Malaysia Taiwan Greece Switzerland Finland the United Kingdom Pakistan Czech Republic Philippines Luxembourg Argentina Belgium Italy Germany India Sweden Austria Thailand Denmark Hungary Netherlands Poland Peru New Zealand Brazil Chile Turkey Mexico Portugal

Asia the Middle East Europe Africa Asia Oceana Asia Asia Europe Asia Asia North America Europe North America Europe Europe Asia Asia Europe Europe Europe Europe the Middle East Europe Asia Europe Latin America Europe Europe Europe Asia Europe Europe Asia Europe Europe Europe Europe Latin America Oceana Latin America Latin America the Middle East Latin America Europe

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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32

Cash & Short Term Investments (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value (total assets = 100)

Rank

Percentile

22.10 21.53 16.72 16.58 15.98 15.83 15.79 15.69 15.50 15.46 14.36 14.17 13.48 12.64 12.39 11.85 11.71 11.57 11.56 11.41 11.25 10.72 10.68 10.67 9.83 9.74 9.66 9.45 8.53 6.36 6.30 6.14 6.14 5.03 4.50 4.42 4.05 3.85 3.79 3.68 3.31 3.19 3.18 3.05 2.64 0.47 0.43 0.42 0.41 0.40 0.38

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Ireland Faroe Islands Norway Estonia Monaco Belarus Slovakia Iceland Russia Lithuania Spain France Slovenia Greece Switzerland Finland Malta Liechtenstein Isle of Man the United Kingdom Czech Republic Luxembourg Latvia Croatia Belgium Vatican City Italy Germany Sweden Austria San Marino Jersey Guernsey Denmark Hungary Netherlands Ukraine Gibraltar Georgia Poland Moldova Kazakhstan Bulgaria Andorra Albania Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro Portugal Cyprus

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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33

Receivables (Net) Countries

Value (total assets = 100)

Rank

Percentile

48.48 47.07 40.55 39.45 37.74 37.64 37.09 36.10 35.58 34.41 33.62 33.54 32.87 32.60 31.81 30.71 30.57 30.43 30.27 28.75 28.25 28.08 27.97 27.45 27.38 27.24 26.16 26.11 25.65 25.20 25.08 25.07 24.40 24.35 22.74 22.62 22.21 21.94 21.69 21.23 21.15 19.07 18.76 18.35 15.60

1 2 3 4 5 6 7 8 9 11 12 13 14 15 16 17 18 19 20 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 40 41 42 43 44 45 46 47 51

98.11 96.23 94.34 92.45 90.57 88.68 86.79 84.91 83.02 79.25 77.36 75.47 73.58 71.70 69.81 67.92 66.04 64.15 62.26 58.49 56.60 54.72 52.83 50.94 49.06 47.17 45.28 43.40 41.51 39.62 37.74 35.85 33.96 32.08 30.19 28.30 24.53 22.64 20.75 18.87 16.98 15.09 13.21 11.32 3.77

Region

_________________________________________________________________________________________________________

Spain Portugal Greece India Turkey Mexico France Czech Republic Italy Philippines Argentina Netherlands Israel Ireland Malaysia Pakistan Austria the United Kingdom South Africa Denmark Sweden Norway Germany Japan Belgium Peru Finland New Zealand Brazil Singapore Switzerland Taiwan Chile South Korea Canada Hong Kong USA Russia Luxembourg China Thailand Hungary Indonesia Australia Poland

Europe Europe Europe Asia the Middle East Latin America Europe Europe Europe Asia Latin America Europe the Middle East Europe Asia the Middle East Europe Europe Africa Europe Europe Europe Europe Asia Europe Latin America Europe Oceana Latin America Asia Europe Asia Latin America Asia North America Asia North America Europe Europe Asia Asia Europe Asia Oceana Europe

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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Financial Indicators

34

Receivables (Net) (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value (total assets = 100)

Rank

Percentile

48.48 47.07 45.51 45.06 40.55 37.58 37.09 37.08 36.10 35.87 35.86 35.58 34.26 34.25 33.54 32.91 32.60 31.98 30.85 30.57 30.43 30.28 29.52 29.52 28.75 28.25 28.08 27.97 27.38 27.04 26.16 25.08 24.44 23.78 23.48 23.40 22.44 22.41 22.36 21.94 21.89 21.69 21.69 19.07 17.15 16.31 16.05 15.60 14.02 13.49 13.47

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Spain Portugal Slovenia Cyprus Greece Malta France Isle of Man Czech Republic Vatican City Romania Italy Latvia Croatia Netherlands Bosnia & Herzegovina Ireland Macedonia Serbia & Montenegro Austria the United Kingdom San Marino Jersey Guernsey Denmark Sweden Norway Germany Belgium Andorra Finland Switzerland Monaco Albania Estonia Liechtenstein Iceland Belarus Slovakia Russia Lithuania Faroe Islands Luxembourg Hungary Ukraine Gibraltar Georgia Poland Moldova Kazakhstan Bulgaria

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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35

Total Inventories Countries

Value (total assets = 100)

Rank

Percentile

39.81 39.65 36.42 31.72 29.43 29.36 28.95 27.32 26.04 25.68 25.57 25.46 25.35 24.70 24.51 24.33 21.52 21.50 21.05 20.66 18.50 18.26 18.25 17.67 17.52 17.47 16.81 16.23 15.53 15.46 15.31 15.28 15.27 14.91 14.52 14.45 14.00 13.99 13.88 13.46 12.49 9.94 8.25 7.20 7.18

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 28 29 31 32 33 34 35 36 37 38 40 41 42 43 45 49 50 51 52

98.11 96.23 94.34 92.45 90.57 88.68 86.79 84.91 83.02 81.13 79.25 77.36 75.47 73.58 71.70 69.81 67.92 66.04 64.15 62.26 60.38 58.49 56.60 54.72 52.83 50.94 47.17 45.28 41.51 39.62 37.74 35.85 33.96 32.08 30.19 28.30 24.53 22.64 20.75 18.87 15.09 7.55 5.66 3.77 1.89

Region

_________________________________________________________________________________________________________

Pakistan Peru South Africa Denmark Australia Portugal Italy New Zealand Germany Israel Brazil Ireland Netherlands France Finland Chile Sweden the United Kingdom Norway Thailand China USA Austria Switzerland Hong Kong Spain Belgium Greece South Korea Singapore Japan Luxembourg Hungary India Canada Czech Republic Philippines Russia Indonesia Argentina Poland Malaysia Taiwan Turkey Mexico

the Middle East Latin America Africa Europe Oceana Europe Europe Oceana Europe the Middle East Latin America Europe Europe Europe Europe Latin America Europe Europe Europe Asia Asia North America Europe Europe Asia Europe Europe Europe Asia Asia Asia Europe Europe Asia North America Europe Asia Europe Asia Latin America Europe Asia Asia the Middle East Latin America

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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Financial Indicators

36

Total Inventories (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value (total assets = 100)

Rank

Percentile

34.61 31.72 29.36 29.18 28.95 28.29 28.11 26.04 25.46 25.35 24.70 24.51 21.52 21.50 21.05 18.44 18.25 18.08 17.67 17.63 17.63 17.47 16.81 16.80 16.49 16.40 16.23 15.28 15.27 15.05 14.99 14.97 14.85 14.45 14.28 14.25 13.99 13.96 13.74 13.72 13.71 13.06 12.86 12.49 11.23 10.81 10.79 6.84 6.28 6.10 5.88

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Albania Denmark Portugal Vatican City Italy Andorra Cyprus Germany Ireland Netherlands France Finland Sweden the United Kingdom Norway Iceland Austria San Marino Switzerland Jersey Guernsey Spain Belgium Faroe Islands Liechtenstein Slovenia Greece Luxembourg Hungary Malta Monaco Estonia Isle of Man Czech Republic Belarus Slovakia Russia Lithuania Ukraine Latvia Croatia Gibraltar Georgia Poland Moldova Kazakhstan Bulgaria Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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37

Current Assets - Total Countries

Value (total assets = 100)

Rank

Percentile

86.90 83.62 82.93 82.17 80.55 76.94 76.42 75.70 71.16 70.76 69.08 67.43 66.94 65.90 65.79 64.46 64.18 63.35 62.69 62.23 62.21 60.13 60.12 60.06 59.39 59.01 58.46 58.29 57.88 57.61 56.81 56.68 56.05 55.66 54.70 54.01 53.99 53.70 52.68 51.37 49.83 45.44 45.32 38.85 31.77

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 41 42 44 45 46 51 53

98.11 96.23 94.34 92.45 90.57 88.68 86.79 84.91 83.02 81.13 79.25 77.36 75.47 73.58 71.70 69.81 67.92 66.04 64.15 62.26 60.38 58.49 56.60 54.72 52.83 50.94 49.06 47.17 45.28 43.40 41.51 39.62 37.74 35.85 33.96 32.08 30.19 28.30 22.64 20.75 16.98 15.09 13.21 3.77 0.00

Region

_________________________________________________________________________________________________________

South Africa Israel Ireland Pakistan Spain Portugal France Italy Greece Peru Denmark Norway Germany the United Kingdom India Finland Netherlands Czech Republic Hong Kong Japan Australia USA China Sweden Philippines Argentina South Korea Singapore Taiwan Switzerland New Zealand Austria Indonesia Canada Malaysia Belgium Brazil Thailand Russia Chile Luxembourg Turkey Mexico Hungary Poland

Africa the Middle East Europe the Middle East Europe Europe Europe Europe Europe Latin America Europe Europe Europe Europe Asia Europe Europe Europe Asia Asia Oceana North America Asia Europe Asia Latin America Asia Asia Asia Europe Oceana Europe Asia North America Asia Europe Latin America Asia Europe Latin America Europe the Middle East Latin America Europe Europe

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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38

Current Assets - Total (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value (total assets = 100)

Rank

Percentile

82.93 80.55 76.94 76.42 76.31 75.70 75.62 73.65 71.16 69.08 67.43 66.94 65.95 65.90 65.08 64.46 64.18 63.35 61.77 60.75 60.13 60.12 60.10 60.06 58.83 57.61 56.68 56.53 56.36 56.14 54.74 54.74 54.01 53.79 53.76 53.66 52.68 52.55 49.83 43.17 39.62 38.85 38.51 37.14 34.93 33.22 32.70 31.77 28.57 27.49 27.44

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Ireland Spain Portugal France Vatican City Italy Slovenia Cyprus Greece Denmark Norway Germany Malta the United Kingdom Isle of Man Finland Netherlands Czech Republic Albania Iceland Latvia Faroe Islands Croatia Sweden Andorra Switzerland Austria Monaco Estonia San Marino Guernsey Jersey Belgium Belarus Liechtenstein Slovakia Russia Lithuania Luxembourg Romania Bosnia & Herzegovina Hungary Macedonia Serbia & Montenegro Ukraine Gibraltar Georgia Poland Moldova Kazakhstan Bulgaria

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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Financial Indicators

39

Property Plant and Equipment - Net Countries

Value (total assets = 100)

Rank

Percentile

60.82 49.74 42.66 40.91 40.59 40.39 35.78 35.48 33.50 32.37 30.55 29.91 29.40 29.17 28.69 28.27 28.01 27.84 27.32 27.30 26.60 25.17 24.64 24.45 24.30 23.31 23.18 22.56 22.36 21.41 20.81 17.57 16.34 15.64 15.45 14.57 14.37 11.74 11.73 9.11 9.04 7.99 6.76 5.72 5.71

1 2 3 4 5 6 7 8 11 13 15 16 18 19 20 21 22 23 24 25 26 28 29 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52

98.11 96.23 94.34 92.45 90.57 88.68 86.79 84.91 79.25 75.47 71.70 69.81 66.04 64.15 62.26 60.38 58.49 56.60 54.72 52.83 50.94 47.17 45.28 41.51 39.62 37.74 35.85 33.96 32.08 30.19 28.30 26.42 24.53 22.64 20.75 18.87 16.98 15.09 13.21 11.32 9.43 7.55 5.66 3.77 1.89

Region

_________________________________________________________________________________________________________

Hungary Poland Brazil Thailand Chile Philippines Singapore Indonesia Malaysia South Korea China Canada New Zealand Russia Netherlands Switzerland Taiwan Peru Australia Japan Austria the United Kingdom Sweden Luxembourg Hong Kong Denmark Finland Germany India USA Portugal Greece Norway Czech Republic Spain Argentina Italy Pakistan France Israel Ireland Belgium South Africa Turkey Mexico

Europe Europe Latin America Asia Latin America Asia Asia Asia Asia Asia Asia North America Oceana Europe Europe Europe Asia Latin America Oceana Asia Europe Europe Europe Europe Asia Europe Europe Europe Asia North America Europe Europe Europe Europe Europe Latin America Europe the Middle East Europe the Middle East Europe Europe Africa the Middle East Latin America

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

40

Property Plant and Equipment - Net (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value (total assets = 100)

Rank

Percentile

60.82 54.69 52.00 51.20 49.74 44.72 43.04 42.96 34.70 31.21 30.44 29.78 29.72 29.17 29.10 28.69 28.27 26.60 26.38 26.35 25.69 25.69 25.17 24.64 24.45 24.30 23.31 23.30 23.18 22.56 21.63 20.81 19.92 17.57 16.34 16.28 16.07 15.64 15.45 14.85 14.84 14.51 14.49 14.37 11.73 9.04 7.99 5.44 4.99 4.85 4.68

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Hungary Ukraine Gibraltar Georgia Poland Moldova Kazakhstan Bulgaria Monaco Estonia Andorra Belarus Slovakia Russia Lithuania Netherlands Switzerland Austria Liechtenstein San Marino Jersey Guernsey the United Kingdom Sweden Luxembourg Albania Denmark Faroe Islands Finland Germany Iceland Portugal Cyprus Greece Norway Malta Isle of Man Czech Republic Spain Latvia Croatia Slovenia Vatican City Italy France Ireland Belgium Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

41

Intangible Other Assets Countries

Value (total assets = 100)

Rank

Percentile

29.27 14.53 12.58 12.03 10.07 9.91 9.72 8.97 8.70 8.28 7.83 7.20 6.94 6.74 6.71 6.10 4.97 3.59 2.56 2.34 2.19 2.17 2.08 2.01 2.01 1.98 1.94 1.50 1.35 1.15 1.04 0.89 0.54 0.33 0.31 0.31 0.27 0.27

1 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 31 32 33 34 35 36 37 38 40 41

97.67 93.02 90.70 88.37 86.05 83.72 81.40 79.07 76.74 74.42 72.09 69.77 67.44 65.12 62.79 60.47 58.14 55.81 53.49 51.16 48.84 46.51 44.19 41.86 39.53 37.21 34.88 32.56 27.91 25.58 23.26 20.93 18.60 16.28 13.95 11.63 6.98 4.65

Region

_________________________________________________________________________________________________________

Belgium USA Canada Norway Switzerland Australia Sweden France Luxembourg Austria Finland Malaysia New Zealand Germany Italy the United Kingdom Denmark Singapore Spain Greece Israel Ireland Czech Republic Hong Kong Netherlands China Argentina South Korea Russia India Japan Peru South Africa Hungary Turkey Mexico Poland Thailand

Europe North America North America Europe Europe Oceana Europe Europe Europe Europe Europe Asia Oceana Europe Europe Europe Europe Asia Europe Europe the Middle East Europe Europe Asia Europe Asia Latin America Asia Europe Asia Asia Latin America Africa Europe the Middle East Latin America Europe Asia

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

42

Intangible Other Assets (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value (total assets = 100)

Rank

Percentile

29.27 14.68 12.03 10.07 9.72 9.39 8.97 8.70 8.28 8.20 8.00 8.00 7.83 7.19 6.77 6.74 6.71 6.10 4.97 3.48 2.56 2.40 2.34 2.17 2.17 2.14 2.08 2.01 1.98 1.98 1.93 1.44 1.38 1.37 1.35 1.35 0.77 0.33 0.30 0.30 0.29 0.28 0.27 0.27 0.26 0.25 0.25 0.24 0.24

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49

97.96 95.92 93.88 91.84 89.80 87.76 85.71 83.67 81.63 79.59 77.55 75.51 73.47 71.43 69.39 67.35 65.31 63.27 61.22 59.18 57.14 55.10 53.06 51.02 48.98 46.94 44.90 42.86 40.82 38.78 36.73 34.69 32.65 30.61 28.57 26.53 24.49 22.45 20.41 18.37 16.33 14.29 12.24 10.20 8.16 6.12 4.08 2.04 0.00

_________________________________________________________________________________________________________

Belgium Iceland Norway Switzerland Sweden Liechtenstein France Luxembourg Austria San Marino Jersey Guernsey Finland Andorra Vatican City Germany Italy the United Kingdom Denmark Monaco Spain Slovenia Greece Ireland Malta Isle of Man Czech Republic Netherlands Latvia Croatia Faroe Islands Estonia Belarus Slovakia Russia Lithuania Albania Hungary Ukraine Romania Gibraltar Georgia Poland Bosnia & Herzegovina Macedonia Serbia & Montenegro Moldova Kazakhstan Bulgaria

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

3.3 3.3.1

FINANCIAL RETURNS RATIOS

IN

43

POLAND: LIABILITY STRUCTURE

Overview

In this chapter we consider the liability structure of firms operating in Poland benchmarked against global averages. The chapter begins by defining relevant terms. A common-size statement, or vertical analysis of liabilities and shareholder equity is then presented for the proto-typical firm operating in Poland and the average global benchmarks (sometimes referred to as a financial “gap” analysis). The figure reflect firms involved in steam, gas and hydraulic turbines and turbine generator set units in Poland. For ratios where there are large deviations between Poland and the benchmarks, graphics are provided (total liabilities and equity = 100 percent). Then the distribution of ratios is presented in the form of ranks and percentiles. Certain key vertical analysis liability ratios are highlighted.

3.3.2

Liabilities and Equity – Definitions of Terms

The following definitions are provided for those less familiar with the liability-side of financial statement analysis. As this chapter deals with the vertical analysis and global benchmarking of liabilities and equity, only definitions covering certain terms used in this chapter’s tables and graphs are provided here. The glossary below reflects commonly accepted definitions across various countries and official sources. •

Accounts Payable. Accounts payable are defined as amounts owed on open account to private persons or organizations for goods or services received.

•

Common Equity. Common equity is defined to equal the company's net worth. It typically comprises capital stock, capital surplus, retained earnings, and, in some cases, net worth reserves. Common equity is the portion of total net worth belonging to the common stockholders. Synonyms which are often used for common equity are “common stock” and “net worth”.

•

Current Liabilities - Total. Total current liabilities are defined as the total amount of obligations which would require the use of current assets or other current liabilities to pay.

•

Current Portion of Long Term Debt. The current proportion of long term debt is typically defined as debt which is payable in more than one year.

•

Long Term Debt. Long-term debt is defined to be due in a period exceeding one year or one operating cycle, whichever is longer. Long-term debt can have an extended repayment period such as a many-year mortgage on land and buildings, or debt that's intended to be permanent such as bonds issued to investors.

•

Long Term Debt Excluding Capitalized Leases. Long term debt excluding capitalized leases is defined as debt which is typically due in a period exceeding one year or one operating cycle, whichever is longer, less capitalized leases (see Long Term Debt for exceptions). Capital leases are generally recorded as assets with liability at the current value of the lease payment.

•

Shareholders Equity. Shareholders equity is commonly defined to be the amount of total equity reserved for common and preferred shareholders.

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Financial Indicators

44

•

Short Term Debt. Short term debt is generally defined as debt payable within one year.

•

Total Liabilities. Total liabilities are generally defined to include all the claims against a corporation. Liabilities include accounts and wages and salaries payable, dividends declared payable, accrued taxes payable, fixed or long-term liabilities such as mortgage bonds, debentures, and bank loans.

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2007 Icon Group International, Inc.

Financial Indicators

3.3.3

45

Liability Structure: Outlook

Using the methodology described in the introduction, the following table summarizes liability and equity structure benchmarks for firms involved in steam, gas and hydraulic turbines and turbine generator set units in Poland. To allow comparable benchmarking, a common index of Total Liabilities & Shareholders Equity = 100 is used. All figures are current-year projections for companies operating in Poland based on latest financial results available. Liability Structure Poland Europe World Avg.

_________________________________________________________________________________________________________

Accounts Payable Short Term Debt & Current Portion of Long Term Debt Other Current Liabilities Current Liabilities - Total Long Term Debt Long Term Debt Excluding Capitalized Leases Total Liabilities Common Equity Other Appropriated Reserves Unappropriated Reserves Total Liabilities & Shareholders Equity

7.33 14.48 7.05 28.86 8.20 8.20 37.07 44.72 20.36 20.73 100.00

12.07 12.07 12.86 36.78 9.95 9.81 50.49 41.30 7.07 7.03 100.00

12.85 10.39 11.64 36.82 6.27 6.20 45.11 46.61 4.64 11.54 100.00

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

3.3.4

46

Large Variances: Liabilities

The following graphics summarize for steam, gas and hydraulic turbines and turbine generator set units the large liability structure gaps between firms operating in Poland and the world average. A gap cannot necessarily be interpreted as a positive or negative reflection on performance. Gaps may signal areas of specialization, market focus, or expertise. More contextual information is required to fully interpret these gaps. The gaps highlighted here are simply those that are large.

Gap: Accounts Payable 15 10

12.07

12.85

7.33

5 0 -5

-5.52

-10 Poland

Europe

World Average

Gap

Gap: Short Term Debt & Current Portion of Long Term Debt 15

14.48 12.07 10.39

10 4.09

5 0 Poland

Europe

World Average

Gap

Gap: Other Current Liabilities 12.86

15 10

11.64

7.05

5 0 -5 Poland

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Europe

World Average

-4.59 Gap

2007 Icon Group International, Inc.

Financial Indicators

47

Gap: Current Liabilities - Total 36.78

40 30

36.82

28.86

20 10 0 -7.96

-10 Poland

Europe

World Average

Gap

Gap: Long Term Debt 9.95

10

8.2

8

6.27

6 4 1.93

2 0 Poland

Europe

World Average

Gap

Gap: Long Term Debt Excluding Capitalized Leases 9.81

10

8.2

8

6.2

6 4

2

2 0 Poland

Europe

World Average

Gap

Gap: Total Liabilities 60 50 40 30 20 10 0 -10

50.49

45.11

37.07

Poland

www.icongrouponline.com

Europe

World Average

-8.04 Gap

2007 Icon Group International, Inc.

Financial Indicators

48

Gap: Common Equity 50

44.72

41.3

46.61

40 30 20 10 0

-1.89

-10 Poland

Europe

World Average

Gap

Gap: Other Appropriated Reserves 25

20.36

20

15.72

15 10

7.07

5

4.64

0 Poland

Europe

World Average

Gap

Gap: Unappropriated Reserves 25

20.73

20 15

11.54

10

7.03

9.19

5 0 Poland

Europe

World Average

Gap

Gap: Total Liabilities & Shareholders Equity 100

100

100

100 80 60 40 20

0

0 Poland

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Europe

World Average

Gap

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Financial Indicators

3.3.5

49

Key Percentiles and Rankings

We now consider the distribution of liability ratios for steam, gas and hydraulic turbines and turbine generator set units using ranks and percentiles. What percent of countries have a value lower or higher than Poland (what is the ratio's rank or percentile)? The table below answers this question with respect to the vertical analysis of liability structure. The ranks and percentiles indicate, from highest to lowest, where a value falls within the distribution of all countries considered in the global benchmark (the number of countries in the benchmark per line item may vary, as indicated in the Rank). Again, a high or low figure does not necessarily indicate good or bad performance. After the summary table below, a few key vertical liability ratios are highlighted in additional tables. Liability Structure

Poland

Rank of Total

Percentile

Accounts Payable Short Term Debt & Current Portion of Long Term Debt Other Current Liabilities Current Liabilities - Total Long Term Debt Long Term Debt Excluding Capitalized Leases Total Liabilities Common Equity Other Appropriated Reserves Unappropriated Reserves Total Liabilities & Shareholders Equity

7.33 14.48 7.05 28.86 8.20 8.20 37.07 44.72 20.36 20.73 100.00

46 of 50 12 of 53 38 of 53 39 of 53 29 of 48 28 of 48 44 of 53 26 of 53 5 of 49 4 of 37

8.00 77.36 28.30 26.42 39.58 41.67 16.98 50.94 89.80 89.19

_________________________________________________________________________________________________________

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

50

Accounts Payable Countries

Value (total liabilities & equity = 100)

Rank

Percentile

31.84 24.17 22.32 20.60 20.15 19.56 18.99 18.07 15.66 15.51 15.18 14.89 14.85 14.78 14.52 13.84 13.66 13.56 13.26 13.18 13.15 12.44 12.35 11.85 11.72 11.53 11.19 10.99 10.84 10.30 9.38 9.10 9.02 8.97 8.95 8.78 8.71 8.18 7.33 7.01 7.00 2.06

1 2 3 4 5 6 7 9 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 27 28 29 30 31 32 34 36 37 38 39 40 42 43 44 46 47 48 50

98.00 96.00 94.00 92.00 90.00 88.00 86.00 82.00 78.00 76.00 74.00 72.00 70.00 68.00 66.00 64.00 62.00 60.00 58.00 56.00 54.00 52.00 50.00 46.00 44.00 42.00 40.00 38.00 36.00 32.00 28.00 26.00 24.00 22.00 20.00 16.00 14.00 12.00 8.00 6.00 4.00 0.00

Region

_________________________________________________________________________________________________________

Belgium Italy Spain Philippines India France Brazil Chile Japan Hong Kong Singapore Greece Taiwan Netherlands the United Kingdom New Zealand Canada Norway Czech Republic Denmark South Korea Sweden Argentina Russia Australia Thailand Austria Indonesia Switzerland China Luxembourg Germany USA Hungary Malaysia Israel Ireland Finland Poland Turkey Mexico Peru

Europe Europe Europe Asia Asia Europe Latin America Latin America Asia Asia Asia Europe Asia Europe Europe Oceana North America Europe Europe Europe Asia Europe Latin America Europe Oceana Asia Europe Asia Europe Asia Europe Europe North America Europe Asia the Middle East Europe Europe Europe the Middle East Latin America Latin America

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

51

Accounts Payable (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value (total liabilities & equity = 100)

Rank

Percentile

31.84 24.37 24.17 22.32 20.95 19.56 14.89 14.87 14.78 14.72 14.52 14.33 13.80 13.62 13.56 13.26 13.18 12.68 12.58 12.58 12.44 12.10 12.07 11.85 11.82 11.19 11.08 10.84 10.80 10.80 10.12 9.38 9.11 9.10 8.97 8.71 8.18 8.06 7.67 7.55 7.33 6.66 6.59 6.34 6.33 6.12 5.94 5.73 1.80

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49

97.96 95.92 93.88 91.84 89.80 87.76 85.71 83.67 81.63 79.59 77.55 75.51 73.47 71.43 69.39 67.35 65.31 63.27 61.22 59.18 57.14 55.10 53.06 51.02 48.98 46.94 44.90 42.86 40.82 38.78 36.73 34.69 32.65 30.61 28.57 26.53 24.49 22.45 20.41 18.37 16.33 14.29 12.24 10.20 8.16 6.12 4.08 2.04 0.00

_________________________________________________________________________________________________________

Belgium Vatican City Italy Spain Slovenia France Greece Faroe Islands Netherlands Monaco the United Kingdom Andorra Malta Isle of Man Norway Czech Republic Denmark Estonia Latvia Croatia Sweden Belarus Slovakia Russia Lithuania Austria San Marino Switzerland Guernsey Jersey Liechtenstein Luxembourg Iceland Germany Hungary Ireland Finland Ukraine Gibraltar Georgia Poland Romania Moldova Kazakhstan Bulgaria Bosnia & Herzegovina Macedonia Serbia & Montenegro Albania

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

52

Current Liabilities - Total Countries

Value (total liabilities & equity = 100)

Rank

Percentile

60.54 58.44 57.60 52.51 52.20 49.47 48.47 47.78 45.62 44.98 42.99 42.62 41.74 41.66 41.58 41.02 40.85 40.74 40.61 40.11 39.05 37.83 37.20 36.79 36.11 35.29 34.60 33.26 33.15 33.01 32.94 31.08 31.01 30.90 30.83 29.13 28.86 28.55 27.30 26.03 25.68 25.51 25.28 23.73 23.18

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 23 24 25 26 27 28 30 31 32 33 34 35 36 37 38 39 40 41 42 45 46 47 50 51

98.11 96.23 94.34 92.45 90.57 88.68 86.79 84.91 83.02 81.13 79.25 77.36 75.47 73.58 71.70 69.81 67.92 66.04 64.15 62.26 60.38 56.60 54.72 52.83 50.94 49.06 47.17 43.40 41.51 39.62 37.74 35.85 33.96 32.08 30.19 28.30 26.42 24.53 22.64 20.75 15.09 13.21 11.32 5.66 3.77

Region

_________________________________________________________________________________________________________

Brazil Spain Chile South Africa Pakistan Italy Portugal Taiwan Greece France Norway the United Kingdom Austria China India Denmark Turkey Mexico Czech Republic Belgium Netherlands Argentina Japan South Korea Finland Hungary Hong Kong Sweden Russia Switzerland Germany Israel Thailand Singapore Ireland Philippines Poland Luxembourg Peru USA Malaysia Australia Canada New Zealand Indonesia

Latin America Europe Latin America Africa the Middle East Europe Europe Asia Europe Europe Europe Europe Europe Asia Asia Europe the Middle East Latin America Europe Europe Europe Latin America Asia Asia Europe Europe Asia Europe Europe Europe Europe the Middle East Asia Asia Europe Asia Europe Europe Latin America North America Asia Oceana North America Oceana Asia

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

53

Current Liabilities - Total (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value (total liabilities & equity = 100)

Rank

Percentile

58.44 54.86 49.87 49.47 48.47 46.40 45.62 44.98 42.99 42.62 42.28 41.74 41.73 41.34 41.02 40.61 40.31 40.31 40.11 39.05 38.81 38.55 38.53 36.11 35.62 35.47 35.29 34.61 33.85 33.77 33.39 33.26 33.18 33.15 33.07 33.01 32.94 31.73 30.83 30.80 30.17 29.96 29.71 28.86 28.55 26.30 25.95 24.97 24.93 24.58 23.83

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Spain Slovenia Vatican City Italy Portugal Cyprus Greece France Norway the United Kingdom Malta Austria Isle of Man San Marino Denmark Czech Republic Guernsey Jersey Belgium Netherlands Romania Latvia Croatia Finland Bosnia & Herzegovina Estonia Hungary Macedonia Belarus Slovakia Serbia & Montenegro Sweden Faroe Islands Russia Lithuania Switzerland Germany Ukraine Ireland Liechtenstein Gibraltar Monaco Georgia Poland Luxembourg Iceland Moldova Kazakhstan Bulgaria Andorra Albania

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

54

Long Term Debt Countries

Value (total liabilities & equity = 100)

Rank

Percentile

32.68 21.19 19.31 19.13 19.04 18.79 18.33 16.39 16.33 14.29 14.18 13.29 13.18 11.75 10.94 10.59 10.56 10.49 10.03 9.83 9.49 8.50 8.45 8.32 8.20 7.99 7.66 7.48 7.35 6.23 5.50 4.53 3.69 3.63 3.09 2.75 2.56 2.32 1.69 1.55 1.53

1 2 3 4 5 6 7 8 9 12 14 15 16 17 18 19 20 21 22 23 25 26 27 28 29 30 32 33 34 35 37 38 40 41 42 43 44 45 46 47 48

97.92 95.83 93.75 91.67 89.58 87.50 85.42 83.33 81.25 75.00 70.83 68.75 66.67 64.58 62.50 60.42 58.33 56.25 54.17 52.08 47.92 45.83 43.75 41.67 39.58 37.50 33.33 31.25 29.17 27.08 22.92 20.83 16.67 14.58 12.50 10.42 8.33 6.25 4.17 2.08 0.00

Region

_________________________________________________________________________________________________________

New Zealand Belgium Portugal Finland Thailand Netherlands Sweden Switzerland Norway USA Luxembourg Denmark Australia Canada Taiwan Turkey Mexico Austria Hungary Germany the United Kingdom South Korea Japan France Poland India Russia Italy Spain Indonesia Singapore South Africa Hong Kong China Greece Czech Republic Argentina Malaysia Peru Israel Ireland

Oceana Europe Europe Europe Asia Europe Europe Europe Europe North America Europe Europe Oceana North America Asia the Middle East Latin America Europe Europe Europe Europe Asia Asia Europe Europe Asia Europe Europe Europe Asia Asia Africa Asia Asia Europe Europe Latin America Asia Latin America the Middle East Europe

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

55

Long Term Debt (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value (total liabilities & equity = 100)

Rank

Percentile

33.84 21.19 19.31 19.13 18.79 18.48 18.33 16.39 16.33 15.30 14.44 14.18 13.29 10.49 10.39 10.13 10.13 10.06 10.03 9.83 9.49 9.23 9.02 8.97 8.66 8.58 8.44 8.32 8.20 8.19 7.82 7.80 7.66 7.64 7.54 7.48 7.38 7.35 7.10 7.09 6.90 5.33 3.54 3.09 2.86 2.82 2.75 2.61 2.61 1.53 1.47

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Andorra Belgium Portugal Finland Netherlands Cyprus Sweden Switzerland Norway Liechtenstein Iceland Luxembourg Denmark Austria San Marino Jersey Guernsey Romania Hungary Germany the United Kingdom Bosnia & Herzegovina Ukraine Macedonia Serbia & Montenegro Gibraltar Georgia France Poland Estonia Belarus Slovakia Russia Lithuania Vatican City Italy Moldova Spain Kazakhstan Bulgaria Slovenia Monaco Faroe Islands Greece Malta Isle of Man Czech Republic Latvia Croatia Ireland Albania

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

56

Total Liabilities Countries

Value (total liabilities & equity = 100)

Rank

Percentile

67.94 67.25 67.09 66.15 64.53 64.47 63.76 63.36 61.47 60.67 60.17 60.05 58.24 57.68 57.21 57.04 56.88 56.64 56.35 53.05 52.06 51.92 51.65 50.71 50.38 49.75 49.19 48.53 45.83 45.42 45.32 44.29 43.73 41.26 40.01 39.43 38.81 37.78 37.07 35.30 35.01 31.52 30.75 29.75 29.13

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 30 31 32 34 35 38 39 40 42 43 44 45 46 47 48 49 51

98.11 96.23 94.34 92.45 90.57 88.68 86.79 84.91 83.02 81.13 79.25 77.36 75.47 73.58 71.70 69.81 67.92 66.04 64.15 62.26 60.38 58.49 56.60 54.72 52.83 50.94 49.06 47.17 43.40 41.51 39.62 35.85 33.96 28.30 26.42 24.53 20.75 18.87 16.98 15.09 13.21 11.32 9.43 7.55 3.77

Region

_________________________________________________________________________________________________________

Portugal Belgium Austria Spain Italy Germany Brazil Netherlands Sweden Chile Denmark Norway France Finland Taiwan New Zealand Switzerland South Africa the United Kingdom Pakistan Turkey Mexico India Thailand Japan Greece Luxembourg South Korea China USA Hungary Czech Republic Russia Argentina Australia Canada Hong Kong Singapore Poland Israel Ireland Indonesia Peru Malaysia Philippines

Europe Europe Europe Europe Europe Europe Latin America Europe Europe Latin America Europe Europe Europe Europe Asia Oceana Europe Africa Europe the Middle East the Middle East Latin America Asia Asia Asia Europe Europe Asia Asia North America Europe Europe Europe Latin America Oceana North America Asia Asia Europe the Middle East Europe Asia Latin America Asia Asia

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

57

Total Liabilities (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value (total liabilities & equity = 100)

Rank

Percentile

67.94 67.25 67.09 66.45 66.15 65.05 65.03 64.79 64.79 64.53 64.47 63.36 62.10 61.47 60.17 60.05 59.07 58.24 57.68 56.88 56.35 53.08 49.75 49.47 49.19 46.78 46.11 45.88 45.51 45.39 45.32 44.65 44.55 44.29 44.12 43.73 43.63 42.56 42.04 42.02 40.76 38.75 38.15 37.22 37.07 36.63 35.01 33.33 32.07 32.01 26.84

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Portugal Belgium Austria San Marino Spain Vatican City Cyprus Jersey Guernsey Italy Germany Netherlands Slovenia Sweden Denmark Norway Andorra France Finland Switzerland the United Kingdom Liechtenstein Greece Romania Luxembourg Estonia Malta Iceland Isle of Man Bosnia & Herzegovina Hungary Belarus Slovakia Czech Republic Macedonia Russia Lithuania Serbia & Montenegro Latvia Croatia Ukraine Gibraltar Georgia Faroe Islands Poland Monaco Ireland Moldova Kazakhstan Bulgaria Albania

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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58

Common Equity Countries

Value (total liabilities & equity = 100)

Rank

Percentile

70.87 69.29 69.25 64.70 64.69 64.17 60.19 59.97 59.11 56.07 54.68 53.58 50.89 50.04 49.10 48.70 48.32 47.94 47.81 46.95 45.09 44.72 44.36 42.27 42.12 42.01 41.92 41.54 40.96 39.82 39.57 39.49 38.36 36.79 36.37 36.33 34.89 34.43 34.23 34.03 32.76 32.56 32.09 32.06 31.17

1 2 3 4 5 6 8 10 11 12 13 14 15 16 17 18 19 20 21 22 25 26 28 29 30 31 32 33 35 36 37 38 39 41 42 43 44 45 46 47 48 49 50 51 52

98.11 96.23 94.34 92.45 90.57 88.68 84.91 81.13 79.25 77.36 75.47 73.58 71.70 69.81 67.92 66.04 64.15 62.26 60.38 58.49 52.83 50.94 47.17 45.28 43.40 41.51 39.62 37.74 33.96 32.08 30.19 28.30 26.42 22.64 20.75 18.87 16.98 15.09 13.21 11.32 9.43 7.55 5.66 3.77 1.89

Region

_________________________________________________________________________________________________________

Philippines Malaysia Peru Israel Indonesia Ireland Singapore Australia Hong Kong Canada Hungary USA China South Korea Thailand Japan India Turkey Mexico Pakistan Russia Poland Greece South Africa the United Kingdom Switzerland Taiwan New Zealand France Denmark Finland Czech Republic Norway Argentina Sweden Luxembourg Italy Brazil Germany Netherlands Chile Belgium Spain Portugal Austria

Asia Asia Latin America the Middle East Asia Europe Asia Oceana Asia North America Europe North America Asia Asia Asia Asia Asia the Middle East Latin America the Middle East Europe Europe Europe Africa Europe Europe Asia Oceana Europe Europe Europe Europe Europe Latin America Europe Europe Europe Latin America Europe Europe Latin America Europe Europe Europe Europe

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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59

Common Equity (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value (total liabilities & equity = 100)

Rank

Percentile

64.17 60.45 58.37 56.68 54.68 54.13 49.17 48.24 46.75 46.04 46.03 45.94 45.55 45.09 44.99 44.72 44.36 43.01 42.12 42.01 41.80 41.12 40.96 40.62 40.58 40.21 39.82 39.57 39.49 39.20 39.19 38.69 38.62 38.36 37.49 37.47 36.37 36.33 35.17 34.89 34.23 34.03 32.56 32.09 32.06 31.17 30.88 30.69 30.13 30.10 30.10

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Ireland Albania Monaco Faroe Islands Hungary Iceland Ukraine Estonia Gibraltar Belarus Georgia Slovakia Romania Russia Lithuania Poland Greece Andorra the United Kingdom Switzerland Bosnia & Herzegovina Malta France Macedonia Isle of Man Moldova Denmark Finland Czech Republic Liechtenstein Serbia & Montenegro Kazakhstan Bulgaria Norway Latvia Croatia Sweden Luxembourg Vatican City Italy Germany Netherlands Belgium Spain Portugal Austria San Marino Cyprus Slovenia Guernsey Jersey

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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2007 Icon Group International, Inc.

