Poland Today Business Review+ No. 005

No. 005 / 30th September 2013 / www.poland-today.pl / magazine, conferences, portal, newsletter

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MANUFACTURING & PROCESSING ATV maker Polaris Industries breaks ground on PLN 100m factory in Opole page 2

BANKING & FINANCE

Another year of "wait & see" ahead of CEE's M&A and private equity market page 4

ENERGY & RESOURCES

State-controlled power utility Energa eyeing November listing on WSE page 5

PROPERTY & CONSTRUCTION

Investment trust Meridian Properties to raise EUR 170m from Warsaw IPO page 6

Mobile firm Polkomtel secures 23,000 sq.m in this year's largest office deal page 7

SERVICES & BPO

ING Services picks new eco-friendly office location for Katowice center page 7

Hospitality chain Best Western on track to have 50 hotels in Poland by end of 2015 page 9

TRANSPORT & LOGISTICS

Gov't to speed up completion of Warsaw ring road page 9

CONSUMER GOODS & RETAIL Austrian EYEMAXX opens first MyBox shopping center, more to come page 12

IT & TELECOM

Orange Polska bundles mobile and fixed line assets under one roof page 13 British Truphone launches Polish unit page 13

POLITICS & ECONOMY

Final terms of pension reform may be less restrictive, Prime Minister says page 14

GUS & NBP confirm Polish economy on slow-growth track page 15

KEY FIGURES

Up-to-date macroeconomic figures, currency & stock market data and lots of other hard-to-find info pages 16-18

Inter IKEA Centre Group operates seven large retail centers in key Polish cities. Photo: IKEA

Swedish Swedish Swedish Swedish giantgiantgiantgiant expands expands expands expands Polish Polish Polish Polish portfolioportfolioportfolioportfolio Inter IKEA Centre Group, the Swedish furniture giant's retail property arm, have extended their Franowo mall in Poznań and taken over one of Warsaw's largest shopping centers - Wola Park. The Swedes are eyeing more targets in Poland. page 10

WIG index at highest level since Feb '08WIG index at highest level since Feb '08WIG index at highest level since Feb '08WIG index at highest level since Feb '08 Warsaw Stock Exchange indices have returned to their pre-crisis glory on the back of better-than-expected performance of listed companies and encouraging macroeconomic data. page 3

weekly newsletter # 005 / 30th September 2013 / page 2

MANUFACTURING & PROCESSING

ATV maker Polaris ATV maker Polaris ATV maker Polaris ATV maker Polaris Industries breaks Industries breaks Industries breaks Industries breaks ground on Opole plantground on Opole plantground on Opole plantground on Opole plant

Polaris Industries, a US manufacturer of all-terrain vehicles (ATVs), broke ground in mid-September on its first foreign assembly plant in the Opole section of the Wałbrzych special economic zone, in south of Po-land. The project is to total PLN 100m and create 350 new jobs next year, according to information provided by the zone, but the final figures are likely to be much higher. "Opole, Poland was chosen due to the availability of skilled labor, location near the A4 motorway, and close proximity to the existing automotive supply base," Matthew Homan, Vice President Europe/Middle East/Africa (EMEA) at Polaris told Poland Today's Lech Kaczanowski earlier this year. "Despite a difficult economy, our EMEA business gained market share and recorded 5% sales growth, demonstrating that our team finds ways to win regard-less of conditions. We're confident in the future of our European business. To better serve those customers, in 2013 we'll break ground on our first overseas as-sembly facility," top Polaris executives Scott W. Wine and Bennett J. Morgan explained the rationale behind the European investment in a letter to shareholders. "At full capacity we expect to employ over 500 em-ployees in Opole. The plant will produce Polaris ATVs, and the Polaris Ranger and RZR side-by-side vehicles. Chassis welding, painting, and finished good assembly are the major processes that will occur within the

plant," Mr. Homan said. The plant's annual output, ac-cording to local authorities will top 250,000. "The figure will vary according to market and custom-er demands and is not determined at this time. Con-sistent with our other operations we will utilize a de-gree of local suppliers. Besides assembly, a product engineering and testing team, with the focus of meet-ing the needs of the European market, will be located in Opole," adds Matthew Homan.

Polaris is one of the world's top producers of all-terrain vehicles Photo: Polaris Industries The NYSE-listed Polaris is a recognized leader in the powersports industry with annual 2012 sales of USD 3.2bn and net income of USD 312m. Polaris revenue rose 21% last year, while over the past three years its sales doubled and its net income tripled. With 4,600 employees worldwide, Polaris seeks aims to become a "highly profitable, USD 5+ bn global enterprise," ac-cording to its management. The company designs, engineers, manufactures and markets off-road vehicles, including all-terrain vehi-cles (ATVs) and its trademark Ranger and RZR side-by-side vehicles, snowmobiles, motorcycles and on-road electric/hybrid powered vehicles. Polaris is among the global sales leaders for both snowmobiles and off-road vehicles but it has also established a pres-

ence in the heavyweight cruiser and touring motorcy-cle market with the Victory brand. The value of Europe's ATV sector was estimated at some EUR 2bn in 2010. There are no official figures on the number of quads in Poland, but some industry rep-resentatives speak of 80-100,000 units. These off-road vehicles (mainly inexpensive Chinese imports) used to be popular a couple of years ago, but a number of well-publicized accidents and the resulting tightening of regulations, accompanied by economic downturn, have brought that boom to a halt.

MANUFACTURING & PROCESSING

Peixin machinery firm Peixin machinery firm Peixin machinery firm Peixin machinery firm to make first Chinese to make first Chinese to make first Chinese to make first Chinese IPO in Warsaw IPO in Warsaw IPO in Warsaw IPO in Warsaw

Chinese machinery manufacturer Peixin Interna-tional Group seeks to debut on the Warsaw Stock Exchange in October and raise EUR 21.35m net to fi-nance a part of its investment program for years 2013-2015, which the company values at EUR 70m. Peixin International will be the first Chinese company traded on the Warsaw exchange. Peixin makes equipment and production lines for hy-giene products (sanitary napkins, diapers, facial tis-sue), with exports (mainly to Asia, Africa, and South America) representing some 47% of its sales. The company has been on the market for more than two decades and it posted sales revenues of EUR 46.5m and a EUR 11.4m net profit in 2012. Its long-term strategy is to maintain a 50/50 ration between exports and domestic sales.


The maximum price of Peixin's shares was set at PLN 25, and book-building for the issue was completed last week. Some 20% of shares will be go to retail inves-tors, the rest to institutional investors in Poland, the prospectus showed. The company expects to debut on the WSE around October 10th, 2013.

One of Peixin's production lines for baby diapers. Photo: Peixin International Group

Peixin seeks to take advantage of the outstanding growth opportunities China and India, where the market for hygienic products is booming thanks to a rapidly expanding middle class. With its EUR 70m in-vestment program the company aims to increase its production capacity, focusing on high margin seg-ments (such as sanitary napkins and diapers) and more advanced machines. A portion of the proceeds will be put towards R&D. Currently Peixin employs some 460 staff including 23 R&D engineers.

