Summary Report 2021

We present the report of the activities of Grupa PSB Handel SA in 2021. The purpose of the Company is to create optimal relations among merchant, industrial and service sectors, to satisfy collectively the construction and renovation needs of our fellow citizens.

CAPITAL, EMPLOYEES AND SHAREHOLDERS STRUCTURE OF GRUPA PSB
On the 31st of December 2021 the value of initial capital of the Company was estimated 50,275,000 PLN and it was divided into 50,275,000 ordinary shares of a nominal value of 1 PLN each.At the end of 2021, the shares of Grupa PSB Handel SA were possessed by 857 shareholders including: 1 foreign company (1.4% of the capital), 16 joint stock companies, 128 limited liability companies, 37 limited liability companies-limited partnerships, 3 cooperatives, 9 civil partnerships, 2 limited-joint-stock companies, 75 general partnerships, 586 natural persons.According to another systematics, the stock ownership may be divided into: trade companies – 51% of the capital share and number of votes, manufacturers (the Company’s contractual Suppliers) – 35% of the capital share and number of votes, and natural persons without business activity – 14% of the capital share and number of votes (pic. 1).

At the end of last year the Company employed 583 people (290 women and 293 men). Over a half of the employees had a university degree. A long time program of staff’s qualifications development in 2021 was significantly shortened due to the pandemic restrictions.
GENERAL RESULTS OF GRUPA PSB
At the end of 2021 Grupa PSB consisted of 410 trade companies, with the total number of 292 builders merchants, 342 PSB-Mrówka outlets and 73 PSB-Profi centres. During this period of time, PSB retail network was enlarged by as many as 32 outlets, while 2 wholesale companies were transformed into modern PSB-Profi centres.The cumulated revenue of Grupa PSB network from construction materials’ sales in 2021 reached a historical level of 9 billion PLN and it was over 18% higher in comparison with the previous year’s. It is as a result of two factors: higher number of construction projects and increment of building materials prices – pic. 2 and pic. 3. An average PSB Partner’s sale was enlarged by 17%, as many as 91% of the companies noted increments, while the remaining 9% noted revenues slumps. In 2020 and during earlier periods, those figures were ca. 70/30.The total revenue of PSB Central office (Grupa PSB Handel SA) was estimated 3,8 billion PLN and it was over 18% higher compared to 2020 – pic. 5.
TRADE EXCHANGE – ASSORTMENT OF GRUPA PSB HANDEL SA
In 2021 Grupa PSB traded with 580 Suppliers, that offered ca. 440,000 assortment items.Last year brought small changes in the assortment groups’ shares in the total Company’s revenue. The leading position went again to building chemicals (14.4%). Tools (11%) came second, thermal insulations (10%) – third, and garden and hobby products (9.5%) – fourth. Wall materials (8.9%) dropped to the fifth position. As for the second five positions, lightings, electrics (3.5%) moved up by two positions. Another ten positions have not been changed significantly in revenue share of Grupa PSB – pic. 7.In 2021, 8% (i.e. 308 mln PLN) of trade exchange with Partners was conducted through the two Logistic Centres of the Company. Goods of the value of over 188 mln PLN were taken from the storage house located in Wełecz , while the deliveries of the Logistic Centre in Wąbrzeźno valued over 120 mln PLN. Ca. 85% of the deliveries through the Company’s Logistic Centres was for Mrówka outlets.
MARKETING STRATEGY
In 2021, the Company continued the strategy of cross country as well as local marketing activities with its Partners and Suppliers. As a result, the brand recognition of Grupa PSB has been gradually increased. Last year, Grupa PSB brand was recognized by ca. 57% of Poles, whereas PSB-Profi brand by 39% and PSB-Mrówka shops by 72% of respondents.Advertisement and promotional campaignsThe purpose of the advertising activities was to strengthen the value of PSB’s and its Partners’ brands in customers’ awareness as well as to provide the potential and existing clients with advertisements about trade offer. PSB strategy is based on omnichannel attitude, where both online and offline access channels were integrated to enable customers to consistently reach the offer. The campaigns were supposed to reach the target groups – private constructors, building companies and institutional investors.