Financial Indicators

3.4 3.4.1

FINANCIAL RETURNS RATIOS

IN

60

POLAND: INCOME STRUCTURE

Overview

In this chapter we consider the income structure of companies operating in Poland benchmarked against global averages. The chapter begins by defining relevant terms. A common-size statement, or vertical analysis of income is then presented for the proto-typical firm involved in steam, gas and hydraulic turbines and turbine generator set units operating in Poland and the average global benchmarks (total revenue = 100 percent). For ratios where there are large deviations between Poland and the benchmarks, graphics are provided. Then the distribution of ratios is presented in the form of ranks and percentiles. Certain key vertical analysis income ratios are highlighted across countries in the comparison group.

3.4.2

Income Statements – Definitions of Terms

The following definitions are provided for those less familiar with the income-side of financial statement analysis. As this chapter deals with the vertical analysis and global benchmarking of income, only definitions covering certain terms used in this chapter’s tables and graphs are provided here. The glossary below reflects commonly accepted definitions across various countries and official sources. •

Amortization. Amortization generally refers to the depreciation, depletion, or charge-off to expense of intangible and tangible assets over a period of time. Amortization is commonly understood to be the taking as an expense (writing off) of the loss of value of an intangible asset such as a copyright, a patent, or a mailing list, in an accounting period.

•

Cost of Goods Sold (excluding depreciation). For retail companies, cost of goods sold is generally defined as the equivalent of starting inventory plus purchases minus ending inventory. In manufacturing, cost of goods sold is defined to equal the starting inventory plus the cost of goods manufactured minus ending inventory. Most pure service firms do not generally have cost of goods sold.

•

Depletion. Depletion is commonly defined to be included as one of the elements of amortization, and is understood to be the portion of the carrying value (other than the portion associated with tangible assets) prorated in each accounting period for financial reporting purposes.

•

Depreciation. Depreciation generally is defined as the expiration in the service life of fixed assets, other than depletable assets, attributable to wear and tear, deterioration, action of the physical elements, inadequacy and obsolescence. Depreciation is commonly defined as the portion of the cost of a fixed asset charged as an expense during a particular period. In accounting for depreciation, the cost of a fixed asset, less any salvage value, is prorated over the estimated service life of such an asset, and each period is charged with a portion of such cost. Through this process, the cost of the asset is ultimately charged off as an expense.

•

Earnings Before Interest and Taxes (EBIT). EBIT is a financial measure defined as revenues less cost of goods sold and selling, general, and administrative expenses. In other words, operating and non-operating profit before the deduction of interest and income taxes.

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•

Gross Income. Gross income is commonly defined as all the money, goods, and property received by the company that must be included as taxable income.

•

Interest Expense on Debt. Interest expenses on debt are those which are spent on current debt and added to the net income so avoid underestimating interest coverage.

•

Net Income Available to Common. Net income available to common is defined as the net income available to common stockholders.

•

Net Income Before Preferred Dividends. Net income before preferred dividends is generally calculated as the difference between total revenues and total expense prior to the granting of preferred dividends.

•

Net Sales or Revenues. Revenues or net sales are defined as payments made to and received by an entity. May take the form of taxes, user fees, fines, fees for service, and so on.

•

Operating Income. Operating income is generally defined to equal operating revenues less operating expenses. It typically excludes items of other revenue and expense such as equity in earnings of unconsolidated companies, dividends, interest income and expense, income taxes, extraordinary items, and cumulative effect of accounting changes.

•

Pretax Income. Pretax income is generally defined as income before tax deductions.

•

Selling, General & Administrative Expenses. Selling, general and administrative expenses are expenses independent from cost of sales for the purpose of illustrating the amount of the company's selling and administrative costs. Generally included in this figure are the costs of employees' salaries, commissions, and travel expenses; company payroll and office costs; and advertising and promotion.

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3.4.3

62

Income Structure: Outlook

Using the methodology described in the introduction, the following table summarizes income structure benchmarks for firms involved in steam, gas and hydraulic turbines and turbine generator set units in Poland. To allow comparable benchmarking, a common index of Net Sales or Revenues = 100 is used. All figures are current-year projections for companies operating in Poland based on latest financial results available. Income Structure Poland Europe World Avg.

_________________________________________________________________________________________________________

Net Sales or Revenues Cost of Goods Sold (Excluding Depreciation) Depreciation, Depletion & Amortization Gross Income Selling, General & Administrative Expenses Operating Income Other Income/Expense Net Earnings Before Interest and Taxes (EBIT) Interest Expense on Debt Pretax Income Net Income Before Extra Items/Prefer Dividends Net Income Before Preferred Dividends Net Income Available to Common

100.00 64.58 6.99 10.22 8.51 1.73 0.72 2.45 1.40 1.05 1.05 1.05 1.05

100.00 70.09 4.68 18.16 13.76 5.46 0.83 8.40 4.33 4.14 2.61 2.62 2.61

100.00 69.36 4.50 16.64 9.33 6.55 1.48 9.61 3.64 6.00 4.29 4.43 4.29

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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Financial Indicators

3.4.4

63

Large Variances: Income

The following graphics summarize for steam, gas and hydraulic turbines and turbine generator set units the large income structure gaps between firms operating in Poland and the world average. A gap cannot necessarily be interpreted as a positive or negative reflection on performance. Gaps may signal areas of specialization, market focus, or expertise. More contextual information is required to fully interpret these gaps. The gaps highlighted here are simply those that are large.

Gap: Cost of Goods Sold (Excluding Depreciation) 80

64.58

70.09

69.36

60 40 20 0

-4.78

-20 Poland

Europe

World Average

Gap

Gap: Depreciation, Depletion & Amortization 8

6.99

6

4.68

4.5

4

2.49

2 0 Poland

Europe

World Average

Gap

Gap: Gross Income 18.16

20 15

16.64

10.22

10 5 0 -5

-6.42

-10 Poland

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Europe

World Average

Gap

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64

Gap: Selling, General & Administrative Expenses 13.76

15 10

9.33

8.51

5 0

-0.82

-5 Poland

Europe

World Average

Gap

Gap: Operating Income 8 6 4 2 0 -2 -4 -6

5.46

6.55

1.73

-4.82 Poland

Europe

World Average

Gap

Gap: Earnings Before Interest and Taxes (EBIT) 8.4

10 5

9.61

2.45

0 -5 -7.16 -10 Poland

Europe

World Average

Gap

Gap: Interest Expense on Debt 6

4.33

4 2

3.64

1.4

0 -2

-2.24

-4 Poland

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Europe

World Average

Gap

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65

Gap: Pretax Income 6 6

4.14

4 2

1.05

0 -2 -4

-4.95

-6 Poland

Europe

World Average

Gap

Gap: Net Income Before Extra Items/Prefer Dividends 6

4.29

4 2

2.61 1.05

0 -2 -3.24

-4 Poland

Europe

World Average

Gap

Gap: Net Income Before Preferred Dividends 6

4.43

4 2

2.62 1.05

0 -2 -3.38

-4 Poland

Europe

World Average

Gap

Gap: Net Income Available to Common 6

4.29

4 2

2.61 1.05

0 -2 -3.24

-4 Poland

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Europe

World Average

Gap

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Financial Indicators

3.4.5

66

Key Percentiles and Rankings

We now consider the distribution of income ratios for steam, gas and hydraulic turbines and turbine generator set units using ranks and percentiles. What percent of countries have a value lower or higher than Poland (what is the ratio's rank or percentile)? The table below answers this question with respect to the vertical analysis of income structure. The ranks and percentiles indicate, from highest to lowest, where a value falls within the distribution of all countries considered in the global benchmark (the number of countries in the benchmark per line item may vary, as indicated in the Rank). Again, a high or low figure does not necessarily indicate good or bad performance. After the summary table below, a few key vertical income ratios are highlighted in additional tables. Income Structure

Poland

Rank of Total

Percentile

Net Sales or Revenues Cost of Goods Sold (Excluding Depreciation) Depreciation, Depletion & Amortization Gross Income Selling, General & Administrative Expenses Operating Income Other Income/Expense Net Earnings Before Interest and Taxes (EBIT) Interest Expense on Debt Pretax Income Net Income Before Extra Items/Prefer Dividends Net Income Before Preferred Dividends Net Income Available to Common

100.00 64.58 6.99 10.22 8.51 1.73 0.72 2.45 1.40 1.05 1.05 1.05 1.05

42 of 52 7 of 53 45 of 52 36 of 46 46 of 53 28 of 53 49 of 53 31 of 53 48 of 53 43 of 53 43 of 53 43 of 53

19.23 86.79 13.46 21.74 13.21 47.17 7.55 41.51 9.43 18.87 18.87 18.87

_________________________________________________________________________________________________________

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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67

Cost of Goods Sold (Excluding Depreciation) Countries

Value (total revenue = 100)

Rank

Percentile

90.62 89.40 88.70 88.31 87.88 85.34 83.94 82.83 80.14 79.88 78.96 77.69 77.62 76.49 76.48 76.47 75.55 74.93 74.02 73.34 73.18 73.11 72.79 72.53 72.22 71.69 70.30 70.28 70.19 69.67 69.56 69.10 68.44 68.41 67.89 67.33 67.16 64.58 63.43 63.25 62.95 62.88 62.58 58.30

1 2 3 4 5 6 7 8 10 11 12 13 14 16 17 18 19 20 21 23 24 25 26 27 28 29 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 50

98.08 96.15 94.23 92.31 90.38 88.46 86.54 84.62 80.77 78.85 76.92 75.00 73.08 69.23 67.31 65.38 63.46 61.54 59.62 55.77 53.85 51.92 50.00 48.08 46.15 44.23 40.38 38.46 36.54 34.62 32.69 30.77 28.85 26.92 25.00 23.08 21.15 19.23 17.31 15.38 13.46 11.54 9.62 3.85

Region

_________________________________________________________________________________________________________

Philippines Belgium New Zealand Portugal Taiwan Denmark India France South Korea Spain Hungary South Africa Norway Austria Finland Australia Singapore Indonesia Canada Germany China Brazil Switzerland Peru Russia Japan Greece Netherlands Thailand Sweden Chile the United Kingdom Hong Kong Malaysia Israel Ireland Italy Poland Turkey Mexico Luxembourg USA Czech Republic Argentina

Asia Europe Oceana Europe Asia Europe Asia Europe Asia Europe Europe Africa Europe Europe Europe Oceana Asia Asia North America Europe Asia Latin America Europe Latin America Europe Asia Europe Europe Asia Europe Latin America Europe Asia Asia the Middle East Europe Europe Europe the Middle East Latin America Europe North America Europe Latin America

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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68

Cost of Goods Sold (Excluding Depreciation) (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value (total revenue = 100)

Rank

Percentile

91.86 89.40 88.31 85.34 84.53 82.83 79.88 78.96 77.62 77.26 76.49 76.48 75.76 74.99 73.87 73.87 73.74 73.57 73.34 73.26 72.79 72.22 72.05 71.01 70.30 70.28 69.67 69.10 67.92 67.70 67.51 67.33 67.16 66.47 65.63 65.15 64.58 64.30 63.53 63.31 62.95 62.58 60.26 59.40 59.38 58.06 55.87 55.77 55.30 53.75 51.85

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Andorra Belgium Portugal Denmark Cyprus France Spain Hungary Norway Estonia Austria Finland San Marino Slovenia Jersey Guernsey Belarus Slovakia Germany Monaco Switzerland Russia Lithuania Ukraine Greece Netherlands Sweden the United Kingdom Liechtenstein Vatican City Gibraltar Ireland Italy Georgia Faroe Islands Malta Poland Isle of Man Iceland Albania Luxembourg Czech Republic Romania Latvia Croatia Moldova Kazakhstan Bulgaria Bosnia & Herzegovina Macedonia Serbia & Montenegro

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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69

Selling, General & Administrative Expenses Countries

Value (total revenue = 100)

Rank

Percentile

28.49 28.26 26.51 26.27 25.90 25.12 22.54 21.79 20.82 19.42 18.12 18.08 17.87 17.85 17.15 16.96 16.58 16.50 15.50 14.65 14.27 13.83 12.73 12.54 11.16 10.41 10.40 10.21 9.92 9.39 9.27 8.72 8.51 8.37 8.35 8.29 7.97 6.46 0.93

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 18 19 20 22 23 24 26 27 28 29 30 31 32 33 34 35 36 38 39 40 41 42 45

97.83 95.65 93.48 91.30 89.13 86.96 84.78 82.61 80.43 78.26 76.09 73.91 71.74 69.57 67.39 65.22 60.87 58.70 56.52 52.17 50.00 47.83 43.48 41.30 39.13 36.96 34.78 32.61 30.43 28.26 26.09 23.91 21.74 17.39 15.22 13.04 10.87 8.70 2.17

Region

_________________________________________________________________________________________________________

Israel Ireland Netherlands Peru USA the United Kingdom Sweden Italy Japan South Africa Turkey Mexico Thailand Finland Germany Canada Hong Kong Switzerland China France Luxembourg Malaysia Norway Greece Czech Republic Hungary Argentina Denmark Austria Australia South Korea Taiwan Poland Brazil Russia Singapore Chile Indonesia Philippines

the Middle East Europe Europe Latin America North America Europe Europe Europe Asia Africa the Middle East Latin America Asia Europe Europe North America Asia Europe Asia Europe Europe Asia Europe Europe Europe Europe Latin America Europe Europe Oceana Asia Asia Europe Latin America Europe Asia Latin America Asia Asia

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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Financial Indicators

70

Selling, General & Administrative Expenses (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value (total revenue = 100)

Rank

Percentile

28.26 26.51 26.17 25.12 22.93 22.54 21.97 21.79 17.85 17.22 17.15 16.50 15.90 15.80 15.39 15.36 14.82 14.65 14.27 12.73 12.54 11.62 11.47 11.16 10.60 10.59 10.41 10.21 9.92 9.82 9.58 9.58 9.36 8.94 8.90 8.76 8.53 8.51 8.51 8.35 8.33 8.04 7.65 7.36 7.35

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45

97.78 95.56 93.33 91.11 88.89 86.67 84.44 82.22 80.00 77.78 75.56 73.33 71.11 68.89 66.67 64.44 62.22 60.00 57.78 55.56 53.33 51.11 48.89 46.67 44.44 42.22 40.00 37.78 35.56 33.33 31.11 28.89 26.67 24.44 22.22 20.00 17.78 15.56 13.33 11.11 8.89 6.67 4.44 2.22 0.00

_________________________________________________________________________________________________________

Ireland Netherlands Iceland the United Kingdom Albania Sweden Vatican City Italy Finland Romania Germany Switzerland Faroe Islands Bosnia & Herzegovina Liechtenstein Macedonia Serbia & Montenegro France Luxembourg Norway Greece Malta Isle of Man Czech Republic Latvia Croatia Hungary Denmark Austria San Marino Jersey Guernsey Ukraine Estonia Gibraltar Georgia Belarus Poland Slovakia Russia Lithuania Monaco Moldova Kazakhstan Bulgaria

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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71

Operating Income Countries

Value (total revenue = 100)

Rank

Percentile

13.67 11.79 11.49 11.22 11.15 11.12 11.05 9.82 8.69 8.64 8.46 7.86 7.83 7.64 7.42 7.41 7.00 6.96 6.87 6.52 6.45 6.40 6.27 6.10 5.94 5.61 5.30 5.16 4.51 3.95 3.86 3.72 3.67 3.52 3.17 2.78 2.54 2.12 1.73 1.50 1.39 0.95 0.69 -2.29 -2.31

1 2 3 4 5 6 7 10 11 12 13 15 16 17 18 19 20 21 22 23 24 25 27 28 29 30 31 32 34 35 36 38 39 40 42 43 44 45 46 47 48 50 51 52 53

98.11 96.23 94.34 92.45 90.57 88.68 86.79 81.13 79.25 77.36 75.47 71.70 69.81 67.92 66.04 64.15 62.26 60.38 58.49 56.60 54.72 52.83 49.06 47.17 45.28 43.40 41.51 39.62 35.85 33.96 32.08 28.30 26.42 24.53 20.75 18.87 16.98 15.09 13.21 11.32 9.43 5.66 3.77 1.89 0.00

Region

_________________________________________________________________________________________________________

Spain Brazil Indonesia Chile Turkey Mexico Hong Kong Singapore South Africa India Malaysia Greece Netherlands New Zealand USA Canada Czech Republic South Korea Pakistan Argentina the United Kingdom Italy Russia France Belgium Sweden China Norway Thailand Japan Finland Portugal Switzerland Austria Luxembourg Denmark Germany Hungary Poland Philippines Taiwan Australia Peru Ireland Israel

Europe Latin America Asia Latin America the Middle East Latin America Asia Asia Africa Asia Asia Europe Europe Oceana North America North America Europe Asia the Middle East Latin America Europe Europe Europe Europe Europe Europe Asia Europe Asia Asia Europe Europe Europe Europe Europe Europe Europe Europe Europe Asia Asia Oceana Latin America Europe the Middle East

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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Financial Indicators

72

Operating Income (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value (total revenue = 100)

Rank

Percentile

13.67 12.83 10.60 10.60 9.73 9.52 9.45 9.12 7.92 7.86 7.83 7.50 7.28 7.19 7.00 6.71 6.64 6.64 6.45 6.45 6.40 6.40 6.39 6.27 6.25 6.10 5.94 5.61 5.16 3.86 3.72 3.67 3.56 3.52 3.48 3.42 3.39 3.39 3.17 2.78 2.54 2.12 1.91 1.81 1.79 1.73 1.56 1.50 1.50 0.60 -2.29

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Spain Slovenia Faroe Islands Romania Bosnia & Herzegovina Monaco Macedonia Serbia & Montenegro Andorra Greece Netherlands Iceland Malta Isle of Man Czech Republic Estonia Latvia Croatia Vatican City the United Kingdom Belarus Italy Slovakia Russia Lithuania France Belgium Sweden Norway Finland Portugal Switzerland Cyprus Austria San Marino Liechtenstein Guernsey Jersey Luxembourg Denmark Germany Hungary Ukraine Gibraltar Georgia Poland Moldova Kazakhstan Bulgaria Albania Ireland

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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73

Earnings Before Interest and Taxes (EBIT) Countries

Value (total revenue = 100)

Rank

Percentile

35.95 35.85 27.11 25.79 13.70 13.08 11.65 11.48 10.85 10.78 10.66 9.91 9.81 9.08 8.82 7.99 7.82 7.73 7.59 7.56 7.53 7.39 7.34 7.32 6.82 6.68 6.66 6.61 6.36 6.06 5.61 5.49 4.89 4.71 4.07 3.73 3.16 3.04 3.00 2.78 2.71 2.45 2.04 -1.63 -1.65

1 2 4 5 6 7 8 9 10 11 12 14 15 16 18 19 20 22 23 24 25 26 27 28 29 31 32 33 35 36 38 39 40 41 42 43 44 45 46 47 48 49 50 52 53

98.11 96.23 92.45 90.57 88.68 86.79 84.91 83.02 81.13 79.25 77.36 73.58 71.70 69.81 66.04 64.15 62.26 58.49 56.60 54.72 52.83 50.94 49.06 47.17 45.28 41.51 39.62 37.74 33.96 32.08 28.30 26.42 24.53 22.64 20.75 18.87 16.98 15.09 13.21 11.32 9.43 7.55 5.66 1.89 0.00

Region

_________________________________________________________________________________________________________

Turkey Mexico Brazil Chile Spain Greece Czech Republic India Argentina Indonesia Malaysia Singapore Hong Kong New Zealand South Africa Italy Netherlands Thailand USA Canada France China South Korea Norway the United Kingdom Pakistan Sweden Russia Finland Taiwan Germany Austria Portugal Switzerland Luxembourg Belgium Denmark Australia Hungary Japan Peru Poland Philippines Ireland Israel

the Middle East Latin America Latin America Latin America Europe Europe Europe Asia Latin America Asia Asia Asia Asia Oceana Africa Europe Europe Asia North America North America Europe Asia Asia Europe Europe the Middle East Europe Europe Europe Asia Europe Europe Europe Europe Europe Europe Europe Oceana Europe Asia Latin America Europe Asia Europe the Middle East

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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Financial Indicators

74

Earnings Before Interest and Taxes (EBIT) (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value (total revenue = 100)

Rank

Percentile

34.16 31.35 30.47 29.39 13.70 13.08 12.86 12.13 11.97 11.65 11.05 11.05 9.61 9.41 9.40 8.05 7.99 7.82 7.67 7.53 7.32 7.07 6.82 6.75 6.73 6.66 6.61 6.59 6.36 5.61 5.49 5.44 5.30 5.30 4.89 4.71 4.68 4.39 4.07 3.73 3.16 3.00 2.70 2.57 2.53 2.45 2.36 2.21 2.12 2.12 -1.63

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro Spain Greece Slovenia Malta Isle of Man Czech Republic Latvia Croatia Monaco Faroe Islands Andorra Vatican City Italy Netherlands Iceland France Norway Estonia the United Kingdom Belarus Slovakia Sweden Russia Lithuania Finland Germany Austria San Marino Guernsey Jersey Portugal Switzerland Cyprus Liechtenstein Luxembourg Belgium Denmark Hungary Ukraine Gibraltar Georgia Poland Albania Moldova Kazakhstan Bulgaria Ireland

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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75

Pretax Income Countries

Value (total revenue = 100)

Rank

Percentile

15.44 14.69 13.06 11.91 10.76 9.67 9.58 9.47 9.21 9.11 8.92 7.87 7.25 6.56 6.43 6.27 6.02 5.99 5.76 5.73 5.72 5.45 5.07 5.04 4.74 4.57 4.34 4.29 4.15 3.43 3.39 3.35 2.97 2.46 2.14 1.83 1.39 1.30 1.29 1.25 1.05 -1.98 -1.99 -6.48 -6.50

1 2 3 4 5 6 7 8 9 10 11 14 15 16 18 19 20 21 22 23 24 25 27 28 30 32 33 34 35 36 37 38 39 40 41 42 44 45 46 47 48 49 50 52 53

98.11 96.23 94.34 92.45 90.57 88.68 86.79 84.91 83.02 81.13 79.25 73.58 71.70 69.81 66.04 64.15 62.26 60.38 58.49 56.60 54.72 52.83 49.06 47.17 43.40 39.62 37.74 35.85 33.96 32.08 30.19 28.30 26.42 24.53 22.64 20.75 16.98 15.09 13.21 11.32 9.43 7.55 5.66 1.89 0.00

Region

_________________________________________________________________________________________________________

Brazil Chile Spain Hong Kong Greece India Czech Republic Malaysia Singapore Indonesia Argentina South Africa New Zealand Canada USA Thailand France Italy Netherlands Norway the United Kingdom Pakistan South Korea China Sweden Russia Finland Germany Austria Switzerland Portugal Taiwan Luxembourg Belgium Japan Philippines Denmark Australia Hungary Peru Poland Ireland Israel Mexico Turkey

Latin America Latin America Europe Asia Europe Asia Europe Asia Asia Asia Latin America Africa Oceana North America North America Asia Europe Europe Europe Europe Europe the Middle East Asia Asia Europe Europe Europe Europe Europe Europe Europe Asia Europe Europe Asia Asia Europe Oceana Europe Latin America Europe Europe the Middle East Latin America the Middle East

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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76

Pretax Income (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value (total revenue = 100)

Rank

Percentile

13.06 12.26 11.42 10.76 9.97 9.84 9.58 9.09 9.09 8.93 7.51 6.50 6.04 6.02 5.99 5.76 5.73 5.72 4.89 4.74 4.67 4.66 4.57 4.56 4.34 4.29 4.15 4.11 4.00 4.00 3.43 3.39 3.25 3.20 2.97 2.46 1.39 1.29 1.16 1.10 1.09 1.08 1.05 0.95 0.91 0.91 -1.98 -5.31 -5.51 -5.67 -6.18

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Spain Slovenia Faroe Islands Greece Malta Isle of Man Czech Republic Latvia Croatia Monaco Andorra Iceland Vatican City France Italy Netherlands Norway the United Kingdom Estonia Sweden Belarus Slovakia Russia Lithuania Finland Germany Austria San Marino Guernsey Jersey Switzerland Portugal Cyprus Liechtenstein Luxembourg Belgium Denmark Hungary Ukraine Gibraltar Albania Georgia Poland Moldova Kazakhstan Bulgaria Ireland Serbia & Montenegro Macedonia Bosnia & Herzegovina Romania

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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2007 Icon Group International, Inc.

Financial Indicators

3.5 3.5.1

77

FINANCIAL RETURNS IN POLAND: PROFITABILITY RATIOS Overview

In this chapter we consider additional financial ratios estimated for firms involved in steam, gas and hydraulic turbines and turbine generator set units operating in Poland benchmarked against global averages. The chapter begins by defining relevant terms. Estimates are then presented for the proto-typical firm operating in Poland compared to average global benchmarks. For ratios where there are large deviations between the average firm in Poland and the benchmarks, graphics are provided. Then the distribution of ratios is presented in the form of ranks and percentiles. Certain key ratios are highlighted across countries in the comparison group.

3.5.2

Ratios – Definitions of Terms

The following definitions are provided for those less familiar with financial ratio analysis. As this chapter deals with the global benchmarking of ratios, only definitions covering certain terms used in this chapter’s tables and graphs are provided here. The glossary below reflects commonly accepted definitions across various countries and official sources. •

Accounts Receivables Days. The number of days' receivable sales generally correlates to the amount of the accounts receivables to the average daily sales on account. Accounts receivables days is often determined by dividing the gross receivables by (net sales/365).

•

Cash Earnings Return On Equity (%). Cash earnings return on equity generally measures the return of revenues to the shareholders. This ratio is generally calculated by dividing (net income before nonrecurring items minus preferred dividends) by the average common equity.

•

Cash Flow. Cash flow is generally defined as being equal to the company's net income plus the charge-off amounts for depreciation, depletion, amortization, extraordinary charges to reserves. These are bookkeeping deductions which are not paid out as cash.

•

Current Ratio. The current ratio is generally defined as a ratio of liquidity measuring the ability of a business to pay its current obligations when due. The current ratio is generally calculated by dividing total current assets by total current liabilities. Managers and lenders often want the current ratio to be 2.00 or greater. This ratio is often seen as an indication of short-term debt-paying ability. The higher the ratio, the more liquid the company.

•

Fixed Charge Coverage Ratio. The fixed charge coverage ratio is generally seen as an indication of the company's ability to cover its fixed charges. This ratio is typically determined by dividing recurring earnings excluding interest expense, tax expense, equity earnings, and minority earnings plus interest from rentals by interest expense including capitalized interest and interest from rentals.

•

Gross Profit Margin (%). The gross profit margin is typically defined to equals the difference, in percent, between net sales revenue and the cost of goods sold.

•

Inventories (# of Days) Held. Inventory days held is generally determined by dividing the ending inventory by (the cost of goods held/365). The number of days held results in the average daily cost of goods held.

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78

•

Inventory Turnover (%). Inventory turnover is used as a measure of the balance of inventory. It generally compares the amount of inventory with the total sales for the year. The ratio can reflect both on the quality of the inventory and the efficiency of management. Typically, the higher the turnover rate, the greater the likelihood that profits would be larger and less working capital bound up in inventory.

•

Net Margin (%). The net margin is the ratio of net income dollars generated by each dollar of sales.

•

Operating Profit Margin (%). Operating profit margin percent is the ratio of operating profit to net sales. Operating profit (loss) is income or loss before taxes calculated by the difference between total revenues and total expense disregarding the effects of any extraordinary transactions.

•

Quick Ratio. The quick ratio, also commonly known as the “acid test ratio”, is a refined current ratio and is often seen as a more conservative measure of liquidity. The quick ratio is generally determined by dividing cash and equivalents plus trade receivables by total current liabilities. The ratio shows the degree to which a company's current liabilities can be covered by the most liquid current assets. Financial management texts generally conclude that any value of less than 1 to 1 implies a reciprocal dependency on inventory or other current assets to liquidate short-term debt.

•

Reinvestment Rate - Total (%). The reinvestment rate is typically defined as the rate at which an investor assumes interest payments made on a debt security can be reinvested over the life of that security.

•

Return on Assets (%). Return on assets is generally used to measure a company's ability to use assets to create profit.

•

Return on Equity - Total (%). The return on total equity ratio is often seen to reflect the profitability of the company's operations after income taxes. Return on equity is often considered to be a good measure of the company's profitability. Tax laws and tax loss carryovers can affect the net income and therefore can also affect the return on equity.

•

Return on Invested Capital (%). The ratio of return on invested capital is typically defined as an evaluation of earnings performance without regard to the method of financing. This ratio measures the earnings on investment and is an indication of how well the company utilizes its asset base. Return on investment is a type of return on capital, therefore this ratio can be an indication of the company’s ability to reward investors who provide long-term funds and to attract future investors.

•

Working Capital. Net working capital equals the difference between total current assets and total current liabilities. Working capital often reflects a company's ability to expand volume and meet obligations. Since growth is usually one goal, the amount of working capital on this year's balance sheet should be greater than that of the previous year's. This is an efficiency, or turnover, ratio which benchmarks the rate at which current assets less current liabilities are used by the company in making sales. A low ratio can indicate a less profitable use of working capital in making sales. On the other hand, a very high ratio can indicate the company is wasting current assets which could be more efficiently deployed in production and in increasing sales and profits; or that the company my be undercapitalized, and thus vulnerable to liquidity problems in a period of weak business conditions.