BANKING & FINANCE

Warsaw bourse's key Warsaw bourse's key Warsaw bourse's key Warsaw bourse's key index WIG rallies to index WIG rallies to index WIG rallies to index WIG rallies to more than 5more than 5more than 5more than 5----year high year high year high year high

The Warsaw Stock Exchange's main index WIG passed the 50,600 points mark on Thursday, reaching the highest level in nearly six years. The last time WIG

reached this level was some seven months before the Lehman Brothers collapse and the global financial cri-sis that came in its wake. The recent rally on the War-saw bourse began at an unusual time, during the sum-mer, when trading is usually weaker than throughout the remainder of the year. This year, however, inves-tors kept busy over the summer, encouraged by the first timid signs of recovery in Western Europe, with August trading volume reaching PLN 17.2bn, some 20% higher than in the corresponding month of 2012.

WSE's main market index WIG in 2012-2013

36,000

38,000

40,000

42,000

44,000

46,000

48,000

50,000

52,000

2 Jan 12

23 Feb 12

13 A

pr 12

1 Jun 12

19 Jul 12

5 Sep 12

22 O

ct 12

7 D

ec 12

30 Jan 13

18 M

ar 13

9 M

ay 13

26 Jun 13

12 A

ug 13

27 Sep 13

Source: Warsaw Stock Exchange

Besides improvement on the macroeconomic front, Warsaw-listed companies were themselves a source of positive news. Many businesses, especially banks, posted much better results than could be expected in the context of the record low interest rates. Conse-quently, between early July and the end of August Citi Handlowy shares gained some 25%, BRE stock rose 20% and Pekao SA was up by 15%. The market took a momentary plunge at the beginning of September, af-ter the Prime Minister announced details of the pen-sion reform that will significantly weaken the position of the OFE funds, key investors on the Warsaw Stock Exchange. Looking back, it seems like many investors used this as an excuse to cash in on their summer gains, but the indices have fully recovered by now, reaching the best result since February 2008.

"The current surge in exports, particularly to emerging markets, should soon translate into solid quarterly fi-nancial results of Polish companies. It should become very clear already in final three months of this year. The two large IPOs, Energa and PKP Cargo, which are being currently prepared by the government, will further contribute to the positive trend," commented Piotr Lonczak, financial analyst at Bankier.pl.

BANKING & FINANCE

Another year of Another year of Another year of Another year of """"wait wait wait wait & see& see& see& see"""" ahead of CEE's ahead of CEE's ahead of CEE's ahead of CEE's corporate finance and corporate finance and corporate finance and corporate finance and private equity private equity private equity private equity playersplayersplayersplayers

Although the 2012 & 2013 dealflow figures in Central & Eastern Europe have avoided the downturn seen in major eurozone markets, those hoping for a sudden boom in M&A activity across the region may need to exercise some more patience. This seems to be the message of Mergermarket's Central & Eastern Eu-ropean M&A and Private Equity Forum 2013, which last week in Warsaw brought together the re-gion's corporate finance and private equity communi-ty. Poland Today was a media sponsor of the event, which saw M&A practitioners, investment bankers, heads of corporate development, private equity inves-tors assess the current state of the CEE M&A market and discuss their projections for the near future. The general mood was that of "cautious optimism," with the "wait & see" approach dominating most dis-cussions. Although the European economy seems to have avoided the worst-case scenario, drifting onto somewhat calmer waters, and despite an abundance of liquidity on the financial markets, private equity inves-


tors and corporate buyers are still iffy about acquisi-tions, whereas the potential sellers are not particularly eager to sell. "There is still a lot of uncertainty in the boardrooms, CEO confidence is low, and the occasion-al noise about certain transactions falling through tends to get blown out of proportion," is how one sen-ior investment banker described the situation on the buyer side. As for the sellers, amid record low interest rates, many seem to be lacking a clear idea what to do next with the potential proceeds. Playing it safe That explains why a vast majority of deals that do get done are the so-called "familiar transactions" that typ-ically involve investors increase their stake in a busi-ness they know and understand. A good example of this trend was Generali's takeover of the central Eu-ropean insurance group PPF. The Italian group had been involved in the business for years and hence the transaction risk was low. So far this year as many as 82% of all CEE M&A deals were strategic buyouts with financial investors representing the remaining 18%.

This year's edition of the Central & Eastern European M&A and Private Equity Forum, was held on 24th September at Warsaw's Westin Hotel Photo: Mergermarket

As far as investor origin is concerned, they represent mainly European capital, with very few overseas buy-

ers. One big question seems to be how to attract Asian and American investors to the region, and according to experts, a period of sustained stability in the market and series of successfully finalized, large transactions, are needed to set the stage for big buyouts. Meanwhile, the few opportunities available across the region are there for local private equity buyers and strategic in-vestors to grab.

The 2012 year saw a number of high profile M&A deals in Poland, mainly from the financial sector, such as the acquisition of Kredyt Bank by Santander and TUiR Warta by Talanx. The largest private equity transac-tion in Poland in 2012 was the EUR 400m sale of LuxMed, the leading provider of healthcare services in Poland to UK's BUPA. Nevertheless, compared to a record-breaking 2011, the value and volume of transac-tions in 2012 was significantly lower and Poland did not attract as many leading global funds. Regional pri-vate equity players remained active, however, and the M&A market observed a reasonable number of deals, including by Abris Capital, Enterprise Investors, Mid Europa Partners, Advent, Innova Capital, Val-ue4Capital and MCI Management. CEE scores high on demographics The one word that came up in many discussions and in various contexts was "demographics." For one, Central Europe remains an attractive destination for buyouts because it continues to offer the type of growth pro-spects the "Old Europe" can no longer sustain. Alt-hough far from the mind-blowing scale of the econom-ic convergence one can witness in China or India, countries like Poland or the Czech Republic still have a great deal of catching up to do before they reach the living standards of their European peers. This explains why the consumer goods & retail sector attracts so much attention from private equity buyers - the growth scenarios and metrics are much clearer than elsewhere. Another key issue, also demographic in na-ture, is the fact that many CEE entrepreneurs who es-

tablished their businesses shortly after the fall of Communism, are now nearing retirement, which makes the question of succession increasingly rele-vant. The panel on family business and M&A, where with PE practitioners and entrepreneurs discussed the challenges and opportunities involved in such pro-jects, was one of the highlights of the forum.

Private equity investment in CEE in EURm

0

500

1,000

1,500

2,000

2,500

3,000

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Source: EVCA/PEREP_Analytics for 2007-2012 data; Thomson-

Reuters/PriceWaterhouseCooper for previous’ years data.

