Sunday, 29 July 2012

Bankruptcy spate

Recall this post? Remember the economic slowdown in late 2008 and 2009? Remember how Poland has got off it lightly? How do you assess the resilience of the Polish economy to weather the current storm?

One of the indicators of an economy’s strength is the number companies filing for insolvency. If only this gauge was to be taken into account, the Polish economy should be hailed as much more ailing than in 2009, when despite lower GDP growth more companies managed to get by.

2012, if it does not bring the end of the world just before Christmas, will go down in a history as a year of most spectacular bankruptcies. The list grows impressive and I surmise this is not the end yet.

For starters, Advadis. The company has actually been under water since 2009 and its misery lasted quite long, before liquidation was declared by the court. It has not been delisted yet and at the present its shares trade at 0.04 – 0.05 PLN and are “the cheapest” on the whole Warsaw Stock Exchange’s main market. The risk associated with price changes is hence noteworthy. Although a change of price of one tick resulting in increase of 25% sounds alluring for a refined speculator, I keep away from such stocks, for sake of their low liquidity and intrinsic value no higher than zero.

In March Dolnośląskie Surowce Skalne, lead contractor of middle section of A2, which took over responsibility for the hapless section, filed for insolvency. In April the court declared its liquidation, which was later changed to bankruptcy arrangement. I have no hopes the firm will ever recover. The Silesian company dealing with rock extraction has not risen to the challenge of building a motorway in an unfavourable market environment and under adverse terms of contract with the state road-building agency.

The avalanche grew apace in June. In the first days of this month PBG and its subsidiaries, including the biggest – Hydrobudowa, in the face of inability to settle their liabilities, filed for insolvency, which was soon declared in the variant involving protection from creditors. Woes of the construction industry have many causes. First and foremost is the price war which sparked off in 2010 when tender for road construction before Euro 2012 were put out. The companies, suffering from shrinking portfolio of orders, resulting from the economic slowdown, competed so heavily that they offered very low margins and accepted lack of revaluation clauses (allowing for price negotiations if prices of raw materials and other costs rise) and delayed payment deadlines in contract between them and the state road-building agency. Heavy leverage and liquidity squeeze knocked the company down I recently skimmed through some files at work and found an analytical report from August 2011 with ‘buy’ recommendation for PBG and target price of 155 PLN. Now shares of the firm are trading at around 6 PLN.

The next construction company queuing for bankruptcy was Polimex Mostostal, another one stricken by over-leveraging, losses on state-paid contracts and growing balance of accounts receivable. In mid-July the company sent a letter to financing banks and bondholders in which offered to enter into a “standstill agreement”, under which creditors would hold back from claiming their money for four months. In fact it meant buying time to revive the company and admitting severity of financial hardship. The agreement has been reached and the future of Polimex remains an open issue, but if creditors allow it to reorganise I see a bright future before it.

Construction companies themselves are not the only victims of the crisis. The wave has wiped out several subcontractors, left many workers jobless, done out of money creditors, i.e. bank and holders of seemingly safe investment fund units.

2011 was a hard year for the fish industry. All companies from it listed on the stock exchange have not been doing well. The reason for troubles were high prices of fishes on international market that could not be passed onto customers. The trend reversed in late 2011, but one of the companies in the sector, Wilbo, did not resist the pressure and popped off in July.

Retail sector in Poland seemed resilient to economic slowdown, but 2012 saw one notable fatality in this industry. Delicatessen network, Bomi, filed for bankruptcy in late June. The Company had been mismanaged for years and incurred losses since 2010. I blame the flawed business model for the downfall. In Polish society in which where you shop does not reflect upon your social status, luxurious and expensive delicatessen have a narrow niche on the market. Bomi positioned itself as a posh shop for the better-off, many of who actually prefer to buy groceries in supermarkets and discounter shops. Bomi’s strategy proved a big failure and the company has eventually gone under. The chain will probably be taken over by one or more of the competitors.