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Financial Indicators

3.5.3

79

Ratio Structure: Outlook

Using the methodology described in the introduction, the following table summarizes ratio structure benchmarks for firms involved in steam, gas and hydraulic turbines and turbine generator set units in Poland. All figures are currentyear projections for companies operating in Poland based on latest financial results available. Ratios Poland Europe World Avg. _________________________________________________________________________________________________________

Profitability Return on Equity - Total (%) Reinvestment Rate - Total (%) Return on Assets (%) Return on Invested Capital (%) Cash Earnings Return On Equity (%) Cash Flow % Sales Cost Goods Sold / Sales (%) Gross Profit Margin (%) Selling, General & Administrative Expense/Net Sales (%) Operating Profit Margin (%) Operating Inc / Total Capital (%) Pretax Margin (%) Net Margin (%) Total Asset Turnover (X) th USD Asset Utilization Inventory Turnover (%) Net Sales % Working Capital Capital Expenditure % Total Assets Capital Expenditure % Total Sales Leverage Total Debt % Total Capital Long Term Debt % Total Capital Equity % Total Capital Total Debt % Total Assets Common Equity % Total Assets Total Capital % Assets Fixed Charge Coverage Ratio Fixed Assets % Common Equity Working Capital % Total Capital Liquidity Quick Ratio Current Ratio Cash & Equivalents % Total Current Assets Receivables % Total Current Assets Inventories % Total Current Assets Accounts Receivables Days Inventories (# of Days) Held

1.81 1.81 1.76 2.32 15.61 9.10 64.58 10.22 8.51 1.73 2.64 1.05 1.05 0.74

8.41 0.54 5.54 8.99 19.12 7.04 70.09 18.16 12.56 5.46 11.46 4.14 2.62 1.00

11.23 4.31 7.52 11.23 13.86 8.76 69.36 16.64 8.76 6.55 13.01 6.00 4.43 0.97

4.17 20.94 6.57 7.21

5.77 7.78 6.00 8.77

5.42 0.95 4.74 7.07

27.52 12.68 69.11 22.68 44.72 52.92 1.43 90.97 4.50

31.57 17.99 72.70 21.96 41.37 52.70 16.50 67.92 36.06

23.33 11.25 79.34 16.58 46.61 54.37 61.22 67.16 33.69

0.55 0.90 9.48 40.15 32.16 66.78 57.74

1.13 1.67 14.55 47.48 29.19 108.30 80.22

1.20 1.75 18.14 44.00 27.67 110.57 99.11

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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2007 Icon Group International, Inc.

Financial Indicators

3.5.4

80

Large Variances: Ratios

The following graphics summarize for steam, gas and hydraulic turbines and turbine generator set units the large ratio structure gaps between firms operating in Poland and the world average. A gap cannot necessarily be interpreted as a positive or negative reflection on performance. Gaps may signal areas of specialization, market focus, or expertise. More contextual information is required to fully interpret these gaps. The gaps highlighted here are simply those that are large.

Gap: Return on Equity - Total (%) 15

11.23 8.41

10 5

1.81

0 -5 -9.42 Gap

-10 Poland

Europe

World Average

Gap: Return on Invested Capital (%) 15 8.99

10 5

11.23

2.32

0 -5 -8.91

-10 Poland

Europe

World Average

Gap

Gap: Operating Inc / Total Capital (%) 15

11.46

13.01

10 5

2.64

0 -5 -10

-10.37

-15 Poland

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Europe

World Average

Gap

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81

Gap: Net Sales % Working Capital 25

20.94

19.99

20 15 7.78

10 5

0.95

0 Poland

Europe

World Average

Gap

Gap: Equity % Total Capital 80

69.11

72.7

79.34

60 40 20 0 -10.23

-20 Poland

Europe

World Average

Gap

Gap: Fixed Charge Coverage Ratio 100

61.22

50 1.43

16.5

0 -50

-59.79

-100 Poland

Europe

World Average

Gap

Gap: Fixed Assets % Common Equity 100

90.97

80

67.92

67.16

60 40

23.81

20 0 Poland

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World Average

Gap

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Gap: Working Capital % Total Capital 36.06

40 20

33.69

4.5

0 -20 -29.19 -40 Poland

Europe

World Average

Gap

Gap: Cash & Equivalents % Total Current Assets 18.14

20 15 10

14.55 9.48

5 0 -5 -8.66

-10 Poland

Europe

World Average

Gap

Gap: Accounts Receivables Days 150 108.3 100

110.57

66.78

50 0 -43.79 Gap

-50 Poland

Europe

World Average

Gap: Inventories (# of Days) Held 99.11

100

80.22 57.74

50 0 -41.37

-50 Poland

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Europe

World Average

Gap

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3.5.5

83

Key Percentiles and Rankings

We now consider the distribution of financial ratios for steam, gas and hydraulic turbines and turbine generator set units using ranks and percentiles. What percent of countries have a value lower or higher than Poland (what is the ratio's rank or percentile)? The table below answers this question with respect to financial ratios. The ranks and percentiles indicate, from highest to lowest, where a value falls within the distribution of all countries considered in the global benchmark (the number of countries in the benchmark per line item may vary, as indicated in the Rank). Again, a high or low figure does not necessarily indicate good or bad performance. After the summary table below, a few key financial ratios are highlighted in additional tables. Ratios

Poland

Rank of Total

Percentile

1.81 1.81 1.76 2.32 15.61 9.10 64.58 10.22 8.51 1.73 2.64 1.05 1.05 0.74

44 of 53 41 of 53 49 of 53 49 of 53 32 of 53 16 of 53 42 of 52 45 of 52 35 of 46 46 of 53 51 of 53 48 of 53 43 of 53 47 of 53

16.98 22.64 7.55 7.55 39.62 69.81 19.23 13.46 23.91 13.21 3.77 9.43 18.87 11.32

4.17 20.94 6.57 7.21

39 of 53 2 of 53 16 of 53 19 of 53

26.42 96.23 69.81 64.15

27.52 12.68 69.11 22.68 44.72 52.92 1.43 90.97 4.50

30 of 53 34 of 48 40 of 53 18 of 53 26 of 53 39 of 53 48 of 53 12 of 53 51 of 53

43.40 29.17 24.53 66.04 50.94 26.42 9.43 77.36 3.77

0.55 0.90 9.48 40.15 32.16 66.78 57.74

51 of 53 51 of 53 43 of 53 34 of 53 18 of 53 42 of 53 45 of 53

3.77 3.77 18.87 35.85 66.04 20.75 15.09

_________________________________________________________________________________________________________

Profitability Return on Equity - Total (%) Reinvestment Rate - Total (%) Return on Assets (%) Return on Invested Capital (%) Cash Earnings Return On Equity (%) Cash Flow % Sales Cost Goods Sold / Sales (%) Gross Profit Margin (%) Selling, General & Administrative Expense/Net Sales (%) Operating Profit Margin (%) Operating Inc / Total Capital (%) Pretax Margin (%) Net Margin (%) Total Asset Turnover (X) th USD Asset Utilization Inventory Turnover (%) Net Sales % Working Capital Capital Expenditure % Total Assets Capital Expenditure % Total Sales Leverage Total Debt % Total Capital Long Term Debt % Total Capital Equity % Total Capital Total Debt % Total Assets Common Equity % Total Assets Total Capital % Assets Fixed Charge Coverage Ratio Fixed Assets % Common Equity Working Capital % Total Capital Liquidity Quick Ratio Current Ratio Cash & Equivalents % Total Current Assets Receivables % Total Current Assets Inventories % Total Current Assets Accounts Receivables Days Inventories (# of Days) Held

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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84

Gross Profit Margin (%) Countries

Value

Rank

Percentile

USA Turkey Italy Mexico Israel Ireland the United Kingdom Hong Kong Sweden Netherlands Malaysia Japan Peru Germany Thailand Switzerland South Africa China Canada Brazil Greece Singapore Luxembourg Chile Finland Australia Austria Norway Indonesia Czech Republic Spain South Korea Argentina Russia France India Hungary Denmark Poland Portugal Taiwan Belgium New Zealand Philippines

32.95 29.28 29.27 29.20 28.66 28.43 27.60 27.47 26.24 25.80 25.29 24.37 24.36 22.73 22.57 22.47 21.38 21.33 21.30 20.35 19.74 19.63 19.43 19.37 19.31 19.19 19.14 18.87 17.67 17.57 17.29 16.48 16.37 14.85 13.40 12.57 12.50 10.84 10.22 10.08 9.82 8.31 7.64 2.42

1 2 3 4 5 6 7 8 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 30 31 32 34 36 37 39 40 42 43 44 45 46 47 48 50 51

98.08 96.15 94.23 92.31 90.38 88.46 86.54 84.62 80.77 78.85 76.92 75.00 73.08 71.15 69.23 67.31 65.38 63.46 61.54 59.62 57.69 55.77 53.85 51.92 50.00 48.08 46.15 42.31 40.38 38.46 34.62 30.77 28.85 25.00 23.08 19.23 17.31 15.38 13.46 11.54 9.62 7.69 3.85 1.92

Region

_________________________________________________________________________________________________________

North America the Middle East Europe Latin America the Middle East Europe Europe Asia Europe Europe Asia Asia Latin America Europe Asia Europe Africa Asia North America Latin America Europe Asia Europe Latin America Europe Oceana Europe Europe Asia Europe Europe Asia Latin America Europe Europe Asia Europe Europe Europe Europe Asia Europe Oceana Asia

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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2007 Icon Group International, Inc.

Financial Indicators

85

Gross Profit Margin (%) (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value

Rank

Percentile

Iceland Vatican City Italy Ireland Romania the United Kingdom Faroe Islands Sweden Netherlands Bosnia & Herzegovina Macedonia Serbia & Montenegro Germany Switzerland Albania Liechtenstein Greece Luxembourg Finland Austria Monaco San Marino Norway Guernsey Jersey Malta Isle of Man Czech Republic Spain Latvia Croatia Slovenia Estonia Belarus Slovakia Russia Lithuania France Hungary Ukraine Denmark Gibraltar Georgia Poland Portugal Cyprus Moldova Kazakhstan Bulgaria Belgium Andorra

33.29 29.51 29.27 28.43 27.82 27.60 26.34 26.24 25.80 25.53 24.81 23.93 22.73 22.47 21.27 20.97 19.74 19.43 19.31 19.14 19.03 18.96 18.87 18.49 18.49 18.29 18.05 17.57 17.29 16.68 16.67 16.23 15.89 15.16 15.13 14.85 14.82 13.40 12.50 11.24 10.84 10.68 10.52 10.22 10.08 9.65 9.19 8.84 8.83 8.31 7.92

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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Financial Indicators

86

Pretax Margin (%) Countries

Value

Rank

Percentile

Brazil Chile Spain Hong Kong Greece India Czech Republic Malaysia Singapore Indonesia Argentina South Africa New Zealand Canada USA Thailand France Italy Netherlands Norway the United Kingdom Pakistan South Korea China Sweden Russia Finland Germany Austria Switzerland Portugal Taiwan Luxembourg Belgium Japan Philippines Denmark Australia Hungary Peru Poland Ireland Israel Mexico Turkey

15.44 14.69 13.06 11.91 10.76 9.67 9.58 9.47 9.21 9.11 8.92 7.87 7.25 6.56 6.43 6.27 6.02 5.99 5.76 5.73 5.72 5.45 5.07 5.04 4.74 4.57 4.34 4.29 4.15 3.43 3.39 3.35 2.97 2.46 2.14 1.83 1.39 1.30 1.29 1.25 1.05 -1.98 -1.99 -6.48 -6.50

1 2 3 4 5 6 7 8 9 10 11 14 15 16 18 19 20 21 22 23 24 25 27 28 30 32 33 34 35 36 37 38 39 40 41 42 44 45 46 47 48 49 50 52 53

98.11 96.23 94.34 92.45 90.57 88.68 86.79 84.91 83.02 81.13 79.25 73.58 71.70 69.81 66.04 64.15 62.26 60.38 58.49 56.60 54.72 52.83 49.06 47.17 43.40 39.62 37.74 35.85 33.96 32.08 30.19 28.30 26.42 24.53 22.64 20.75 16.98 15.09 13.21 11.32 9.43 7.55 5.66 1.89 0.00

Region

_________________________________________________________________________________________________________

Latin America Latin America Europe Asia Europe Asia Europe Asia Asia Asia Latin America Africa Oceana North America North America Asia Europe Europe Europe Europe Europe the Middle East Asia Asia Europe Europe Europe Europe Europe Europe Europe Asia Europe Europe Asia Asia Europe Oceana Europe Latin America Europe Europe the Middle East Latin America the Middle East

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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Financial Indicators

87

Pretax Margin (%) (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value

Rank

Percentile

Spain Slovenia Faroe Islands Greece Malta Isle of Man Czech Republic Latvia Croatia Monaco Andorra Iceland Vatican City France Italy Netherlands Norway the United Kingdom Estonia Sweden Belarus Slovakia Russia Lithuania Finland Germany Austria San Marino Guernsey Jersey Switzerland Portugal Cyprus Liechtenstein Luxembourg Belgium Denmark Hungary Ukraine Gibraltar Albania Georgia Poland Moldova Kazakhstan Bulgaria Ireland Serbia & Montenegro Macedonia Bosnia & Herzegovina Romania

13.06 12.26 11.42 10.76 9.97 9.84 9.58 9.09 9.09 8.93 7.51 6.50 6.04 6.02 5.99 5.76 5.73 5.72 4.89 4.74 4.67 4.66 4.57 4.56 4.34 4.29 4.15 4.11 4.00 4.00 3.43 3.39 3.25 3.20 2.97 2.46 1.39 1.29 1.16 1.10 1.09 1.08 1.05 0.95 0.91 0.91 -1.98 -5.31 -5.51 -5.67 -6.18

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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Financial Indicators

88

Quick Ratio Countries

Value

Rank

Percentile

Australia Hong Kong Malaysia Israel Ireland Indonesia Canada USA Singapore Japan Philippines South Korea Greece Germany Switzerland Norway France Russia Czech Republic India New Zealand Thailand Sweden Peru Finland Argentina Luxembourg Spain the United Kingdom Italy China Netherlands Denmark Portugal South Africa Belgium Turkey Mexico Austria Taiwan Pakistan Hungary Poland Brazil Chile

12.75 3.86 3.62 2.46 2.44 2.25 2.22 2.17 1.59 1.59 1.55 1.41 1.39 1.36 1.33 1.32 1.29 1.27 1.23 1.22 1.22 1.22 1.19 1.18 1.15 1.15 1.15 1.09 1.06 1.05 1.05 1.04 1.01 0.98 0.97 0.95 0.94 0.93 0.92 0.87 0.81 0.67 0.55 0.44 0.41

1 2 3 4 5 6 7 8 11 12 13 14 15 16 17 18 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 38 39 40 41 43 44 45 46 48 49 51 52 53

98.11 96.23 94.34 92.45 90.57 88.68 86.79 84.91 79.25 77.36 75.47 73.58 71.70 69.81 67.92 66.04 60.38 58.49 56.60 54.72 52.83 50.94 49.06 47.17 45.28 43.40 41.51 39.62 37.74 35.85 33.96 32.08 28.30 26.42 24.53 22.64 18.87 16.98 15.09 13.21 9.43 7.55 3.77 1.89 0.00

Region

_________________________________________________________________________________________________________

Oceana Asia Asia the Middle East Europe Asia North America North America Asia Asia Asia Asia Europe Europe Europe Europe Europe Europe Europe Asia Oceana Asia Europe Latin America Europe Latin America Europe Europe Europe Europe Asia Europe Europe Europe Africa Europe the Middle East Latin America Europe Asia the Middle East Europe Europe Latin America Latin America

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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2007 Icon Group International, Inc.

Financial Indicators

89

Quick Ratio (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value

Rank

Percentile

3.70 2.44 2.19 1.54 1.39 1.36 1.36 1.33 1.32 1.30 1.30 1.29 1.29 1.27 1.27 1.27 1.27 1.24 1.23 1.19 1.17 1.17 1.15 1.15 1.09 1.06 1.06 1.05 1.04 1.03 1.02 1.01 0.98 0.95 0.94 0.92 0.91 0.89 0.89 0.89 0.82 0.79 0.77 0.67 0.60 0.57 0.56 0.55 0.49 0.47 0.47

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Faroe Islands Ireland Iceland Monaco Greece Estonia Germany Switzerland Norway Belarus Slovakia France Malta Russia Lithuania Isle of Man Andorra Liechtenstein Czech Republic Sweden Latvia Croatia Finland Luxembourg Spain Vatican City the United Kingdom Italy Netherlands Albania Slovenia Denmark Portugal Belgium Cyprus Austria San Marino Jersey Guernsey Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro Hungary Ukraine Gibraltar Georgia Poland Moldova Kazakhstan Bulgaria

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

90

Current Ratio Countries

Value

Rank

Percentile

Australia Hong Kong Malaysia Israel Ireland Indonesia USA Canada Peru New Zealand Germany Japan Singapore Denmark Switzerland Philippines Thailand Sweden France Finland Norway South Korea Greece Luxembourg Netherlands Russia the United Kingdom Italy South Africa India Czech Republic Portugal China Pakistan Argentina Spain Austria Belgium Taiwan Turkey Mexico Hungary Poland Brazil Chile

13.84 4.39 4.29 3.49 3.46 3.24 3.18 3.02 2.88 2.39 2.34 2.22 2.15 2.07 2.04 2.04 1.98 1.97 1.93 1.92 1.91 1.91 1.84 1.77 1.74 1.72 1.70 1.69 1.67 1.67 1.64 1.59 1.58 1.57 1.53 1.43 1.40 1.36 1.28 1.11 1.11 1.10 0.90 0.89 0.85

1 2 3 4 5 6 7 9 10 11 12 14 15 16 17 18 19 20 21 22 23 24 25 26 28 30 31 32 33 34 36 37 38 39 41 43 44 45 46 47 48 49 51 52 53

98.11 96.23 94.34 92.45 90.57 88.68 86.79 83.02 81.13 79.25 77.36 73.58 71.70 69.81 67.92 66.04 64.15 62.26 60.38 58.49 56.60 54.72 52.83 50.94 47.17 43.40 41.51 39.62 37.74 35.85 32.08 30.19 28.30 26.42 22.64 18.87 16.98 15.09 13.21 11.32 9.43 7.55 3.77 1.89 0.00

Region

_________________________________________________________________________________________________________

Oceana Asia Asia the Middle East Europe Asia North America North America Latin America Oceana Europe Asia Asia Europe Europe Asia Asia Europe Europe Europe Europe Asia Europe Europe Europe Europe Europe Europe Africa Asia Europe Europe Asia the Middle East Latin America Europe Europe Europe Asia the Middle East Latin America Europe Europe Latin America Latin America

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

91

Current Ratio (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value

Rank

Percentile

4.21 3.46 3.22 2.52 2.48 2.34 2.08 2.07 2.04 1.97 1.93 1.92 1.91 1.91 1.84 1.84 1.77 1.76 1.75 1.74 1.72 1.72 1.71 1.71 1.70 1.69 1.69 1.64 1.59 1.56 1.56 1.52 1.43 1.40 1.38 1.36 1.35 1.35 1.34 1.10 1.06 0.99 0.97 0.94 0.94 0.93 0.91 0.90 0.81 0.78 0.78

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Faroe Islands Ireland Iceland Albania Andorra Germany Monaco Denmark Switzerland Sweden France Finland Norway Liechtenstein Greece Estonia Luxembourg Belarus Slovakia Netherlands Russia Lithuania Vatican City Malta the United Kingdom Italy Isle of Man Czech Republic Portugal Latvia Croatia Cyprus Spain Austria San Marino Belgium Jersey Guernsey Slovenia Hungary Romania Ukraine Bosnia & Herzegovina Macedonia Gibraltar Georgia Serbia & Montenegro Poland Moldova Kazakhstan Bulgaria

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

92

Inventories % Total Current Assets Countries

Value

Rank

Percentile

Peru Australia Pakistan New Zealand Brazil Denmark Chile South Africa Hungary Germany Netherlands Portugal Italy Finland Sweden Thailand the United Kingdom Poland Austria France Switzerland China USA Israel Belgium Ireland Norway Canada Luxembourg South Korea Hong Kong Singapore Indonesia Japan India Russia Philippines Spain Greece Czech Republic Malaysia Argentina Turkey Mexico Taiwan

56.44 49.39 48.44 48.09 47.35 46.27 45.06 42.47 39.32 39.11 38.32 38.16 37.62 37.10 36.08 34.00 33.43 32.16 32.15 31.98 31.03 30.92 30.79 30.38 30.35 30.13 30.07 27.49 26.84 26.48 26.38 25.75 24.80 24.75 24.10 23.86 23.58 22.32 21.05 18.74 18.69 17.46 15.84 15.80 14.86

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 25 26 27 28 30 31 32 33 35 36 37 39 40 41 43 44 46 47 49 50 51 52

98.11 96.23 94.34 92.45 90.57 88.68 86.79 84.91 83.02 81.13 79.25 77.36 75.47 73.58 71.70 69.81 67.92 66.04 64.15 62.26 60.38 58.49 56.60 52.83 50.94 49.06 47.17 43.40 41.51 39.62 37.74 33.96 32.08 30.19 26.42 24.53 22.64 18.87 16.98 13.21 11.32 7.55 5.66 3.77 1.89

Region

_________________________________________________________________________________________________________

Latin America Oceana the Middle East Oceana Latin America Europe Latin America Africa Europe Europe Europe Europe Europe Europe Europe Asia Europe Europe Europe Europe Europe Asia North America the Middle East Europe Europe Europe North America Europe Asia Asia Asia Asia Asia Asia Europe Asia Europe Europe Europe Asia Latin America the Middle East Latin America Asia

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

93

Inventories % Total Current Assets (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value

Rank

Percentile

Andorra Albania Denmark Hungary Germany Netherlands Portugal Vatican City Italy Finland Cyprus Sweden Ukraine Gibraltar the United Kingdom Georgia Poland Austria France San Marino Iceland Guernsey Jersey Switzerland Belgium Ireland Norway Liechtenstein Moldova Kazakhstan Bulgaria Luxembourg Estonia Faroe Islands Monaco Belarus Slovakia Russia Lithuania Spain Greece Slovenia Malta Isle of Man Czech Republic Latvia Croatia Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro

49.80 49.26 46.27 39.32 39.11 38.32 38.16 37.92 37.62 37.10 36.53 36.08 35.36 33.62 33.43 33.10 32.16 32.15 31.98 31.84 31.11 31.05 31.05 31.03 30.35 30.13 30.07 28.96 28.91 27.82 27.77 26.84 25.52 25.30 24.97 24.36 24.30 23.86 23.80 22.32 21.05 20.96 19.51 19.25 18.74 17.79 17.78 15.05 13.81 13.42 12.95

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

94

Accounts Receivables Days Countries

Value

Rank

Percentile

Turkey Mexico Malaysia China Italy Greece Japan India Spain Israel Ireland Czech Republic France Argentina Portugal Peru Austria South Korea Singapore Netherlands Switzerland Norway Russia Germany Taiwan Denmark Sweden Hungary Hong Kong the United Kingdom Brazil Thailand Canada Finland Luxembourg Chile Philippines USA Belgium Poland Australia Indonesia New Zealand South Africa Pakistan

357.98 357.00 174.24 140.37 139.34 133.01 132.06 129.31 123.36 121.19 120.18 118.41 111.00 110.30 97.52 95.11 93.62 93.59 92.69 92.30 87.80 87.10 84.34 84.28 83.15 82.99 82.85 81.65 80.25 79.96 79.39 79.18 79.10 78.40 75.93 75.53 71.26 70.09 70.01 66.78 65.78 53.09 52.84 50.69 48.79

1 2 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 44 47 48 49 51

98.11 96.23 92.45 90.57 88.68 86.79 84.91 83.02 81.13 79.25 77.36 75.47 73.58 71.70 69.81 67.92 66.04 64.15 62.26 60.38 58.49 56.60 52.83 50.94 49.06 47.17 45.28 43.40 41.51 39.62 37.74 35.85 33.96 32.08 30.19 28.30 26.42 24.53 22.64 20.75 16.98 11.32 9.43 7.55 3.77

Region

_________________________________________________________________________________________________________

the Middle East Latin America Asia Asia Europe Europe Asia Asia Europe the Middle East Europe Europe Europe Latin America Europe Latin America Europe Asia Asia Europe Europe Europe Europe Europe Asia Europe Europe Europe Asia Europe Latin America Asia North America Europe Europe Latin America Asia North America Europe Europe Oceana Asia Oceana Africa the Middle East

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

95

Accounts Receivables Days (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value

Rank

Percentile

Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro Vatican City Italy Greece Spain Malta Isle of Man Ireland Czech Republic Slovenia Latvia Croatia France Portugal Austria Cyprus San Marino Netherlands Guernsey Jersey Estonia Monaco Switzerland Norway Belarus Slovakia Russia Germany Lithuania Albania Denmark Sweden Liechtenstein Hungary the United Kingdom Finland Faroe Islands Luxembourg Ukraine Iceland Belgium Gibraltar Georgia Poland Moldova Kazakhstan Bulgaria Andorra

340.13 312.13 303.36 292.63 140.47 139.34 133.01 123.36 123.28 121.66 120.18 118.41 115.80 112.40 112.35 111.00 97.52 93.62 93.35 92.73 92.30 90.41 90.41 90.22 89.88 87.80 87.10 86.11 85.91 84.34 84.28 84.14 83.02 82.99 82.85 81.93 81.65 79.96 78.40 76.95 75.93 73.43 70.80 70.01 69.81 68.74 66.78 60.04 57.78 57.67 54.72

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

96

Inventories (# of Days) Held Countries

Value

Rank

Percentile

Italy China Peru Israel Ireland Thailand Denmark Netherlands Australia Germany Japan Hong Kong Sweden France Brazil USA Malaysia the United Kingdom Chile Turkey Mexico Finland Switzerland Norway Austria South Korea South Africa Luxembourg Singapore Russia Hungary Spain New Zealand Indonesia Portugal India Pakistan Canada Poland Greece Czech Republic Argentina Taiwan Belgium Philippines

200.12 198.98 166.34 146.42 145.21 133.49 114.02 110.88 110.72 109.81 107.97 96.49 95.10 94.96 93.99 93.46 91.97 90.97 89.43 89.04 88.80 85.48 83.67 80.42 79.31 78.82 76.82 72.36 71.18 71.03 70.60 69.83 68.57 68.04 67.74 66.69 66.27 60.38 57.74 55.27 49.21 45.84 45.15 40.74 32.19

1 2 3 4 5 6 7 9 10 11 12 14 15 16 17 18 19 20 21 22 23 24 25 27 28 29 30 31 33 34 35 37 38 39 40 41 42 44 45 46 47 49 50 51 52

98.11 96.23 94.34 92.45 90.57 88.68 86.79 83.02 81.13 79.25 77.36 73.58 71.70 69.81 67.92 66.04 64.15 62.26 60.38 58.49 56.60 54.72 52.83 49.06 47.17 45.28 43.40 41.51 37.74 35.85 33.96 30.19 28.30 26.42 24.53 22.64 20.75 16.98 15.09 13.21 11.32 7.55 5.66 3.77 1.89

Region

_________________________________________________________________________________________________________

Europe Asia Latin America the Middle East Europe Asia Europe Europe Oceana Europe Asia Asia Europe Europe Latin America North America Asia Europe Latin America the Middle East Latin America Europe Europe Europe Europe Asia Africa Europe Asia Europe Europe Europe Oceana Asia Europe Asia the Middle East North America Europe Europe Europe Latin America Asia Europe Asia

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

97

Inventories (# of Days) Held (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value

Rank

Percentile

Vatican City Italy Ireland Albania Denmark Netherlands Germany Sweden France Iceland Faroe Islands the United Kingdom Finland Romania Switzerland Norway Austria San Marino Liechtenstein Bosnia & Herzegovina Guernsey Jersey Estonia Macedonia Serbia & Montenegro Belarus Luxembourg Slovakia Russia Andorra Lithuania Hungary Spain Monaco Portugal Slovenia Cyprus Ukraine Gibraltar Georgia Poland Greece Moldova Malta Isle of Man Kazakhstan Bulgaria Czech Republic Latvia Croatia Belgium

201.74 200.12 145.21 145.20 114.02 110.88 109.81 95.10 94.96 94.42 92.53 90.97 85.48 84.60 83.67 80.42 79.31 78.56 78.08 77.64 76.60 76.60 75.99 75.45 72.79 72.52 72.36 72.36 71.03 71.01 70.86 70.60 69.83 69.02 67.74 65.56 64.84 63.49 60.37 59.44 57.74 55.27 51.92 51.23 50.55 49.96 49.87 49.21 46.71 46.69 40.74

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

3.6 3.6.1

98

PRODUCTIVITY IN POLAND: ASSET-LABOR RATIOS Overview

In this chapter, we consider numerous asset-labor ratios for steam, gas and hydraulic turbines and turbine generator set units in Poland benchmarked against global averages. Productivity and utilization ratios are presented for companies oprating in Poland and the average global benchmarks for steam, gas and hydraulic turbines and turbine generator set units. For ratios where there are large deviations between Poland and the benchmarks, graphics are provided (sometimes referred to as a “gap” analysis). Then the distribution of ratios is presented in the form of ranks and percentiles. Certain asset-labor ratios are highlighted across countries in the comparison group. In the case of asset-labor ratios, this report maintains comparability over time and across countries by using a common currency (the US dollar) and relates each measure to a “per employee basis”. Ratios are projected using raw financial statistics and, as ratios, are therefore comparable. Given a country’s human resource ratios, the resulting figures are benchmarked across regional and global averages. We then report the larger asset-labor ratio gaps for steam, gas and hydraulic turbines and turbine generator set units that Poland has vis-à-vis the worldwide average. Again, a gap need not be a bad sign. Rather, it is simply a substantial difference that might merit further attention or signal a firm’s relative incentive to invest locally. All figures are projections, so due caution is required.

3.6.2

Asset to Labor: Outlook

The following tables and graphs are prepared using the methodology described at the beginning of this section. All units are in thousands of US dollars per employee. All figures are current-year projections for steam, gas and hydraulic turbines and turbine generator set units in Poland based on latest financial results available. Labor-asset Ratios ($k/employee) Poland Europe World Avg.

_________________________________________________________________________________________________________

Cash & Short Term Investments Receivables (Net) Total Inventories Current Assets - Total Property Plant and Equipment - Net Other Assets Intangible Other Assets Total Assets

2.01 8.50 6.81 17.33 27.12 0.15 0.15 44.60

19.81 80.12 37.20 140.04 45.86 11.38 8.54 244.38

21.26 46.74 23.18 93.95 31.94 6.15 3.80 162.19

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

3.6.3

99

Asset to Labor: International Gaps

The following graphics summarize for steam, gas and hydraulic turbines and turbine generator set units the large labor-asset gaps between firms operating in Poland and the world average. A gap cannot necessarily be interpreted as a positive or negative reflection on performance. Gaps may signal areas of specialization, market focus, or expertise. More contextual information is required to fully interpret these gaps. The gaps highlighted here are simply those that are large.