The main media for advertisements were:

• Television – “Nasz Nowy Dom” (Our New House) program, campaigns supporting PSB Mrówka promotional leaflets, sponsorship of programs of renovative and garden topics, spot campaign for wholesale channel,
• Radio – spot campaigns, radio sponsorship, radio campaigns in Mrówka outlets
• Promotional leaflets
• Own publications – bi-monthly magazine “Głos PSB”(Voice of PSB), quarterly magazine “M jak Mrówka” (A for Ant), “Barometr Budownictwa” (Building Barometer) and “Informator Statystyczny” (Statistical Informant),
• External advertisement
• Internet – websites (www.mrowka.com.pl and grupapsb.com.pl), Facebook, Instagram, YouTube channel, Partners’ business cards on Google, campaigns with dedicated content.

Media about Grupa PSB

In 2021 media published almost 14,000 publications about Grupa PSB (14% more compared to 2020) – pic. 9. Last year, due to the dynamical changes of building materials prices, Grupa PSB was providing media with multiple analyses and commentaries thus it became one of the most opinion-forming companies on the market concerning the following topics: prices changes trends of construction-renovating materials and their availability on the market, sale results or market situation connected with e.g. high inflation, prices increments of materials, electricity, gas, fuels or labour costs.

Fairs of Grupa PSB

The fairs give Suppliers possibility to present their offers, commence branch meetings as well as conclude contracts with numerous independent business entities united in Grupa PSB which, on the other hand, have opportunity to choose a supplier and place orders.

Presently there are three such events during a year:

• PSB Spring Fair

The first one is the PSB’s Spring Fair in March, that has been organized for the 19th time in 2021. Due to the pandemic restrictions it was commenced in online version. Negotiations between exhibitors and purchasers were organized in the form of Zoom video meetings. The integration of Zoom application with the PSB fair system enabled to combine utility of meetings arrangement and orders placing with online calls in tandem. During the three-day event ca. 15,000 contracts with the total value of 341 million PLN were concluded. The event was attended by 372 PSB Partners and 237 exhibitors – contractual PSB’s Suppliers. The value of orders placed estimated 298 mln PLN.

• PSB Autumn Fair

The second every-year fair event is in September. Last year it was organized for the 7th time, also in on-line version. There were 57 exhibitors (PSB’s biggest Suppliers) and 319 PSB Partners participated in this two-day event. Totally, ca. 5,000 contracts with the value of 127.6 million PLN were executed.

• PSB Garden Fair

The last fair event every year is Garden Fair in November. In 2021 it was organized for the 4th time, and similarly to the previous two events last year – it was also in on-line version. Its purpose is to enable Mrówka outlets prepare early for the spring season. The two-day fair recorded 60 exhibitors – Suppliers of garden assortment and representatives of over 238 PSB Partners. During the video meetings performed on Zoom platform, the Partners completed over 4,200 contracts with the value of over 82.6 mln PLN.

Conferences of Grupa PSB

At the end of last year Grupa PSB prepared two presentations within the framework of conferences with Partners and Suppliers. Due to the pandemic restrictions, again the meetings could not be organized in a traditional, personal form, thus presentations were shared online on our conference platform. There were multiple market analyses, summaries of results and effectiveness of PSB network activities, offers for the coming year, information about trainings, marketing in the presentations. The materials were watched totally by over 1,000 people.

Loyalty programs

• Payback loyalty program

Mrówka network has been participating in a multi-partner loyalty program Payback for eight years. In 2021 outlets issued over 400,000 new cards of the program with PSB Mrówka logotype. Program participants made ca. 5.5 mln transactions in total, which was 14.5% of retail network revenue.

• Bonus sale program Build with PSB for constructors

In 2021 the program was realized in 28 PSB points of sale with support of 29 Suppliers. The turnover of few hundred customers estimated almost 22 mln PLN and it was over 4% share of PSB warehouses’ revenue.