Summer is the holiday season and a year without a bankruptcy of a travel agency could not be deemed memorable. Early July saw the spectacular downfall of Sky Club, legal successor of well-known Triada. Within hours the agency ceased to sell trips and send its customers for holidays. Most of eighteen thousand of tourists who holidayed with Sky Club had to return to Poland ahead of plan, those who have not set off yet, would not go at all. The liability of the tour operator was covered by an insurance guarantee of 25 million zlotys, sufficient merely to organise comeback to Poland for tourists stuck abroad. The afflicted clients, surprised by the bankruptcy before the departure, will be wrangling to claim their money for months. I do not dare to assess their chances to recover money. Needless to say several small travel agencies declared insolvency so far.

Bomi and Sky Club dragged down IDM brokerage firm. The once renowned company has not officially gone under water, but its troubles are apparent. It lost many of its own and its clients’ funds in stocks and bonds of the companies described above.

OLT Express enter the Polish market on 1 April 2012. By offering competitive prices for domestic flights (99 PLN) it beat competitors and soon gained many clients. Its lucky string has not lasted long. On Friday the operator officially suspended its operations, the cited reason is cutting off funding from lessors and key stakeholder, Amber Gold, a mysterious vehicle, black-listed by the Polish Financial Supervision, which offers high-yielding deposits, allegedly backed in gold, incidentally said to be a Ponzi scheme.

Who next? Hard to predict. Economic indicators, including faltering consumer confidence, point at lean times, so some more spectacular business failures might be witnessed this year.

Sunday, 22 July 2012

Still reliable?

I would always resent when somebody reiterated the common belief that French cars are crappy. Most people hold the opinion they stand out in terms of design but several glitches, mainly electronics going bonkers, take the gloss off the well-shaped bodywork.

I defied this conviction by citing the example of Renault Megane which has belonged to my family for nine years now. My father bought it brand-new in 2003 and signed it over to me last year. The car has a very low mileage (53,067 kilometres now) – the upshot of taking on average one longer (more than 500 km to the destination and back in total) trip a year and using it in town when justified only.

Until last month, the car let us down on average less than once in two years. It had a bad track record in the third year of usage – then within one summer of 2006 it had three minor breakdowns – first revolutions sensor packed up, then central locking system close all doors except one, later boot door lock disintegrated. It had a more serious breakdown in September 2010, when it had to be towed away to Renault garage after ignition coils packed up, but as they’d been three years overdue for replacement I’m putting it down to Renault mechanics’ negligence.

Never look a horse gift in a mouth (I paid no money to my parents for the car), but over the year of owning it I had to replace a battery last autumn and have the brakes changed, but these were just the effects of wear-and-tear. The car withstood temperatures below –20C without any problems, but then in early June something began to clatter when I cranked up the engine, as shot on this video. The sequence is exactly the same. Revolutions go up, then something clangs, rattle or gives off some other sort of annoying noise and the engine cuts out. Right away I crank it up again, the rattle is not as loud as at first attempt, but revolutions level off on flush gear level. Funnily enough, it occurs randomly, and for example when I started the car after 13 days of sitting totally idle during my illness, it fired up beyond reproach. The cause of the nuisance is the dephaser pulley (koło zmiennych faz rozrządu for my Polish readers), a very common glitch in Megane II 1.6 16V engine. Renault has never officially admitted it is a manufacturing defect in this model and never recalled cars affected by it, but if you drive a hard bargain you can expect to have the repair partly refunded. I haven’t had it fixed yet, as the problem is not exacerbating (i.e. the engine does not cut out when running on flush gear), but I will have it done before winter together with the whole cam set (camshaft, timing belt, pumps, etc) due for replacement after each five years. Estimated expense – some 2,000 PLN.