Gap: Cash & Short Term Investments ($k/employee) 30

19.81

21.26

20 10

2.01

0 -10 -19.25 Gap

-20 Poland

Europe

World Average

Gap: Receivables (Net) ($k/employee) 100 80 60 40 20 0 -20 -40

80.12 46.74 8.5

Poland

Europe

-38.24 Gap

World Average

Gap: Total Inventories ($k/employee) 37.2

40 30

23.18

20 10

6.81

0 -10 -16.37

-20 Poland

www.icongrouponline.com

Europe

World Average

Gap

2007 Icon Group International, Inc.

Financial Indicators

100

Gap: Current Assets - Total ($k/employee) 140.04

150

93.95

100 50

17.33

0 -50 -76.62

-100 Poland

Europe

World Average

Gap

Gap: Property Plant and Equipment - Net ($k/employee) 45.86

50 40 30

31.94

27.12

20 10 0

-4.82

-10 Poland

Europe

World Average

Gap

Gap: Other Assets ($k/employee) 15

11.38

10 5

6.15 0.15

0 -5

-6

-10 Poland

Europe

World Average

Gap

Gap: Intangible Other Assets ($k/employee) 8.54

10

3.8

5 0.15 0

-3.65

-5 Poland

www.icongrouponline.com

Europe

World Average

Gap

2007 Icon Group International, Inc.

Financial Indicators

101

Gap: Total Assets ($k/employee) 300

244.38 162.19

200 44.6

100 0 -100

-117.59

-200 Poland

www.icongrouponline.com

Europe

World Average

Gap

2007 Icon Group International, Inc.

Financial Indicators

3.6.4

102

Key Percentiles and Rankings

We now consider the distribution of asset-labor ratios using ranks and percentiles across . What percent of countries have a productivity indicator lower or higher than Poland (what is the indicator's rank or percentile)? The table below answers this question with respect to asset-labor structure. The ranks and percentiles indicate, from highest to lowest, where a value falls within the distribution of all countries considered in the global benchmark (the number of countries in the benchmark per line item may vary, as indicated in the Rank). Again, a high or low figure does not necessarily indicate good or bad performance or productivity. After the summary table below, a few key asset-labor ratios are highlighted in additional tables. Asset Structure ($k/employee)

Poland

Rank of Total

Percentile

2.01 8.50 6.81 17.33 27.12 0.15 0.15 44.60

48 of 53 45 of 53 46 of 53 50 of 53 31 of 53 51 of 53 40 of 43 46 of 53

9.43 15.09 13.21 5.66 41.51 3.77 6.98 13.21

_________________________________________________________________________________________________________

Cash & Short Term Investments Receivables (Net) Total Inventories Current Assets - Total Property Plant and Equipment - Net Other Assets Intangible Other Assets Total Assets

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

103

Cash & Short Term Investments Countries

Value ($K/employee)

Rank

Percentile

75.14 70.27 66.82 65.96 59.44 53.76 51.33 50.91 45.09 41.62 31.76 30.89 25.36 25.22 23.91 23.54 23.26 22.10 21.82 21.32 21.29 20.61 19.83 18.87 15.55 14.68 13.42 12.33 10.82 10.73 8.87 8.08 7.34 6.19 6.17 5.53 3.39 3.31 2.47 2.46 2.01 1.75 1.06 0.46 0.44

1 2 3 4 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 29 30 31 32 34 35 37 38 39 41 42 43 46 47 48 49 51 52 53

98.11 96.23 94.34 92.45 88.68 86.79 84.91 83.02 81.13 79.25 77.36 75.47 73.58 71.70 69.81 67.92 66.04 64.15 62.26 60.38 58.49 56.60 54.72 52.83 50.94 49.06 45.28 43.40 41.51 39.62 35.85 33.96 30.19 28.30 26.42 22.64 20.75 18.87 13.21 11.32 9.43 7.55 3.77 1.89 0.00

Region

_________________________________________________________________________________________________________

Taiwan Australia USA South Korea Russia Japan Israel Ireland Norway China Canada Hong Kong Singapore France Greece Italy Germany Finland Switzerland South Africa Czech Republic the United Kingdom Argentina Luxembourg Spain Belgium Malaysia Sweden Indonesia Austria Pakistan Denmark Netherlands Turkey Mexico India Peru Thailand New Zealand Hungary Poland Philippines Portugal Brazil Chile

Asia Oceana North America Asia Europe Asia the Middle East Europe Europe Asia North America Asia Asia Europe Europe Europe Europe Europe Europe Africa Europe Europe Latin America Europe Europe Europe Asia Europe Asia Europe the Middle East Europe Europe the Middle East Latin America Asia Latin America Asia Oceana Europe Europe Asia Europe Latin America Latin America

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

104

Cash & Short Term Investments (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value ($K/employee)

Rank

Percentile

67.50 63.59 60.69 60.55 59.44 59.30 50.91 45.09 29.62 25.22 24.59 23.91 23.73 23.54 23.26 22.16 22.10 21.87 21.82 21.29 20.61 20.37 20.21 20.20 18.87 15.55 14.68 14.60 12.33 10.73 10.63 10.36 10.36 8.08 7.34 5.88 5.39 5.24 5.06 2.96 2.56 2.46 2.21 2.10 2.07 2.01 1.81 1.74 1.73 1.06 1.01

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Iceland Estonia Belarus Slovakia Russia Lithuania Ireland Norway Faroe Islands France Monaco Greece Vatican City Italy Germany Malta Finland Isle of Man Switzerland Czech Republic the United Kingdom Liechtenstein Latvia Croatia Luxembourg Spain Belgium Slovenia Sweden Austria San Marino Guernsey Jersey Denmark Netherlands Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro Albania Andorra Hungary Ukraine Gibraltar Georgia Poland Moldova Kazakhstan Bulgaria Portugal Cyprus

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

105

Receivables (Net) Countries

Value ($K/employee)

Rank

Percentile

468.24 466.96 178.16 125.28 102.56 99.19 92.42 90.46 77.51 69.00 64.27 63.99 61.36 59.42 57.06 53.96 53.58 53.51 49.54 45.46 44.90 41.38 41.25 40.51 39.32 39.14 38.94 31.36 31.27 30.96 28.85 27.96 26.99 26.67 23.89 23.42 21.95 17.22 15.96 15.18 10.40 8.53 8.50 7.31 5.60

1 2 4 5 6 7 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 50

98.11 96.23 92.45 90.57 88.68 86.79 83.02 81.13 79.25 77.36 75.47 73.58 71.70 69.81 67.92 66.04 64.15 62.26 60.38 58.49 56.60 54.72 52.83 50.94 49.06 47.17 45.28 43.40 41.51 39.62 37.74 35.85 33.96 32.08 30.19 28.30 26.42 24.53 22.64 20.75 18.87 16.98 15.09 13.21 5.66

Region

_________________________________________________________________________________________________________

Turkey Mexico Taiwan Portugal South Korea Italy Russia Japan Greece Czech Republic Argentina France Norway Germany Netherlands Israel Spain Ireland Denmark Switzerland Austria USA Sweden Malaysia Luxembourg Finland Belgium South Africa the United Kingdom Singapore Hong Kong Canada Peru China Pakistan India New Zealand Australia Brazil Chile Hungary Thailand Poland Indonesia Philippines

the Middle East Latin America Asia Europe Asia Europe Europe Asia Europe Europe Latin America Europe Europe Europe Europe the Middle East Europe Europe Europe Europe Europe North America Europe Asia Europe Europe Europe Africa Europe Asia Asia North America Latin America Asia the Middle East Asia Oceana Oceana Latin America Latin America Europe Asia Europe Asia Asia

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

106

Receivables (Net) (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value ($K/employee)

Rank

Percentile

444.89 408.27 396.79 382.76 125.28 119.92 99.99 99.19 98.87 94.37 94.15 92.42 92.21 77.51 71.83 70.89 69.00 65.49 65.46 63.99 61.36 59.42 57.06 53.58 53.51 50.30 49.54 45.46 44.90 44.47 43.36 43.36 42.42 41.80 41.25 39.32 39.14 38.94 31.27 30.02 27.66 23.56 22.73 10.40 9.35 8.89 8.75 8.50 7.65 7.36 7.35

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro Portugal Cyprus Vatican City Italy Estonia Belarus Slovakia Russia Lithuania Greece Malta Isle of Man Czech Republic Latvia Croatia France Norway Germany Netherlands Spain Ireland Slovenia Denmark Switzerland Austria San Marino Guernsey Jersey Liechtenstein Iceland Sweden Luxembourg Finland Belgium the United Kingdom Monaco Faroe Islands Albania Andorra Hungary Ukraine Gibraltar Georgia Poland Moldova Kazakhstan Bulgaria

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

107

Total Inventories Countries

Value ($K/employee)

Rank

Percentile

89.29 89.04 80.46 78.14 77.12 69.50 63.82 53.05 49.54 45.66 41.73 41.73 39.46 39.14 38.80 38.38 36.62 34.00 31.28 30.97 30.78 30.56 27.27 27.05 26.11 25.85 23.91 23.43 23.25 22.96 21.66 20.54 20.40 19.71 18.28 15.90 15.35 15.13 10.77 8.33 8.03 7.95 6.81 6.20 2.28

1 2 4 5 6 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 39 40 41 42 43 44 45 46 49 52

98.11 96.23 92.45 90.57 88.68 84.91 83.02 81.13 79.25 77.36 75.47 73.58 71.70 69.81 67.92 66.04 64.15 62.26 60.38 58.49 56.60 54.72 52.83 50.94 49.06 47.17 45.28 43.40 41.51 39.62 37.74 35.85 33.96 32.08 30.19 26.42 24.53 22.64 20.75 18.87 16.98 15.09 13.21 7.55 1.89

Region

_________________________________________________________________________________________________________

Turkey Mexico Italy Portugal South Korea Russia Taiwan Denmark Japan France Netherlands Germany Israel Ireland Norway South Africa Peru Finland Switzerland Pakistan Sweden USA Austria Luxembourg Greece Australia Belgium China Czech Republic New Zealand Argentina the United Kingdom Singapore Canada Spain Brazil Hong Kong Chile Malaysia Hungary Thailand India Poland Indonesia Philippines

the Middle East Latin America Europe Europe Asia Europe Asia Europe Asia Europe Europe Europe the Middle East Europe Europe Africa Latin America Europe Europe the Middle East Europe North America Europe Europe Europe Oceana Europe Asia Europe Oceana Latin America Europe Asia North America Europe Latin America Asia Latin America Asia Europe Asia Asia Europe Asia Asia

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

108

Total Inventories (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value ($K/employee)

Rank

Percentile

84.84 81.11 80.46 78.14 77.85 75.66 74.80 74.35 72.99 70.96 70.80 69.50 69.33 53.05 45.66 41.73 41.73 39.14 38.80 34.00 31.96 31.28 30.88 30.78 29.19 27.27 27.05 27.01 26.33 26.33 26.11 24.20 23.91 23.88 23.78 23.25 22.07 22.06 20.54 19.78 18.28 17.16 14.72 8.33 7.49 7.12 7.01 6.81 6.12 5.89 5.88

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Romania Vatican City Italy Portugal Bosnia & Herzegovina Macedonia Cyprus Estonia Serbia & Montenegro Belarus Slovakia Russia Lithuania Denmark France Netherlands Germany Ireland Norway Finland Albania Switzerland Iceland Sweden Liechtenstein Austria Luxembourg San Marino Jersey Guernsey Greece Malta Belgium Isle of Man Andorra Czech Republic Latvia Croatia the United Kingdom Monaco Spain Slovenia Faroe Islands Hungary Ukraine Gibraltar Georgia Poland Moldova Kazakhstan Bulgaria

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

109

Current Assets - Total Countries

Value ($K/employee)

Rank

Percentile

563.71 562.18 355.71 251.30 226.46 207.87 204.76 203.78 149.02 147.79 147.63 147.02 137.06 136.69 131.62 121.69 116.22 113.35 109.84 107.82 103.26 98.25 95.65 91.09 89.30 87.67 86.83 84.74 84.64 77.72 77.53 75.30 75.23 67.61 64.85 63.92 47.75 37.98 33.59 31.96 25.65 21.87 21.18 17.33 9.67

1 2 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 40 41 42 43 44 46 47 50 52

98.11 96.23 92.45 90.57 86.79 84.91 83.02 81.13 79.25 77.36 75.47 73.58 71.70 69.81 67.92 66.04 64.15 62.26 60.38 58.49 56.60 54.72 52.83 50.94 49.06 47.17 45.28 43.40 41.51 39.62 37.74 35.85 33.96 32.08 30.19 28.30 24.53 22.64 20.75 18.87 16.98 13.21 11.32 5.66 1.89

Region

_________________________________________________________________________________________________________

Turkey Mexico Taiwan South Korea Russia Italy Portugal Japan Israel Ireland USA Norway France Greece Germany Czech Republic Denmark Argentina Australia Netherlands Switzerland Finland China South Africa Luxembourg Spain Sweden Austria Canada Singapore Belgium the United Kingdom Hong Kong Peru Malaysia Pakistan New Zealand India Brazil Chile Indonesia Thailand Hungary Poland Philippines

the Middle East Latin America Asia Asia Europe Europe Europe Asia the Middle East Europe North America Europe Europe Europe Europe Europe Europe Latin America Oceana Europe Europe Europe Asia Africa Europe Europe Europe Europe North America Asia Europe Europe Asia Latin America Asia the Middle East Oceana Asia Latin America Latin America Asia Asia Europe Europe Asia

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

110

Current Assets - Total (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value ($K/employee)

Rank

Percentile

535.60 491.52 477.70 460.80 242.26 231.22 230.69 226.46 225.93 209.55 207.87 204.76 196.00 149.14 147.79 147.02 137.06 136.69 131.62 126.69 125.02 121.69 116.22 115.50 115.45 107.82 103.26 98.25 96.36 89.30 87.67 86.83 84.74 83.94 82.31 81.84 81.84 77.53 75.37 75.30 72.14 59.02 49.45 21.18 19.05 18.11 17.83 17.33 15.58 14.99 14.96

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro Estonia Belarus Slovakia Russia Lithuania Vatican City Italy Portugal Cyprus Iceland Ireland Norway France Greece Germany Malta Isle of Man Czech Republic Denmark Latvia Croatia Netherlands Switzerland Finland Liechtenstein Luxembourg Spain Sweden Austria San Marino Slovenia Guernsey Jersey Belgium Monaco the United Kingdom Faroe Islands Albania Andorra Hungary Ukraine Gibraltar Georgia Poland Moldova Kazakhstan Bulgaria

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

111

Property Plant and Equipment - Net Countries

Value ($K/employee)

Rank

Percentile

149.59 128.39 115.70 81.21 70.98 70.79 66.34 59.06 55.39 55.01 54.74 47.34 44.97 43.98 41.51 40.65 40.57 38.07 37.53 35.70 35.49 34.02 33.99 33.16 33.00 31.76 29.73 27.12 26.54 26.10 25.25 24.71 22.51 20.39 18.60 16.22 14.54 14.19 13.41 13.30 11.91 10.38 9.13 6.58 6.27

1 2 4 5 6 7 8 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 27 28 29 30 31 32 33 34 35 36 37 38 40 42 43 44 46 47 48 50 51 52

98.11 96.23 92.45 90.57 88.68 86.79 84.91 81.13 79.25 77.36 75.47 73.58 71.70 69.81 67.92 66.04 64.15 62.26 60.38 58.49 56.60 54.72 52.83 49.06 47.17 45.28 43.40 41.51 39.62 37.74 35.85 33.96 32.08 30.19 28.30 24.53 20.75 18.87 16.98 13.21 11.32 9.43 5.66 3.77 1.89

Region

_________________________________________________________________________________________________________

Taiwan South Korea Russia Japan Turkey Mexico Greece Czech Republic Portugal Argentina Switzerland Luxembourg China Germany Australia Malaysia Netherlands Austria USA Canada Finland Denmark Sweden Hungary Norway Italy Singapore Poland Brazil the United Kingdom Chile New Zealand Peru Thailand France Spain Hong Kong Indonesia Israel Ireland Belgium India Pakistan Philippines South Africa

Asia Asia Europe Asia the Middle East Latin America Europe Europe Europe Latin America Europe Europe Asia Europe Oceana Asia Europe Europe North America North America Europe Europe Europe Europe Europe Europe Asia Europe Latin America Europe Latin America Oceana Latin America Asia Europe Europe Asia Asia the Middle East Europe Europe Asia the Middle East Asia Africa

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

112

Property Plant and Equipment - Net (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value ($K/employee)

Rank

Percentile

123.77 118.13 117.86 115.70 115.43 67.44 66.34 61.89 61.48 60.68 60.15 59.06 58.02 56.06 56.03 55.39 54.74 53.02 51.08 47.34 43.98 40.57 38.07 37.92 37.71 36.76 36.76 35.49 34.02 33.99 33.16 33.00 32.02 31.76 29.82 28.83 28.36 27.92 27.12 26.10 25.59 24.39 23.47 23.42 19.65 18.60 16.22 15.23 13.94 13.30 11.91

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Estonia Belarus Slovakia Russia Lithuania Romania Greece Bosnia & Herzegovina Malta Isle of Man Macedonia Czech Republic Serbia & Montenegro Latvia Croatia Portugal Switzerland Cyprus Liechtenstein Luxembourg Germany Netherlands Austria Iceland San Marino Jersey Guernsey Finland Denmark Sweden Hungary Norway Vatican City Italy Ukraine Monaco Gibraltar Georgia Poland the United Kingdom Andorra Moldova Kazakhstan Bulgaria Albania France Spain Slovenia Faroe Islands Ireland Belgium

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

113

Intangible Other Assets Countries

Value ($K/employee)

Rank

Percentile

48.49 29.65 29.55 19.59 18.57 18.47 16.88 15.30 15.07 14.60 14.10 13.21 12.49 10.50 8.82 8.76 7.26 6.46 6.02 5.84 5.81 5.80 5.76 5.22 4.27 3.87 3.86 3.77 3.23 2.97 2.83 2.35 0.68 0.57 0.46 0.18 0.15 0.12

1 2 3 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 26 27 28 29 30 32 33 34 35 36 37 38 39 40 41

97.67 95.35 93.02 88.37 86.05 83.72 81.40 79.07 76.74 74.42 72.09 69.77 67.44 65.12 62.79 60.47 58.14 55.81 53.49 51.16 48.84 46.51 44.19 39.53 37.21 34.88 32.56 30.23 25.58 23.26 20.93 18.60 16.28 13.95 11.63 9.30 6.98 4.65

Region

_________________________________________________________________________________________________________

Belgium USA Norway France Italy Canada Switzerland Malaysia Sweden Luxembourg Austria Germany Finland Australia Denmark the United Kingdom Greece Czech Republic Argentina New Zealand Israel South Korea Ireland Russia Singapore Turkey Mexico Hong Kong Netherlands Japan Spain China Peru South Africa India Hungary Poland Thailand

Europe North America Europe Europe Europe North America Europe Asia Europe Europe Europe Europe Europe Oceana Europe Europe Europe Europe Latin America Oceana the Middle East Asia Europe Europe Asia the Middle East Latin America Asia Europe Asia Europe Asia Latin America Africa Asia Europe Europe Asia

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

114

Intangible Other Assets (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value ($K/employee)

Rank

Percentile

48.49 29.96 29.55 19.59 18.72 18.57 16.88 15.75 15.07 14.60 14.10 13.97 13.62 13.62 13.21 12.49 8.82 8.76 7.26 6.73 6.64 6.46 6.13 6.13 6.05 5.76 5.59 5.33 5.32 5.22 5.21 4.14 3.67 3.61 3.37 3.28 3.23 3.16 2.83 2.65 0.59 0.18 0.16 0.16 0.15 0.15 0.13 0.13 0.13

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49

97.96 95.92 93.88 91.84 89.80 87.76 85.71 83.67 81.63 79.59 77.55 75.51 73.47 71.43 69.39 67.35 65.31 63.27 61.22 59.18 57.14 55.10 53.06 51.02 48.98 46.94 44.90 42.86 40.82 38.78 36.73 34.69 32.65 30.61 28.57 26.53 24.49 22.45 20.41 18.37 16.33 14.29 12.24 10.20 8.16 6.12 4.08 2.04 0.00

_________________________________________________________________________________________________________

Belgium Iceland Norway France Vatican City Italy Switzerland Liechtenstein Sweden Luxembourg Austria San Marino Jersey Guernsey Germany Finland Denmark the United Kingdom Greece Malta Isle of Man Czech Republic Latvia Croatia Andorra Ireland Estonia Belarus Slovakia Russia Lithuania Monaco Romania Faroe Islands Bosnia & Herzegovina Macedonia Netherlands Serbia & Montenegro Spain Slovenia Albania Hungary Ukraine Gibraltar Georgia Poland Moldova Kazakhstan Bulgaria

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

3.7 3.7.1

115

PRODUCTIVITY IN POLAND: LIABILITY-LABOR RATIOS Overview

In this chapter we consider the liability-labor ratios of companies operating in Poland benchmarked against global averages for steam, gas and hydraulic turbines and turbine generator set units. For ratios where there are large deviations between Poland and the benchmarks, graphics are provided (sometimes referred to as a “gap” analysis). Then the distribution of productivity ratios is presented in the form of ranks and percentiles. Certain key liabilitylabor ratios are highlighted for steam, gas and hydraulic turbines and turbine generator set units across countries in the comparison group. Definitions of liability statement terms are given in Chapter 3. In the case of liability-labor ratios, this report maintains comparability over time and across countries by using a common currency (the US dollar) and relates each measure to a “per employee basis”. Ratios are projected using raw financial statistics and, as ratios, are therefore comparable. Given a country’s human resource ratios, the resulting figures are benchmarked across regional and global averages. I then report the larger liability-labor ratio gaps for steam, gas and hydraulic turbines and turbine generator set units that Poland has vis-à-vis the worldwide average. Again, a gap need not be a bad sign. Rather, it is simply a substantial difference that might merit further attention or signal a firm’s relative incentive to invest locally. All figures are projections, so due caution is required.

3.7.2

Liability to Labor: Outlook

The following tables and graphs are prepared using the methodology described at the beginning of this section. All units are in thousands of US dollars per employee. All figures are current-year projections for steam, gas and hydraulic turbines and turbine generator set units in Poland based on latest financial results available. Labor-liability Ratios ($k/employee) Poland Europe World Avg.

_________________________________________________________________________________________________________

Accounts Payable Short Term Debt & Current Portion of Long Term Debt Other Current Liabilities Current Liabilities - Total Long Term Debt Long Term Debt Excluding Capitalized Leases Total Liabilities Common Equity Other Appropriated Reserves Unappropriated Reserves Total Liabilities & Shareholders Equity

4.00 7.89 3.85 15.74 4.47 4.47 20.21 24.39 11.10 11.30 44.60

27.47 35.70 30.01 97.10 27.04 26.83 131.49 108.59 10.89 13.79 244.38

17.12 22.43 19.46 63.27 12.60 12.51 78.99 79.02 5.85 11.20 162.19

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

3.7.3

116

Liability and Equity to Labor: International Gaps

The following graphics summarize for steam, gas and hydraulic turbines and turbine generator set units the large labor-liability gaps between firms operating in Poland and the world average. A gap cannot necessarily be interpreted as a positive or negative reflection on performance. Gaps may signal areas of specialization, market focus, or expertise. More contextual information is required to fully interpret these gaps. The gaps highlighted here are simply those that are large.

Gap: Accounts Payable ($k/employee) 27.47

30

17.12

20 10

4

0 -10

-13.12

-20 Poland

Europe

World Average

Gap

Gap: Short Term Debt & Current Portion of Long Term Debt ($k/employee) 35.7

40 30 20 10

22.43 7.89

0 -10

-14.54

-20 Poland

Europe

World Average

Gap

Gap: Other Current Liabilities ($k/employee) 40

30.01

30

19.46

20 10

3.85

0 -10

-15.61

-20 Poland

www.icongrouponline.com

Europe

World Average

Gap

2007 Icon Group International, Inc.

Financial Indicators

117

Gap: Current Liabilities - Total ($k/employee) 97.1

100

63.27 50 15.74 0 -47.53 Gap

-50 Poland

Europe

World Average

Gap: Long Term Debt ($k/employee) 27.04

30 20 10

12.6 4.47

0 -8.13

-10 Poland

Europe

World Average

Gap

Gap: Long Term Debt Excluding Capitalized Leases ($k/employee) 26.83

30 20 10

12.51 4.47

0 -8.04

-10 Poland

Europe

World Average

Gap

Gap: Total Liabilities ($k/employee) 131.49

150

78.99

100 50

20.21

0 -50

-58.78

-100 Poland

www.icongrouponline.com

Europe

World Average

Gap

2007 Icon Group International, Inc.

Financial Indicators

118

Gap: Common Equity ($k/employee) 150

108.59 79.02

100 50

24.39

0 -50

-54.63

-100 Poland

Europe

World Average

Gap

Gap: Other Appropriated Reserves ($k/employee) 12

11.1

10.89

10 8

5.85

6

5.25

4 2 0 Poland

Europe

World Average

Gap

Gap: Unappropriated Reserves ($k/employee) 13.79

15 11.3

11.2

10 5 0.1 0 Poland

Europe

World Average

Gap

Gap: Total Liabilities & Shareholders Equity ($k/employee) 300

244.38 162.19

200 100

44.6

0 -100

-117.59

-200 Poland

www.icongrouponline.com

Europe

World Average

Gap

2007 Icon Group International, Inc.

Financial Indicators

3.7.4

119

Key Percentiles and Rankings

We now consider the distribution of liability-labor ratios using ranks and percentiles across . What percent of countries have a value lower or higher than Poland (what is the indicator's rank or percentile)? The table below answers this question with respect to liability-labor ratios. The ranks and percentiles indicate, from highest to lowest, where a value falls within the distribution of all countries considered in the global benchmark (the number of countries in the benchmark per line item may vary, as indicated in the Rank). Again, a high or low figure does not necessarily indicate good or bad performance or productivity. After the summary table below, a few key liabilitylabor ratios are highlighted in additional tables. Liability Structure ($k/employee)

Poland

Rank of Total

Percentile

4.00 7.89 3.85 15.74 4.47 4.47 20.21 24.39 11.10 11.30 44.60

44 of 50 35 of 53 45 of 53 45 of 53 38 of 48 37 of 48 45 of 53 46 of 53 15 of 49 15 of 37 46 of 53

12.00 33.96 15.09 15.09 20.83 22.92 15.09 13.21 69.39 59.46 13.21

_________________________________________________________________________________________________________

Accounts Payable Short Term Debt & Current Portion of Long Term Debt Other Current Liabilities Current Liabilities - Total Long Term Debt Long Term Debt Excluding Capitalized Leases Total Liabilities Common Equity Other Appropriated Reserves Unappropriated Reserves Total Liabilities & Shareholders Equity

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

120

Accounts Payable Countries

Value ($K/employee)

Rank

Percentile

87.40 87.02 86.79 71.13 57.18 52.99 51.53 41.59 32.27 30.19 25.93 25.15 25.00 23.85 22.39 21.64 21.11 20.86 19.28 18.81 18.61 18.34 16.74 16.67 15.82 15.07 13.03 12.19 11.82 11.64 11.56 11.47 11.24 11.22 10.99 8.68 4.89 4.58 4.36 4.00 3.36 1.00

1 2 3 5 6 7 9 10 11 12 13 14 15 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 44 47 50

98.00 96.00 94.00 90.00 88.00 86.00 82.00 80.00 78.00 76.00 74.00 72.00 70.00 66.00 64.00 62.00 60.00 58.00 56.00 54.00 52.00 50.00 48.00 46.00 44.00 42.00 40.00 38.00 36.00 34.00 32.00 30.00 28.00 26.00 24.00 22.00 20.00 18.00 16.00 12.00 6.00 0.00

Region

_________________________________________________________________________________________________________

Taiwan Turkey Mexico Italy South Korea Japan Russia Belgium France Norway Denmark Greece Spain Netherlands Czech Republic Sweden Singapore Argentina Switzerland Germany Hong Kong USA Canada Luxembourg Austria the United Kingdom Finland China Brazil New Zealand Israel Ireland Chile India Australia Malaysia Hungary Indonesia Thailand Poland Philippines Peru

Asia the Middle East Latin America Europe Asia Asia Europe Europe Europe Europe Europe Europe Europe Europe Europe Europe Asia Latin America Europe Europe Asia North America North America Europe Europe Europe Europe Asia Latin America Oceana the Middle East Europe Latin America Asia Oceana Asia Europe Asia Asia Europe Asia Latin America

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

121

Accounts Payable (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value ($K/employee)

Rank

Percentile

82.68 75.88 73.74 71.71 71.14 71.13 55.12 52.61 52.49 51.53 51.41 41.59 32.27 30.19 25.93 25.15 25.00 23.85 23.47 23.31 23.00 22.39 21.64 21.25 21.24 20.47 19.28 18.81 18.53 17.99 17.84 16.67 15.82 15.67 15.28 15.28 15.07 13.03 12.05 11.47 4.89 4.40 4.18 4.12 4.00 3.59 3.46 3.45 0.87

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49

97.96 95.92 93.88 91.84 89.80 87.76 85.71 83.67 81.63 79.59 77.55 75.51 73.47 71.43 69.39 67.35 65.31 63.27 61.22 59.18 57.14 55.10 53.06 51.02 48.98 46.94 44.90 42.86 40.82 38.78 36.73 34.69 32.65 30.61 28.57 26.53 24.49 22.45 20.41 18.37 16.33 14.29 12.24 10.20 8.16 6.12 4.08 2.04 0.00

_________________________________________________________________________________________________________

Romania Bosnia & Herzegovina Macedonia Vatican City Serbia & Montenegro Italy Estonia Belarus Slovakia Russia Lithuania Belgium France Norway Denmark Greece Spain Netherlands Slovenia Malta Isle of Man Czech Republic Sweden Latvia Croatia Monaco Switzerland Germany Iceland Liechtenstein Faroe Islands Luxembourg Austria San Marino Guernsey Jersey the United Kingdom Finland Andorra Ireland Hungary Ukraine Gibraltar Georgia Poland Moldova Kazakhstan Bulgaria Albania

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

122

Current Liabilities - Total Countries

Value ($K/employee)

Rank

Percentile

506.75 505.36 226.98 166.02 149.61 141.55 129.00 118.68 87.93 82.29 77.84 73.25 72.19 68.24 65.14 63.90 63.87 61.93 61.10 57.37 57.14 55.81 53.70 51.60 50.72 49.41 48.51 42.51 42.16 40.61 38.86 37.71 37.66 35.84 31.31 30.41 29.23 25.11 21.73 19.95 19.24 15.74 12.06 9.20 4.74

1 2 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 38 39 40 41 42 43 44 45 46 49 52

98.11 96.23 92.45 90.57 86.79 84.91 83.02 81.13 79.25 77.36 75.47 73.58 71.70 69.81 67.92 66.04 64.15 62.26 60.38 58.49 56.60 54.72 52.83 50.94 49.06 47.17 45.28 43.40 41.51 39.62 37.74 35.85 33.96 32.08 28.30 26.42 24.53 22.64 20.75 18.87 16.98 15.09 13.21 7.55 1.89

Region

_________________________________________________________________________________________________________

Turkey Mexico Taiwan South Korea Russia Italy Portugal Japan Norway Greece France Czech Republic Denmark Argentina China Spain Germany Netherlands Austria Belgium Switzerland South Africa Finland Sweden USA Luxembourg the United Kingdom Israel Ireland Pakistan Singapore Hong Kong Brazil Chile Canada Malaysia Peru Australia India New Zealand Hungary Poland Thailand Indonesia Philippines

the Middle East Latin America Asia Asia Europe Europe Europe Asia Europe Europe Europe Europe Europe Latin America Asia Europe Europe Europe Europe Europe Europe Africa Europe Europe North America Europe Europe the Middle East Europe the Middle East Asia Asia Latin America Latin America North America Asia Latin America Oceana Asia Oceana Europe Europe Asia Asia Asia

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

123

Current Liabilities - Total (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value ($K/employee)

Rank

Percentile

481.48 441.85 429.42 414.23 160.05 152.76 152.41 149.61 149.26 142.70 141.55 129.00 123.49 87.93 82.29 77.84 76.27 75.26 73.25 72.19 69.53 69.50 63.90 63.87 61.93 61.10 60.52 59.98 59.00 59.00 57.37 57.14 53.70 53.32 51.60 51.24 49.41 48.51 42.16 37.69 36.16 25.52 20.66 19.24 17.31 16.45 16.20 15.74 14.15 13.62 13.59

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro Estonia Belarus Slovakia Russia Lithuania Vatican City Italy Portugal Cyprus Norway Greece France Malta Isle of Man Czech Republic Denmark Latvia Croatia Spain Germany Netherlands Austria San Marino Slovenia Jersey Guernsey Belgium Switzerland Finland Liechtenstein Sweden Iceland Luxembourg the United Kingdom Ireland Monaco Faroe Islands Albania Andorra Hungary Ukraine Gibraltar Georgia Poland Moldova Kazakhstan Bulgaria

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

124

Long Term Debt Countries

Value ($K/employee)

Rank

Percentile

131.37 131.02 93.29 51.38 42.58 38.37 32.88 31.75 29.79 27.66 27.47 26.88 26.22 25.89 25.76 25.46 21.50 21.03 18.72 17.44 16.90 16.06 15.56 14.71 14.38 11.39 9.59 8.36 7.00 5.47 5.36 4.50 4.47 4.22 4.19 3.52 3.29 3.26 3.01 2.10 1.07

1 2 4 5 6 8 9 10 11 12 13 14 15 16 17 18 19 20 22 23 24 25 26 27 28 29 30 31 32 34 36 37 38 39 40 41 42 43 44 45 48

97.92 95.83 91.67 89.58 87.50 83.33 81.25 79.17 77.08 75.00 72.92 70.83 68.75 66.67 64.58 62.50 60.42 58.33 54.17 52.08 50.00 47.92 45.83 43.75 41.67 39.58 37.50 35.42 33.33 29.17 25.00 22.92 20.83 18.75 16.67 14.58 12.50 10.42 8.33 6.25 0.00

Region

_________________________________________________________________________________________________________

Turkey Mexico Taiwan Portugal South Korea Russia Belgium Norway Switzerland Netherlands New Zealand USA Japan Sweden Luxembourg Finland Italy Greece Czech Republic Argentina Denmark Austria France Germany Canada Australia the United Kingdom Spain Thailand Hungary South Africa Singapore Poland Israel Ireland Malaysia Hong Kong China India Indonesia Peru

the Middle East Latin America Asia Europe Asia Europe Europe Europe Europe Europe Oceana North America Asia Europe Europe Europe Europe Europe Europe Latin America Europe Europe Europe Europe North America Oceana Europe Europe Asia Europe Africa Asia Europe the Middle East Europe Asia Asia Asia Asia Asia Latin America

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

125

Long Term Debt (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value ($K/employee)

Rank

Percentile

124.82 114.55 111.33 107.39 51.38 49.18 41.05 39.18 39.09 38.37 38.28 32.88 31.75 29.79 28.45 27.80 27.66 27.15 25.89 25.76 25.46 21.67 21.50 21.03 19.49 19.23 18.72 17.77 17.76 16.90 16.06 15.90 15.56 15.51 15.51 14.71 9.59 8.36 7.85 5.47 4.92 4.68 4.60 4.47 4.36 4.19 4.02 3.87 3.86 3.15 0.94

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro Portugal Cyprus Estonia Belarus Slovakia Russia Lithuania Belgium Norway Switzerland Andorra Liechtenstein Netherlands Iceland Sweden Luxembourg Finland Vatican City Italy Greece Malta Isle of Man Czech Republic Latvia Croatia Denmark Austria San Marino France Guernsey Jersey Germany the United Kingdom Spain Slovenia Hungary Ukraine Gibraltar Georgia Poland Monaco Ireland Moldova Kazakhstan Bulgaria Faroe Islands Albania

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

126

Total Liabilities Countries

Value ($K/employee)

Rank

Percentile

645.86 644.10 320.58 219.98 198.23 181.11 180.80 159.41 123.30 120.24 104.91 102.02 100.53 100.09 99.65 98.31 97.45 93.39 90.99 87.00 86.46 86.18 83.27 72.79 68.71 64.07 60.67 53.22 52.78 49.13 47.95 44.43 41.53 41.27 39.67 37.74 37.64 36.21 31.56 25.72 24.71 20.21 19.36 11.90 4.74

1 2 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 49 52

98.11 96.23 92.45 90.57 86.79 84.91 83.02 81.13 79.25 77.36 75.47 73.58 71.70 69.81 67.92 66.04 64.15 62.26 60.38 58.49 56.60 54.72 52.83 50.94 49.06 47.17 45.28 41.51 39.62 37.74 35.85 33.96 32.08 30.19 28.30 26.42 24.53 22.64 20.75 18.87 16.98 15.09 13.21 7.55 1.89

Region

_________________________________________________________________________________________________________

Turkey Mexico Taiwan South Korea Russia Italy Portugal Japan Germany Norway Greece France Denmark Austria Switzerland Belgium Netherlands Czech Republic Sweden Argentina USA Luxembourg Finland Spain China the United Kingdom South Africa Israel Ireland Canada New Zealand Singapore Hong Kong Pakistan Brazil Chile Australia Malaysia Peru India Hungary Poland Thailand Indonesia Philippines

the Middle East Latin America Asia Asia Europe Europe Europe Asia Europe Europe Europe Europe Europe Europe Europe Europe Europe Europe Europe Latin America North America Europe Europe Europe Asia Europe Africa the Middle East Europe North America Oceana Asia Asia the Middle East Latin America Latin America Oceana Asia Latin America Asia Europe Europe Asia Asia Asia

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

127

Total Liabilities (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value ($K/employee)

Rank

Percentile

613.66 563.15 547.31 527.95 212.07 202.40 201.94 198.23 197.77 182.57 181.11 180.80 173.07 123.30 120.24 104.91 102.02 100.53 100.09 99.65 99.14 98.31 97.45 97.23 96.66 96.66 95.95 93.39 92.98 90.99 88.65 88.61 87.35 86.18 83.27 72.79 68.33 64.07 52.78 49.66 43.08 39.82 27.55 24.71 22.22 21.13 20.80 20.21 18.17 17.49 17.46

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro Estonia Belarus Slovakia Russia Lithuania Vatican City Italy Portugal Cyprus Germany Norway Greece France Denmark Austria Switzerland San Marino Belgium Netherlands Malta Jersey Guernsey Isle of Man Czech Republic Liechtenstein Sweden Latvia Croatia Iceland Luxembourg Finland Spain Slovenia the United Kingdom Ireland Andorra Monaco Faroe Islands Albania Hungary Ukraine Gibraltar Georgia Poland Moldova Kazakhstan Bulgaria

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

128

Common Equity Countries

Value ($K/employee)

Rank

Percentile

594.71 593.09 283.20 188.26 169.65 158.60 138.81 128.58 127.52 124.76 95.17 94.48 88.58 86.69 86.29 85.33 84.11 82.29 79.71 78.35 77.17 71.16 69.51 68.57 67.27 66.78 63.47 60.03 59.93 52.54 51.16 49.32 46.42 42.59 36.53 34.91 33.55 31.09 29.82 27.55 25.21 24.39 21.42 20.38 11.54

1 2 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 38 39 40 41 42 44 45 46 48 50 52

98.11 96.23 92.45 90.57 86.79 84.91 83.02 81.13 79.25 77.36 75.47 73.58 71.70 69.81 67.92 66.04 64.15 62.26 60.38 58.49 56.60 54.72 52.83 50.94 49.06 47.17 45.28 43.40 41.51 39.62 37.74 35.85 33.96 32.08 28.30 26.42 24.53 22.64 20.75 16.98 15.09 13.21 9.43 5.66 1.89

Region

_________________________________________________________________________________________________________

Turkey Mexico Taiwan South Korea Russia Japan USA Israel Ireland Australia Norway Greece Malaysia Canada Italy Portugal Czech Republic Switzerland China Argentina France Luxembourg Germany Singapore Finland Hong Kong Denmark Netherlands Peru Sweden Belgium the United Kingdom Austria South Africa Pakistan New Zealand Spain Indonesia Hungary India Thailand Poland Brazil Chile Philippines

the Middle East Latin America Asia Asia Europe Asia North America the Middle East Europe Oceana Europe Europe Asia North America Europe Europe Europe Europe Asia Latin America Europe Europe Europe Asia Europe Asia Europe Europe Latin America Europe Europe Europe Europe Africa the Middle East Oceana Europe Asia Europe Asia Asia Europe Latin America Latin America Asia

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

129

Common Equity (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value ($K/employee)

Rank

Percentile

565.06 518.55 503.97 486.14 181.49 173.22 172.82 169.65 169.25 140.23 127.52 95.17 94.48 87.57 86.99 86.41 86.29 85.33 84.11 82.29 81.68 79.83 79.80 77.17 76.78 71.16 69.51 67.27 66.50 64.03 63.47 60.03 52.54 52.31 51.16 49.32 46.42 45.98 44.83 44.83 36.16 33.55 31.50 29.82 26.81 25.49 25.10 24.39 21.92 21.10 21.06

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro Estonia Belarus Slovakia Russia Lithuania Iceland Ireland Norway Greece Malta Vatican City Isle of Man Italy Portugal Czech Republic Switzerland Cyprus Latvia Croatia France Liechtenstein Luxembourg Germany Finland Monaco Faroe Islands Denmark Netherlands Sweden Albania Belgium the United Kingdom Austria San Marino Jersey Guernsey Andorra Spain Slovenia Hungary Ukraine Gibraltar Georgia Poland Moldova Kazakhstan Bulgaria

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

3.8 3.8.1

130

PRODUCTIVITY IN POLAND: INCOME-LABOR RATIOS Overview

In this chapter we consider the income-labor ratios for steam, gas and hydraulic turbines and turbine generator set units in Poland benchmarked against global averages. For ratios where there are large deviations between the average firm operating in Poland and the benchmarks, graphics are provided (sometimes referred to as a “gap” analysis). Then the distribution of ratios is presented in the form of ranks and percentiles. Certain key income-labor ratios are highlighted across countries in the comparison group. In the case of income-labor ratios, this report maintains comparability over time and across countries by using a common currency (the US dollar) and relates each measure to a “per employee basis”. Ratios are projected using raw financial statistics and, as ratios, are therefore comparable. Given a country’s human resource ratios, the resulting figures are benchmarked across regional and global averages. We then report the larger income-labor ratio gaps for steam, gas and hydraulic turbines and turbine generator set units that Poland has vis-à-vis the worldwide average. Again, a gap need not be a bad sign. Rather, it is simply a substantial difference that might merit further attention or signal a firm’s relative incentive to invest locally. All figures are projections, so due caution is required.