Opportunities in TMT, healthcare In telecommunications, a sector that saw some major deals in Poland not so long ago, market insiders are not expecting much M&A action in the coming two years simply because few can make sense of it at the mo-ment. Amid persisting uncertainty with regard to the dominant technology, business model, profitability, and regulatory environment, big buyers prefer to wait for the LTE and fiber network rollouts in key markets, such as Poland, to reach a critical mass, before making any further moves. The potential is certainly there, however, as Europe's TMT market still remains very fragmented vis-à-vis the US, and consolidation seems inevitable, with only a handful of TMT conglomerates being expected to remain on the market in the long-term. Another sector that received some extra attention at this year's event, was healthcare, put in the M&A spot-


light by the Lux Med deal. One of CEE's most active buyers in the segment at the moment is the Czech-Slovak private equity company Penta Investments, which is building regional healthcare and pharma re-tail businesses. Penta's representatives shared their in-sights on the challenges involved in healthcare pro-jects, but their overall message was rather encourag-ing. Investors interested in CEE's healthcare sector should certainly be prepared to adopt a longer than usual investment horizon, with 7-10 years in Penta's case being the necessary minimum, but the long-term rewards can be worthwhile. However, the regulatory risk remains very high in CEE, even if longer time frames as well as geographic diversification help to re-duce it, to some degree. When it comes to the most at-tractive segments of the healthcare market, hospitals seem to be the number one target, with some 30-40% of them being in the red and public owners running out of ideas on how to subsidize them for much longer. A significant portion of CEE's hospital segment, which receives roughly a half of the region's total healthcare spending, seems bound to be privatized in the coming years, so huge opportunities certainly exist, for the more daring and for the patient. Lots of liquidity, lots of questions One the financing front, things are said to be looking up, with banks being "back in lending mood," as one senior banker put it. There is, however, much less ap-petite for risk, with certain industries facing difficulty raising capital for strategic projects. The energy sector for instance, including renewables, which used to be the hottest thing only a few years ago, has lost its ap-peal, as the US shale gas revolution and dropping pric-es of green certificates made bankers allergic to fi-nancing development of power industry projects. Dif-ficult access to bank credit in recent years has fuelled spectacular growth of the high-yield debt market. The latter remains reserved, however, only for the largest transactions. With Polish banks sitting on piles of cash, PLN-denominated high-yield bonds would be a wel-

come development, according to some panelists, but for now this still seems to be a song of the (perhaps not so distant) future. With printing presses at central banks in the US and Japan still working at full capaci-ty, the markets remain over-liquid, but the question on everyone's mind is when this global experiment in quantitative easing will end and what impact will that have on financing. The good news for Poland is that there should be more than enough domestic funding to keep local investors busy, but some uncertainty re-mains, as the markets are yet to make sense of the planned changes to the country's pension system. Some market insiders argue that the Polish govern-ment's decision to nationalize treasury bonds held by the OFE pension funds, at the same time encouraging the latter to invest more aggressively in stocks and corporate bonds, may in fact stimulate M&A activity, while others fear stagnation.

ENERGY & RESOURCES

StateStateStateState----controlled power controlled power controlled power controlled power utility Energa eyeing utility Energa eyeing utility Energa eyeing utility Energa eyeing November listingNovember listingNovember listingNovember listing

State-controlled power group Energa has filed its prospectus with financial market regulator KNF, as the Treasury prepares to float the company on the Warsaw Stock Exchange by the end of the year. Depu-ty Treasury Minister Pawel Tamborski said the IPO, which could raise up to PLN 2bn based on analysts' es-timates, would take place in November. Energa is the country's biggest seller of energy pro-duced from renewable sources such as wind farms and hydro-electric plants. Poland had earlier declared it wanted to keep a 50% stake in the company to retain corporate control. Thanks to changes to Energa stat-

utes turning 35% of company shares into privileged ones the Treasury has a greater flexibility in shaping the size of the offer.

Energa's HQ at Gdańsk's Oliva Gate office building. Photo: Energa

In 1H 2013 the group saw its revenues come in at PLN 5.8bn, marking a 3% improvement y/y, resulting main-ly from a higher distribution tariffs. Its EBITDA rose 6% y/y, to PLN 1.127bn (a margin of 19%), whereas the consolidated net profit topped PLN 533m (up 4% y/y). Electricity sales were 15.44 TWh, up 9% over the same period last year, whereas the Group’s gross electricity generation came to 2.5 TWh in 1H 2013. Energa has recently embarked on an ambitious in-vestment program which envisages PLN 12.5bn worth of capital expenditures in the distribution segment alone by 2021. In January-June 2013 the group invest-ed PLN 1bn, some 28% more than in 1H 2012. In line with Energa's strategic focus on development and modernization of the grid, its distribution subsidiary Energa-Operator received the largest share of that amount (PLN 553m). Thanks to these ongoing invest-ments, the Gdańsk-based company is steadily enhanc-ing energy security and the reliability of supply. In 1H 2013 the group supplied more than 10 TWh to more than 2.9m clients.


In a move to diversify the sources of financing for its investments, in June Energa signed an agreement with the European Bank for Reconstruction and Develop-ment (EBRD). Pursuant to this agreement Energa-Operator is to receive PLN 800m, which will help the distribution unit commission a sophisticated metering system forming part of the smart grid solutions being implemented by the Group. Besides investments in the distribution segment, Energa is concentrating on expanding its renewable energy capacity. Earlier this year Energa and Poland's top power utility PGE jointly acquired wind farms from Denmark's DONG Energy. This deal expanded Energa’s generation portfolio to include the Karcino Wind Farm with a capacity of 51 MW in the Western Pomeranian Region and a project pipeline with a ca-pacity of roughly 252 MW. As a result, the group’s in-stalled RES capacity grew to more than 0.4 GW and in 1H 2013 it generated 0.92 TWh worth of electricity from renewable sources. In addition to the DONG deal, Energa and PGE, backed by EBRD, to acquire the Polish wind energy assets of Spain's Iberdrola Re-newables Polska. This agreement enabled Energa to acquire two wind farms with a total installed capacity of 114 MW, namely Karścino in the Western Pomera-nia and Bystra in Pomerania and a bundle of projects with a capacity of roughly 1,186 MW.

DATA BOX: UNEMPLOYMENT Polish registered unemployment rate decreased to

13.0% in August from 13.1% in July, Central Statistical

Office (GUS) said. The number of registered jobless at

end-August measured 2.843m. In August, 203,600

persons registered as unemployed, down by 32,700

from July level, while 213,300 came off the rolls, down

from 252,300 in July.


Investment trust Investment trust Investment trust Investment trust Meridian Properties to Meridian Properties to Meridian Properties to Meridian Properties to raise EUR 170raise EUR 170raise EUR 170raise EUR 170mmmm from from from from Warsaw IPO Warsaw IPO Warsaw IPO Warsaw IPO

Meridian Properties, a Real Estate Investment Trust (REIT) registered in the Netherlands and backed by CEE-focused private equity group Bluehouse Capi-tal, has revived its plan for a listing on the Warsaw bourse, having reduced the offering size by 15% to EUR 170m due to changes in its real estate portfolio, the company said. Meridian first announced the IPO in mid-July only to put the project on hold due to difficult market condi-tions. Now the date has been set for mid-October, with Citi is the sole bookrunner, and Alpha Bank, Erste Bank and Raiffeisen acting as co-lead managers. The IPO targets retail and institutional investors in Poland as well as institutional investors abroad. The Europe-an Bank for Reconstruction and Development has been mentioned among the potential institutional buyers. The company said it wanted to spend almost EUR 88m from the IPO proceeds to acquire a portfolio of nine properties – six office buildings and three retail parks in Bulgaria, the Czech Republic, Hungary and Roma-nia, with a combined GLA of 104,000 sq.m and 97%-leased to quality tenants Kraft, Eurohold, Lufthansa, Citibank and Eureko, among others, in office build-ings as well as leading grocery & DIY chains (Spar and Baumax) in the retail parks. The rest will be put towards other acquisitions in the region (EUR 57m) and loan repayments (EUR 17m).