On Monday two weeks ago while driving to work I opened a window in driver’s door and unfortunately couldn’t shut it. Instead of leaving the car on P&R car park, I had to drive to Renault garage. The first diagnose sounded like a sentence. The whole system, including hydraulic elements and little engine was defective, the cost of the new part – over 1,000 PLN, some 10% of the car’s market value – an overt absurdity. I needed the car for the afternoon so I asked the mechanics to dismantle the door, assemble the window in a closed position and check what actually was wrong. Lucky me, only the engine packed up, while hydraulics, despite some signs of wear and tear, was still in working order. I made an arrangement for a repair on Friday…

On Wednesday I pulled up to the petrol station to fuel up the car. I was again lucky, not to be running out of petrol, because I couldn’t simply put the pipe of the fuel dispenser to the petrol cap. Again, the hydraulic element packed up. A quick call to Renault garage and a request for a more comprehensive service on Friday. My bill as I was picking the car up was 640 PLN, therein some 250 PLN for spare parts, original, yet quite inexpensive and almost 400 PLN for labour charges. A man-hour there will set you back 160 PLN before tax. Add up 23% VAT and subtract my 15% loyalty programme discount and this gives you roughly 167 PLN for an hour spent by a well-trained mechanic mending your depreciating tin.

After three letdowns over two months, I fear next breakdowns and bills charged by Renault. There is a chance that nothing packs up for many months, but the car has nine years and even despite low mileage some of its components might have reached the end of their useful lives. I can also turn to a private garage rather than keep on letting Renault rip me off, but the car is stuffed with electronics so much that in some cases a mechanic is helpless if he can’t hook the vehicle up to the computer.

Now I’m facing two options – keep sinking money into the car, or buy a new one. I don’t mind driving an old car, I’m only concerned about its reliability and expenses incurred to keep it going. The old car will surely require some outlays, but the brand-new one is a bigger one-off expenditure and would prompt me to buy a full motor insurance. On the other hand, a brand-new vehicle usually gives the comfort of reliability and if even if something breaks down, it should be covered by a warranty (but beware and read all provisions in a warranty statement, including exception printed in a small font at the bottom of a page).

Actually it’s not the right time to have the car replaced, even having to spend some 3,000 PLN a year to keep it running is less than motor insurance premium (at least 2,000 PLN in the first year for a brand-new small car worth between 40,000 – 50,000 PLN) and less than depreciation in the first year of using it (25% of the showroom price evaporates over the first year).

I can still take this car for a longer trip without fearing an unexpected breakdown. All described above defects could have occurred in a younger car with a lower mileage (dephaser pulleys pack up even after 20,000 kilometres in defective Meganes II and window opening mechanisms can stop working even in brand-new cars) so I’m intent on taking care of my Megane and dreaming of a company car, mindful that the best years for getting perks from employers are gone…

Sunday, 15 July 2012

Heavy Sunday...

The length of today’s musings is sponsored by a hangover. I got tanked up yesterday because I planned and wanted and I feel no remorse.

In brief, drinking around half a litre of vodka within some four hours by a 24-year-old male, 190 centimetres tall, weighing 70 kilograms, who used to be well-trained in boozing, currently seldom looking for occasions to indulge in consumption of alcohol beverages can result in:
1) joyful frame of mind, upbeat attitude towards challenges and unwarranted friendliness towards people,
2) not feeling dizzy, nor having problems keeping the balance (to my huge surprise),
3) not having stomach turned upside down and having its contents thrown up inadvertently, albeit it has to be emphasised at the certain moment I knew I’d had enough and drinking a single droplet more could end up very unpleasantly,
4) having irregular blood pleasure and heartbeat – again this body reaction proves to be the biggest peril affecting well-being just after drinking on the day after,
5) sleeping too shortly and waking up at 3 a.m., after mere four hours of sleep (most people sleep well while hammered),
6) being unable to sit behind the wheel for the whole day (better not to play with the fire…) and reluctant to cycle (weather’s perfect in terms of temperature today!),
7) having serious problems to string together a blog post longer than a few sentences,
8) trying harder to acquire some knowledge while poring over the 4th volume of my CFA level 1 textbook.

All in all, the state of intoxication brings about a huge temptation to revert to it more often. This is the simplest path to losing control over drinking and falling into a dire addiction, so it’s much better to resist it and wait patiently for the next occasion…

Sunday, 8 July 2012

Not fond of extremes…

It’s been the ninth day of the first heat wave in Poland this summer. Weather forecasters avow the mass of Saharian air is about give way to cooler Atlantic air and the period of temperatures above +30C is drawing to a close. Nine days is still fewer than seventeen, which is the length of cold snap that gripped Poland between 27 January and 12 February this year.