3.8.2

Income to Labor: Outlook

The following tables and graphs are prepared using the methodology described at the beginning of this section. All units are in thousands of US dollars per employee. All figures are current-year projections for steam, gas and hydraulic turbines and turbine generator set units in Poland based on latest financial results available. Labor-income Ratios ($k/employee) Poland Europe World Avg.

_________________________________________________________________________________________________________

Net Sales or Revenues Cost of Goods Sold (Excluding Depreciation) Depreciation, Depletion & Amortization Gross Income Selling, General & Administrative Expenses Operating Income Other Income/Expense Net Earnings Before Interest and Taxes (EBIT) Interest Expense on Debt Pretax Income Net Income Before Extra Items/Prefer Dividends Net Income Before Preferred Dividends Net Income Available to Common

40.62 32.08 3.47 5.08 4.23 0.86 0.36 1.22 0.70 0.52 0.52 0.52 0.52

198.08 151.12 8.63 39.60 27.93 13.28 1.20 23.43 16.42 7.04 4.00 4.02 3.99

128.08 93.24 5.06 25.62 15.38 9.69 1.13 15.79 9.49 6.36 3.98 4.14 3.98

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

3.8.3

131

Income to Labor: Gaps

The following graphics summarize for steam, gas and hydraulic turbines and turbine generator set units the large labor-income gaps between firms operating in Poland and the world average. A gap cannot necessarily be interpreted as a positive or negative reflection on performance. Gaps may signal areas of specialization, market focus, or expertise. More contextual information is required to fully interpret these gaps. The gaps highlighted here are simply those that are large.

Gap: Net Sales or Revenues ($k/employee) 198.08

200

128.08

150 100 50

40.62

0 -50 -87.46

-100 Poland

Europe

World Average

Gap

Gap: Cost of Goods Sold (Excluding Depreciation) ($k/employee) 200

151.12

150

93.24

100 50

32.08

0 -50

-61.16

-100 Poland

Europe

World Average

Gap

Gap: Gross Income ($k/employee) 39.6

40 20

25.62 5.08

0 -20

-20.54

-40 Poland

www.icongrouponline.com

Europe

World Average

Gap

2007 Icon Group International, Inc.

Financial Indicators

132

Gap: Selling, General & Administrative Expenses ($k/employee) 27.93

30

15.38

20 10

4.23

0 -10

-11.15

-20 Poland

Europe

World Average

Gap

Gap: Operating Income ($k/employee) 13.28

15

9.69

10 5

0.86

0 -5 -8.83

-10 Poland

Europe

World Average

Gap

Gap: Earnings Before Interest and Taxes (EBIT) ($k/employee) 30

23.43 15.79

20 10

1.22

0 -10

-14.57

-20 Poland

Europe

World Average

Gap

Gap: Interest Expense on Debt ($k/employee) 20

16.42

15

9.49

10 5

0.7

0 -5 -8.79

-10 Poland

www.icongrouponline.com

Europe

World Average

Gap

2007 Icon Group International, Inc.

Financial Indicators

133

Gap: Pretax Income ($k/employee) 10

7.04

6.36

5 0.52 0 -5

-5.84

-10 Poland

Europe

World Average

Gap

Gap: Net Income Before Extra Items/Prefer Dividends ($k/employee) 4

3.98

4 2

0.52

0 -2 -3.46

-4 Poland

Europe

World Average

Gap

Gap: Net Income Before Preferred Dividends ($k/employee) 6

4.02

4.14

4 2

0.52

0 -2 -3.62

-4 Poland

Europe

World Average

Gap

Gap: Net Income Available to Common ($k/employee) 3.99

3.98

4 2

0.52

0 -2 -3.46

-4 Poland

www.icongrouponline.com

Europe

World Average

Gap

2007 Icon Group International, Inc.

Financial Indicators

3.8.4

134

Key Percentiles and Rankings

We now consider the distribution of income-labor ratios using ranks and percentiles across . What percent of countries have a value lower or higher than Poland (what is the ratio's rank or percentile)? The table below answers this question with respect to income-labor ratios. The ranks and percentiles indicate, from highest to lowest, where a value falls within the distribution of all countries considered in the global benchmark (the number of countries in the benchmark per line item may vary, as indicated in the Rank). Again, a high or low figure does not necessarily indicate good or bad performance or productivity. After the summary table below, a few key income-labor ratios are highlighted in additional tables. Income Structure ($k/employee)

Poland

Rank of Total

Percentile

40.62 32.08 3.47 5.08 4.23 0.86 0.36 1.22 0.70 0.52 0.52 0.52 0.52

48 of 53 49 of 52 41 of 53 49 of 52 39 of 46 47 of 53 33 of 53 49 of 53 42 of 53 48 of 53 47 of 53 47 of 53 47 of 53

9.43 5.77 22.64 5.77 15.22 11.32 37.74 7.55 20.75 9.43 11.32 11.32 11.32

_________________________________________________________________________________________________________

Net Sales or Revenues Cost of Goods Sold (Excluding Depreciation) Depreciation, Depletion & Amortization Gross Income Selling, General & Administrative Expenses Operating Income Other Income/Expense Net Earnings Before Interest and Taxes (EBIT) Interest Expense on Debt Pretax Income Net Income Before Extra Items/Prefer Dividends Net Income Before Preferred Dividends Net Income Available to Common

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

135

Cost of Goods Sold (Excluding Depreciation) Countries

Value ($K/employee)

Rank

Percentile

853.22 388.78 306.09 298.54 297.72 275.82 226.16 205.13 195.15 192.75 183.90 181.64 173.87 166.87 154.77 148.01 147.81 144.11 142.21 138.02 130.19 125.85 122.99 121.96 117.95 113.63 108.57 106.86 101.13 100.45 99.62 97.70 90.30 90.09 85.39 58.03 47.81 45.74 45.49 44.83 39.22 37.34 33.69 32.08

1 2 3 4 5 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 39 40 41 42 43 45 46 47 49

98.08 96.15 94.23 92.31 90.38 84.62 82.69 80.77 78.85 76.92 75.00 73.08 71.15 69.23 67.31 65.38 63.46 61.54 59.62 57.69 55.77 53.85 51.92 50.00 48.08 46.15 44.23 42.31 40.38 38.46 36.54 34.62 32.69 30.77 28.85 25.00 23.08 21.15 19.23 17.31 13.46 11.54 9.62 5.77

Region

_________________________________________________________________________________________________________

Taiwan Portugal South Korea Turkey Mexico Russia South Africa Belgium Japan Norway Australia Italy France Denmark Singapore Germany Sweden Finland Switzerland USA Austria Peru Luxembourg Greece Netherlands New Zealand Czech Republic Spain Argentina Israel Ireland the United Kingdom Canada Hong Kong China Malaysia Brazil India Chile Indonesia Hungary Thailand Philippines Poland

Asia Europe Asia the Middle East Latin America Europe Africa Europe Asia Europe Oceana Europe Europe Europe Asia Europe Europe Europe Europe North America Europe Latin America Europe Europe Europe Oceana Europe Europe Latin America the Middle East Europe Europe North America Asia Asia Asia Latin America Asia Latin America Asia Europe Asia Asia Europe

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

136

Cost of Goods Sold (Excluding Depreciation) (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value ($K/employee)

Rank

Percentile

388.78 372.15 295.08 283.65 281.63 280.98 275.82 275.18 260.30 252.98 244.04 205.13 192.75 183.11 181.64 173.87 166.87 150.08 148.01 147.81 144.11 142.21 139.43 132.71 130.19 128.96 125.73 125.73 122.99 121.96 117.95 117.67 113.03 111.55 109.86 108.57 106.86 103.05 103.01 100.32 99.62 97.70 86.39 39.22 35.27 33.53 33.02 32.08 28.84 27.75 27.70

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Portugal Cyprus Estonia Romania Belarus Slovakia Russia Lithuania Bosnia & Herzegovina Macedonia Serbia & Montenegro Belgium Norway Vatican City Italy France Denmark Monaco Germany Sweden Finland Switzerland Iceland Liechtenstein Austria San Marino Guernsey Jersey Luxembourg Greece Netherlands Andorra Malta Isle of Man Albania Czech Republic Spain Latvia Croatia Slovenia Ireland the United Kingdom Faroe Islands Hungary Ukraine Gibraltar Georgia Poland Moldova Kazakhstan Bulgaria

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

137

Selling, General & Administrative Expenses Countries

Value ($K/employee)

Rank

Percentile

85.31 85.08 80.20 60.93 55.92 50.19 46.12 43.04 42.68 37.87 35.50 34.27 33.88 33.19 32.31 30.88 30.70 26.55 26.43 26.40 26.26 20.61 20.42 19.08 17.66 17.22 16.99 15.82 15.22 12.28 10.88 9.72 5.47 5.21 5.17 4.25 4.23 3.31 0.34

1 2 3 5 6 7 8 9 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 41 45

97.83 95.65 93.48 89.13 86.96 84.78 82.61 80.43 78.26 76.09 73.91 71.74 69.57 67.39 65.22 60.87 58.70 56.52 54.35 52.17 50.00 47.83 45.65 43.48 41.30 39.13 36.96 34.78 32.61 30.43 28.26 26.09 23.91 21.74 19.57 17.39 15.22 10.87 2.17

Region

_________________________________________________________________________________________________________

Turkey Mexico Taiwan Netherlands USA Japan Italy Israel Ireland Norway Sweden South Korea Finland the United Kingdom Germany Russia Switzerland Luxembourg South Africa France Australia Denmark Canada Greece Austria Hong Kong Czech Republic Argentina China Peru Malaysia Singapore Brazil Chile Hungary Thailand Poland Indonesia Philippines

the Middle East Latin America Asia Europe North America Asia Europe the Middle East Europe Europe Europe Asia Europe Europe Europe Europe Europe Europe Africa Europe Oceana Europe North America Europe Europe Asia Europe Latin America Asia Latin America Asia Asia Latin America Latin America Europe Asia Europe Asia Asia

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

138

Selling, General & Administrative Expenses (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value ($K/employee)

Rank

Percentile

81.05 74.38 72.29 69.73 60.93 56.49 46.50 46.12 42.68 37.87 35.50 33.88 33.19 33.03 32.31 31.53 31.46 30.88 30.81 30.70 28.65 26.55 26.40 20.61 19.08 17.68 17.66 17.49 17.45 17.05 17.05 16.99 16.51 16.12 16.12 10.72 9.42 5.17 4.65 4.42 4.35 4.23 3.80 3.66 3.65

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45

97.78 95.56 93.33 91.11 88.89 86.67 84.44 82.22 80.00 77.78 75.56 73.33 71.11 68.89 66.67 64.44 62.22 60.00 57.78 55.56 53.33 51.11 48.89 46.67 44.44 42.22 40.00 37.78 35.56 33.33 31.11 28.89 26.67 24.44 22.22 20.00 17.78 15.56 13.33 11.11 8.89 6.67 4.44 2.22 0.00

_________________________________________________________________________________________________________

Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro Netherlands Iceland Vatican City Italy Ireland Norway Sweden Finland the United Kingdom Estonia Germany Belarus Slovakia Russia Lithuania Switzerland Liechtenstein Luxembourg France Denmark Greece Malta Austria San Marino Isle of Man Guernsey Jersey Czech Republic Faroe Islands Latvia Croatia Albania Monaco Hungary Ukraine Gibraltar Georgia Poland Moldova Kazakhstan Bulgaria

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

www.icongrouponline.com

2007 Icon Group International, Inc.

Financial Indicators

139

Operating Income Countries

Value ($K/employee)

Rank

Percentile

52.50 52.36 28.13 25.37 25.35 22.09 18.71 17.95 17.23 16.36 15.88 14.98 13.40 12.72 11.93 11.74 11.12 11.08 10.83 10.17 10.16 9.79 9.52 8.80 8.67 8.61 8.13 7.79 7.71 7.41 7.34 6.99 6.76 6.41 6.24 5.37 3.63 2.69 1.05 0.86 0.56 0.54 -2.21 -3.72 -3.75

1 2 4 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 40 42 46 47 48 49 51 52 53

98.11 96.23 92.45 88.68 86.79 84.91 83.02 81.13 79.25 77.36 75.47 73.58 71.70 69.81 67.92 66.04 64.15 62.26 60.38 58.49 56.60 54.72 52.83 50.94 49.06 47.17 45.28 43.40 41.51 39.62 37.74 35.85 33.96 32.08 30.19 28.30 24.53 20.75 13.21 11.32 9.43 7.55 3.77 1.89 0.00

Region

_________________________________________________________________________________________________________

Turkey Mexico South Korea Taiwan Russia Netherlands South Africa USA Spain Portugal Norway Italy Greece France Czech Republic Pakistan Argentina Belgium Canada Japan Singapore New Zealand the United Kingdom Hong Kong China Finland Sweden Malaysia Brazil Switzerland Chile Germany Austria Luxembourg Denmark India Indonesia Thailand Hungary Poland Philippines Australia Peru Ireland Israel

the Middle East Latin America Asia Asia Europe Europe Africa North America Europe Europe Europe Europe Europe Europe Europe the Middle East Latin America Europe North America Asia Asia Oceana Europe Asia Asia Europe Europe Asia Latin America Europe Latin America Europe Europe Europe Europe Asia Asia Asia Europe Europe Asia Oceana Latin America Europe the Middle East

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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Financial Indicators

140

Operating Income (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value ($K/employee)

Rank

Percentile

49.88 45.78 44.49 42.92 27.12 25.88 25.82 25.35 25.29 22.09 18.13 17.23 16.36 16.18 15.88 15.66 15.10 14.98 13.40 12.72 12.42 12.26 11.93 11.33 11.32 11.08 10.14 9.86 9.52 8.61 8.44 8.13 7.41 6.99 6.91 6.76 6.69 6.53 6.53 6.41 6.24 1.05 0.95 0.90 0.89 0.86 0.77 0.75 0.74 -1.93 -3.72

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro Estonia Belarus Slovakia Russia Lithuania Netherlands Iceland Spain Portugal Slovenia Norway Cyprus Vatican City Italy Greece France Malta Isle of Man Czech Republic Latvia Croatia Belgium Andorra Monaco the United Kingdom Finland Faroe Islands Sweden Switzerland Germany Liechtenstein Austria San Marino Jersey Guernsey Luxembourg Denmark Hungary Ukraine Gibraltar Georgia Poland Moldova Kazakhstan Bulgaria Albania Ireland

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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Financial Indicators

141

Earnings Before Interest and Taxes (EBIT) Countries

Value ($K/employee)

Rank

Percentile

169.22 168.76 44.85 29.31 26.41 22.51 21.53 20.45 20.42 20.00 19.28 18.96 18.18 17.73 17.18 16.94 16.87 15.00 13.89 12.62 11.63 11.41 11.29 10.92 10.22 9.79 9.78 9.76 9.74 9.68 9.46 9.18 8.30 8.18 7.52 6.98 6.55 3.48 3.28 2.97 1.49 1.22 0.76 -2.68 -2.70

1 2 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 36 37 38 39 40 41 42 43 48 49 50 52 53

98.11 96.23 92.45 90.57 86.79 84.91 83.02 81.13 79.25 77.36 75.47 73.58 71.70 69.81 67.92 66.04 64.15 62.26 60.38 58.49 56.60 54.72 52.83 50.94 49.06 47.17 45.28 43.40 41.51 39.62 37.74 35.85 32.08 30.19 28.30 26.42 24.53 22.64 20.75 18.87 9.43 7.55 5.66 1.89 0.00

Region

_________________________________________________________________________________________________________

Turkey Mexico Taiwan South Korea Russia Netherlands Portugal Norway Greece USA Italy South Africa Czech Republic Brazil Spain Argentina Chile France Germany Finland New Zealand Pakistan Canada Australia Singapore the United Kingdom Austria Sweden Hong Kong China Switzerland Malaysia Belgium Luxembourg Japan India Denmark Thailand Peru Indonesia Hungary Poland Philippines Ireland Israel

the Middle East Latin America Asia Asia Europe Europe Europe Europe Europe North America Europe Africa Europe Latin America Europe Latin America Latin America Europe Europe Europe Oceana the Middle East North America Oceana Asia Europe Europe Europe Asia Asia Europe Asia Europe Europe Asia Asia Europe Asia Latin America Asia Europe Europe Asia Europe the Middle East

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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Financial Indicators

142

Earnings Before Interest and Taxes (EBIT) (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value ($K/employee)

Rank

Percentile

160.78 147.55 143.40 138.33 28.26 26.97 26.91 26.41 26.35 22.51 21.53 20.61 20.45 20.42 20.20 19.44 19.28 18.93 18.68 18.18 17.26 17.25 17.18 16.13 15.00 13.89 12.62 12.04 9.91 9.79 9.78 9.76 9.68 9.46 9.44 9.44 9.34 8.82 8.30 8.18 6.55 2.86 1.49 1.34 1.27 1.25 1.22 1.10 1.05 1.05 -2.68

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Romania Bosnia & Herzegovina Macedonia Serbia & Montenegro Estonia Belarus Slovakia Russia Lithuania Netherlands Portugal Cyprus Norway Greece Iceland Vatican City Italy Malta Isle of Man Czech Republic Latvia Croatia Spain Slovenia France Germany Finland Andorra Monaco the United Kingdom Austria Sweden San Marino Switzerland Jersey Guernsey Faroe Islands Liechtenstein Belgium Luxembourg Denmark Albania Hungary Ukraine Gibraltar Georgia Poland Moldova Kazakhstan Bulgaria Ireland

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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Financial Indicators

143

Pretax Income Countries

Value ($K/employee)

Rank

Percentile

34.08 20.39 18.65 18.38 18.09 17.50 16.49 16.47 16.31 14.94 14.68 14.61 13.67 12.10 11.65 10.11 10.09 9.70 9.60 9.54 9.32 9.29 8.98 8.57 8.40 8.23 8.23 7.64 7.12 6.72 6.35 6.26 6.16 6.04 3.35 3.00 2.39 1.24 0.68 0.64 0.52 -3.20 -3.23 -30.51 -30.60

1 2 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 30 31 32 33 34 35 36 37 38 40 44 45 46 48 49 50 52 53

98.11 96.23 92.45 90.57 88.68 86.79 84.91 83.02 81.13 79.25 77.36 75.47 73.58 71.70 69.81 67.92 66.04 64.15 62.26 60.38 58.49 56.60 54.72 52.83 50.94 49.06 47.17 43.40 41.51 39.62 37.74 35.85 33.96 32.08 30.19 28.30 24.53 16.98 15.09 13.21 9.43 7.55 5.66 1.89 0.00

Region

_________________________________________________________________________________________________________

Taiwan South Korea Netherlands Russia USA Norway Greece South Africa Spain Portugal Czech Republic Italy Argentina France Germany Canada Brazil Finland Chile Singapore Pakistan New Zealand the United Kingdom Australia Hong Kong Malaysia China Austria Switzerland Sweden Belgium India Luxembourg Japan Denmark Thailand Indonesia Peru Philippines Hungary Poland Ireland Israel Mexico Turkey

Asia Asia Europe Europe North America Europe Europe Africa Europe Europe Europe Europe Latin America Europe Europe North America Latin America Europe Latin America Asia the Middle East Oceana Europe Oceana Asia Asia Asia Europe Europe Europe Europe Asia Europe Asia Europe Asia Asia Latin America Asia Europe Europe Europe the Middle East Latin America the Middle East

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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Financial Indicators

144

Pretax Income (Steam, Gas and Hydraulic Turbines and Turbine Generator Set Units) Countries in Europe

Value ($K/employee)

Rank

Percentile

19.66 18.76 18.72 18.65 18.38 18.33 18.28 17.50 16.49 16.31 15.31 15.28 15.08 14.94 14.73 14.68 14.61 14.30 13.93 13.93 12.10 11.65 9.70 9.62 9.25 8.98 8.06 7.64 7.57 7.38 7.38 7.12 6.72 6.64 6.35 6.16 3.35 1.08 0.64 0.58 0.55 0.54 0.52 0.47 0.45 0.45 -3.20 -25.01 -25.93 -26.68 -29.07

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

98.04 96.08 94.12 92.16 90.20 88.24 86.27 84.31 82.35 80.39 78.43 76.47 74.51 72.55 70.59 68.63 66.67 64.71 62.75 60.78 58.82 56.86 54.90 52.94 50.98 49.02 47.06 45.10 43.14 41.18 39.22 37.25 35.29 33.33 31.37 29.41 27.45 25.49 23.53 21.57 19.61 17.65 15.69 13.73 11.76 9.80 7.84 5.88 3.92 1.96 0.00

_________________________________________________________________________________________________________

Estonia Belarus Slovakia Netherlands Russia Lithuania Iceland Norway Greece Spain Slovenia Malta Isle of Man Portugal Vatican City Czech Republic Italy Cyprus Latvia Croatia France Germany Finland Andorra Monaco the United Kingdom Faroe Islands Austria San Marino Guernsey Jersey Switzerland Sweden Liechtenstein Belgium Luxembourg Denmark Albania Hungary Ukraine Gibraltar Georgia Poland Moldova Kazakhstan Bulgaria Ireland Serbia & Montenegro Macedonia Bosnia & Herzegovina Romania

_________________________________________________________________________________________________________

Source: Philip M. Parker, Professor, INSEAD, copyright 2007

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145

4 4.1

MACRO-ACCESSIBILITY IN POLAND EXECUTIVE SUMMARY

Poland became a member of the European Union on May 1, 2004. Poland joined NATO in 1999 and has become a close ally to the United States. Industrial cooperation between the United States and Poland in defense industries, including aviation and high technology, are resulting from increased U.S. interest. The U.S. and Polish governments are encouraging closer economic and commercial ties. With 39 million people, Poland accounts for half of the population and nearly half of the economic output of the tencountries comprising the EU enlargement zone. For Poland, EU membership means furthering the structural transformation of the economy, and harmonization of its administrative and regulatory systems with those of Acquis Communitaire. Poland’s transportation, communications, banking, insurance and distribution systems are still in various stages of development. While communication and banking systems are advanced, the highway system still requires huge investments. The government controls about 30 percent of economic activity, and faces the challenge to privatize remaining state-owned interests in sectors such as coal, steel and rail transport. Opportunities for U.S. firms exist across a broad spectrum of sectors. National defense, high technology, data systems, telecommunications, environmental equipment and services are among best prospects. U.S. goods and services enjoy a very good reputation in the market. The American Chamber of Commerce in Poland now has more than 300 members.

4.2

ECONOMIC FUNDAMENTALS AND DYNAMICS

Poland was one of the leaders of the economic transformation of Central and Eastern Europe in the 1990s, reflecting its early adoption of an aggressive program of market-oriented reforms (“shock therapy”) following the fall of communism in 1989.

4.2.1

Government Intervention Risks

Poland has made remarkable progress in transforming itself into a private-sector-led market economy. However, a frequent complaint of business executives operating in Poland, both foreign and domestic, is the sluggishness, inconsistency, and unpredictability of regulatory decision-making. Taxes in Poland have been relatively high, particularly for a country at its income level. The constitution prohibits the government from borrowing from the central bank. The constitution also mandates that public debt cannot exceed 60 percent of GDP.

4.2.2

Balance of Payments Issues

The rapid expansion of domestic demand in the latter half of the 1990s, combined with the Russian financial crisis of 1998, led to a worrisome deterioration in Poland’s external finances. Poland greatly benefits from the 1991 Paris Club and the 1994 London Club debt-rescheduling agreements, which roughly cut in half Poland’s foreign debt. In 1995, Poland paid back all IMF drawings. www.icongrouponline.com

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Macro-Accessibility

4.2.3

146

Infrastructure Development

Communications, banking, insurance, accounting, and distribution systems are still developing in Poland. Communications services are adequate. Domestic long-distance service is open to competition; in January 2003, TPSA’s monopoly on international service was ended. Internet usage is low compared to U.S. and Western European levels, but increasing rapidly. The high cost of telecommunications services, coupled with the continued dominant position of TPSA, have slowed the introduction of new services, including e-commerce. Cellular phone usage is high and service reliable. Companies establishing branch offices find office space and housing relatively expensive. Foreign companies can acquire small parcels of land without obtaining government permission, but the government has moved slowly in granting permits to acquire large parcels and some companies have complained there still are unnecessary delays in acquiring small parcels. There is a shortage of personnel with training and experience in some fields, particularly in finance, marketing, and human resources. The banking system is relatively well developed and well regulated. Foreign-owned banks control over 80 percent of the banking sector’s equity. Banks set their own lending and deposit rates. Poland’s road system is poor. The number of cars on the roads is more than double that of 1990, but highway construction has not kept pace. There is especially a lack of adequate highways between major cities capable of carrying the increased volume of trucks necessary for the growth of Poland’s distribution systems. Rural road travel is particularly difficult and very dangerous at night. Poland’s air and seaports are structurally adequate for receiving and shipping cargo. All are in need of expansion and modernization to facilitate the growth of Poland’s economy. The existing rail network in Poland is extensive.

4.2.4

Regional Economic Integration

Poland became a full member of the EU on May 1, 2004. Despite the major reorientation of the economy reflected in EU accession, Poland has maintained strong trade ties with Russia and the countries to the east.

4.2.5

Economic Relationship with the United States

Every post-1989 Polish government has been a strong supporter of a continued American military and economic presence in Europe, and has identified active participation in NATO since joining in 1999 and accession to the European Union as Poland’s principal foreign policy priorities. Poland cooperates closely with the United States on such issues as nuclear non-proliferation, human rights, regional cooperation in Central and Eastern Europe, and reform of the United Nations. Poland served successfully as the Chairman in Office of the Organization for Security and Cooperation in Europe (OSCE) in 1998 and chaired the Community of Democracies Initiative (CDI) and hosted CDI’s first conference in Warsaw in 2000. From 1989 until the closure of U.S.AID’s Polish program in 2000, Poland was the largest recipient of U.S. assistance to Central and Eastern Europe. Since 1989, the U.S. has committed more than USD 4 billion to such areas as debt reduction, privatization, financial stabilization, financial institution building, entrepreneurial training, support for a free press and other democratic institutions, and efforts to improve Poland’s environment. Until its closeout in 2001, the Peace Corps program in Poland was one of the world’s largest. Poland’s close cooperation with the United States is reflected in the large number of high-level visits exchanged between the two countries in recent years. www.icongrouponline.com

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Macro-Accessibility

4.3

147

POLITICAL RISKS

Leaders of Poland’s major political parties have repeatedly expressed strong public support for foreign and specifically U.S. investment. Substantial foreign direct investment is considered essential to Poland’s achieving its overarching goal of raising the standard of living to the levels of Western Europe. A particularly sensitive issue for many Poles, for historic reasons, is the EU-mandated liberalization of the sale of land to all EU citizens. Although all of Poland’s major political parties at one time or another have exhibited some reservations about allowing foreigners to acquire dominant positions in strategic firms As for trade issues, political parties’ support for reducing tariff and non-tariff trade barriers varies from the avowedly open-market stance of the Civic Platform (PO) to the generally protectionist position of PSL and the extremist parties of the left and right. However, overall, Poland has lowered trade barriers in accordance with its international obligations to WTO. Trade unions are also an element for foreign business to consider. The Polish trade union movement, the engine of the social movement that precipitated communism’s collapse in the 1980’s, has occasionally been problematic for foreign investors, particularly when managers of newly privatized state enterprises have instituted management changes. Resistance has also come from often-bloated middle management in such enterprises. But considering the growth and magnitude of U.S. investment, few American investors have encountered significant difficulties with Polish unions.

4.3.1

Relations between National and Provincial Leaders

Poland’s January 1, 1999 administrative reform divided the country into 16 provinces (wojewodztwo) headed by governors (wojewoda) appointed by the Prime Minister. Provinces are subdivided into counties (powiat) at the intermediate level, and into municipalities (gmina) at the local level. Every four years the Poles elect local assemblies (Sejmik) at the provincial and county level. Each Sejmik is headed by a Marshall. Local government manages public finances, health care, schools, social welfare assistance, and police. It also functions as the owner of local public assets including unutilized land. Local government is financed largely from the state budget, but also draws a small portion of its revenue from local taxes and fees, which according to the constitution it has the right to determine.

4.3.2

The Political System

Poland is a parliamentary democracy. The Constitution adopted in 1997 enhances several key elements of democracy including judicial review and the legislative process, while continuing to guarantee the wide range of civil rights, such as the right to free speech, press, and assembly that Poles have enjoyed since 1989. Poland has a bicameral Parliament, comprised of a Lower House (Sejm) and Upper House (Senate). Within the legislative branch of the government, the Sejm has preeminent power. The Senate’s authority is limited to amending or delaying legislation passed by the Sejm. Both bodies are elected simultaneously. Elections to the Sejm are proportionate from multi-member districts ranging in size from seven to nineteen deputies. Elections to the Senate are by plurality, from two- to -four-member districts. The Polish President is the commander-in-chief of the armed forces and may veto legislation passed by the Parliament. According to the new Constitution, Presidential vetoes can be overturned by a three-fifths vote in the Sejm.

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Orientation of Major Political Parties The Polish political parties are described below. They are commonly referred to by the Polish acronyms given in parentheses. •

Democratic Left Alliance (SLD). The left-of-center SLD is comprised mostly of successor parties to the communist-era Polish United Workers Party (PZPR). The party’s leadership generally supports liberal economic policies but stresses the importance of cushioning the harsher effects of economic reform.

•

Civic Platform (PO): Center-right grouping established in January 2001 by three influential politicians: Maciej Plazynski, former Marshal of the Sejm (left PO in May 2003), Donald Tusk, former Vice Marshal of the Senate, and Andrzej Olechowski, former Minister of Finance and Foreign Affairs. PO advocates flat taxes, Americanstyle parliamentary elections in single-member districts, and direct election of local government executives.

•

Law and Justice (PiS): Established in June 2001 from elements of the then ruling Solidarity Electoral Action (AWS). Rightist, first led by popular former Minister of Justice Lech Kaczynski. Stresses law and order and a “strong and just society.”

•

Polish Peasant Party (PSL): Headed by former Deputy Prime Minister Jaroslaw Kalinowski. Communist-era supporter of the Communist regime. After 1989 the PSL announced a return to its pre-1945 agrarian centrist tradition. The PSL highlights its declared mission of protecting Poland’s small family farmers, but its senior leaders include a number of agribusinessmen.

•

League of Polish Families (LPR): Far-right, strongly nationalistic Catholic party (established in June 2001). Staunchly anti-Communist radicals with affinity to the Catholic Radio Maryja and its associated newspaper, Nasz Dziennik. Strongly opposed to Polish membership in EU and sale of Polish real estate to foreigners.

•

Self-Defense (SO): Radical populist party. SO organizes street protests and media stunts to highlight a variety of social concerns.

•

Union of Labor (UP): Bills itself as an “ideologically pure” social-democratic party advocating a broad social safety net. It is the smallest of the major parties in Poland.

•

Conservative-Peasant Alliance (SKL): Originally established in January 1997.

4.4

MARKETING STRATEGIES

Opportunities for doing business in Poland are, like the population, dispersed throughout the country. Twenty-five percent of the population resides in rural areas, and urban dwellers are widely spread among a number of population centers.