PSB marketing store

PSB Partners can purchase e.g. company clothes, printing paper, shopping bags, minor advertising gifts and marking elements for branch offices of our network, in the marketing store. In 2021 ca. 610 Partners made purchases of ca. 4.4 mln PLN in the store.
CORPORATE SOCIAL RESPONSIBILITY
In 2021 due to the pandemic Grupa PSB and its Partners realized the yearly social, cultural, educative and integrative activities in less scope. However, similarly to the year 2020, last year Grupa PSB network was involved mainly in support for hospitals and medical points in Covid-19 treatment. During this period of time Grupa PSB donated i.a. sanitizers to seven hospitals in Świętokrzyskie province.Last year Grupa PSB carried on the following activities:TV program “Nasz Nowy Dom” (“Our New House”) about renovating and charity topics. Each episode transmitted by TV Polsat was watched averagely by 1.3 mln viewers. In 2021 Grupa PSB supported renovations of 24 houses, both financially and by donating building materials. Moreover, from the beginning of the sponsorship cooperation with the program we have helped improve living standards of over 170 families.

“Bezpieczna droga do szkoły” (“Safe way to school”) activity – in 2021, 30 Mrówka outlets joined the activity, since September 2021 they have trained almost 5,500 pupils from 79 schools. Despite the pandemic the result was very good. The idea of this activity is to educate the students about rules of moving in road traffic.
EXPANSION OF PSB NETWORK
The network of retail points of sale called PSB-Mrówka was enlarged by 32 outlets in 2021 in this figure were 25 Mrówka shops and 7 Mini-Mrówka shops. At the end of 2021, PSB retail network consisted of 342 outlets (in this figure 83 Mini-Mrówka outlets) – pic. 10. Their total revenue was estimated 3.1 billion PLN.At the end of 2021 Mrówka network had totally over 480,000 m² of modern sale surface and employed over 7,000 people. The shops, depending on their surface, offer from few thousands to several dozen thousands of products necessary for renovation and maintenance of houses, flats and gardens.An average Mrówka shop serves a population of 30.000 residents. The estimation shows that about 4 million households located in villages and small towns purchase goods in our branch offices.

In 2022 another 20 retail outlets will be opened.

Profi centres

In 2021, the network of modern builders merchants was enlarged by 4 new points: MB PIASECZNO Złotokłos, KENPOL Łódź, BAUMA Sulejów, PSB PROFI KOWALCZYK Wieliczka. At the end of 2021 the network of PSB Profi consisted of 73 branch offices (pic. 11) that made over 1,68 billion PLN revenue.

In the above mentioned period of time Grupa PSB continued implementing and optimizing motivation systems as well as upgrading logistic and sale processes. The functions of the sale representatives were implemented and developed. Another improvements commenced in 2021: implementation of control units to minimise hazardous situations occurrence, amendment of expositions and presentations of the whole construction systems, extension of assortment groups scope.
TRAININGS AND CONSULTING OF GRUPA PSB
PSB Academy – Grupa PSB has been organising the project for years, as different trainings for various participants.In 2021 due to the pandemic the program was realized by Grupa PSB in much lower scope.On-line training calendar and e-learning platform allow Grupa PSB to coordinate all training types for the whole network.

PSB Central Office, throughout its own specialists as well as its Suppliers’ realises different series of trainings for network employees:
– Technical trainings for the sales employees from retail and wholesale branch offices to increase the knowledge about Suppliers’ products and technologies
– Trainings about procedures and service standards in Mrówka outlets
-Trainings about shop operating management
– Soft skills trainings for managers and sellers (sale, customer service and management).
– Mini-MBA of Grupa PSB – in 2021, due to limits and restrictions connected with Covid-19, Grupa PSB did not organise the training. The project shall commence again in 2022