Being fed up with the big freeze, I pledged not to gripe about the big heat when it comes. So now, not a word of complaint, only a comparison of those two types of extreme weather. Unlike most people, I prefer sea climate, with mild winters and summers and lots of precipitation.

Temperatures in the range of -15C and +30C are what I call bearable. If they drop below, or rise above it, withstanding the weather begins to be a nuisance. If you are fond of them anyway, enjoy the paragraphs below.

Extreme temperatures hit your wallet. When it’s cold, your central heating has to run at full blast to keep your dwelling warm. Sooner or later the heating bill has to be settled. This is the direct and palpable expense incurred by the cold weather. The cost of heat is dispersed in many other expenses – of electricity, if you have air-conditioning system, but this is still uncommon at homes in Poland, water – you need to take baths and change clothes even a few times a day, if you need to water the garden and it doesn’t rain, the water bill skyrockets.

Garments. Putting on several layers of clothes to keep you warm when it’s –20C outside is not pleasant, nor convenient, but if you are outside and wrapped up, it’s still alright. Troubles set in when you find yourself in a warm interior and you begin to swelter, since it’s not always possible to take off all the unnecessary layers. When it’s hot outside, you naturally wear is little as possible. In principle, this is the upside of the heat wave, when you look at young attractive women, but in fact, if you’re not on holiday, in many situations you just can’t dress casually, or as casually as you’d like to. Wearing a suit in extreme weather is not a pleasure and I don’t dare to judge whether it’s worse to have to don it when it’s –22C or when it’s +32C. In the former case a solid overcoat and long johns are a must, in the latter you’re very likely to break sweat within second (unless you have a big tolerance of heat).

Staying at home. Here the frost has the edge. In Poland you can easily take shelter from cold at home (don’t mind the heating bill), while when air-conditioning is seldom installed in private houses (although prevalent in office and public buildings), therefore dwellings heat up and after a few of excessive warmth outside and the heat is inescapable.

There are people who prefer to stay at home when temperatures go into extremes. This is visible if you take a stroll on a lazy Sunday afternoon when temperature hits the day-time high. No matter if the high is –15C or +35C, there will be almost surely no pedestrians and sparse cars in sight. When in need to move around you have four basic choices: on foot, by bike, by public transport and by car. If you walk, depending on the weather you have to either dress a lot, or almost not at all and be exposed to extreme temperature. In winter cycling is rather impossible, in the summer it can be nice, as long as the temperature is nice (for me up to +25C). If you take a longer trip by bike, don’t forget the headwear and litres of water to prevent your body from dehydration (my scribble begins to resemble agony aunt’s handbook). Public transport vehicles which run overground have a tendency to fail when it’s very cold. Rails sometimes crack, so your tram or train may not come in time and some badly-maintained buses might not start after a night in the depot. Other potential inconveniences include broken down heating and doors jamming when opened and letting chilly wind inside. On hot summer days breakdowns are rather rare, though engines can overheat, or rails can distend, but the real plague in Warsaw these days are defective air-con systems. Passengers report temperatures inside vehicles of +44C. No wonder a tram driver passed out a few days ago in such heat. Going by car looks then like a pleasure… If you have a garage… In winter the facility saves you scrapping hard rime of the windows (even if these are only side windows, the exercise may bring you close to a frostbite), cold-starting the car (not a problem, if the vehicle is properly maintained) and heating it up before you pull out, or grappling with gear lever before the oil runs thin. In the summer the temperature inside your car sitting in the sun may rise even to +70C, so it is best to park it under the roof, or on the eastern side of the building, so that in the afternoon it is in the shadow. The salvation comes with the air-conditioning, these days common even in low-end cars. Unfortunately if you use it often, you risk exposure to temperature shocks and resultant illness and you’ll be bound to visit the petrol station much sooner, as the device guzzles petrol without scruples… The advantage of the summer is that you can leave your car sitting for several days and it’ll start without problems. In the winter not using a car for a longer period of times means running a risk of having problems starting it.