Meridian's target markets. Image: Meridian Properties

Meridian Properties will be the first REIT listed on the Warsaw Stock Exchange. Its core business focuses on investing in and actively managing a diversified property portfolio within emerging Europe, comprised of stabilized, income producing real estate assets with international tenants and institutional quality leases. On the WSE, Meridian will join the likes of Israeli-owned developer GTC, which is likewise present in Eastern Europe and the Balkans. As far as Meridian's investment objectives are con-cerned, the company said it intends to provide regular cash distributions to its shareholders and achieve in-flation-indexed risk-adjusted returns based on long-term contracted rental revenues producing income visibility, substantial capital growth, low leverage and no development risk. Meridian is planning to distrib-ute 100% of its funds from operations on a quarterly basis as dividends, whilst maintaining prudent long-term leverage with a target LTV of 35% - 45%. With regards to Meridian’s property investment strategy, it said it would seek to further acquire newly construct-ed real estate assets in emerging Europe including Po-


land, generally less than five years of age, which are income producing, have an occupancy rate of at least 95%, a weighted average remaining lease duration of at least five years and an international tenant base with institutional quality lease agreements. The com-pany will not invest in developments or land acquisi-tions and will not undertake any zoning, permitting or construction-related risk. The team behind Meridian Properties are Greek en-trepreneurs who back in 2004 founded the Bluehouse group, a private equity real estate investment man-agement firm focused in emerging Europe. With offic-es in Bulgaria, Czech Republic, Romania, Croatia, Ser-bia and Greece, Bluehouse is managing capital across three funds, investing on behalf of a high-quality insti-tutional investor base, including financial institutions, pension funds, endowments, multimanager funds and family offices. Bluehouse has invested in over 26 prop-erty transactions and has completed several successful exits.


Mobile firm Polkomtel Mobile firm Polkomtel Mobile firm Polkomtel Mobile firm Polkomtel secures 23,000 sq.m in secures 23,000 sq.m in secures 23,000 sq.m in secures 23,000 sq.m in this year's largest this year's largest this year's largest this year's largest office dealoffice dealoffice dealoffice deal

Shortly after Orange and T-Mobile moved into their brand new offices in Warsaw, the country's third lead-ing mobile operator Polkomtel likewise picked its new headquarters in the Polish capital. Polkomtel, op-erator of the Plus mobile network, agreed to take up 23,000 sq.m in a brand new building to be developed by White Stone Development and asset managed by MF Capital. White Stone Development is best

known for its upscale residential project Eko Park in Warsaw. Polkomtel’s new head office is being constructed at Konstruktorska street, in Warsaw's sprawling Mokotów business district. This seven-storey building was designed by Kuryłowicz & Associates, according to the Tenant’s technical requirements. Polkomtel will move to the new location in September 2015. "We are honored that Polkomtel entrusted CBRE with securing a new location for its headquarters and the negotiation process of lease terms. This is the largest lease transaction in the Polish office market in 2013 and we are proud that CBRE is a business partner of such a prestigious company. We believe that this build-to-suit building will fulfill all of our client’s re-quirements and improve their working environment," said Daniel Bienias, Director of Office Agency at CBRE, which brokered the deal.

Polkomtel will move into the new building in Sep-tember 2015. Photo: White Stone Development

Polkomtel's competitor, the Deutsche Telekom-owned T-Mobile, it has just recently finished relocating to the shiny and new T-Mobile Office Park, delivered in May in Warsaw's Mokotów district by Flemish developer Ghelamco. As the anchor tenant, the operator has taken up 27,000 sq.m of the park's total 40,000 sq.m

GLA. T-Mobile Office Park has received BREEAM Ex-cellent certification of energy efficiency and environ-mental performance. According to Ghelamco Poland, the project is the first existing office scheme in Poland to have been granted such certification. There are 34 BREEAM Excellent-certified buildings in Europe, of which only five have already been completed. As for the the France Telekom-owned Orange Polska, the company has just moved into its newly completed Miasteczko Orange complex in the Ochota district. Developed by France's Bouygues Immobilier Polska, the class-A development was ac-quired two years before its completion by the Qatar Investment Authority, through the sovereign wealth enterprise's Qatar Holdings LLC. With a GLA of 45,000 sq.m, the built-to-suit complex houses offices for 3,300 staff, a canteen with 300 seats, park-ing lots for 1,050 vehicles and 120 cars, and a number of additional class-A amenities. Although each of the three operators holds a very similar share in the Polish mobile sector (slightly less than 30%, see page 13), Orange Polska encompasses al-so the fixed-line operations of the former monopolist TPSA, which explains why its needs almost twice as much office space as its competitors.

SERVICES & BPO

ING Services picks ING Services picks ING Services picks ING Services picks new new new new office office office office location for location for location for location for Katowice centerKatowice centerKatowice centerKatowice center

ING Services Polska, the Katowice-based shared services unit of Dutch financial giant ING, has leased 5,600 sq.m in GPP Business Park - the city's first project boasting a BREEAM sustainability certificate


at the highest, "outstanding" level. The company will occupy the second building in GPP Business Park, which is to reach completion in Q2 2014. Located on Konduktorska St., in the Katowice special economic zone, GPP Business Park will have a total GLA of 30,000 sq.m in four buildings, the first of which (7,800 sq.m) has already been completed. The developer offered ING temporary accommodation be-fore the outsourcing company moves into its brand new offices in May next year.

Once completed, the new, GPP Business Park in Katowicewill offer 30,000 sq.m of class-A, BREEAM-certified office space. Photo: EDPR At the beginning of the year ING Services confirmed plans is to create 156 IT and R&D jobs in Katowice. The project, estimated at PLN 80m and supported by a PLN 12m grant under the EU's operational program Innovative Economy, is to reach completion in June 2015. Over the past five years the center's workforce has grown from 215 to 450 and the figure keeps in-creasing. Since the beginning of the year already some 30 new staff members have been recruited. Established in 2003, ING Services Polska was initially providing IT support to ING operations in Poland: the

bank ING Bank Śląski and pension fund company ING Nationale-Nederlanden. Over time, its geo-graphical scope expanded. "We are currently serving some 40 ING group compa-nies from 15 European countries as well as Singapore," Kamila Heitzman of ING Service Polska's head office told Poland Today's Lech Kaczanowski earlier this year. Asked what will constitute the bulk of the PLN 80m capex, which seems somewhat steep as for an outsourcing operation, Ms. Heitzman explained: "Our main objective is to recruit highly qualified IT and R&D staff whose remuneration represents a sub-stantial portion of the qualifying costs. Other expendi-tures will include purchase of hardware, soft-ware, and office equipment and office rents."

We are serving some 40 ING Group companies from 15 European countries and Singapore. So far, ING's data center in Katowice has been respon-sible mainly for hosting system resources to maintain customer databases and applications. Additionally, the center offers services related to database administra-tion, backup and restore, security administration as well as network connection hosting. As part of its on-going expansion ING Service Polska's competences will expand to include also software development, testing and application management, as well as data security issues. The R&D unit, with a planned staff of 21 engineers, is to focus on development of ING's IT tools and process solutions. "In short, the expansion will bring about a significant improvement to our hosting division and Security Op-

erations Center. Besides making our services more competitive in terms of both price and quality, ING will create the first knowledge center in Poland spe-cializing in hosting and security operations." Apart from ING Bank Śląski, one of Poland's leading banks with 434 branches, 3.2m retail customers, and PLN 73.6bn worth of assets, the Dutch giant owns a number of businesses in Poland, from pension and in-vestment funds, insurance, leasing, factoring and stock brokerage, to property development.

