Questions from shareholders of Mennica Polska and analytics
- Where are investments in public companies (Puławy, Ruch) recognized in the balance sheets? According to what value are they recognized (purchase price? current share price index? in a different way?)
Evaluation of Ruch and Puławy shares are recognized in revaluation reserve; in the balance sheets they are recognized in “Other long-term investments”. These shares are evaluated as at the balance day according to share price index; differences are recognized in revaluation reserve. - Since 2008, distribution costs have appeared in the income statement (they were little at first, i.e. approx. PLN 1-2M for a quarter of a year; now they are PLN 5-6M for a quarter of a year). What is the reason of this group of costs? How can their changes be predicted in future (whether they increase or decrease, e.g. because of the end of development activities in flat sector)?
Distribution costs recognized in the consolidated financial statement do not concern development activities. They concern the Mint of Poland Treasury; this item is characteristic for commercial companies. These costs appeared in 2008 because the Treasury has begun trade activities concerning sales for individual clients since September 2008. - Mennica announce the calls for the sales of Ruch shares. Why is it worth investing in a company that generated losses at the end of 2009 and requires substantial restructurisation?
Between Ruch and Mennica there are many synergies e.g. in the scope of electronic payments or trading competences. We are certain that thanks to such synergies we are able to generate the additional margin for Mennica Polska. The results for the fourth quarter of 2009 constitute a certain surprise for us. We do not hold complete information on the reasons of such poor results. However, we are worried about the fact that most of Ruch’s losses are due to its operational activity. Ruch’s results clearly show that the company requires thorough restructurisation and change of the owner.
Mennica Polska has a plan of Ruch’s restructurisation, which was prepared on the basis of publicly available information on this company. Until the end of the call we cannot publish this plan. - How much time will Ruch’s restructurisation last?
The exact period of restructurisation will follow from the detailed analysis of Ruch, which will be performed after the end of the call. However these will not be months but rather years.
The Management Board of Mennica Polska is experienced in restructuring of companies.
Mennica has also undergone such changes and their results are presented in the financial statements of Mennica Polska. - Does Mennica Polska plan other investments – e.g. takeover of any foreign mint?
The takeover of Ruch is a huge project, in which the Management Board of Mennica Polska will be engaged for the several next years. Thus we do not plan big transactions. - President of Mennica Polska Tadeusz Steckiewicz had been appointed for the Supervisory Board of Ruch but after several weeks he resigned. Has President Tadeusz Steckiewicz taken part in the meetings of the Supervisory Board of Ruch?
President T. Steckiewicz has not taken part in any meetings of Ruch’s Supervisory Board. - Does Mennica Polska plan the issue of bonds?
At present situation taking a loan is more payable for the Company. - Will Mennica Polska consolidate the results of Ruch in its statements after taking over the shares of Ruch and control over this company?
If the call results in success of 66% of results, Ruch will be included into the financial statements of Mennica Polska. However, we will not finance Ruch’s activity from the resources of Mennica Polska. - What investments does Mennica Polska plan for 2010?
The Company does not publish financial forecasts; we also do not inform about capital expenditures that it is going to spend in the future. - Does Mennica Polska have any knowledge about the date when the Ministry of State Treasury is going to sell its package of shares in the Company?
Please refer to the Ministry of State Treasure since it is not Mennica Polska which should answer the question. - Will Mennica Polska achieve revenues and profits on development activity in 2010?
Project in this segment were completed in 2009. - Are there any reprivatisation claims against plots on which buildings of Mennica Polska are located?
There are such claims. Due to the fact that administrative decisions issued by the State Treasury constitute the subject of proceedings, the addressee of such claims should by only the State Treasury. At presents there are ongoing proceedings related to stating the invalidity of administrative decisions, thus such proceedings do not have a defined value of the subject of case. The proceedings concern a part of the plot in Warsaw, on which Mennica’s office block Aurum is located (the proceedings were described in the prospectus of Mennica as of 1997) and a part of the plot at the crossing of Pereca and Żelazna streets. Neither of these proceedings has been completed until now. - Will the Management Board of Mennica Polska recommend the payment of dividend from Mennica’s profits in the following years?
The decision in this case will be taken by the Shareholders. If a call for Ruch ends positively, due to the necessity of restructuring this company the Management Board of Mennica Polska will not recommend the payment of dividend. - Beginning with the year 2008, the profit and loss account began to include the cost of sales (initially relatively small, approx. 1-2 million of Polish zloty per quarter, now it is 5-6 million of Polish zloty per quarter). What is the appearance of this group of costs connected with? How can their future changes be assessed (rise/drop. e.g. in view of closure of the developing activities in the construction segment)?
The cost of sales revealed in the consolidated financial statement do not concern developing activities. They concern Skarbiec Mennicy Polskiej S.A. – the item typical of commercial companies. They appeared in the year 2008 because, with the beginning of September 2008, Skarbiec began commercial activities in the field of sales to individual customers
- How will the Mint comment on the position of Ruch regarding the price in the tender offer and internal methodology for valuation applied by Ruch?
The Mint of Poland will not comment on the position of the Board of Directors of Ruch and on internal methodology of the valuation prepared by Ruch, especially as neither the methodology nor the valuation have been made public. - The trade unions accuse the Mint of having no investing plans: „the party announcing the tender offer unfortunately has no plans in this scope”.