In terms of people’s moods, below minus twenty a typical frame of mind is a well-balanced blend of weariness and joy. On one hard, withstanding the frost is pain in the arse, but on other we don’t give up to it. It’s chilly outside, but we have money to pay for the heating, warm clothes to wear, our reliable cars don’t let us down and we persevere. In the summer most people are overwhelmed with fatigue and aggression. Hot, so hot-tempered. A small spark is sufficient to break out a huge quarrel, people are inattentive, impatient, sleepy and simply worn-out.

The above can be a not-the-worst example of a “pros-and-cons” essay. May copycats draw inspiration from it.

Sunday, 1 July 2012


Outside +33C, inside +28.5C, despite external rollers pulled down. I dread to think how hot it would be in my room without them. But some five months ago when temperatures in the morning were hitting minus twenties, I promised not to gripe about the heat wave when it comes. Frost has one advantage over heat – you can take shelter from it at home, assuming you have heating put in. Air-conditioning in private houses is not popular in Poland, so we swelter, but don’t have to think about the coming heating bill, wear several layers of clothing, wait for a public transport vehicle that fails to run according to timetable, etc.

In this temperature I feel like taking a nap; I even understand why siesta is so common in southern Europe in the summer months – when it’s above +30C you simply get drowsy.

Yawn… Not a temperature conducive to thinking, nor the time is right. I’ve had more than enough time to think many aspect of my life over when I had to stay in bed for some nine days in June.

Was it all just a coincidence? My first true holidays since September 2009, carefully planned, long awaited and two weeks before the departure, probably on my way to and from Poznań by train I contracted an illness. I blame this journey, because on my way to Poznań air-con was cooling the compartment at full blast, while on my way back it wasn’t running at all, windows were locked and inside the carriage you could breath in a abhorrent stench of fungus…

Then I disregarded problems with sore throat, they didn’t pass as they’d come, a small illness developed into a bigger one, I got one antibiotic, it helped for a while, but didn’t fully cure me. On the eve of my departure I came down with high fever and the next day it turned out I had the accursed laryngitis. The second antibiotic, despite staying in bed, didn’t help as well. Finally the third one, in the third week of my struggle against disease, set me free from the illness, but knocked me down solidly and played havoc with my heart and muscles (thank God it left out my digestive system…) and left me stranded at home, unable to do any physical exercise, not to drive car for a few days. Eventually, I recuperated…

So why did it strike in the period of holidays and in warm June, not when weather can contribute to catching a cold? Was it a punishment?

Could it be a punishment for the idea to go on holidays completely on my own for the first time? For the plan to do spend time exactly the way I want, without taking heed of other people’s opinions and without having to put up with their habits, whims, shortcomings? Many people spend holidays in such way, many would never try to go alone, but is something condemnable in it?

Could it be a punishment for being at loggerheads with my parents? For falling out over every smallest thing, just as a matter of principle? After all they’ve always wished me well and when we disagreed and eventually I reluctantly followed their advice, with hindsight they were proven right. And even if not, they had the courage admit their mistake and advise me not to listen to them every time. Now we all decided to mend our ways and get along quite well, but for how long?

Could it be the punishment for how I foster relationships? Isn’t it true that I meet and talk to people I call my friends too infrequently? With time most friendships have all loosed up, especially I began to feel it upon finishing the studies. How many times have I rejected meeting proposals just because I was too busy, too tired, short of time? How come relationships between people can fall apart so easily? Do social media replace real world – I checked today I have 113 friends on facebook, while many of them I haven’t seen for ages and I haven’t invited many people I know well and meet every day. Facebook doesn’t reflect reality. Real friends matter, not boosting your friend count on social networking portal.