DATA BOX: KATOWICE OFFICE MARKET IN 1H 2013 Leasing volume in Katowice’s office market reached

27,500 sq.m in H1 2013, with pre-lets accounting for

51% of the total. The largest deals involved owner oc-

cupation of space. Polski Koks took up over 6,150 sq.m

in the office building in Paderewskiego Street, while

the companies from group Getin Bank and LC Corp

signed a lease for 6,000 sq.m in phase one of the LC

Corp Tower project.

At the end of Q2 2013, Katowice’s office stock ex-

ceeded 300,000 sq.m, largely following the comple-

tions of Nowe Katowickie Centrum Biznesu (13,000

sq.m) and Polski Koks’ head office (6,150 sq.m). Under

construction are the passive office building (6,000

sq.m) developed within the Euro-Centrum Science and

Technology Park and the first two phases of Skanska’s

Silesia Business Park totaling more than 20,000 sq.m.

The vacancy rate in Katowice was up by over 1.5 pps

to 8.3% from the rate at the end of 2012. Asking rents

stood at EUR 13–14/sq.m/month in Q2 2013, with ef-

fective rents at EUR 11–12/sq.m/month.

Source: Cushman & Wakefield


TRANSPORT & LOGISTICS

Government to speed Government to speed Government to speed Government to speed up completion of up completion of up completion of up completion of Warsaw ring roadWarsaw ring roadWarsaw ring roadWarsaw ring road

A program to close the ring of expressways around Warsaw is to reach completion in 2019 announced Prime Minister Donald Tusk, confirming that tenders for the subsequent sections of the project in the south of Warsaw will be announced by the end of the year. This sudden surge of interest in Warsaw's traffic woes on the part of ministers seems to be directly related to the upcoming referendum on the recall of the city's mayor Hanna Gronkiewicz-Waltz, who is one of Mr. Tusk's long-time allies. Politics aside, the ring road is of strategic importance for the Polish capital and its completion is vital to reducing congestion in certain key areas. The first southern section of the beltway (S2), linking the Konotopa junction (where the A2 highway from Berlin reaches Warsaw) with the Chopin airport and Ursynów (Puławska) was opened earlier this month. Although its completion brought relief to many com-muters and helped distribute some through traffic, it also created massive congestion on Puławska street, one of Warsaw's key arteries. This is where the ring road ends at the moment, although according to plans it should be extended further east, cutting though the residential areas of Ursynów and Wilanów and across the Vistula river to connect with the S17 Warsaw-Lublin road. While the recently completed section cost approxi-mately EUR 1.03bn (PLN 4.3bn) to build, including a EUR 601m (PLN 2.5bn) EU grant, the next piece (en-compassing a tunnel under Ursynów and a new bridge

on the Vistula) is being estimated at some PLN 9bn. With the state coffers already stretched to the limit, government representatives have been rather reluc-tant to finance the project, but the traffic jams on Puławska and the looming referendum prompted the ministers to reassess their priorities. The ring road has been given precedence over two other major road in-vestments in the Warsaw area: the S7 expressway from Bemowo bound for Gdańsk, bypassing the jammed suburb of Łomianki, and its extension in the south of Warsaw, towards Kraków and Radom. The funding that was earmarked for these two projects will now be put towards the completion of the ring road.

The planned sections of the Warsaw beltway are marked with dotted lines, whereas green and red lines indicate sections that are opened to traffic. Image: Wikipedia CC

As far as the timeline is concerned, the first tender, for the Puławska-Wał Miedzeszyński section, including a 2.7km tunnel and a brand new bridge, is to be an-nounced by the end of the year, with completion ex-pected in 2018. The subsequent tenders are expected in May 2014 (connecting with the S17 Warsaw-Lublin

road; construction: 2016-2019), March 2015 and Q1 2016 (eastern sections of the ring). The latter two pro-jects are yet to obtain environmental permits. A tender is currently underway for a road bypassing the notori-ously congested suburb of Marki in the north east of Warsaw. In approximately three years, once the Marki bypass as well as the S8 fork near Raszyn and Janki in the south west reach completion, drivers should be able to easily get around the western and northern outskirts of the Polish capital. Although the completion of Warsaw's ring road is still half a decade away, the government's newly found en-thusiasm for the project is good news both for the Warsaw drivers, who according to car navigation company TomTom waste more time due to bad traffic than in any other European capital, as well as for Po-land's construction industry, which is yet to recover from its post-credit crunch malaise.

SERVICES & BPO

Best Western on track Best Western on track Best Western on track Best Western on track to have to have to have to have 50505050 hotels in hotels in hotels in hotels in Poland by Poland by Poland by Poland by end of 2015end of 2015end of 2015end of 2015

The global hospitality chain Best Western has se-cured its fourth location on the Polish coast with the three-star Best Western Plus Business Faltom in Gdańsk as well as its second hotel in Wrocław with Best Western Plus Q Hotel Wrocław. Both are three-star properties aimed primarily at business travelers and both a part of Best Western's mid-range "Plus" segment, which is being represented in Poland by six hotels. As of September 2013, there are 21 hotels oper-ating under the Best Western logo in Poland with a handful of others being under construction.


"BW Faltom is one of three hotels we have opened so far this year, the other two being BW Galicya in Kraków and BW AGIT Congress and Spa in Lublin. We are planning a further three openings by the end of the year in Opole, Piotrków Trybunalski and Modlin. Besides that, we have another eight contracts signed with different investors for openings in 2014 and also 2015, including four properties under construction and four conversions," says Gheorghe Marian Cristescu, Best Western country sales director for Poland. "Our initial target set in 2011 was to have 30 contracts signed by the end of 2013. At this stage we are happy to announce that we have already surpassed that goal and we are far from done this year," Mr. Cristescu tells Poland Today. Prior to joining Best Western in April last year, Mr. Cristescu had been working in the Polish hospitality market for over a decade, previously as a national sales director in Poland's leading hospitality group Orbis, subsidiary of France's Accor. Built at the cost of PLN 15m by Tomasz Falkowski, a local entrepreneur and owner of the Faltom group, the Gdańsk hotel is located 2km from the Tricity ring road and 25km from the airport. It includes 40 double rooms, 6 suites, two conference rooms, and a wellness centre. As for the Wrocław property, it has 127 rooms, one suite, and five conference rooms and it is situated within a 10 minute walking distance from the central railway station. It belongs to Polish Grupa Dobry Ho-tel, which has so far launched three properties under the Best Western logo in Poland and seeks to build an-other two over the two coming years. The chain's expansion in Poland is being managed by BW Hotels Osuuskunta, also known as Best West-ern Hotels Finland, Baltic States and Poland - the affil-iate office of Best Western International responsible for the brand and hotel services in the region. Alt-hough until last year Finland, with 16 hotels, had been

the largest market for BW Hotels Osuuskunta, the bal-ance has shifted to Poland, which will continue to fuel the chain's growth in the region for years to come.

Best Western Plus Business Faltom is the chain's 4th hotel in the Pomerania region. Photo: EDPR

Founded in 1946 Best Western is the world's biggest hotel chain. All of its hotels are independently operat-ed and owned by private investors. All facilities oper-ating within the chain share the same quality and standards of customer services as well as sales and marketing programs. Best Western, which received a number of industry awards on the Polish market last year, had been planning to announce eight new mem-ber hotels in Poland in 2012, but eventually the chain signed 13 new agreements with some hotels to open in 2013 and some in 2014. "Our target for the end of 2015 is to have 50 contracts signed in Poland, and based on our progress so far, we are very likely to go beyond that. Let me also add that the activity of our main competitors in the market is really helping our efforts, as it enables investors to bet-ter understand the value for money factor of our offer. We are in advanced talks for further contracts to be fi-nalized by the end of the year, so it is possible that we

will manage to seal more agreements in 2013, for open-ings in 2014 and 2015," says Mr. Cristescu.