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The largest Polish cities include:

4.4.1

CITY

POPULATION

Warsaw Lodz Krakow Wroclaw Poznan Gdansk Szczecin Bydgoszcz Lublin

1,632,500 812,300 740,500 639,400 580,000 461,300 419,000 386,300 356,000

Distribution Channel Options

Consumer Goods Distribution Competition in the consumer goods sector, particularly non-durable consumer goods, is intense in Poland. The previously insatiable demand for western goods has been replaced by more pragmatic attitudes about price and quality. Polish consumers and importers are selective about the products they buy. Locally made brands have improved immensely in quality. Brand name recognition is still important, but it is sometimes a challenge for U.S. firms to develop brand images and loyalty, as the market has been introduced to hundreds of new western and Polish brands. Despite the expansion of international chains of supermarkets, hypermarkets and large specialty stores, the retail market in Poland continues to be fragmented. Many small local independent retail shop owners are losing business to the large international chains and therefore protest establishment of new large stores. Smaller shops are also joining merchants associations to petition authorities to preserve small, independent Polish retailing. In 2000, 11 Polish retail networks founded the Union of Polish Retail Networks (UPDS), an organization with nationwide coverage. Despite the fact that the organization unites retail business owners, it intends to cooperate with Polish wholesalers. Small companies continue to dominate the Polish retail market. Ninety-eight percent of retail companies own no more than two outlets. The wholesale market is also fragmented. Ten foreign wholesale companies produce 70% of total wholesale sales. The number of hypermarkets is expanding rapidly in Poland. The top ten retailers in Poland are foreign, and include such chains as Macro, Geant Casino, Auchan, Jeronimo Martins, IKEA, Carrefour, HIT, Castorama, OBI, Leclerc, and Tesco. Twenty four percent of Poles do their shopping in hypermarkets, 45% in small stores, 20% in miscellaneous, and 9% in discount stores. According to survey data 52% of customers shopping in the large-scale retail outlets cite the wide range of products as an attraction, 44% believe prices are lower, 25% are attracted by promotions and discounts, 23%note convenience, and 19% seek the “hands-on” experience. More than ten western hypermarket and supermarket chains operate in the food retail market. All large supermarket chains doing business in Poland report aggressive plans for expansion over the next two years. Foreign retail chains invest not only in hypermarkets but also in smaller, discount store types of retail chains situated near customers’ homes or work places. There is a considerable amount of development in specialty and do-it-yourself (DIY) retail chains. The fastest growing chains are OBI, IKEA, Euro-net, Media Markt, Stinnes, Castorama, Praktiker, Nomi, Leroy Merlin and Bricomarche. The major local DIY chain is Komfort (with about 100 outlets).

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Macro-Accessibility

150

Currently there is growing activity in constructing large shopping centers (“shopping malls”). Companies including Globe Trade Center, ING Real Estate, ECC, TK Development, Apsys, Cefic and Metro are the most active in Poland. Globe Trade Center was the investor in Warsaw’s Galeria Mokotow, the first integrated shopping and entertainment center in Poland (it has 60,000 sq meter of retail space and 240 stores). Large shopping centers are also located in other locations in Poland. The most important feature of a successful shopping center is a proper and functional selection of stores, in terms of goods range and prices. There are over 50 foreign retail clothing chains in Poland. The rapid growth of these chains is a result of the expansion of shopping malls. Very popular are Part Two, Carly Gray (Cottonfield, Jackpot, Inwear), Olsen, Cubus, KappAhl, Claire, Max Mara, Deni Cler, Morgan, and Benneton. Well-known foreign apparel brands have been introduced into Poland by two companies, Ultimate Fashion (Esprit, River Island, Wallis, Celio) and Young Fashion (Zara). Most large retail chains offer customers credit cards. Usually the cards involve participation in loyalty programs. Although credit cards are becoming a major means of payment and most shops now accept them for payment, Poland is still largely a cash economy. Checks are almost unheard of, but cash machine networks have sprung up throughout the country. Smaller U.S. companies usually enter the Polish market by partnering with a small, regionally located distributor and then developing a network from there. Larger firms may initially establish a regional warehouse system with a series of trucks and distributors in order to branch out to assorted markets across Poland. This requires a significant upfront investment.

Industrial Goods Distribution Imports of equipment and technology have remained steady as Polish industry modernizes and restructures to compete with the West. However, some industries in Poland rely mostly on imports. Poles are familiar with the technical parameters of U.S. products, even prior to the actual introduction of those products in the marketplace. This reflects the fact that serious Polish importers do their homework. Industrial distributors may therefore be part of a network that developed from former foreign trade organizations (that handled imports during the Communist period), or may be individuals with significant connections to their industry (frequently former employees of the large foreign trade firms). As industries and companies continue to privatize in Poland, distribution networks are expanding in scope and complexity. Many distributors of industrial equipment are very specialized and have very specific technical expertise. Because of this, some are better able to represent foreign manufacturers on a national level than most consumer goods distributors. However, exporters should be aware that large industrial enterprises when looking for heavy machinery would rather have direct contact with manufacturers. As with consumer goods, importers and other companies that represent foreign companies are becoming more sophisticated and selective. The number and variety of imported goods available on the Polish market play an important role here as well. Polish agents or distributors increasingly look to foreign partners to provide marketing and promotional support, training and financing. Polish trade fairs, which have become more and more specific in scope, are a good place to look for possible distributors. Also, it is advisable to consider having one exclusive distributor. Potential channel partners in this sector tend to prefer exclusive arrangements because often they bear the marketing costs of new products and do not want potential competitors to reap the benefits of their promotional activities.

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Macro-Accessibility

4.4.2

151

Agents and Distributors

Polish companies tend to act more as distributors (importing, taking possession of, and reselling a good) than as agents. Expensive equipment is an exception to this, since many Polish companies do not have the financial capability to make such purchases. Also, heavy industrial equipment tends to be sold directly to end-uses due to the inability of most distributors to purchase the equipment prior to re-selling it to end-users. There are no laws imposing roles for Polish importers. Distributor and agent agreements may take any form beneficial to the parties involved. It is best to find a distributor who is experienced, knowledgeable, and well-connected to existing distribution channels for the product. Polish companies tend to be younger and less experienced than their western counterparts. In most cases, product and marketing training must be provided to new distributors.

4.4.3

Franchising Activities

Poland remains ripe for the continued growth of franchising. Poland has worked to develop a strong commercial infrastructure by focusing on telecommunication, banking services, media and advertising. The most popular and largest U.S. franchises arrived in the early 1990’s and helped to introduce the concept in Poland. Their success over the last decade has proven to be the best advertisement for the promotion of franchising in Poland. McDonald’s, the first franchiser to Poland, established its first operation here in 1992. Currently there are over 180 McDonald’s restaurants, including 45 operating in their franchising system. McDonald’s franchise network is developing very fast and is the most popular fast-food chain. Other U.S. fast growing franchise networks include: •

The Athlete’s Foot (TAF)

•

Kodak Express

•

Pizza Hut

•

KFC

•

Coca Cola Services

•

T.G.I. Friday

•

Blimpie

•

Sbarro

•

Midas

•

New York City Pizza (located at Statoil stations)

•

Collagena

•

Subway

•

Levi’s Strauss

•

Budget Rent-a-Car

•

Futurekids

•

Lee Cooper

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The latest U.S. franchise system that entered the Polish market is MBE Mail Boxes ETC. The largest foreign franchisers active in Poland (excluding the U.S. franchise systems) are: •

TelePizza (fast-food)

•

Adidas-Salomon and Adidas Poland (sportswear and equipment)

•

Intersport (sportswear and equipment)

•

Aral (oil stations)

•

Afga (photo laboratories)

•

Whittard (tea-shops)

•

Spar and Rema (food supermarkets)

•

Body Basics (body care cosmetics retail chains)

•

Yves Rocher (perfumeries and beauty salons)

•

Petit Beteau (children clothes retail network)

•

Marks & Spencer (apparel)

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Jean Louis David (hairstyling salons)

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Jean-Claude Biguine (hair and beauty salons)

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Jean Algue Paris and Camille Albane (hairstyling salons)

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Costcutter (food shops)

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EE English First (language schools)

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HDS (stationery)

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Cyberland (Internet clubs)

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Mamuska-The Cheescake Shop, Denmer’s Teahouse, Grupa Muszkieterow (Intermarche and Bricomarche )

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Ann Rent a Car Poland and Yamaha Szkola Muzyczna (music schools; master franchise purchased by Promusica from Yamaha Europa GmbG)

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Ritz Collection (jewelry retail chain)

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Tivoli, Pizza Express, and Pizza Pai (fast food)

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Mobil’ Affiche Polska (moving advertising)

Polish franchise firms began to operate in 1991-1992, that is, simultaneously with large western franchisers entering the Polish market. The pioneers of Polish franchising are: •

A. Blikle (luxury cake-shops-since 1991)

•

Pozegnanie z Afryka (“Out of Africa” gourmet coffee shops-since 1992)

They were followed by: •

American-style Chicken, Mr. Hamburger, Lesne Runo (fast-food)

•

A.D. Dragowski (real estate offices)

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Gabriel Hair and Beauty Salons, Chata Polska, Groszek, Piotr i Pawel (food retail)

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Drogerie Natura (drugstores)

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Saloniki Prasowe (owned by Kolporter - press distribution)

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U Szewczyka (footwear retail chain)

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Debica Dekart (tire sales and replacement)

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Laboratorium Kosmetyczne DR Irena Eris (beauty salons & retail)

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Orbis Travel, (tourist services)

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YES Bizuteria (jewelry)

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Zielona Budka (ice-cream shops)

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Sklepy Familijne (food stores)

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CCC (footwear retail chain)

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Rafineria Gdanska, PKN Orlen (gas & oil stations)

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There are over 120 franchise systems operating in Poland including local and foreign franchising systems. About 58% foreign franchising systems operating in Poland are franchises from the EU countries. The franchising sector employs over a half million people. The major franchising employers are: •

Retail distributors (48%)

•

Gas stations (13%)

•

Catering & hotel services (10%)

The largest number of franchises are American, French, and German. The major sector shares in the franchise market are retail trade, services, and catering. Financing is the most critical element for successful entry and penetration by U.S. franchisors. Although it has generally been difficult for foreign companies to locate Polish investors capable of becoming master franchisees, the number of local candidates interested in becoming master franchisees is on the rise. There are no Polish laws or regulations that specifically address franchising. A franchise is subject to general commercial law. The contract between two parties is therefore the sole legal platform for the franchise agreement. It usually contains not only elements of civil law, but also elements of intellectual property and trademark protection. The best franchise concept prospects are in retail trade, services (automotive, maid and personal services, commercial cleaning, laundry and dry-cleaning), mid-range and low-end hotels/motels, and fast-food chains. Business services, currently not represented within the franchising sector in Poland, holds great potential.

4.4.4

Direct Marketing Options

The direct marketing concept is still relatively small in Poland and is mostly practiced by joint ventures or foreign companies selling consumer products and services. Several years ago the first foreign companies began to sell a very limited assortment of products through catalogs. This form of marketing is growing rapidly, but one factor limiting the spread of direct marketing is the fact that cash is still used for most sales transactions. Nevertheless, the Polish market offers enormous potential, especially for the expansion of mail-order companies. Mail order customers are predominantly women. Mail-order companies selling books, CDs and cassettes have become popular in Poland. www.icongrouponline.com

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Presently, the most popular method of direct marketing is direct mail, advertisements in printed media, and telemarketing. Electronic media is opening new opportunities. Cable television companies have introduced new shopping channels. The number of Internet users is growing very quickly, resulting in expanded Internet on-line “shopping malls.” The Direct Marketing Association, Stowarzyszenie Marketingu Bezposredniego (SMB), was established in Poland in 1995. Currently SMB has 87 members including catalog and mail order, fulfillment, telemarketing, advertising, direct marketing, production services, Internet, electronic media, financial, database, broker, administration, insurance, and distribution companies. The members of SMB have established a code of ethics and guidelines in order to establish effective methods of operations in direct marketing, protecting consumer’s rights and preventing illegal business practices. The organization participated in the drafting of legislation for the protection of privacy, which was adopted in 1998. SBM provides training and educational activities on a regular basis. SMB is a member of FEDMA (European Federation of Direct Marketing) and IFDMA (International federation of Direct Marketing).

4.4.5

Joint Ventures and Licensing Options

Joint ventures as a form of business are abundant in Poland. Many U.S. businesses in Poland take the form of joint ventures, with Polish companies set up to handle sales in the market. Joint ventures are an excellent way to facilitate export sales to the Polish market. Most joint ventures are set up so the American partner contributes capital and technology. The Polish partner typically contributes land, distribution channels, trained workers, access to the Polish market and introductions within the local government and business community that could take years to develop for an American company on their own. More and more, American firms participating in joint ventures are asked to provide marketing, training, and promotional support to their Polish partners. Licensing of products, technology, technical data, and services is practiced less in Poland, due to concerns about intellectual property protection. Licensing is particularly prevalent in the industrial manufacturing, consumer goods, and textile sectors.

4.4.6

Creating a Sales Office

The choice of business entity that U.S. companies choose to establish is often determined by the scope of activities that the company plans to undertake in Poland. If a U.S. company only plans to sell its products and services in Poland through its own office, it usually establishes a representative office. If a U.S. company plans to invest in Poland, there are generally only two legal forms available, a limited liability company or a joint stock company. The entity most commonly employed by foreign investors is that of a limited liability company. The following are the two forms of entities used by investors and information on establishing a representative office:

Limited Liability Companies Limited liability companies (Sp. z o.o.) require at least one founder and a minimum initial capital of 4,000 PLN. This capital must be paid in full before the company can be registered. A limited liability company may be 100 percent foreign-owned. Reserves are not required to be taken out of after tax earnings, audits are only obligatory in certain situations, and assets can only be distributed six months after liquidation is announced.

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Joint Stock Companies Joint stock companies (S.A.) require a minimum of 100,000 PLN minimum initial capital, of which 25% must be paid prior to registration. There are no maximum limits and in-kind contributions are exempt from customs duty. After-tax profits from the venture may be exchanged and repatriated without permission at the end of each fiscal year of the venture. Proceeds from the sale of shares in the venture, or liquidation of the venture may also be repatriated. Twelve months must pass after the liquidation announcement before assets may be distributed. Polish law does not allow interim dividends. The minimum number of founders is three entities.

Representative Offices Representative offices are permitted by law to engage in business activity under three variations: supervisory offices, technical offices and commercial branch offices. Permits for establishing an office are granted by the relevant Ministry upon application by the foreign firm. Permits are valid for the length of time granted by the Ministry, which is usually a maximum of two years. The foreign firm must reapply for renewal of its permit. Offices are by law treated as parts of the U.S. company, and are considered an importer of products from abroad. Therefore, offices may not engage in retailing or manufacturing activities and may hold inventory only for marketing and service purposes. Modern telephones, copy machines, faxes, computers and office amenities are easily available and can be leased from a number of reputable Polish and western firms. The secretarial labor pool is reasonably abundant, although English speaking secretaries with modest secretarial skills are not easily found. Employees with western management and accounting experience are becoming easier to find. There are many executive search firms that offer assistance in finding appropriate staff.

4.4.7

Selling Strategies

As discussed earlier, the Polish market is in most cases regional, and this description applies to selling as well. Because unemployment is significantly lower in the cities, urban dwellers generally have more purchasing power than inhabitants of rural areas. The countryside is dotted with single-factory (or formerly single-factory) towns, many of which suffer from high unemployment. Letters, faxes, Internet Web sites and packages of product literature will serve to introduce a product or service to a Polish company. Communication in the Polish language is recommended if the seller would like to receive a speedy reply. U.S. companies should ensure that translations from English into Polish are performed only by professional translators who are fluent in modern business Polish and grammar. A Polish customer generally will not consider making a final purchase until he or she has met with someone face to face to discuss the product. However, the Internet is valuable selling tool and many Polish companies have begun to conduct business on the Internet. As noted above, American companies that are little known outside of the U.S. may need to make a significant effort (often marketing, training, or other promotional activities) to convince their prospective Polish customer of their credibility. Product demonstrations are effective, as Poles tend to be skeptical about claims until they are proven. Sponsored visits to the U.S. company’s headquarters or manufacturing plant frequently helps to convince Polish buyers to purchase a U.S. product. The decision making process, especially in large companies or government agencies, can be painfully slow, as every person or section involved in a decision usually must sign off before a decision is made. It usually takes several meetings, and many rounds of negotiations before a deal is closed. This means that success in Poland is difficult without an in-country presence, whether an agent, distributor, or representative office.

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Polish customers will want to discuss the technical parameters of the product, explain their needs, and negotiate the price. In addition, the product may not be sold at the first meeting, as the customer will want some time to consider the points discussed and to arrange financing. Initial orders are frequently small due to limited amounts of working capital and high rates of interest on credit. Follow-on sales often grow rapidly once effectiveness and profitability are established. American exporters should be aware of the Polish customer’s main problem: access to capital. Most Polish firms are still too small to consider going public or to issue commercial paper. Therefore, most business activities, including payment for imports, are still self-financed. American companies that can arrange for affordable financing for their Polish customers will have an edge over their competitors. The U.S. Export-Import Bank (Ex-Im Bank) offers a credit insurance program that can help small and medium size U.S. firms in this regard. Polish customers are generally enthusiastic about U.S. products and, if seriously interested, will travel great distances across Poland in order to meet with a U.S. representative who may be visiting Warsaw. If a prospective customer shows continued effort and interest in dialogue, the potential for a sale is good, even if the time leading up to conclusion of a contract seems long by U.S. norms. If the proposal is well thought out, the pricing is flexible (or assistance with financing is offered) and promotion, servicing and customer support are part of the package, chances are good that a sale will ultimately be completed. Doing business in Poland is built upon personal relationships and trust. U.S. companies have an advantage in Poland, as the U.S., its people, and its products are held in high regard.

4.4.8

Advertising and Trade Promotion

The trade fair business in Poland boomed at the beginning of past decade, from a single major event (the annual June Poznan International Fair) to a full year’s schedule of industry and product specific events in major cities around the country. Some fairs are still proving their worth while others have lost popularity in recent years and are no longer attracting key Polish and international business. Direct U.S. company presence at trade fairs in Poland is minimal, but some U.S. firms exhibit through their European or Polish distributors. U.S. firms exhibiting in larger western European trade fairs particularly those in the Commercial Service’s Showcase Europe program will encounter Polish buyers at those events. The U.S. Commercial Service in Warsaw can help find distributors interested in representing U.S. products at Polish fairs. Advertising in Poland is considered important, not only in the consumer product field but also in developing a company image for all kinds of goods. Television, which reaches virtually every home in Poland via local channels or satellite, is believed to be the most effective advertising medium in Poland. Products advertised through television commercials show the greatest sales growth among all advertised products. The bulk of advertising revenues go to television. The price of television spots on top rated shows has grown dramatically in the last few years as demand has soared. Radio is another means of advertising with more than 200 local radio stations as well as two national networks in operation. There is a ban on cigarette and alcohol (including beer and wine) advertising for broadcasters and on alcohol ads for display and print media. There is also a ban on pharmaceutical advertising, except for over-the-counter drugs and in professional publications. Print media advertising is sophisticated, and the print media market itself has grown to include a full range of publications. Major newspapers circulate throughout Poland and reach every corner of the country. In addition, special interest magazines, business journals, niche publications, and specialized newspapers have proliferated. Newsweek Polska, a division of Newsweek, celebrated its second anniversary this year (2003). Classified advertising is very well developed and effective. Most U.S. companies find print media to be a highly effective means of reaching customers and candidates for jobs.

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Newspapers Major daily newspapers include: •

Rzeczpospolita

•

Gazeta Wyborcza

•

Zycie

•

Trybuna

Business Journals Major daily business journals include: •

Prawo i Gospodarka

•

Puls Biznesu

Business News Poland is a business journal printed by Boss Economic Information on a weekly basis. Business Week Polski is published on a monthly basis. There are also two English-language weeklies that cater mainly to foreigners in Poland: •

Warsaw Business Journal

•

Warsaw Voice

Agencies Major international, as well as local, advertising and public relations agencies abound in Poland. Advertising and promotional service agencies include: •

McCann-Erickson

•

Leo Burnett

•

Ogilvy & Mather

•

Saatchi & Saatchi

•

Publicis

•

Lowe Lintas GGK

•

Upstairs Y&R

•

JWT/Parintex

•

D’Arcy

•

NoS/BBDO

•

Scholz & Friends

•

TBWA

•

RMG Marcom

•

Ad Fabrika/FCB

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For further contact information on these journals and firms please contact the U.S. Commercial Service in Warsaw at [email protected] at telephone number (48) 22 625-4374 or fax number (48) 22 621-6327.

4.4.9

Pricing Issues

Pricing is key to the sale of U.S. products in Poland. As mentioned above, working capital is limited in Poland, even among the larger, more successful Polish companies. Polish businesses generally spend money wisely, after thoughtful and sometimes lengthy consideration. The most commonly expressed reason for failed sales efforts according to potential Polish clients continues to be that “the price is too high.” Pricing of U.S. made products is complicated by the addition of customs duties, Value Added Tax (VAT), and, in some cases, excise tax, all of which may elevate the final retail price of a product dramatically. Flexibility in pricing is the key, and initial market penetration to gain product knowledge among Polish consumers is the goal. Successful U.S. exporters work together with their Polish representatives to keep costs, particularly import costs, as low as possible. For example, some companies ship products unassembled to help reduce import duties. The Polish market for all kinds of products is large and expanding, but increasingly competitive. U.S. companies that approach the market with a long-term view of creating market share for their products will reap rewards. Supplying After price, service is second on the list of the Polish customer’s concerns. A manufacturer in the United States is seen by the Polish distributor and customer alike as being very far away from a product exported to Poland. A potential customer may shy away from U.S. products because he/she fears ineffective servicing, simply due to distance, if the product requires repair or servicing. Shipping a product back to the United States for repair or service, even if paid for by the U. S. company, is not generally a preferred option for Polish customers. Sending spare parts to Poland is easy to do. Some firms provide service for their exports to Poland through European representatives or firms licensed to repair their products. Even then, some distributors worry that they may not get adequate support. The ideal method is to provide service and customer support through a trained Polish representative or U.S. affiliate company. The local technical support teams are a part of the U.S. company’s image on the Polish market. Their effective, fast and reliable service reflects on the U.S. manufacturers’ success in Poland. Therefore U.S. manufacturers should be ready to provide full assistance to their service personnel in Poland. U.S. manufacturers with major export accounts in Poland may wish to periodically send a service representative to Poland to work with the local representative and visit customers.

4.4.10

Public Sector Marketing

Poland’s public procurement law, in effect since January 1995 (January 1996 for local government entities), applies to most acquisitions of goods, services, or construction by nearly all government agencies, including local governments, foundations, associations, and cooperatives. Procurements by the Ministry of Defense are also included, but are subject to special rules. Procurements by state-owned enterprises are excluded from the law. All tenders for products or services in amounts above 30,000 EUR must be officially announced to the public. Tenders for lower amounts can be announced locally in the local press or through local media. The Polish procurement law provides for domestic preferences. Bids submitted by Polish firms are lowered (only for the purpose of the evaluation of the tender) by 20%. Tenders are evaluated by assigning an appropriate number of points to various parts of the offer by each bidder. When a project is actually executed by a Polish company, the

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price paid by the public entity is what the Polish bidder quoted. This 20% “rule” applies only to bids in which a minimum of 50% of the content of the project originates in Poland. Unlimited tendering is the preferred method, and other procedures are restricted. Tender documents must contain specifications, selection criteria and terms and conditions for the contract. The deadline for the submission of bids must be at least six weeks from the announcement of a tender. Bids are opened publicly. Participation in tenders is open to all those who are legally, technically, and financially able to perform the contract (including foreign companies). Information on the Office of Public Procurement, public procurement regulations and public tenders (also in English) is available through Internet: http://www.uzp.gov.pl. The U.S. Commercial Service strongly urges U.S. firms bidding on Polish government tenders to utilize the Department of Commerce’s advocacy and counseling services to avoid common pitfalls in this complex process.

4.4.11

Hiring Local Counsel

The legal environment in Poland continues to evolve at a rapid pace. In general, Polish law firms follow changes closely. Thus, American companies doing business in Poland are strongly urged to maintain legal representation. This is particularly essential when bidding on a major project, forming a joint venture, or untangling a trade dispute. Most major law firms in Poland provide business counseling in addition to legal advice. Some are experienced in helping their contacts find Polish business partners, investments or projects to pursue. U.S. accounting and consulting firms in Poland can also offer legal advice and business counseling. Most of the major international accounting firms have operations in Poland that focus on business formation, tax matters, and employee benefits. Many are also involved in the privatization process in Poland, including advising the Polish government. All can offer practical business counseling and assistance in establishing a representative office or incorporating a business in Poland. A U.S. exporter new to the Polish market may not initially need specialized legal, accounting, or consulting advice as it pursues potential partners. It can, however, take comfort in knowing that expert advice is abundant and available in Poland through the offices of major U.S. and Polish law and consulting firms when problems arise. For a list of law firms in Poland, please contact the U.S. Commercial Service in Warsaw at [email protected], at telephone number (48) 22 625-4374, or fax number (48) 22 621-6327.

4.5 4.5.1

IMPORT AND EXPORT REGULATION RISKS Trade Barriers

Poland complies with the Harmonized Tariff System. Tariff rates are generally revised at the beginning of each year, although tariff suspensions can be introduced or lifted at any time. Depending on the country of origin, products are divided into three categories: •

Developing nations

•

Members of the World Trade Organization

•

Countries with which Poland has a bilateral or multilateral preferential trade agreement

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In 1992, Poland signed an Association Agreement with the EU that lowered or eliminated tariffs on many EU produced goods imported into Poland, while tariffs on U.S. products did not change. At that time, the U.S. managed to negotiate more favorable rates for some product categories, but many U.S. products are still at a disadvantage compared to EU competitors. As a result of a June 2001 agreement, which went in effect on September 6, 2002, between Poland and the United States, the import duty assessed on U.S. grapefruit, some wines as well as almonds was reduced. Duty on grapefruits originating from the U.S. dropped from 15% to 5%. Wines originating from the U.S. wines with alcohol content of less than 13% also benefited from the 30% down to 20% tariff reduction (minimum 25 EUR/hl). In shell almonds duties were reduced from 16% to 5.6% and shelled almonds from 16% to 3.5%. For some luxury and strategic products (e.g. alcohol, cosmetics, cigarettes, sugar confectionery, video cameras, satellite antennas, passenger cars, gasoline, and oil) an excise tax is also applied. The excise tax is levied on top of the customs tariff. Duty free quotas have been applied within certain industries, including the automotive, computer, and pharmaceutical sectors. U.S. and foreign firms have benefited from these quotas. In some instances the quotas are targeted on products originating from specific export regions (e.g. cars from the EU as a result of the Association Agreement), and in others they have been assessed to help protect local industry (e.g. pharmaceutical), to help develop industries (e.g. computer parts and components), or to protect the environment. Refunds are possible for customs duty paid on raw materials, semi-finished goods, and products used in the manufacture of goods for export within thirty days, contingent on documentation certifying customs duty was paid on the goods when they were imported. However, some U.S. firms have encountered significant delays in receiving refunds of customs duties and others have suggested replacing the “up front payment/refund after re-export” system with a bond system.

Agricultural Tariffs As a result of Uruguay Round commitments Poland maintains tariff rate quotas (TRQs) for import-sensitive agricultural products such as beef, pork, poultry meat, wheat and rye flours, rapeseed oil, some processed products, yeast, sauces, alcohol, tobacco, and tobacco products. The within-quota tariff is 30 percent and applies to all countries including the EU. The over-quota tariff is 76 percent plus a maximum 0.9 EUR/kg. As a part of Poland’s - EU pre-accession agreement, Poland established a 21,000 ton duty free import quota for poultry meat from the EU. This elimination of tariffs for the EU resulted in a significant increase in imports of poultry meat from the EU at the expense of imports from the United States. Poland maintains a duty free import quota for 34,500 tons of pork imported from the EU. A duty free quota for 23,000 tons of poultry meat imported from the EU. Poland is a major transshipment point for U.S. poultry meat shipments to Belarus, Ukraine and Moldova.

Customs Regulations and Contact Information Customs duties are based on the CIF value of the product. Customs officials are extremely strict with regards to proper documentation. It is essential that exporters take care to fill out documents properly to avoid costly delays in customs clearance. For further information on Polish customs regulations, please contact: Customs Information ul. Swietokrzyska 12 00-916 Warsaw Telephone: (48) 22 694-4479 or 694-3194

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Tariff Rates

Customs duties apply to all products imported into Poland. Tariffs range from 0 (zero) to nearly 400% (strong specialty sprits). The Polish tariff schedule has different rates for the same commodities depending on their country of origin. Introduction of changes to the custom tariff (e.g. suspensions of tariffs) after it has been published is a common practice in Poland.

Import Tariffs Poland rescinded its import tax in 1997. As in much of Europe, a Value Added Tax (VAT) is assessed. There are four VAT rates: 0%, 3%, 7%, and 22%, depending on the product. VAT is levied on the CIF value of the product plus duty plus excise tax (if applicable). An excise tax is also levied on certain goods, including alcohol, cigarettes, and cars, which is collected at the border on the basis of the CIF value.

4.5.3

Licenses Required for Imports

In general, the trade of goods and services is not restricted in Poland. In some areas, including imports of strategic goods (e.g. police and military products, radioactive elements, weapons, transportation equipment, chemicals) a license or concession is required. Imports of beer, wine and strong alcoholic beverages, gas, and certain agricultural and food products (including dairy, poultry, and tobacco products) are also licensed. A permit is necessary to sell imported alcoholic products. A phytosanitary import permit issued by Plant Quarantine Inspection Service is required for the import of all live plants, fresh fruits, and vegetables into Poland. Several common weed seeds have quarantine status which hampers U.S. grain and oilseed exports to Poland. Certain goods are subject to import quotas in Poland. These include gasoline, diesel fuel and heating oils; wine and other alcohol; and cigars and cigarettes. The Ministry of Economy issues import permits and concessions and regulates quotas. However, other Polish ministries have special jurisdiction over products such as tobacco (Ministry of Agriculture); permits related to air, sea, or road transport (Ministry of Transportation); or natural resources (Ministry of Environmental Protection). U.S. exporters should ascertain whether their product requires import certification before shipping. In most cases, before an issuing ministry grants import permission on a product, the product must be reviewed and recommended for import into Poland by one or more inspectorates or technical associations, depending on the nature of the product. This can be a costly, lengthy, and confusing process for the U.S. exporter and the Polish importer alike. It is often necessary to submit samples of products or equipment for testing, regardless of the issuance of previous U.S. or international certificates. The presentation of detailed documentation on a product is a must, and all requests by relevant inspection agencies should be strictly adhered to in order to speed up certification procedures. Once an application and supporting materials have been submitted, the inspecting agency will make a positive or negative recommendation for import to the appropriate Polish ministry. When the import of a specific product is approved, further imports of that product are free from additional regulation. U.S. companies with several lines of like products (e.g. pharmaceutical, food preparation, or chemical products) should begin the approval procedure on all products as early as possible. Some products, once imported, also require registration. This is particularly true of products that come into contact with or can affect the health of the consumer. In the case of hazardous materials the importer must receive permission to use the product before applying for a concession to import the product into Poland. Importers of meat, meat products, and offal must obtain a veterinary permit and each consignment must be accompanied by the health certificate issued by USDA’s veterinary authorities. Veterinary permits are also required

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for the import of live animals. Veterinary permits for breeding livestock, semen, and embryos are not issued unless a positive opinion for the importation is received from the Central Animal Breeding Office. Polish regulations require imported products, including food and agriculture products, to be inspected for compliance with Polish standards. The inspection agency, Centralny Inspektorat Standardyzacji (CIS) is charged with ensuring the “quality” of products offered on the Polish market.

4.5.4

Entering Temporary Imports

A license is also required for temporary import of goods, which takes place under the supervision of Polish customs officials. Written confirmation is required, stating that the goods will be sent out of Poland on specific dates. A deposit is required for the import of the goods subject to clearance, which must be equal the value of the goods to be exported or the total import customs duty and taxes. Commercial samples of zero or low value can usually be imported free of customs duty by means of a written statement to Polish customs confirming the value of the sample and that it will stay in the possession of the importing entity. Temporary imports may also enter Poland under an ATA Carnet. Promotional materials must be clearly marked “no commercial value” in order to clear customs.

4.5.5

Special Import/Export Requirements and Certifications

The only approved form for customs clearance is the Single Administrative Document (SAD), which is also used by the European Union. This form requires the completion of 56 items, including details about parties to the sale contract, terms of delivery and payment, customs procedures and the country of origin of the imported goods. The importer must also complete a declaration of customs value, and the information contained in it must correspond to that in the SAD document. An original invoice, or in some cases, a pro forma invoice indicating the value of the goods is also required. Some types of goods are defined as sensitive for the Polish market. Therefore, their import is controlled by specific government agencies that are authorized to grant licenses or permits for some goods, i.e., sanitary licenses for agricultural goods, permits for medical goods and licenses for weapons and explosive materials.

Labeling Issues As noted above, certificate of origin documents are required for importation. Labeling and packaging requirements also vary depending on the product. Consumer goods require a product description in Polish somewhere on or inside the package. Packaging should clearly indicate the country of manufacture. Packaged or canned food products require Polish language labels containing the product composition, nutritional value, an outdate, the name and address of the producer, and the product weight. The Polish government is considering requiring food products using Genetically Modified Organisms (GMOs) to be so labeled. Some U.S. companies have found that using the English language somewhere on the packaging (e.g. product name, promotional slogan) helps give the product additional prestige or value in the eyes of the Polish consumer.

Restrictions on Imports The import of some products is prohibited. These include two-stroke engine cars; automobiles, racing cars, and vans older than ten years; trucks older than six years; automobiles with no proof of the year in which they were manufactured and badly damaged automobiles.

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Controls on Exports A validated U.S. export license is required prior to shipping certain controlled commodities to Poland, as provided under the U.S. Department of Commerce’s Bureau of Export Administration’s (BXA) Commodity Control List. For more information and assistance, please contact BXA’s Exporter Counseling Division at (202) 482-4811 or refer to BXA’s Web site at http://www.bxa.doc.gov. Poland is a member of the Wassenaar Arrangement and has established its own export control regime for munitions and dual use commodities.

Warranty and Non-Warranty Repairs Items sent for repairs under warranty do not have duties placed on them when they are returned to Poland. The same applies to parts imported under warranty for repairs in Poland.