Auditing service – is offered by the Company’s specialists to PSB network’s retail and wholesale points of sale. The main purpose of the auditors is consulting of correct operation of outlets and warehouses, compliance with PSB’s standards and procedures as well as support in establishing the right development strategy. In 2021 there were below mentioned types of audits:
1. Basic audits for newly opened Mrówka outlets
2. Full audits for longer existing points of sale
3. Audits and consulting dedicated to garden and decorations departments
4. Audits dedicated to wholesale points and Profi centres

Totally 114 audits were performed in 2021.
SERVICES FOR PARTNERS AND SUPPLIERS
Grupa PSB, taking advantage of the scale effect, for many years has been acquiring cheaply various means and services that are necessary for every wholesale house and Mrówka shop. They are e.g.: purchase of fuel and electricity, mobiles, means of transportation, computer software and hardware, shop equipment and courier services. In these fields, the Company cooperates with a dozen Partners representing several economic areas, whereas particular merchant companies in greater or smaller extent, take advantage of the offered conditions.
INVESTMENTS AND PLANS FOR 2022
Last year, the total investment expenditures of Grupa PSB Handel SA amounted to 6.4 million PLN. The most important positions of the expenditures included: completion of Mrówka outlet construction in Andrychów, installation of Busko-Wełecz light pipe, expenses on Logistic Centre in Pińczów, expenses on appliance and equipment, intangible assets, licences and computer programs.In 2022, the Company plans to continue the already started investment tasks that would amount to 24 mln PLN.
FINANCIAL RESULTS
The premise is, that Grupa PSB, as the entity separated from the members is a self-financing one, though oriented to gain a minimal profit. It should be sufficient to cover overheads and sustain the essential reserves that can guarantee obligations solvency towards suppliers as well as creditworthiness.In 2021 the Company significantly increased its capitals throughout new shares (series F, G and H) issuance. As a result, the nominal capital and reserve capital were increased by 43.904.200 PLN in total.In 2021 entrepreneurs had to face the impact of the Coronavirus pandemic on their businesses. The sale revenue of the building branch was not affected by the pandemic.

In 2020 the Managing board of Grupa PSB Handel SA, directed by the precautionary principle, decided to place the reserve for potential future tax liabilities (for the years 2013-2015) of the total amount of 194 mln PLN. In 2021 the level of reserve was changed. It was mainly as a result of the payment of additional 94.348.000 PLN that the Company made but it was also connected with the decision of the Director of the Tax Office in Kielce passed on 13th December 2021 that concerns the year 2014. The reserve made in 2020 for the tax liabilities of 2014 was transformed into obligation. In relation to the year 2013 and also 2014 the Voivedeship Administrative Court passed a ruling suspending the execution of the decision until the final settling comes. Grupa PSB has not received the decision of the 1st instance for the year 2015.

Revenue from sale in 2021 was the highest in PSB’s history and amounted to 3.768 billion PLN. (18% increment vs. 2020), while the profit estimated 34 mln PLN.

Working capital of the Company in 2021 was estimated 150 mln PLN and it was 14% lower in comparison with 2020. Current ratio was 1.34, while the quick ratio was 1.12, thus the Company did not have problems to pay up its liabilities.

Last year the Company paid “sale bonuses” amounting to 122.5 million PLN and “loyalty-marketing” bonuses amounting to 12.5 mln PLN – they constitute the income of the Company’s trade Partners and they are divided according to the engagement into sales and fulfilment of the contractual conditions. Totally in 2021, the Company paid 135 mln PLN of bonuses to its Partners.

Fixed assets of the Company were 174.05 mln PLN. The slump of 2.8% was as a result of the disposal of Mrówka outlet in Jasło and current depreciation of the Company’s assets.

In 2021 Grupa PSB still supported hospitals and medical points in Covid-19 treatment by donating personal protective equipment of the value of 617,000 PLN. This amount was entered as other operating costs.
GRUPA PSB IN EURO-MAT
Grupa PSB Handel SA belongs to an international network of builders merchants groups called Euro-Mat. It includes 21 groups from 19 countries, their total revenue in 2021 was estimated EUR 28 billion. Together, the network has over 7,000 points of sales and employs over 50,000 people.