CONSUMER GOODS & RETAIL

Inter IKEA Centre gets Inter IKEA Centre gets Inter IKEA Centre gets Inter IKEA Centre gets green lightgreen lightgreen lightgreen light for Wola for Wola for Wola for Wola Park deal and Park deal and Park deal and Park deal and launcheslauncheslauncheslaunches Franowo extensionFranowo extensionFranowo extensionFranowo extension

Inter IKEA Centre Group Poland, the shopping centre arm of Sweden's flat pack furniture giant IKEA, has received regulatory clearance to acquire the Wola Park mall in Warsaw from European property investor IXIS AEW Europe (AEW). A preliminary agreement was signed in mid-July and the final deal, the value of which has not been disclosed, should be signed in 1-2 months if all goes as planned. Built in 2002, Wola Park was sold to AEW by Ivanhoe Cambridge back in 2007 for EUR 140m. The centre is located in the western part of Warsaw, on Górczewska street. It comprises 58,100 sq.m (including an 18,100 sq.m Auchan hypermarket, which is a separate proper-ty), which is let out to 197 tenants, mostly in the appar-el industry. The property includes ample space for ex-pansion, which is a major asset, considering its loca-tion near many densely-populated residential areas. The previous owners had plans for an 18,000 sq.m ex-tension. "We intend to execute the extension according to AEW's plans, but we may take the opportunity to part-ly change the content and function of the extension in the way we consider better suited to our idea of the product. A portion of this extension is already under signed lease agreements," Mikael Andersson, Manag-


ing Director of Inter IKEA Centre Group Poland, tells Poland Today. It should perhaps be noted that in a couple of years Wola Park will be the only retail centre in Warsaw (except Tesco Kabaty, which is yet to be transformed from a drab hypermarket-anchored property into a modern mall, and Arkadia, which is some 700m from the Dworzec Gdański station) to be located right by a subway station.

According to plans, the new east-west line of the Warsaw subway may reach Wola Park sometime by the end of the decade. Photo: Wola Park

"Wola Park has a very attractive tenant mix and loca-tion, while the expansion of the local transport infra-structure will make it more accessible for a significant part of Warsaw's population. The mall will be an im-portant part of our portfolio, enhancing its attractive-ness and significantly diversifying our offer," Mikael Andersson says. Since so far the group has developed all of their Polish projects on their own, anchoring them by IKEA stores, we asked Mr. Andersson whether the Wola Park investment marks a break with that tradition. "That model remains valid for our new developments, either as an IKEA store directly integrated into an en-closed shopping center or a free standing unit in a re-tail park. It is a very unique retailer to have present at our centers. However, in the case of Wola Park, we

have been given the possibility to acquire an existing centre, which supports our expansion plans as a shop-ping centre developer and operator, even if we cannot guarantee the presence of an IKEA store there." More projects in the pipeline On 25 September Inter IKEA Center Group launched its newest project in Poland, a 14,000 sq.m extension of the Franowo shopping center in Poznań, with new tenants that include Smyk, Sport Direct, RTV Euro AGD, Jysk, and Bel-Pol. Including the outlets that had been already present at the site, the expanded Franowo park totals some 80,000 sq.m of retail space and houses 35 outlets, including an impressive range of home improvement/DIY stores. Located some 7km south east of Poznań, near the A2 motorway, Franowo offers 1,600 parking spaces.

Following its recent expansion, the Franowo park to-tals 80,000 sq.m. Photo: Inter IKEA Center Group As part of the IKEA group, Inter IKEA Center Group Poland is responsible for preparation, implementation and management of commercial property projects. In Poland, the group owns seven shopping centers, which are situated in Gdańsk, Łódź, Poznań, Wrocław, Ka-towice and Warsaw (two centers, Janki and Targówek). The company is working on a new shop-ping center in Lublin, adjacent to a new IKEA store in the southeastern city, as well as a major expansion of their Bielany Park in Wrocław.

In the latter case, Inter IKEA Centre Group has re-cently received a building permit that will enable the investor to transform the existing 80,000 sq.m com-plex (already the largest in Lower Silesia) into the big-gest shopping centre in the country with a GLA of 145,000 sq.m and some 200 outlets. The company is planning to take down a former IKEA store building in Bielany and erect the new section of the shopping cen-tre on its site. The development is scheduled to be completed in 2015.

Anchored by an IKEA store, the new centre in Lublin is to open in Q4 2014 with a GLA of 80,000 sq.m. Image: Inter IKEA Center Group

"As part of our long term plan for Poland we are con-sidering further acquisitions of existing shopping cen-ters. As we intend to stay and grow on the Polish mar-ket, they should be well established shopping centers in good locations, with good sustainable offers. At this stage we are only looking at a limited number of larger regional capitals, where we believe it is important for us to be present. On the development side, besides the aforementioned projects, such as Franowo, we will continue with more extensions in all our existing retail centers as well as keep working on increasing com-mercial and non-commercial offers in these locations. Regarding new developments, we are looking at 4-5 new locations around Poland and this includes new enclosed shopping centers as well as retail parks with strip-malls and big box tenants."


DATA BOX: RETAIL WAREHOUSES & RETAIL PARKS IN 1H 2013 Total retail park and retail warehouse stock in Poland

stands at 2.4m sq.m, with parks accounting for around

26% of the total. In H1 2013, more than 60,000 sq.m

came onto the market. Another 60,000 sq.m is cur-

rently under construction and scheduled for comple-

tion in 2013–2014, largely in small retail parks. The es-

timated development pipeline provides for a further

100,000 sq.m of retail park and retail warehouse

space by the end of 2015.

Poland’s retail park sector is currently experiencing

rapid growth with a dozen or so developers strongly

active on the market. Retail parks are planned and de-

veloped primarily in small and medium-sized cities,

frequently as small schemes with convenience retail-

ing. The highlight of H1 2013 was the opening of the

retail park in the Europa Centralna scheme in Gliwice

offering 40,000 sq.m and stores of Castorama, Saturn,

Jula, Sports Direct, RTV EURO AGD, Jysk, Ski Team

and Reserved. The largest retail park now under con-

struction is the next phase of the IKEA Franowo com-

plex totaling 14,000 sq.m.

Large retail parks include mainly stores with DIY

products, household appliances and electronics, furni-

ture, sports goods and homeware. Smaller schemes

accommodate household appliances and electronics,

multimedia, accessories, drugstores, discount fashion

and footwear tenants. The vacancy rate in retail parks

stands at around 5%. Large-scale, non-food stores are

also expanding as standalone schemes.

Rents in retail parks are stable at EUR 6-8/

sq.m/month for large units and EUR 9-13/sq.m /month

for medium-sized space. Rents for freestanding retail

warehouses average EUR 6–8/sq m/month.