4.5.6

Local Standards

“B” Safety Certificates Harmonization of standards, certification, and testing procedures with the EU, including greater reliance on voluntary standards, is now the main objective of Polish standardization policy. Under the European Conformity Assessment Agreement of 1997, Poland agreed to introduce an EU-compatible certification system. Since 1994 Poland has developed and applied its own extensive system of standards and certification to protect consumer interests. Originally not harmonized with international product standards, it is been gradually adjusted to the European Union system of certification, which will be valid when Poland becomes the EU member. The European “CE” mark and the manufacturer’s statement are currently recognized for a number of products. However, the law is not clear on these issues and guidance from the PCBC and other testing centers are vague. If a U.S. company is in possession of a European “CE” mark for its products or an ISO 9000 certificate for its company, these documents can help to accelerate the current certification process. Information regarding the cost for testing products is also inconsistent. In most cases testing procedures can be lengthy. The U.S. Commercial Service advises U.S. exporters to contact its Warsaw at [email protected] or at the telephone or fax numbers listed in Chapter 11 to determine whether or not their products are subject to certification requirements and updates on current certification procedures.

Other Polish Standards Polish standards that cover a wide range of products have been developed over the years by a central institution, the Polish Standards Committee (PKN). Poland’s Standardization Law provides the foundation for moving toward a system based on self-certification and for greater harmonization with EU and international standards. Much of the PKN’s recent work has focused on reviewing Polish standards. The plan is for Poland to invoke EU standards in cases where EU and other international standards differ.

Building Products: Special, Separate Technical Approval Required No standards exist for many building products that are new to Poland. However, prior to being introduced on the Polish market these products must be certified that they conform to existing Polish building product standards. Products must receive technical approval, a document issued by designated research and development institutes.

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The central institution performing tests for the vast majority of building products and materials is the Institute for Building Technology (ITB) in Warsaw. The ITB deals with products such as siding, roof shingles, windows and bricks. Some building products, after receiving technical approval, may also require a “B” Certificate, as described above. After Poland joins the EU, it is expected that the requirement for “B” certificate will not longer be valid. Number of companies in Poland, possessing ISO series 9000 certificates is growing.

4.5.7

Free Trade Zone Options

Duty free zones can be established by the Minister of Finance in cooperation with the Minister of Economy and are managed by authorities designated by the Ministers, which is usually the provincial governor who issues the operating permit for a given zone. Bonded warehouses and customs and storage facilities are available. They are operated under permission issued by the customs authorities and can be operated by commercial code companies. Customs duties are repaid to the importer for re-exports of products within 12 months of the date of customs clearance in full or partially, depending upon their length of time in country.

4.5.8

Adherence to Free Trade Agreements

EU Association Agreement As mentioned above, Poland began implementing the trade provisions of the Association Agreement with the European Union in 1992. This has lowered or eliminated duties on most EU exports to Poland.

FTAs Poland has free trade agreements (FTAs) with the European Free Trade Association (EFTA) countries (Iceland, Norway, Switzerland, and Liechtenstein) as well as with Israel, Lithuania, Latvia, Estonia, Turkey, and Croatia. These agreements grant firms from these countries certain tariff preferences over U.S. competitors and give lower tariffs to Polish companies exporting to these countries.

4.6 4.6.1

INVESTMENT CLIMATE Openness to Foreign Investment

Foreign capital has played an important role in the transformation and development of the modern Polish market economy. Since 1990, Poland has been the recipient of over $65 billion in foreign direct investment (FDI), principally from Western Europe and the United States. Successive Polish governments have sought to attract and retain foreign-based companies, which have brought modern production, marketing, and management techniques to Poland, created new jobs, and increased Poland’s linkages to the world economy. Foreign companies enjoy unrestricted access to the Polish market, apart from legal limitations on foreign ownership of companies in selected strategic sectors. One exception is real estate, particularly involving agricultural land,

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which remains politically sensitive for historic reasons. Public attitudes towards foreign investment are generally good, although specific cases of foreign investment have become controversial. For example, the large retail discount chains, primarily British, French and German, that have taken an increasing share of the Polish retail market are criticized for driving smaller Polish-owned shops out of business. Foreign and domestic companies complain that the Polish Government economic decision making is slow, inconsistent, and unpredictable. Responding to these concerns, the Polish Parliament adopted in March 2002 a program called “Entrepreneurship First” (a part of an economic development strategy “EntrepreneurshipDevelopment-Work”) with the aim of improving the conditions for establishing and running businesses in Poland for both foreign and domestic investors. The package includes proposals simplifying taxes, making it easier to hire workers, reducing labor costs, and simplifying procedural regulations.

Major Laws and Regulations Poland has a legal regime that protects property rights and investment, allows private business activity in almost every sector of the economy, provides generally equal treatment for domestic and foreign companies, and permits the repatriation abroad of profits and capital. Poland’s 1997 Constitution protects the rights of private ownership and succession and states that expropriation is allowed solely for public purposes and only with just compensation. In January 2001 the legal framework for the establishment and operation of companies in Poland, and in particular of companies with foreign investors, was significantly altered, when a new Commercial Companies Code and a new Law on Economic Activity took effect. These new laws replaced existing legislation -- the 1934 Commercial Code and the 1991 Law on Companies with Foreign Participation. The goal of these two laws, as well as a new Law on Public Aid to Companies, is to define and limit the role of the state in economic and commercial life, notably by reducing the number of government approvals and setting clear rules for state subsidies. The GOP is working on amendments to the Economic Activity Law with the aim to create a business friendly environment in Poland. Poland made considerable progress in adapting Polish law to the EU and OECD standards including implementation of the national treatment principle. With few exceptions, foreign investors are now guaranteed national treatment. Foreign ownership restrictions in a number of sectors will be amended when Poland joins the EU, in conformity with EU law. However, foreign companies from outside the EU will not necessarily enjoy the same access rights as EUbased firms. In April 2002, the Polish Parliament passed a law on the financial support of investments. In line with this Law a company investing in Poland, foreign or Polish, may receive assistance from the Polish budget. Under the 2000 Commercial Code, companies can be established as joint-stock companies, limited liability companies, limited joint-stock partnerships, professional partnerships, registered partnerships, and limited partnerships. All of these are available to a foreign investor, provided he has the right of permanent residence in Poland and originates from a country offering reciprocity for Polish enterprises. If the above conditions are not met, the investor may establish only a limited partnership, a limited liability company or a joint-stock company. Such investors are not subject to further limitations on the form of economic activity they chose to undertake. The November 1999 Law on Economic Activity also revised existing rules for establishing branch and representative offices. Branch offices are registered in the National Court Register under the name of the foreign investor, with the notation “branch in Poland.” A branch office can perform any activity within the scope of business of the parent foreign investor who established the branch. Representative offices are limited in their activities to promotion and advertising for the parent foreign investor. Representative offices are registered in a special log kept by the Minister of Economy, who must obtain the opinion of the appropriate ministry or administrative authority responsible for the sector a foreign investor wants to operate in. Registration may be refused in certain situations provided by law (required documents are not submitted on time; for State security reasons). Establishing a branch or representative office no longer requires obtaining any permits from administrative authorities, as was required before. In both cases, registration and an entry into the appropriate register is obligatory.

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According to the Law on the National Court Register of October 1997, all companies, commercial partnerships, and sole proprietorships must be registered in the Register of Entrepreneurs, which is that part of the National Court Register managed by district courts. Even companies that are already entered in the commercial register must register in the National Court Register. The Register of Entrepreneurs is open to the public.

Screening and Licensing Poland does not have any general screening mechanism for entry and establishment of businesses by foreign firms. Authorization requirements and foreign equity limits do exist for a limited number of sectors. The Law on Economic Activity requires a permit from the Treasury Ministry for certain major capital transactions, or lease of assets, with a state-owned enterprise. Furthermore, that law restricts investment in certain sectors to Polish entities based on considerations of “public security.” For example, only a Polish entity can establish an airport, but licenses and concessions for defense production and management of seaports will be granted on the basis of national treatment for investors from OECD countries. Polish law establishes the following ceilings on the share of foreign ownership: air transport (49 percent); radio and television broadcasting (33 percent); and gambling (0 percent). Furthermore, in some sectors (broadcasting, insurance) the number of Polish citizens on supervisory and management boards must be higher than the number of foreigners. The sale of agricultural land to foreigners has long been a sensitive issue. The 1920 Law on Acquisition of Real Estate by Foreigners prohibited a foreigner from acquiring real estate without Polish Government permission. In 1996, Poland liberalized that law as part of its effort to join the OECD. The amended law allows foreign individuals and firms to own an apartment, 0.4 hectares (4,000 square meters) of urban land, or up to one hectare of agricultural land without a permit. Also, foreign companies no longer need to obtain pre-approval for larger amounts of land before participating in bidding for a project or privatization. The acquisition of real estate exceeding the above limits, or the purchase of shares in a foreign-controlled Polish company owning real estate, still requires approval from the Ministry of Interior, with the consent of the Defense and Agriculture Ministries. Companies report that procedures on acquisition of the real estate are more transparent and the whole process is less burdensome. Special rules apply to enterprises from EU countries. If an EU enterprise which has established a branch in Poland applies for permission to buy land, the Ministry of Internal Affairs and Administration generally grants the permission if it is essential to conduct business. Permission might be refused for reasons of social policy or public security. A foreign business intending to buy real estate in Poland may apply for a provisional permit from the Ministry of Administration and Interior which is valid for up to six months, during which time the company is expected to assemble documents demonstrating it is a viable business. The Ministry rarely turns down final permits once the company presents its formal application. Foreign and domestic investors alike must obtain governmental concessions, licenses or permits to engage in certain activities. For example, the National Bank of Poland (central bank) and the Finance Ministry issue banking licenses; the Finance Ministry provides permission to operate an insurance company; the Securities and Exchange Commission grants licenses for brokerage activities; the postal and telecoms regulator URTiP issues licenses for telecommunication and courier services; the National Broadcasting Council issues radio and television broadcasting licenses; the Economy Ministry gives permits for foreign trading in certain goods and services; the Health Ministry authorizes permits for the pharmaceutical and medical materials sectors; the Infrastructure Ministry provides licenses for air, international road, rail and maritime transport, and the construction and exploitation of highways; local governments provide permits for buses and taxis, waste disposal, pharmacies, and extraction of minerals; the Interior Ministry licenses the arms industries and security services; and the Agriculture Ministry provides permits for alcohol and tobacco industries. This process was liberalized in 2001, when the number of sectors in which concessions are required was reduced from 27 to 9 -- broadcasting, aviation, energy, weapons, rail transport, highway construction, mining, and private security services. www.icongrouponline.com

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Discrimination against Foreign Investors Generally, foreign investors receive similar treatment as domestic investors both at the time of their initial investment and after the investment is made. Foreign firms do face potential discrimination in public procurement contracts. Poland’s 1994 Government Procurement Act, as amended, which is based on the United Nations model, allows for a twenty-percent price advantage for domestic firms. There is also a fifty percent domestic material and labor content minimum required for all bids. Moreover, the ordering body can limit the participation in bidding procedures to domestic entities on condition that the value of the procurement or the stake of public finance contribution does not exceed EUR 30,000. Irrespective of the value, tenders for construction are limited to domestic entities (only Polish materials and products may be utilized). Amendments to the Public Procurement Act (passed in July 2003) are intended to make the procurement process more transparent. New regulations raise the threshold above which state institutions must hold tenders for procurements to EUR 6,000 from EUR 3,000. Previously, some companies abused vague wording in the statute to artificially prolong the tender process if they believed they were likely to lose a bid. The amendments also stipulate that complete documentation will be available to bidders after a tender has been finalized.

4.6.2

Conversion and Transfer Policies

Restrictions on Converting or Transferring Funds Poland provides full IMF Article VIII convertibility for current transactions. The Polish foreign exchange law fully conforms to the OECD Codes of Liberalization of Capital Movements and Current Invisible Operations. The new law introduces a distinction between non-residents from EU countries and non-residents from third countries. It breaks the latter into not only non-EU countries, but also to non-OECD and non- European Economic Area (EEA) countries. Non-residents from the EU (as well as OECD and EEA) are treated with priority and currency transactions in their case are subject to more lenient provisions than currency transactions with non-residents from third countries. The foreign exchange law defines restrictions and obligations connected with transactions turnover in foreign exchange. Exceptions from those restrictions and obligations requires a general (issued by the Minister of Finance in the form of a decree) or individual foreign exchange permit. Foreign exchange permits issued by the National Bank of Poland (NBP) are needed to: •

Determine and accept amounts due from non-residents by residents in currency other than convertible currency (the list of convertible currencies is published by the President of NBP on the web)

•

Export and dispatch abroad of domestic and foreign currencies of an amount exceeding EUR 10,000 (within the framework of a single transaction) excluding exporting and dispatch abroad of domestic and foreign currencies by non-residents should they have previously imported them into the country and duly declared this upon customs clearance

•

Open accounts in banks and branches of banks, located in third countries, both directly and through other entities, by residents

•

Make payments between residents in foreign currencies, excluding payments between private individuals, if they are not connected to the management of a business activity

•

Conduct office-related exchange activities

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Special restrictions may be introduced on foreign exchange transactions with foreign countries, if they are necessary to: •

Implement the decisions of the authorities of international institutions, of which the Republic of Poland is a member

•

Ensure public order and security

•

Ensure balance of payments, in the case of its general imbalance or a sudden economic slump

•

Ensure the stability of the Polish currency in the event of sudden fluctuations of its exchange rate or any threat in this matter.

Generally, all operations and payments in Poland must be made in the Polish currency (zloty). Transfer of sums by non-residents that are subject to taxation may be carried out only after the presentation of a confirmation from a tax office verifying the payment of the due taxes. A foreigner who does not need a permit may convert or transfer currency to make payments abroad for goods or services and also may transfer abroad his share of after-tax profit due from operations in Poland. Capital brought into Poland by foreign investors may be freely withdrawn from Poland in instances of liquidation, expropriation, or decrease in capital share. Full repatriation of profits and dividend payments is allowed without obtaining a permit. However, a Polish company (including a Polish subsidiary of a foreign company) must file withholding tax with the Polish tax authorities on any distributable dividends unless a double taxation treaty is in effect. There is a double taxation treaty with the United States. An exporter may open foreign exchange accounts in the currency it chooses.

Availability of Foreign Exchange and Remittance Foreign exchange is widely available through commercial banks, as well as exchange offices. Payments and remittances in convertible currency may be made and received through a bank authorized to engage in foreign exchange transactions; most banks have such an authorization. Poland does not prohibit remittance through a legal parallel market, including one utilizing convertible negotiable instruments (such as dollar-denominated Polish bonds in lieu of immediate payment in dollars). As a practical matter, however, such payment methods are rarely, if ever, used. Foreign investors have not complained of any significant difficulties or delays in remitting investment returns such as dividends, return of capital, interest and principal, lease payments, royalties or management fees.

4.6.3

Expropriation and Compensation

Since the collapse of communism in 1989, potential expropriation in Poland has not been an issue. The Law on Land Management and Expropriation of Real Estate provides that property may be expropriated only in accordance with statutory provisions such as the construction of public works, national security considerations or other specified cases of public interest. Full compensation, at market value, must be paid for the expropriated property. Article 21 of the Constitution states that “Expropriation is admissible only for public purposes and upon equitable compensation.” Although there have been no cases of expropriations since reforms began in 1990, the implementation of a major highway construction program in Poland may involve some expropriations of land under the above-mentioned law. There may also be challenges brought by companies investing in electricity generation plants related to a draft law which would cancel long term energy contracts.

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Dispute Settlement

Generally, foreign firms are wary of the slow and over-burdened Polish court system and prefer to rely on other means to defend their rights, notably international arbitration. Similar to the French and German systems, the Polish legal system is a prosecutorial one. Contracts involving foreign parties normally have a dispute settlement clause that gives terms for arbitration of possible dispute in a third country court (in Britain or Switzerland, for example, in the case of a dispute between U.S. and Polish parties). Poland has a bankruptcy law. Declaration of bankruptcy may be filed by a company’s creditors or governing bodies. Every creditor of an insolvent company lays claims to his liability in writing. Liabilities are repaid in the following order: cost of legal proceedings; employee remuneration; liabilities to the State and Social Security Fund (ZUS), secured by a mortgage or pledge; other liabilities secured by mortgages or pledges; other taxes and other public liabilities; other liabilities. Prior to 1998, a secured creditor’s position could be superseded by subsequent tax arrearages and other secured credits. The Mortgage Banking Act of 1997 and the Law on Registered Pledges and Pledge Registry of 1997 protect qualified mortgagors and secured creditors against subsequent tax liens and other secured and unsecured claims. Instead of liquidation, the bankruptcy proceedings may be finalized by an agreement between the company and its creditors. A Bankruptcy Law of 28 February 2003, which becomes effective on 1 October 2003, increases creditors rights. This Law introduces a new body - creditors preliminary assembly, a tool designed to enable creditors to influence bankruptcy proceedings. Creditors Assembly has the right to decide, at the initial stage of bankruptcy process, whether a debt settlement agreement is possible or assets of a bankrupt company should be liquidated. Introduction of the new body considerably increases creditor’s role in bankruptcy proceedings. Monetary judgments are usually made in local currency.

International Arbitration Decisions by an arbitration body are not automatically enforceable in Poland, they must be confirmed by a Polish court. Poland is party to four international agreements on dispute resolution, with the Ministry of Finance acting as the government’s representative: •

The 1923 Geneva Protocol on Arbitration Clauses

•

The 1958 New York Convention on the Recognition and Enforcement of International Arbitration Awards

•

The 1961 Geneva European Convention on International Trade Arbitration

•

The 1972 Moscow Convention on Arbitration Resolution of Civil Law Disputes in Economic and Scientific Cooperation

Poland is not a member of Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States.

4.6.5

Trade-Related Investment Measures (TRIMs)

Notification/Compliance Poland notified the WTO that on January 1, 1997, it terminated the measure notified previously under Article 5.1 of the TRIMs. This measure, which had concerned tax rebates limited to domestic cash registers. It was the only one that Poland had given notice of to the WTO.

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Performance Requirements Poland generally does not impose performance requirements for establishing or maintaining an investment. However, in connection with the privatization of certain large companies the government and the purchasers have negotiated terms that included performance requirements. For example, Fiat and Daewoo agreed, among other things, to meet certain negotiated production targets and investment and employment levels when they bought stateowned car plants. As discussed above, there are limits on foreign participation in certain economic activities, such as broadcasting and air transportation.

Investment Tax Incentives Regulations on special economic zones and on public assistance to entrepreneurs provide the basis for exemptions from income tax or other incentives. These have been reviewed as Poland negotiated the terms of its entry into the EU and EU norms on the allowable level of public assistance to private companies begin to apply. Existing tax and other investment incentives are based on the relative prosperity of the region where the investment is based, the size of the investment and the number of jobs created. Strategic investors may obtain real estate tax exemption or reduction as well as additional local incentives. All such exemptions need to be negotiated with the local authorities.

Foreign Participation in Government Financed Research Foreign companies have not participated in government-funded research and development projects managed by the Committee for Scientific Research (KBN). Nonetheless, there is no proscription against such participation.

Visa and Work Permit Requirements Foreign investors can and do bring personnel into Poland. Poland’s visa and work permit requirements allow foreigners to live and work in Poland. However, many firms and foreigners in practice have had difficulty in obtaining both documents. Work permits are issued by local authorities, which vary in the speed with which they issue permits. Poland requires an applicant to receive their visa in his or her home country, rather than in Poland or in neighboring countries. This procedure is often burdensome.

Discriminatory or Preferential Export/Import Policies The government supports exporters through export credit guarantees from a state-owned insurance entity (KUKE). KUKE provides credit guarantees for all firms registered in Poland (this includes foreign firms and firms with foreign capital). However, for products subject to export contracts, the Minister of Economy (in agreement with the Minister of Finance) establishes a minimum percentage share of components of Polish origin in the final product for it to be considered a domestic product. Currently, the minimum percentage share is 50 percent. In February 2002, the Ministry of Finance signed an agreement with Bank Gospodarstwa Krajowego (BGK) on subsidies on interest and export credits with the aim to make it easier for exporters to obtain cheaper credits to finance exports.

4.6.6

Right to Private Ownership and Establishment

Rights of Ownership and Establishment Domestic and foreign private entities have a general right to establish and own, as well as dispose of, a business and to engage in almost all forms of lawful economic activities. Article 64 of the Constitution provides: “Every person has the right to ownership, other property rights, and the right of inheritance. Ownership, other property rights, and the right of inheritance are subject to legal protection that is equal for all. Ownership may be restricted only by law and only to the extent to which it does not abridge the essence of the right of ownership.” In the case of land, a second form of title is the perpetual lease, under which the lease holder generally controls the property for 40 to 99

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years, and which can be extended for up to 99 additional years. Such a perpetual tenant has the right to dispose of its interest in the land by sale, gift, or bequest. As discussed above in Section A.1., there are a few sensitive areas in which participation of foreigners is restricted, e.g., broadcasting, air transportation and gambling; further, foreign ownership of other than a small amount of real estate requires a government permit. Apart from these restrictions, foreign entities can freely establish, acquire and dispose of interests in business enterprises. The Civil Code, as amended, regulates property rights between individuals or legal entities. The amendment of July 1990 reintroduced the basic standards of free market economy and ownership. Civil Code regulations are based on the principles of equality of all parties, regardless of their ownership status, equivalency of obligations, discretion, protection of private ownership and freedom of contracts.

Competitive Equality The private sector has expanded rapidly since 1989 and now dominates almost every sector of the economy, although state-owned entities still dominate such sectors as coal, steel, and utilities. The private sector is estimated to employ over two-thirds of Poland’s labor force and to produce over 70 percent of GDP. Competition between privately owned and state-owned enterprises is steadily being replaced by competition among private firms. Officials at various levels of government occasionally exercise their discretionary authority to help state-owned enterprises. For example, tax authorities have not pressed some large, troubled state-owned enterprises to pay their taxes, in order to avoid putting them into bankruptcy. Nevertheless, in line with EU standards governing competition, the new commercial code that took effect in 2001 has established a more level playing field.

4.6.7

Intellectual Property Risks

Real Property Poland’s legal system protects and facilitates the acquisition and disposition of property. The 1997 Mortgage Banking Act provides that a recorded mortgage by a licensed mortgage bank will take priority over subsequent tax liens and other secured and unsecured claims.

Chattel/Personal Property The 1997 Law on Registered Pledges and Pledge Registry provides protection for secured creditors and establishes a new registry system. Creditors will be able to place liens on assets and rights, both present and in the future.

Legal System Poland has a non-discriminatory legal system accessible to foreign investors that protects and facilitates acquisition and disposition of all property rights, such as land, buildings and mortgages. Many investors -- foreign and domestic -- complain the judicial system is slow. Foreign investors often voice concern about frequent or unexpected changes in laws and regulations.

Intellectual Property Rights In early 2000 Poland passed major new legislation governing intellectual property rights, bringing Poland into compliance with its obligations under the WTO TRIPS Agreement and to the EU. Amendments to the 1994 Copyright Law extended coverage to pre-1974 sound recordings, removing a major shortcoming in Polish law. The new Industrial Property Law replaced existing legislation governing patents, trademarks and other industrial property. Piracy of intellectual property remains a significant problem. In addition, the length of protection afforded to proprietary research test data submitted by pharmaceutical companies remains below U.S. or EU standards. Polish authorities have made little progress in recent years, much remains to be done to protect IPR, and Poland was placed on the USTR “Priority Watch List” due to several shortcomings. www.icongrouponline.com

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TRANSPARENCY OF THE REGULATORY SYSTEM

The government acknowledges that its policies are not as transparent as they ought to be and that bureaucratic requirements continue to impose a burden on investors. Reforms designed to deregulate, increase transparency, and promote competition are underway as part of the broader process of EU accession. Nonetheless, uneven and unpredictable regulatory treatment and a generally high level of administrative red tape are recurring complaints of investors, both domestic and foreign, a problem that the government’s “Entrepreneurship First” reform program is meant to counteract.

Competition Poland made considerable progress in adapting its industry to the needs of an economy based on competition. In the 90’s, reforms in the energy sector began, and many sectors including trade, finance, insurance, telecommunication, motor industry and construction have been privatized. Nevertheless, competition policy in Poland remains an area of concern because roughly 30 percent of output still comes from the state-owned sector. The government seeks to encourage the competition necessary for a free-market economy primarily through privatization and restructuring of most of the remaining large state-owned enterprises and deregulation. In addition, the Office for Competition and Consumer Protection is responsible for promoting fair competition in the market and for tracking and elimination of anti-competitive practices.

Tax, Labor, Health and Safety, and Other Laws as Impediments Foreign and domestic investors must comply with a variety of laws concerning, among other things, taxation, labor practices, health and safety, and the environment. Complaints about these laws, especially the tax system, center on the lack of clarity and often-draconian penalties for minor errors.

4.7.1

Capital Market Risks

Capital Markets Poland’s policies generally facilitate the free flow of financial resources. Banks can and do lend to foreign and domestic companies. Companies also can and do borrow abroad and issue commercial paper. Poland has developed healthy equity markets. The 1991 Law on Public Trading in Securities and Trust Funds created the regulatory framework for operations on the capital market and introduced its major agents: the Securities and Exchange Commission; the stock market; and the stock-broker. This Law was replaced by the 1997 Law on Public Trading and Securities, amendments to which took effect in January 2001. A modern trading system (Warset) was launched on the WSE in 2000, based on a similar system used by the Paris bourse. The system enables direct cooperation with other stock exchanges in Europe. There is also an over the counter market, the Central Table of Offers (CeTO), which operates on a basis similar to NASDAQ and began operations in 1996. The 1997 Investment Funds Act allows for open-end, closed-end, and mixed investment funds. In general, no special restrictions apply to foreign investors purchasing Polish securities. However, as a general rule, corporate bonds are not freely accessible to foreign parties. Poland’s debt instrument market remains poorly developed, with the exception of the Treasury securities segment, in which foreign portfolio investors have been particularly active. The Ministry of Finance is preparing a new law on investment funds, which will include regulations allowing further development of securitization instruments in Poland. Venture capital activity is conducted by investment funds, consulting companies, investment banks, special funds belonging to financial corporations, and companies in the IT sector. Most of those are foreign companies or

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companies with a foreign shareholder, mainly due to the lack of funding and experience in this type of activity on the domestic market. Most companies established by venture capital funds operate in the IT and media sectors.

Credit Allocation Credit allocation has been on market terms. The government, however, has some programs offering below-market rate loans to certain domestic groups, such as farmers and homeowners.

Access Foreign investors and domestic investors have equal access to the Polish financial markets. Most private Polish investment is still financed from retained earnings, while foreign investment is mainly direct investment, using funds obtained outside of Poland. More and more Polish firms are raising capital in Europe or the U.S.

Legal, Regulatory and Accounting Systems Due to recent amendments and interpretations to the 1994 Accounting Law which came into force on January 1, 2002, the Polish accounting standards do not differ significantly from international standards. In cases, where there is no national accounting standard, the appropriate International Accounting Standards may be applied. Poland is in the process of harmonizing legal, regulatory and accounting systems with those in the EU, which sometimes lack transparency. The major international accounting firms provide services in Poland and they are familiar with the U.S., EU and Polish accounting standards.

Portfolio Investment The Polish regulatory system fosters and supervises the portfolio investment market. Both foreign and domestic persons may place funds in demand and time deposits, stocks, bonds, futures and derivatives. The stock and Treasury bill markets are fairly liquid, but many other investments are not, such as Treasury bonds. The Polish Securities and Exchange Commission has built a strong reputation for supervising the stock market.

Banking System The banking sector is dominated by twelve large commercial banks, two of which are controlled by the State Treasury and the remaining ten by foreign institutions. The Polish banking system is considered one of the best regulated and supervised in Central and Eastern Europe.

Cross-Shareholding Cross-shareholding arrangements are rare and so far played a minor role in the Polish economy.

Hostile Takeovers Neither the government nor private firms have taken measures to prevent hostile takeovers by foreign or domestic firms. Hostile takeover attempts are still rare, but have been occurring more frequently.

Standards-Setting Organizations Governmental agencies, and not companies, set industry standards. These agencies are not required to consult with domestic or foreign firms when establishing standards, though the former much more than the latter tend to play an influential role in the process.

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Political Violence

Poland is a politically stable country. There have been no confirmed incidents of politically motivated violence toward foreign investment projects in recent years. Objection to foreign investment is a theme heard from fringe political parties. Poland has neither belligerent neighbors nor insurgent groups. The Overseas Private Investment Corporation (OPIC) provides political risk insurance for Poland.

4.7.3

Corruption

Anti-Corruption Laws and Regulations Polish laws and regulations provide a legal basis for combating corruption. Bribery is a criminal offense and grease payments are not tax-deductible expenses. The Finance Ministry’s tax authorities concede, however, that bribes can be disguised as other payments, which are deductible. One of the chief tools in preventing corruption is a transparent system of government procurement by open tender at all levels of government. A 1997 law restricts economic activity for people holding public positions. This law prevents a public official from engaging in business activities where he or she would have a conflict of interest while he or she is an official and for one year thereafter. The law applies to parliamentarians, government officials, and local officials. On 1 July 2003, new penal code regulations combating corruptions come into force. These amendments include: no punishment for those from whom bribes are extracted when they inform police about this fact; new broader definition of a public official, which includes local government officials, doctors, and CEOs; seizure of assets if an accused person does not manage to prove they come from a legal source.

OECD Anti-Bribery Convention Poland ratified the OECD Convention on Combating Bribery in 2000; implementing legislation became effective February 3, 2001.

Cases of Corruption Reports of alleged corruption are publicized. They often appear in connection with privatization, government contracting, and the issuance of a regulation or permit that benefits a particular company. Reportedly, corruption by custom and border guard officials, tax authorities, and local government officials often occurs and, if discovered, is usually punished. Businesses report that Polish officials have asked for political campaign contributions in return for favorable treatment. Overall, U.S. firms have found that maintaining policies of full compliance with the U.S. Foreign Corrupt Practices Act is effective in building a reputation for good corporate governance and that doing so is in no way an impediment to profitable operations in Poland.

Combating Corruption Corruption is widely recognized as a problem in Poland, as well as a restraint on economic growth and development. While public debate on the subject is growing, there has not yet been a significant improvement in enforcement of anti-bribery criminal laws by the police authorities. The government has sought to reduce the opportunities for corruption, and, in June, the Prime Minister announced a major new initiative. The private sector is now paying greater attention to fighting corruption. In 1998, concerned Poles established the Polish chapter of Transparency International. Several other NGOs have launched campaigns to increase public awareness. Business groups, including the American Chamber of Commerce, have also been vocal on the subject.

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Bribery of a Domestic Official Bribery and abuse of public office are crimes under the Polish Criminal Code.

Bribery of a Foreign Official Legislation implementing the OECD Convention classifies the payment of a bribe to a foreign official as a criminal offense, the same as if it were a bribe to a Polish official.

Enforcement Agencies The Justice Ministry and the police are responsible for enforcing Poland’s anti-corruption criminal laws; the Finance Ministry administers tax collection and is responsible for denying the tax deductibility of bribes.

Convictions No foreign investor or major government official has been found guilty of corruption. A number of officials have been investigated.

4.7.4

Bilateral Investment Agreements

Poland has ratified 56 bilateral investment agreements: •

Albania (1993)

•

Argentina (1992)

•

Australia (1992)

•

Austria (1989)

•

Bangladesh (1999)

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Belgium and Luxembourg (1991)

•

Belarus (1993)

•

Bulgaria (1995)

•

Canada (1990)

•

Chile (2000)

•

China (1989)

•

Croatia (1995)

•

Cyprus (1993)

•

Czech Republic (1994)

•

Denmark (1990)

•

Egypt (1998)

•

Estonia (1993)

•

Finland (1998)

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France (1990)

•

Germany (1990)

•

Greece (1995)

•

Hungary (1995)

•

India (1997)

•

Indonesia (1993)

•

Iran (2001)

•

Israel (1992)

•

Italy (1993)

•

Kazakhstan (1995)

•

Kuwait (1993)

•

Latvia (1993)

•

Lithuania (1993)

•

Malaysia (1994)

•

Moldova (1995)

•

Morocco (1995)

•

the Netherlands (1994)

•

Norway (1990)

•

Portugal (1993)

•

Romania (1995)

•

Singapore (1993)

•

Slovenia (2000)

•

Slovakia (1996)

•

South Korea (1990)

•

Spain (1993)

•

Sweden (1990)

•

Switzerland (1990)

•

Syria (1996)

•

Thailand (1993)

•

Tunisia (1993)

•

Turkey (1994)

•

Ukraine (1993)

•

United Arab Emirates (1994)

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United Kingdom (1988)

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United States (1994)

•

Uruguay (1994)

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Uzbekistan (1995)

•

Vietnam (1994)

•

Yugoslavia (1997)

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Agreements with the United States The United States and Poland signed a Treaty Concerning Business and Economic Relations in 1990; it entered into force in 1994 for an initial period of ten years. The Treaty grants U.S. investors domestic privileges and provides for international arbitration in the case of investment disputes.

4.7.5

OPIC and Other Investment Insurance

OPIC The Overseas Private Investment Corporation (OPIC) provides political risk insurance for U.S. companies investing in Poland against political violence, expropriation, and inconvertibility of local currency. OPIC offers medium- and long-term financing in Poland through its direct loan and guarantee programs. Direct loans are reserved for U.S. small businesses or cooperatives and generally range from $2-10 million. Loan guarantees are issued to U.S. lending institutions and range from $10-75 million, and in certain instances up to $200 million.

MIGA The World Bank’s Multilateral Investment Guarantee Agency also provides investment insurance similar to OPIC’s for investments in Poland.

4.7.6

Labor

Poland has a well-educated, skilled labor force. Productivity remains below western standards, but is rising rapidly. Unit costs remain competitive. There are shortages of persons with foreign language skills and training in contemporary management, finance, and marketing. Polish workers are usually eager to work for foreign, especially American, companies. Most aspects of employee-employer relations are governed by the 1996 Labor Code, which lists employee and employer rights in all sectors, both public and private, and is in the process of being revised. The Polish government adheres to the International Labor Organization (ILO) Convention protecting worker rights. Many of the registered unemployed actually work full- or part-time in the unofficial, gray economy, which adds an estimated 10-15 percent to the official GDP. Overall, employment in the public sector continues to shrink as the private sector grows. Employment has expanded in service industries such as information science, hotels and restaurants, retail trade, real estate and business services, education, and the water treatment and supply sector. The state-owned sector is still about a quarter of the labor force, though employment in such fields as coal mining, steel, and energy is declining. For more detailed labor related information, please consult the Embassy’s Labor Trends report published by the U.S. Department of Labor, Bureau of International Affairs.