The Mint of Poland has announced the tender offer for the shares of Ruch and is planning to invest approx. PLN 280m in the shares of this company. The Mint has not been allowed to verify the situation at Ruch. With regard to the above, our plans regarding the company are mainly based on some commonly available information concerning Ruch’s financial condition. We have always emphasized that retail network is the basic value of Ruch, and that in the event of successful announcement of the tender offer, we will rebuild this Company's new sales network. - The trade unions claim that the land belonging to Ruch, located in the vicinity of the Mint, in the Warsaw district of Wola, are valued at PLN 20k per square meter – and the entire parcel of Ruch at PLN 260m in total. What can the Mint say about it?
The parcels of the Mint of Poland in the Warsaw district of Wola are located at a several hundred meters’ distance from the parcel of Ruch in Wronia Street, however, their location is better. Even during the boom on the real estate market, back in 2007, offers for these parcels in this part of Warsaw involved amounts that were lower nearly by half than the ones indicated by trade union members.
Presently, the prices of parcels of land are even lower due to a market standstill and, in our opinion, they will not return to the level from 2007 even in several years. If the trade unions want to act responsibly, they can sell the parcel of Ruch in Wronia Street for PLN 260m. We think it is pure populism. - The members of trade unions claim that the privatization of Ruch should be withheld until the company value increases. It is generally visible that the Mint, if it acquires Ruch, will not have an easy life with trade unions.
The decision on selling the shares of Ruch will be made by the Shareholders of this company and we cannot say anything on their behalf. The Mint of Poland, as one of the Shareholders, is concerned with the fact that the majority of losses of Ruch in 2009 result from operational activity. In the economic situation Ruch has presently found itself in, the expectations of trade union members may not be met or may even lead to the end of company activity.
As regards the trade unions, we have experience in cooperating with social partners. Trade unions have been operating at the Mint of Poland for many years, and their members include the employees of our company. A few years ago, the team took an active part in restructuring the Mint. The effects of the restructuring are visible in the Mint's financial statement. Withholding the privatization of Ruch, without settling the question of who will buy this Company's shares, may lead to an identical situation the shipyards in Szczecin and Gdynia found themselves in. - The workers' council claims that after Ruch's acquisition by the Mint, the distribution activity will be at risk.
For the Mint, distribution is the fundamental activity of Ruch. After the successful announcement of the tender offer for the shares of Ruch, distribution will certainly remain that way. - The trade unions and the workers' council claim that the main goal of the Mint will be to sell valuable parcels.
We do not know the source of this information. The central aim of the Mint of Poland, as the company that may potentially take control over Ruch, is to develop profit on the basis of the fundamental activity of Ruch.
If Trade Unions and the Workers' Council of Ruch think that the Company's assets in the form of real estate are worth the amount they presented in their declarations, the Mint will be eager to acquire Ruch without the real estate, only with points of sales network.
Obstructing the privatization process shows that there are parties in Ruch that have an interest in preventing it. - What is the Mint’s opinion on the restructuring announced in the evening – making 20% of the team redundant?
We have no knowledge on the legitimacy of these activities, so we do not want to comment on the actions of the Board of Directors of Ruch. - Will the Mint consider raising the price in the announcement of the tender offer or is it already the top level?
We will not comment on that. - Does the Mint have any alternative plans of acquisition and what about acquiring the Czech mint?
At the end of 2009, the Mint of Poland had no debt and its net profit reached nearly PLN 100m. It also has high potential for acquiring external funds for investments. Presently, the Mint's most important project is the successful conclusion of the tender offer for Ruch and leading to a situation in which Ruch will generate profit from operational activity.
Taking control over Ruch and activities related to exercising active owner supervision over Ruch will, to a large degree, involve the Board of Directors of the Mint of Poland and its managers. That is why at the moment we are not planning to launch any large projects related to company acquisitions. The situation may change if the announcement of the tender offer for the shares of Ruch does not come into effect. At the present stage, it is too early to speak in detail of other projects we consider. - Has Ruch been informed about the scope of knowledge of the Mint of Poland's representative in the Supervisory Board of Ruch before his resignation?
The President of the Mint of Poland, Mr. Tadeusz Steckiewicz, did not participate in any meeting of the Supervisory Board of Ruch and did not have any access to documents of Ruch that were not already public. Tadeusz Steckiewicz submitted a suitable declaration related to the matter to the authorities of Ruch.
In the light of the binding rules of law, if Mr. Steckiewicz gained access to Ruch's confidential information, the Mint presently would not have the right to announce the tender offer for the sale of the shares of Ruch. - On 29 March 2010, the Ministry of the Treasury announced that two entities, namely Jupiter NFI and Lurena Investments, were permitted to start negotiations on the acquisition of stocks in the company RUCH S.A. Does it mean that the Mint of Poland will not hold talks with the Ministry of the Treasury on acquiring shares in the RUCH S.A.? What further activities will be undertaken by the Mint of Poland in this respect?
The Ministry of the Treasury should be requested for interpretation of this announcement as it reflects the position of the Ministry, and not the one of the Mint of Poland. the Mint of Poland did not enter into negotiations with the Ministry, aimed at the acquisition of shares in the company RUCH S.A., because earlier it had reached a decision to summon for registration in the sales procedure of the RUCH S.A. shares, and such mode of acquisition of shares in the RUCH S.A. does not provide for negotiations. The response to the call is completely at will of the owners of the RUCH S.A. shares, including the Ministry of the Treasury. The terms of the call are public information.
Mennica Polska S.A.