Source: Cushman & Wakefield

CONSUMER GOODS & RETAIL

Austrian EYEMAXX Austrian EYEMAXX Austrian EYEMAXX Austrian EYEMAXX completes first MyBox completes first MyBox completes first MyBox completes first MyBox shopping center,shopping center,shopping center,shopping center, more more more more to come next yearto come next yearto come next yearto come next year

Austrian developer EYEMAXX Real Estate Group has launched its first Polish retail park, MyBox Oława. Built by Sweden's Skanska at the cost of over EUR 2m, the 2,000 sq.m GLA development is part of a broader pipeline of retail projects the Austrians began to roll out across Central and Eastern Europe last year. "Poland is one of our key markets in the coming years. In general, our plan is to open 3-5 properties a year here," says Jaroslaw Debowiak, head of Retailcenter Management GmbH, EYEMAXX's Polish unit. "When choosing Oława for MyBox we took into con-sideration the town's population, purchasing power, and development potential. We selected a location in the fastest-growing part of the city, with many new residential projects." Located near an existing Biedronka discount grocery, MyBox Oława has attracted a number of major chains: shoe retailer Deichmann, clothing outlet KiK, elec-tronics store RTV Euro AGD, and sports goods shop Martes Sport. Oława is a town of 27,000 situated some 30km from Wrocław. Based in Warsaw, Retailcenter Management GmbH is responsible for acquisition of sites, permits, and ten-ants, project management and implementation. The company is working on another MyBox project in Malbork. With 15 retail and service outlets and more than 200 parking spaces, MyBox Malbork will open in

Q4 2014 in the western part of the historic town, near an existing shopping centre anchored by Tesco. "A few days ago we secured our most recent project in Namysłów, for which a building permit is already in place. It is perfectly located between two food opera-tors: Kaufland and LIDL. The MyBox retail park in Namysłów will offer a GLA of 4,000 sq.m with a very attractive tenant mix, consisting of international ten-ants as well as several well- known Polish brands of-fering sport goods, electronics, shoes, drugstore a fash-ion. We have experienced very good tenant interest and are proud to say that the first lease agreements have already been signed. The opening is planned for Q3 2014," Mr. Dębowiak tells Poland Today.

The newly opened MyBox centre in Oława was an in-stant hit with the locals.. Photo: EYEMAXX

Strip malls or small retail parks such as MyBox have been the hottest thing in Poland's retail property seg-ment in recent years. Such low-cost neighborhood de-velopments with store access directly from the parking lot, and aiming at popular non-food retailers that favor larger units are mushrooming throughout the country. Many international chains prefer this format as a way of entering small towns, where uniform quality, mod-ern retail space is otherwise unavailable.


"This is an attractive niche for us and we do not wish to compete with the big players who build giant retail centers. We are going to focus on the MyBox format for the time being as it gives people in smaller towns access to a broader selection of retail outlets without having to travel to big city shopping malls. In short, it is a tried and tested formula that does not require sub-stantial capital expenditures." Objective: 20 MyBox retail parks The company believes the Polish market can fit up to 200 centers of the MyBox format. EYEMAXX itself has a pipeline worth some EUR 100m, although it has so far secured permits for projects that represent roughly a quarter of the total amount. "It is our stated goal to achieve a market share of approx. 10% with respect to the quoted figure of 200 centers. This corresponds to roughly 20 MyBox retail parks with an average GLA of 3,000-5,000, excluding the adjacent food operator. The actual size of a project strongly depends on its particular location and already existing competition." In addition to the MyBox centers, EYEMAXX is coop-erating with Austrian-Polish developer Tradeland on a 6,200 sq.m FamilyPoint shopping center in Ełk, in the north east of Poland. The two partners have just broke ground on the project, which has been 75% pre-leased to the likes of Avans, Marcpol, CCC, Deichmann, Takko Fashion and Kolporter. Locat-ed right by a newly completed ring road, FamilyPoint Ełk will welcome its first customers in Q1 2014. "At the moment, our cooperation with Tradeland is fo-cused only on the project in Ełk. As one of the biggest players in the CEE region in the field of retail park de-velopment, we profit in some particular cases from joint venture synergies and therefore cannot exclude further future cooperation with already existing or new partners," says Jarosław Dębowiak.

The Vienna-listed EYEMAXX acquires, develops, runs and builds commercial properties in Central Europe, in particular in its established markets of Austria and Germany as well as the neighboring emerging markets of Poland, Slovakia, Serbia and the Czech Republic. As far as its investment policy is concerned, EYEMAXX seeks to either sell its completed projects in open ten-ders or keep them within the group to generate stable profits from rents, depending on the market situation. EYEMAXX has particularly good relations with Ger-man and Austrian retailers, such as C&A, Intersport, Rewe, Bauhaus, Takko, Deichmann and Rossmann, which are the company's key tenants. Over the past five years the company has developed a total of 20 projects under the Stop.Shop and BIGBOX brands throughout the CEE, at the cost of some EUR 200m. In addition to its core retail center business, the company is involved also in other projects such as lo-gistics centers and built-to-suit solutions.

IT & TELECOM

Orange Polska Orange Polska Orange Polska Orange Polska bundlesbundlesbundlesbundles mobile and fixed line mobile and fixed line mobile and fixed line mobile and fixed line assets under assets under assets under assets under one roofone roofone roofone roof, , , , appointsappointsappointsappoints new CEOnew CEOnew CEOnew CEO

It's a busy time at France Telecom's Polish subsidi-aries, with a new corporate structure, new CEO, and new offices all being introduced this autumn. The company decided that its fixed-line operator TPSA and its mobile arm PTK Centertel will merge by the end of this year, under the new name Orange Polska. TPSA already adopted the Orange brand name last year for its fixed activities. The organizational changes will be accompanied by a major reshuffle at the top.

Maciej Witucki, who has led the business for more than half a decade, has stepped down from the posi-tion of CEO to be replaced by Bruno Duthoit. Both de-cisions were approved by TPSA's shareholders in late September. Mr. Duthoit has 35 years of broad international expe-rience in the telecom industry, gained in various coun-tries, and has held several management positions in the Orange Group, including positions of Chief Execu-tive Officer (most recently – in Ethiopia). As for Mr. Witucki, he will take over the chairman position at Or-ange Polska's supervisory board from Professor Andrzej K. Koźminski, who has announced his inten-tion to resign as chairman.

Poland's mobile market in mid-2013 Market share based on declared & estimated user numbers

MVNOs

2%

P4 (Play)