Now a message dear fellow bloggers. In February I was giving a lift to Michael, the same day he met Scatts and Paddy. They all agreed we should call a blogmeet. Four months have passed since then, fourteen months have elapsed since the last blogmeet and… silence…

Could it be the punishment for my (excessive?) commitment to work? For trying to stand out, present myself as reliable and knowledgeable employee at the expense of my private life? Staying overtime, taking up more duties – it was always obvious to me, I could not refuse. Actually I learnt a lot, developed a lot, built a network of professional relationships and gained exposure to influential people in my organisation that can give me a stepping stone for a future promotion. Can I build such valuable relationships in a private life? Were those sacrifices justifiable? Until now, I received no financial reward for my endeavours, prospects of promotion or a pay rise are remote and I seem to appear as someone always eager to do the most unrewarding tasks without a murmur…

Could it… No, start the sentence over a different way… Isn’t it the punishment, maybe even a well-deserved punishment for falling in love with that (don’t try to recall, I haven’t broached that topic and don’t plan to revert to it) girl so senselessly. It’s lasted for too long, I should have got her out of my mind, but well, sometimes you just can’t help yourself. It’s weird given that from the beginning I knew this was not someone I would like to spend my life with, not someone with who I could build a happy marriage. Well, there are situations when people can’t resist to make a step forward, even if they fully realise they’re on the verge of a precipice.

Was it reciprocated – I’ll probably never find it out. So many times I could easily say so, but equally many times, she would be indifferent or turned me away. Her attitude to me chopped and changed, within hours, not even days. I know she can pretend very well, not a good trait for a partner, so it’s impossible to find out what she really felt.

Was it she who hurt me, or wasn’t it me who hurt her as well, maybe even more? If it was reciprocated, I should also blame myself. Under certain circumstances I had to build a smokescreen (e.g. by flirting with other women) just to nip in the bud others’ suppositions there was something between us. But could she see through the smokescreen, or did she suffocate with the smoke? And didn’t I, in the meantime, hurt someone else, didn’t I waste another chance in an unforgivably silly way?

Could there be a future for us? Without a significant reshuffle in either her or my life, in the long run, surely not. In many aspects we are similar, in many aspects we could complement each other, but at the end of the day we are worlds apart. She is full of contradictions (like every woman to some extent), surely fragile and quite sensitive. And here the red light goes on – she’s sensitive only when harm is inflicted to her. I realised it upon compiling this post. If she read it, she’d just pull a face and what actually I was getting at and why I cared about those worse-off people.

I believe like many people, she’s so afraid that somebody can hurt her that she hurts someone else? She’s built a shell surrounding her not to let other people find out what she really feels. I could have enough power and determination to break through this shell, but my hands were tied and they still are. I could only bang my head against it, but is it worth the effort?

I treat this post like a katharsis. I need to break away.

A year ago if somebody had told I would go crazy about somebody with such abandon, I would have ridiculed them, call a downright idiot and bet all my savings they were an idiot. Fortunately, such opportunity didn’t arise and at least I’m not out of money on top of that.

So it stands to reason that my recent apathy is a consequence of this senseless affection. For some time, probably since early spring, I haven’t discerned the beauty in the world, until then I could see it in simple things, such as the sunset I’d lapped up a year ago, nor in magnificent ones. Everything in the world seems to me ugly.

When staying in bed I spotted this on my friend’s (we’ve been trying to arrange a meeting for half a year and guess if we met) wall on facebook. This might suggest another explanation. In late winter, when it sank in to me the senseless affection is beyond all doubt senseless, I resolved to be stronger than ever and than everyone around. I decided not to let any emotions overcome nor overwhelm me, I decided to be the last to lay down weapons on the battlefield, to be the captain the last to escape the sinking ship. I wanted to be bullet-proof, like in the song played so frequently in the radio those days. With time I realised it might be easy to deceive other people, but hard to deceive myself. I had moments when I was near breakdown, there were days when I got in to the car after work and yelled for half a minute to disgorge the negative emotions. It’s over. I haven’t experienced depression – I still feel a lot of energy and according to on-line tests, I have no or almost no signs of it. I haven’t experienced a single panic attack, but anxiety has kept me company for months, if not years. Perhaps this is the price to pay for some choices.

From now it’ll get better. It must…