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Free Trade Zone Options

The operation of foreign trade zones (FTZ) in Poland is regulated by the 1997 Customs Law and FTZ regulations updated in March 2001. Further amendments are on the way as Poland has to harmonize its public aid regulations with those existing in the EU. Business activities within FTZs are based on the same principles as those applied in the EU member countries. Foreign-owned firms have the same investment opportunities as do Polish firms to benefit from foreign trade zones, free ports, and special economic zones. There were seven free customs areas: Gliwice (southern border), Katowice International Airport (duty-free retail trade), Malaszewicze/Terespol (eastern border), Mszczonow near Warsaw (since May 2001), Warszawa-Okecie International Airport (duty-free retail trade within the airport), Szczecin, Swinoujscie, and Gdansk (all Baltic ports). In March 2001, decisions regarding free customs areas have been moved one level down, from the Council of Ministers to the Ministry of Finance. There are also 5 bonded warehouses: •

Gdynia (sea port)

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Krakow (airport)

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Wroclaw (airport)

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Katowice (airport)

•

Gdansk (airport)

Most activity in the free trade zones involves storage, packaging and repackaging. Bonded warehouses and customs and storage facilities are available. The bonded warehouses can be open to the general public or a private entity (with a limitation to the authorized entities). In November 2000, GOP amended the October 1994 Law on Special Economic Zones (SEZs). Under the new rules investors can receive exemption from income tax and/or other incentives totaling no more than 50 percent of the outlays spent on investments or creating new work places. The ceiling for small- and medium-sized companies is 65 percent. These limits are lower (40 and 55 percent) for investors in the Krakow SEZ, located in a relatively prosperous area. Investors may also negotiate with local authorities to receive property tax exemptions.

4.7.8

Foreign Direct Investment

Investment Trends Foreign companies choose Poland for a variety of reasons, including the large domestic market, skilled work force, low labor cost, and proximity of markets. Privatization of large companies has played a significant role in total FDI. While the impact of privatization inflows has declined as the number of large sales decreases, “Greenfield” investments increased in number.

Polish Investment Abroad Poland is a net capital importer. Compared to the amount of foreign capital invested in Poland, Poland’s foreign investments are very small. One of the reasons for the low level of Polish foreign investment is the low level of savings of Polish companies. Poland’s foreign investments are largest in Great Britain, the United States, Belgium, Switzerland and Austria. Almost 50 percent of Poland’s foreign in vestments are connected with the financial sector;

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other investments are in manufacturing, transport, communications and warehouse management; trade and repairs; mining; and construction.

4.8 4.8.1

TRADE AND PROJECT FINANCING The Banking System

Poland’s banking system is the most developed in Central and Eastern Europe, and continues to modernize. With the gradual installation of new telecommunications equipment and services and the advent of increased competition between domestic and foreign banks, services are becoming increasingly more user-friendly and efficient. Although the availability of banking services varies from one bank to another, commercial banks generally offer a variety of money transfer and cash management services, but they do not usually provide access to cheap credit or extensive personal banking services. Banks set their own interest rates based on several factors, particularly the inflation rate, reserve requirements, and the National Bank of Poland (NBP) rates. Special services such as cash management, counseling, and risk management for foreign currency transactions are not consistent from bank to bank. The majority of Polish banks have been privatized. A number of large banks have shares listed on the Warsaw Stock Exchange, and more are planned for the future. The majority of the Polish banking sector’s assets, deposits, and equity are in the hands of the private sector. Foreign companies do not have special restrictions on access to local finance as long as funds are used for activities in Poland. Banks usually request proof of solvency and a business plan, as well as security. Security often takes the form of a large deposit (equal to the amount of the loan plus interest) that earns a relatively low rate of interest. As property values in Poland are difficult to determine, banks often require property pledged as security to be worth two to three times the value of the loan. Loans are also available to smaller businesses that can produce credible offshore guarantees. A growing number of foreign banks are establishing banking operations in Poland, either through local subsidiaries, fully operating branches, or participation in consortium banks, which may also include Polish bank shareholders. Several U.S. banks have offices in Poland. While some banks have branches all over Poland, many are regional or have few branches. Businesses with banking needs in varying areas should carefully consider the location of their bank and availability of branches. The zloty is, for most purposes, fully convertible. Companies operating in Poland have free access to foreign currency, and there have been no failures of the banking system to provide hard currency on demand. Profits can be repatriated by law, including repatriation through bonds and securities. The banking system is supervised by the central bank, the National Bank of Poland (NBP). The NBP is responsible for the issue of money and control of the monetary and credit policy in Poland. It grants banking licenses and foreign exchange permits. Today there are 83 banks in Poland that are privately owned or operate as commercial companies. In addition, there are 1,295 independent cooperative banks. U.S. banks and branches include Citibank, Bank of America, American Express (which also operates full travel-related services in Warsaw), GE Capital, Ford, and General Motors. Fifteen Polish banks have been approved by the Export-Import Bank of the U.S. for bank guarantees and currently engage in foreign trade financing. Business counseling ranks high among the features of some foreign banks in Poland, and most encourage their clients to call before investing. These banks offer counseling services to western firms on regulations and business

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practices in Poland, and some spend considerable time counseling Polish businesses on western business practices, business plans, and financial plans.

4.8.2

Foreign Exchange Control Risks

Since 1996 domestic business entities have not been required to resell foreign currency payments from abroad to a foreign exchange bank. Instead, they may have a Polish bank account denominated in the foreign currency and keep these payments in that account. When these businesses need foreign exchange, the invoice for goods to be purchased must be presented to prove the currency is needed. Most banks insist that there is no problem acquiring foreign currency. Several banks guarantee wire transfers within 48 hours, although the general rule is that foreign banks are faster than domestic banks. A transfer can be as quick as one day if it is between affiliated banks or banks on the SWIFT system and if the order is placed early in the day. It is best to have a contact person at your bank to monitor the transaction.

4.8.3

Financing Exports

All commercial banks in Poland offer funds transfers and investment or working capital loans. Banks are limited by law to their exposure to creditors. Due to these capitalization requirements, large loans must sometimes be shared between two or more banks. The National Bank of Poland (NBP) influences interest rates for deposits or loans via the interbank offer rate. Banks charge rates of interest based on the NBP lombard rate plus bank surcharges and front end fees.

4.8.4

Import Financing

Import financing procedures in Poland adhere to western business practices. All payments go through qualified foreign exchange banks. The safest method of receiving payment for a U.S. export sale is through an irrevocable letter of credit (L/C). However, most banks in Poland require the importer to deposit funds prior to issuance of an L/C. Therefore, for most Polish importers, an L/C is not a financing tool but a payment mechanism. Difficulties in obtaining U.S. bank guarantees on Polish L/Cs seem to stem from considerations of Poland’s overall debt performance. They do not necessarily reflect the actual performance of Polish banks on L/Cs, which is generally considered excellent. Typically, L/Cs are opened for a period to cover production and shipping, and they are normally paid within seven working days after receipt of the goods. Cash payment or down payments provide an extra measure of security for export sales. Polish companies sometimes offer to pay for U.S. exports with cash in advance, as it can be difficult for them to get Polish bank guarantees. U.S. exporters who request cash advance payments (usually through money orders or certified bank drafts) need to be aware that many Polish companies are strapped for cash and may need time to organize their funds. Their delays are not a result of lack of interest, but more often a result of the need for time to arrange financing or loans. Finally, cash payments often arrive in the U.S. in installments and not as a single payment.

4.8.5

Export Financing Options

Sources of financing for projects in Poland vary depending upon specific financial requirements and needs. Financing is found under special programs such as those of the World Bank, the International Finance Corporation (IFC), the European Bank for Reconstruction and Development (EBRD), and other financial assistance programs created by western governments. In addition to local financing through Polish banks, self-financing, and financing www.icongrouponline.com

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through U.S. sources, the following organizations provide financing and/or insurance for investments made in Poland:

Export-Import Bank of the United States (Ex-Im Bank) The Ex-Im Bank provides guarantees of working capital loans for U.S. exporters, guarantees the repayment of loans, and makes loans to Polish purchasers of U.S. goods and services. The Ex-Im Bank also provides credit insurance that assists U.S. exporters shipping on short and medium term credits by insuring against nonpayment by foreign buyers. Working Capital Guarantees cover 90% of the principal and interest on commercial loans to creditworthy, small and medium sized companies that need funds to buy or produce U.S. goods or services for export. Export Credit Insurance policies protect against both the political and commercial risks of a foreign buyer defaulting on payment. There are no discretionary credit limits for short-term comprehensive credit insurance. Coverage is generally limited to irrevocable letters of credit issued or guaranteed by one of the eight banks that Ex-Im recognizes as having an international reputation for creditworthiness. Other transactions are examined on a case by case basis. In addition, Ex-Im Bank offers direct loans, which provide foreign buyers with competitive, fixed rate financing for their purchases from the United States. For more information on Ex-Im Bank programs, please contact: The Export-Import Bank of the United States of America 811 Vermont Ave., N.W. Washington, D.C. 20571 Telephone: (800) 565-EXIM Fax: (202) 565-3380 Web site: http://www.exim.gov

USDA Export Credit Guarantee Programs USDA has three credit guarantee programs to support exports of U.S. food and agricultural products to Poland. The Supplier Credit Guarantee Program (SCGP) is available for Poland. Under the SCGP, USDA guarantees up to 65% of the principal offered on credit terms of 15, 20, 30, 45, 60, 90, 120, 150, and 180 days. SCGP has a limit of USD 10 million for Poland and does not require a letter of credit. USDA guarantees payment of letters of credit issued by Polish banks in favor of U.S. exporters under the GSM-102 and GSM-103 program. GSM-102 export credit guarantees of USD 25 million for 90 days to three years through approved banks are available for Poland. GSM-103 export credit guarantees of up to USD 5 million on credit terms in excess of three years, but not more than five years, are also available for exports of U.S. breeding livestock. Further information on these programs can be obtained from: U.S. Department of Agriculture Foreign Agricultural Service Telephone: (202) 720-7115 Companies may also check news releases for these programs on the Foreign Agricultural Service home page at http://www.fas.usda.gov.

Commercial Bank Financing Historically commercial bank financing for U.S. exports to Poland was limited due to Poland’s poor credit rating. Since the signing of the London and Paris agreements, the number of banks willing to offer financing for U.S. exports to Poland has increased steadily.

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Available Project Financing

The World Bank The World Bank serves as a source of loans for economic development and reform programs in Poland. The World Bank finances projects in several main areas: support of Government efforts in the energy sector, improvement of municipal and basic infrastructure, development of key Polish institutions and systems to support a market oriented economy, and development of the social and financial sectors. The World Bank uses guarantees to support and attract private investment for projects that demand large sums of long term financing, or are in areas of high political risk. Guarantees are used to stimulate investment, and the World Bank only provides partial guarantees, sharing the risk with private lenders. The World Bank utilizes two types of guarantees in addition to the possibility of issuing a World Bank loan. A Contractual Compliance Guarantee protects private lenders against specific risks identified by the host Government, the private party, and the World Bank. A Partial Credit Guarantee protects private lenders against possible late loan payments and finances extensions of medium term loans. A summary of projects and procurement financed by the World Bank is printed in a bimonthly publication that can be obtained by contacting: Development Business UN Department of Public Information PO Box 5850 Grand Central Station New York, NY 10163 5850 Telephone: (212) 963-1515 Fax: (212) 963-1381 Further information on World Bank programs can be obtained from: Public Information Center World Bank Headquarters 1818 H Street, N.W., Room GB 1 300 Washington, D.C. 20043 Telephone: (202) 477-1234 World Bank Resident Mission ul. Emilii Plater 53 00-113 Warsaw, Poland Telephone: (48) (22) 520-8000 Fax: (48) (22) 520-8001

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International Finance Corporation (IFC) The IFC is a member of the World Bank Group, which provides non-government guaranteed direct investment in private businesses. Its purpose is to attract foreign and host country investors to supply additional debt and equity financing. The IFC has been active in Poland since 1987. To date, the IFC has invested over USD 505 million in 26 projects in various sectors. For additional information, please contact: International Finance Corporation Resident Mission ul. Emilii Plater 53 Warsaw, Poland Telephone: (48) (22) 520-6100 Fax: (48) (22) 520-7101

The European Investment Bank (EIB) The European Investment Bank, the European Union’s financing institution, contributes toward the integration, balanced development and economic and social cohesion of the EU Member Countries. To this end, it raises on the markets substantial volumes of funds which it directs on the most favorable terms towards financing capital projects according with the objectives of the Union. Outside the Union the EIB implements the financial components of agreements concluded under European development aid and cooperation policies. Governmental authorities, banks, municipalities and private companies can borrow from the bank, which supports both large scale and small to medium-scale projects. For additional information contact: Information and Communications Department Secretariat General 100 Boulevard Konrad Adenauer L-2950 Luxembourg Fax: +352 43 79 31 89 [email protected]

U.S. Trade and Development Agency (TDA) TDA promotes U.S. exports through direct assistance in high priority overseas projects to developing and middleincome countries, including Poland. TDA accomplishes this by financing feasibility studies and related planning services and training programs. Projects supported by TDA must, as a rule, offer good opportunities for U.S. exports of equipment and services. TDA has feasibility study financing available for public and private sector projects. It offers grants to foreign governments and foreign corporations for feasibility studies on large-scale public sector and private sector industrial and infrastructure projects, which are performed by U.S. firms selected in a competitive bidding process. TDA also will cost-share feasibility studies on large infrastructure and industrial projects with U.S. exporters, project developers or investors on a reimbursable basis. TDA has provided more than USD 10 million in feasibility grants to Poland over the last four years, most of it in the public sector. For further information contact: U.S. Trade and Development Agency 1621 North Kent St., Suite 200 Arlington, VA 22209 Telephone: (703) 875-4357 Fax: (703) 875-4009 E-mail: [email protected] Web site: http://www.tda.gov

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European Bank for Reconstruction and Development The European Bank for Reconstruction and Development (EBRD) operates as a development bank as well as a merchant bank, providing government guarantees and commercial loans. The EBRD lends and invests exclusively in projects in Central and Eastern Europe, and at least 60% of its funding is targeted to private sector companies or state-owned companies going through the privatization process. With an emphasis on the environment, the EBRD requires proposals that demonstrate good products or services with sound market prospects, significant capital commitments by project sponsors, dependable technology, sound environmental management, a high return on investment, and overall financial viability of the borrowing enterprise. For further information, please contact: European Bank for Reconstruction and Development U.S. Office London, England Telephone: (44) 20 7588-4027 Fax: (44) 20 7588-4026 EBRD Poland Office ul. Emilii Plater 53 Warsaw, Poland Telephone: (48) 22 520-5700 Fax: (48) 22 520-5800

Overseas Private Investment Corporation (OPIC) OPIC is a self sustaining U.S. government agency that provides investment information, financing, and political risk insurance for U.S. companies investing in emerging markets like Poland. OPIC offers medium to long term financing in Poland through its direct loans and guarantees program. Direct loans are reserved for U.S. small business or cooperatives and generally range in amounts from USD 2-10 million. Loan guarantees are issued to U.S. lending institutions and range in size from USD 10-75 million, and in certain instances to USD 200 million. OPIC can insure U.S. investments against political violence, expropriation, and inconvertibility of local currency. OPIC has initiated a USD 65 million fund called Poland Partners. The fund is designed to provide capital for new projects, expansion of existing enterprises, and privatization of state owned businesses. Poland Partners will focus on seven high growth sectors: •

Pharmaceutical and personal care products

•

Automotive after-market

•

Building supplies and home improvement

•

Financial services

•

Franchised services

•

Plastic molding

•

Food processing

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OPIC also has developed an environmental fund to provide capital to U.S. companies involved in projects linked to economic development and the protection of the environment in Poland and other countries in Central and Eastern Europe. For projects involving warehousing, industrial sites, and distribution, OPIC has established a real estate fund. For more information, please contact: Overseas Private Investment Corporation 1100 New York Avenue, N.W. Washington, DC 20527 Telephone: (202) 336-8799 Fax: (202) 408-9859 Web site: http://www.opic.gov

Major Banks with Correspondent U.S. Banking Arrangements Bank Polska Kasa Opieki, S.A. (Pekao SA) ul. Grzybowska 53/57 00-950 Warsaw Telephone: (48) 22 656-0780 or 656-0781 Fax: (48) 22 656-0109 Bank Inicjatyw Gospodarczych BIG S.A. (BIG) ul. Kopernika 36/40, skr. poczt. 6 00-924 Warsaw Telephone: (48) 22 657-5050 or 657-5000 Fax: (48) 22 626-7180 or 657-5009 Bank Handlowy w Warszawie S.A. (BH) (Commercial Bank SA) ul. Koszykowa 54 00-950 Warsaw Telephone: (48) 22 630-8625 Fax: (48) 22 630-8609 Bank Rozwoju Eksportu, S.A. (BRE) (Export Development Bank SA) Plac Bankowy 2, skr. poczt. 728 00-950 Warsaw Telephone: (48) 22 637-2800 Fax: (48) 22 637-1879 Powszechna Kasa Oszczednosci Bank Panstwowy (PKO BP) ul. Nowy Swiat 6/12, skr. poczt. 639-00 950 Warsaw Telephone: (48) 22 637-1618 Fax: (48) 22 635-5855 Narodowy Bank Polski (NBP) ul. Swietokrzyska 11/21, skr. poczt. 1011 00-919 Warsaw Telephone: (48) 22 653-2335 or 653-2571 Fax: (48) 22 653-1321 www.icongrouponline.com

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TRAVEL ISSUES Local Business Practices

It is customary to greet by shaking hands in Poland. A businesswoman should not be surprised if a Polish man kisses her hand upon introduction, at subsequent meetings or saying goodbye. American men are not expected to kiss a Polish woman’s hand, but may simply shake hands. Business cards are the norm in Poland and are generally given to each person present in a meeting. As Poles tend to bring more than one person to their meetings, U.S. visitors should bring plenty of business cards. It is not necessary to have business cards printed in Polish. Business attire is generally formal, including a suit and tie for men, and a suit or dress for women. Casual wear, including jeans, is suitable for informal occasions, but more formal dress is usually customary for visiting or entertaining in the evening. Flowers, always an odd number, are the most common gift among friends and acquaintances. Sunday is the traditional day for visiting family and friends in Poland.

4.9.2

Security Advisories

The principal problem encountered by visitors to Poland is property crime. Pick pocketing, hotel break-ins and car theft are common, particularly in areas of heavy tourist activity. Visitors are advised to pay particularly close attention to their belongings while in airports and railway stations, as well as on public transportation. Violent crime remains rare, but is growing. Consult the Consular Information Sheet, prepared by the U.S. Department of State, for updates. This information is available from the U.S. Department of State’s Web site (http://travel.state.gov). There are no visa requirements for U.S. citizens arriving in Poland for business purposes of up to 90 days. Business visitors on temporary duty are required to obtain a work permit if they will be in Poland longer than 90 days. Applications for this permission must be filed with the State/Provintial Employment Office, Work Migration Department (Wojewodzki Urzad Pracy, Dzial Migracji Zarobkowej) by prospective employers six weeks before the start of employment. If the decision is positive, the office will mail a “Promesa” (an assurance of permit issuance) to the employer. The worker uses the “Promesa” to apply for a work visa at a Polish Embassy or Consulate abroad. People already in Poland are obliged to leave the territory of Poland to apply for their work visas. The work visa fee is USD 10 for the application and USD 128 for the visa, payable in U.S. dollars. After arriving in Poland with the visa, the worker must obtain a work permit from the State/Provintial Employment Office within seven days of commencing work. The work permit fee is 800 Polish zloty. Work permits are issued for up to 12 months. Work permits may be extended at the request of the employer. The extension fee is 400 Polish zloty. The workers must also obtain a residency permit if they will be in Poland longer than 90 days. Application for residency permit must be filled with Mazowiecki Urzad Wojewodzki, Wydzial Spraw Obywatelskich i Migracji, Odzial dla Cudzoziemcow. The application fee is 300 PLN (about 75 USD) and resident card fee is 50 PLN (about 13 USD). Residency permits are issued individually for a period of 6-24 months. The extension fee is 150 Polish zloty.

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For more information please contact: Wojewodzki Urzad Pracy w Warszawie (State/Provintial Employment Office in Warsaw) Dzial Migracji Zarobkowej (Work Migration Department) ul. Mlynarska 16 01-205 Warsaw Telephone: (48) 22 631-50-05 Fax: (48) 22 631-42-03 E-mail: [email protected] Web site: www.wup.mazowsze.pl Contact: Joanna Pilka, Chief Work Migration Department Mazowiecki Urzad Wojewodzki (Marzovian Voivodship Office) Wydzial Spraw Obywatelskich i Migracji (Migration and Citizens Service Department) Oddzial ds. Cudzoziemcow (Section for Foreigners) ul. Dluga 5 00-263 Warszawa Web site: www.mazowsze.uw.gov.pl Contact: Maria Kula-Ziemian, Chief Section for Foreigners Telephone: (48) 22 831-48-18 or 695-67-77 Fax: (48) 831-53-73 Contact: Malgorzata Piotrak, Director Migration and Citizens Service Department Telephone: (48) 22 695-65-75 Fax: (48) 695-66-04 E-mail: [email protected]

4.9.3

Local Holidays Observed

The following public holidays are observed in Poland: •

New Year’s Day (January 1)

•

Easter Monday (day after Easter)

•

Labor Day (May 1)

•

Constitution Day (May 3)

•

Corpus Christi (late May/early June)

•

Assumption of the Virgin Mary (August 15)

•

All Saints’ Day (November 1)

•

Independence Day (November 11)

•

Christmas Day (December 25)

•

Boxing Day (December 26)

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Poland is located entirely in the Central European Time (CET) zone, the same time zone as continental Western Europe. Business hours are generally from 8:30 a.m. to 5:00 p.m., Monday through Friday.

4.9.4

Infrastructure for Conducting Business

Transportation by air to and from Poland is excellent. International carriers fly to Poland many times per day from all over the world, and LOT Polish Airlines has direct flights to Warsaw from Chicago, New York and Newark. Delta, American, Northwest and United have code share relationships with various European carriers that service Poland through their European hubs. No U.S. airline services Poland directly at this time. Transportation within Poland is convenient. Flights operate between major cities and railway routes are extensive and reliable. Rental cars are abundant, but due to significantly increased traffic over the past few years and a highway system that has not kept up, driving between Polish cities, especially at night, can be quite dangerous. First class business hotels are available in most major Polish cities, and many are located in the heart of business districts. Major western hotels offer air conditioned rooms with direct dial telephone capability. Many hotels offer a business center with computers, fax, business assistance services, and Internet capabilities. Almost all business hotels take major credit cards. Availability and room rates are seasonal and competitive, and business travelers are advised to check and confirm rates at hotels in advance of their travel. AT&T, Sprint, and MCI calls can be placed from Poland. International direct dialing around the world is possible. The Polish telephone system in some areas is still rotary dial, making it difficult to use automated touch-tone telephone services in the United States. Poland uses the metric system of weights and measures. Electrical appliances use 220 volts AC, 50Hz, with continental European (two-prong) outlets.

Temporary Entry of Personal Laptops and Other Business Materials There are no restrictions on the temporary entry of personal laptop computers or other business materials into Poland.

4.9.5

Country Data Population

38,230,100

Religion

More than 90% Roman Catholic

Government System

Parliamentary Democracy

Language

Polish

Length of Work Week

Monday through Friday

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189

KEY CONTACTS U.S. Embassy Trade-Related Contacts

Commercial (U.S. Commercial Service) Edgar Fulton, Commercial Counselor Robert J. Donovan Jr., Commercial Attache Alain Bobet, Commercial Representative ul. Poznańska 2/4 00-680 Warsaw Telephone: (48) 22 625-4374 Fax: (48) 22 621-6327 E-mail: [email protected] Web site: www.buyusa.gov/poland Agriculture Wayne Molstad, Agricultural Counselor Aleje Ujazdowskie 29/31 00-540 Warsaw Telephone: (48) 22 628-3041 Fax: (48) 22 628-1172 Economic Richard Rorvig, Economic Counselor Aleje Ujazdowskie 29/31 00-540 Warsaw Telephone: (48) 22 628-3041 Fax: (48) 22 625-7494 Office of Defense Cooperation Col. Stanley Prusinski Aleje Ujazdowskie 29/31 00-540 Warsaw Telephone: (48) 22 628-3041 Fax: (48) 22 625-3478 American Consulate General Krakow Kenneth Fairfax, Consul General ul. Stolarska 9 31-043 Krakow Telephone: (48) 12 424-5100 Fax: (48) 12 424-5103

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190

Chambers of Commerce and Bilateral Business Councils

National Chamber of Commerce of Poland Mr. Andrzej Arendarski, President ul. Trebacka 4 00-074 Warsaw Telephone: (48) 22 630-9600 Fax: (48) 22 827-4673 E-mail: [email protected] Web site: www.kig.pl American Chamber of Commerce in Poland Ms. Dorota Dabrowska, Executive Director ul. Emilii Plater 53, Warsaw Financial Center, XIII floor 00-116 Warsaw Telephone: (48) 22 520-5999 Fax: (48) 22) 520-9998 E-mail: [email protected] Web site: www.amcham.com.pl

Country Government Offices Ministry of Infrastructure ul. Chalubinskiego 4/6 00-928 Warsaw Telephone: (48) 22 630 1000 Fax: (48) 22 830-0261 E-mail: [email protected] Web site: www.mi.gov.pl Ministry of Environmental Protection ul. Wawelska 52/54 00-922 Warsaw Telephone: (48) 22 579-2900, 579-2403 Fax: (48) 22 579-2450 E-mail: [email protected] Web site: www.mos.gov.pl Ministry of Agriculture and Rural Development ul. Wspolna 30 00-930 Warsaw Telephone: (48) 22 623-1000, 628-5745 Fax: (48) 22 629-2894 E-mail: [email protected] Web site: www.minrol.gov.pl

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Ministry of Finance ul. Swietokrzyska 12 00-916 Warsaw Telephone: (48) 22 694-3962, 695-5555 Fax: (48) 22 826-6352 E-mail: [email protected] Web site: www.mofnet.gov.pl Ministry of Economy, Labor and Social Policy Pl. Trzech Krzyzy 5 00-950 Warsaw Telephone: (48) 22 693-5000 or 693-5013 Fax: (48) 22 693-4001 E-mail: [email protected] Web site: www.mg.gov.pl Ministry of State Treasury ul. Krucza 36 00-522 Warsaw Telephone: (48) 22 695 8000, 695 9000, 628-1689 or 695-8590 Fax: (48) 22 628-1914, 628 0872, 621-3361 E-mail: [email protected] Web site: www.mst.gov.pl Polish Agency for Foreign Investment Mr. Adam Pawlowicz, President Aleja Roz 2 00-559 Warsaw Telephone: (48) 22 334-9800 Fax: (48) 22 334-9999 E-mail: [email protected] Web site: www.paiz.gov.pl Central Customs Office ul. Swietokrzyska 12 00-916 Warsaw Telephone: (48) 22 811-0128 Fax: (48) 22 614-2627 E-mail: [email protected] Web site: www.guc.gov.pl Central Statistics Office Al. Niepodleglosci 208 00- Warsaw Telephone: (48) 22 608-3000 Fax: (48) 22 608-3001 E-mail: [email protected] Web site: www.stat.gov.pl

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192

Market Research Firms

SMG/KRC Poland-Media S.A. ul. Nowoursynowska 154a 02-797 Warsaw Telephone: (48) 22 545-2000 Fax: (48) 22 545-2100 E-mail: [email protected] Web site: www.smgkrc.pl Pentor Group - Instytut Badania Opinii Sp. z o.o. ul. Domaniewska 41 02-672 Warsaw Telephone: (48) 22 606-1460 Fax: (48) 22 606-1479 E-mail: [email protected] Web site: www.pentor.com.pl IQS and QUANT Group ul. Lekarska 7 00-610 Warsaw Telephone: (48) 825-0933, 827-7586, 825 7587 Fax: (48) 22 825-4870 E-mail: [email protected] Web site: www.iqs-quant.com.pl

4.10.4

Commercial Banks

PKO BP ul. Pulawska 15 00-975 Warsaw Telephone: (48) 22 521-8629, 521-8641, toll free: 0800 120 139 Fax: (48) 22 521-8642 E-mail: [email protected] Web site: www.pkobp.pl Citibank (Poland) S.A. ul. Senatorska 16 00-923 Warszawa Telephone: (48) 22 657-7200, 690-4000, 0801 32 2484 Fax: (48) 657-7580 E-mail: [email protected] Web site: www.citibank.com.pl GE Capital Bank S.A. ul. Waly Jagiellonskie 36 80-853 Gdansk Telephone: (48) 58 301-2221, 304-0781 Fax: (48) 58 300-7702, 304-0701 E-mail: interactive form on the Web site

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Web site: www.gecapital.com Bank of America (Polska) S.A. Al. Jana Pawla II 25 00-854 Warszawa Telephone: (48) 22 654-2500 Fax: (48) 22 654-2515 E-mail: [email protected] Web site: www.bankofamerica.com BIG Bank Gdanski S.A. ul. Kopernika 36/40 00-924 Warsaw Telephone: (48) 22 657-5285 Fax: (48) 22 657-5290 E-mail: not available Web site: www.big.com.pl Bank Pekao S.A. Pl. Bankowy 2 00-095 Warsaw Telephone: (48) 22 531-1000, infoline: 0801 365 365 Fax: (48) 22 635-7784 E-mail: [email protected] Web site: www.pekao.com.pl

4.10.5

Multilateral Development Bank Offices in Poland

European Bank for Reconstruction and Development Warsaw Financial Center 13th Floor ul. Emilii Plater 53 00-113 Warsaw Telephone: (48) 22 520-5700 Fax: (48) 22 520-5800 E-mail: not published Web site: www.ebrd.com World Bank Warsaw Financial Center 9th Floor ul. Emilii Plater 53 00-113 Warsaw Telephone: (48) 22 520-8000 Fax: (48) 22 520-8001 E-mail: [email protected] Web site: www.worldbank.org.pl

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International Finance Corporation Resident Mission in Poland Warsaw Financial Center 9th Floor ul. Emilii Plater 53 00-113 Warsaw Telephone: (48) 520-6100 Fax: (48) 22 520-6101 E-mail: [email protected] Web site: www.ifc.org

4.10.6

Contacts in the U.S.

U.S. Department of Commerce’s Trade Information Center (TIC) Telephone: (800) USA-TRADE U.S. Department of Agriculture Foreign Agricultural Service Agricultural Export Services Division Trade Assistance and Promotion Office 1400 Independence Avenue, S.W. Room 4949 South Bldg., Stop 1052 Washington, D.C. 20250-1052 Telephone: (202) 720-7420 Fax: (202) 690-0193 E-mail: [email protected] Web site: www.fas.usda.gov

4.10.7

Trade Associations

Polish Chamber of Chemical Industry ul. Czackiego 15/17 00-043 Warszawa Telephone: (48) 22 828 7507 Fax: (48) 22 829 7339 E-mail: [email protected] Website: www.pipc.org.pl Polish Chamber of Information Technology and Telecommunications (Polska Izba Informatyki I Telekomunikacji) ul. Nowogrodzka 31, Room 204 00-503 Warsaw Telephone: (48) 22 628-2260, 628-2406 Fax: (48) 22 628-5536 E-mail: [email protected] Web site: www.piit.org.pl

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Polish Chamber of Commerce for Electronics and Telecommunications (Krajowa Izba Gospodarcza Elektroniki I Telekomunikacji) ul. Stepinska 22/30 00-739 Warsaw Telephone: (48) 22 851-0309 Fax: (48) 22 851-0300 E-mail: [email protected] Web site: not available Polish Homebuilders Association (Polskie Stowarzyszenie Budowniczych Domow) ul. Foksal 2 00-366 Warsaw Telephone: (48) 22 828 3044 Telephone/fax: (48) 22 827-7750 E-mail: [email protected] Web site: www.psbd.com.pl Polish Association of Sanitary, Heating, Gas and Air Conditioning Enterprises (Polska Korporacja Techniki Sanitarnej, Grzewczej, Gazowej I Klimatyzacji) ul. Koniczynowa 11 03-612 Warsaw Telephone: (48) 22 678-9893, 678-7929 Fax: (48) 22 678-2076 E-mail: [email protected] Web site: www.sggik.pl The Association of Polish Architects (SARP) ul. Foksal 2 00-950 Warsaw Telephone: (48) 22 826-7439, 827-8710 Fax: (48) 22 826-7456 E-mail: [email protected] Web site: www.sarp.org.pl Polish Pharmaceutical and Medical Equipment Producers Chamber (Polska Izba Przemyslu Farmaceutycznego I Sprzetu Medycznego POLFARMED) ul. Lucka 2/4/6 00-845 Warsaw Telephone: (48) 22 654-5351, 654-5352 Fax: (48) 22 654-5420 E-mail: [email protected] Web site: www.polfarmed.com.pl

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Association of Leasing Companies in Poland Konferencja Przedsiebiorstw Leasingowych ul. Filtrowa 71a apt. 3 02-055 Warsaw Telephone/fax: (48) 22 825-1943 E-mail: [email protected] Web site: www.leasepol.com.pl Packaging Materials and Packaging Manufacturers Association Stowarzyszenie Producentow I Uzytkownikow Materialow Opakowaniowych I Opakowan (PROPAK) ul. Czackiego 3/5 00-950 Warsaw Telephone: (48) 22 828-6426, 828-2715 Fax: (48) 22 773-1932, 828-6426 E-mail: [email protected] Web site: www.propak.pl Economic Chamber of Energy and Environmental Protection (Izba Gospodarcza Energetyki I Ochrony Srodowiska) ul. Krucza 6/14, room 115 00-950 Warsaw Telephone: (48) 22 621-6572 Fax: (48) 22 628-7838 E-mail: [email protected] Web site: not available Polish Power Plant Association (Towarzystwo Gospodarcze Polskie Elektrownie) ul. Krucza 6/14 00-950 Warsaw Telephone: (48) 22 629-0409 Fax: (48) 22 628-6000 E-mail: [email protected] Web site: not available Polish Chamber of Tourism (Polska Izba Turystyki) ul. Astronomow 3 01-415 Warsaw Telephone: (48) 22 836-9971 Fax: (48) 22 836-9973 E-mail: [email protected] Web site: www.pit.org.pl

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5 5.1

DISCLAIMERS, WARRANTEES, AND USER AGREEMENT PROVISIONS DISCLAIMERS & SAFE HARBOR

Summary Disclaimer. This publication ("Report") does not constitute legal, valuation, tax, or financial consulting advice. Nor is it a statement on the performance, management capability or future potential (good or bad) of the company(ies), industry(ies), product(s), region(s), city(ies) or country(ies) discussed. It is offered as an information service to clients, associates, and academicians. Those interested in specific guidance for legal, strategic, and/or financial or accounting matters should seek competent professional assistance from their own advisors. Information was furnished to Icon Group International, Inc. ("Icon Group"), and its subsidiaries, by its internal researchers and/or extracted from public filings, or sources available within the public domain, including other information providers (e.g. EDGAR filings, national organizations and international organizations). 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objectives, financial situation or particular needs of any particular person or legal entity. With respect to any specific company, city, country, region, or industry that might be discussed in this report, investors should obtain individual financial advice based on their own particular circumstances before making an investment decision on the basis of the information in this report. Investing in either U.S. or non-U.S. securities or markets entails inherent risks. In addition, exchange rate movements may have an effect on the reliability of the estimates provided in this report. Icon Group is not a registered Investment Adviser or a Broker/Dealer.

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