17%

Polkomtel (Plus)25%

T-Mobile29%

Orange27%

Source: GUS, Operators

"We acknowledge and understand the decision of Maciej Witucki to step down, after serving nearly sev-en years as the CEO of Orange Polska. We will propose Bruno Duthoit as the new CEO in Poland as his broad international experience, as well as good knowledge of Poland and its telecom market, make him the best candidate to become Maciej’s successor. We are fully confident that Bruno and the management team in Po-


land will successfully execute the strategy of Orange Polska," commented Benoit Scheen, Orange Group’s Executive Vice President for Operations in Europe (excluding France). On the business front, in mid-September Orange Po-land launched its first LTE transmitters in Warsaw. Its competitors Polkomtel (network Plus) and Cyfrowy Polsat are already offering LTE in Poland, and P4 (Play) has just announced its plans to launch LTE. Fol-lowing Warsaw, Orange Poland plans to launch LTE in other locations in Pomerania, Silesia and Greater Po-land, for in total 900 base stations. The LTE network is still in testing, and Orange plans to start full commercial services in 2014. Orange pro-vides LTE on the 1800 MHz band, thanks to its coop-eration agreement with T-Mobile Poland and network infrastructure sharing. Orange aims to acquire fre-quencies from the digital dividend in the auction planned later this year. The aim of Orange Poland is to offer LTE services on the bands 800/1800 MHz at 150 Mbps for 99% of population. Once a monopolist in Poland, with net profits of PLN 4bn in 2004, TPSA has seen its position gradually erode, due to bold measures imposed by Polish and European competition authorities, as well as evolution of the telecoms market itself, with rapid shift from landline to mobile services. The group turned over PLN 14.15bn last year (5.2% down y/y) and earlier this year it signaled a deep fall in 2013 revenue and another dividend cut, causing its share price plunge down to the lowest level since 2003. Financing a costly 4G (LTE) investment program one the one hand, and faced with shrinking revenues and profits from voice services, the group decided to shed some 1,700 em-ployees this year and divest and/or outsource its non-core assets and operations. It is currently seeking buy-ers for Wirtualna Polska, one of Poland's top three online portals by user numbers.

IT & TELECOM

British Truphone British Truphone British Truphone British Truphone launches in Polandlaunches in Polandlaunches in Polandlaunches in Poland

British telecoms operator Truphone, which targets primarily frequent business travelers, has just launched operations in Poland, as part of the compa-ny's international rollout, financed by a substantial cash injection from Russian billionaire Roman Abramovich. Truphone's technology currently allows travelers in eight countries, including the US, UK and Australia, to use a mobile to call, text and access the web at local rates without having to change handset or SIM card. Truphone was founded six years ago by James Tagg, a British inventor who remains with the company as chief technology officer. The company is led by chief executive, Steve Robertson, who created and ran BT's network division, Openreach, until 2011. "Ours will be a small organization, less than 20 staff, with outsourced customer service and the London of-fice playing a key executive role," Joanna Pędzińska, marketing manager at Truphone's Polish arm told Po-land Today's Lech Kaczanowski earlier this year. Asked what sets Truphone apart from other Mobile Virtual Network Operators (MVNOs), Ms. Pędzińska replied: "Although in purely technical terms we can be regard-ed as a virtual operator, since we lack our own infra-structure, we do not really want to be associated with the MVNO concept. Our strength is the innovative technology that enables users to call anywhere in the world at local rates with a single SIM card. We believe this is something business customers have been wait-ing for and it is the B2B market that we are targeting.

With Poland's leading operators offering unlimited domestic calls at a flat rate no MVNO can compete with them on their home turf. But Truphone covers a particular niche where we believe we have an attrac-tive product to offer." At the beginning of the year, Abramovich's investment vehicle, Minden, took the stake in Truphone's latest round of fundraising. In paying GBP 70m for a 23% holding, the deal valued the company at about GBP 300m. An additional GBP 5m was raised from another, undisclosed investor. Following that founding round, the current main shareholder in Truphone, Alexander Abramov, chairman of the mining and metal group Evraz, saw his stake shrink from 80% down to 60%. The funding were to enable Truphone to double the headcount, employing 500 extra staff over the subse-quent 18 months, and expand its coverage to the Neth-erlands, Hong Kong, Germany, Spain and Poland. Truphone's infrastructure partner in Poland is P4 (Play).

POLITICS & ECONOMY

Final tFinal tFinal tFinal terms of pension erms of pension erms of pension erms of pension reform may reform may reform may reform may be less be less be less be less restrictiverestrictiverestrictiverestrictive, PM says, PM says, PM says, PM says

The final shape of Poland's pension reform, to be im-plemented next year, may be slightly different from the initial proposals announced by the government earlier this month (see PT Business Review+ No. 002 page 14). A new initiative, put forward last week by Prime Minister Donald Tusk, may allow the Poles to redirect a portion of their social security contributions back to private pension funds down the road.


The original idea was to force Poles to choose between private pension funds OFE and the state social security fund ZUS for the final portion of their social security contribution, but the ministers are now of the opinion that a single, final, one-way transfer would be too re-strictive. In the evolving plan, Poles would be allowed to shift the flow of premiums back from OFE to ZUS or ZUS to OFE, once every two-three years, Tusk said. A move will only redirect the premium, not shift capi-tal from ZUS to OFE. In early September, the Polish government said it will roll back its 1999 partial privatization of the social se-curity system, sending the portion of the private pen-sion funds (OFE) invested in Treasury bonds (estimat-ed at 51.5% of OFE assets) back to the social security system and making further participation in the system optional. According to that plan, the Poles will have a three month period to declare their desire to remain in the rump system and will be switched to a ZUS-only system if they fail to declare. Should they stay in the OFE fund, the portion of their earnings to be sent to OFE will be at 2.92%. A draft bill on the changes to the pension system is to be ready in the coming weeks, Finance Minister Jacek Rostowski told reporters last week following his meet-ing with the ruling Civic Platform (PO) parliamentary caucus. Although all credit agencies had said that Poland's creditworthiness will remain unaffected by the planned restructuring of the pension system, the coun-try could see chances for an upgrade of its rating from the current A2 level "slightly" limited, Moody's senior analyst Jaime Reusche told financial portal Obserwator Finansowy. "This is an aspect, which slightly limits the possibility of an advancement of the Polish rating from the cur-rent A2 level," Reusche said. "On the other hand,

changes in the pension system will certainly improve the state of public finance and its perspective in the nearest future."

POLITICS & ECONOMY

GUS & NBP confirm GUS & NBP confirm GUS & NBP confirm GUS & NBP confirm Polish economy on Polish economy on Polish economy on Polish economy on slowslowslowslow----growth trackgrowth trackgrowth trackgrowth track

The Polish economy continues to show indications of gradual recovery across numerous sectors, but it re-mains quite dependent on net exports for overall growth and pending data remains critical to that out-look, deputy head of Poland's central statistical office GUS, Halina Dmochowska, told a press conference last week. While net exports "is a significant factor generating growth," she said, the statistical office sees "certain symptoms showing improved domestic demand," in-cluding recent readings of retail sales. Polish retail sales increased at an annual rate of 3.4% in August, on a 0.7% monthly decline, according to GUS, beating the Polish news agency’s (PAP) consensus estimate for 2.8% annual growth. Dmochowska's view was mirrored by central bank governor Marek Belka, who told reporters later that week that Poland was entering the stage of "a slow, gradual" economic recovery, based on a number of small positive signals coming from the economy and is thus unlikely to face any major inflationary impulses in the coming period. "This recovery will be gradual," Belka said at the side-lines of a business forum in Sopot. "Gradual does not mean impetuous or fantastic but still, based on all the

signals inflowing from the economy it seems that a slow, gradual but still a recovery is not threatened." Among positive signals coming from the economy, Belka named faster growth of industrial output, accel-eration of retail sales growth as well as an unexpected drop in the August unemployment rate. According to the NBP chief, "the worst in Poland is over." As the re-covery will be gradual, no large inflationary impulses should appear soon, Belka said, adding that no further changes to interest rates should be expected this year. Poland's ten-member Monetary Policy Council last cut rates at the July sitting, concluding an easing cycle that took 225 basis points from official interest rates in eight cuts starting in November 2012.

DATA BOX: RETAIL SALES Polish retail sales increased at an annual rate of 3.4% in

August, on a 0.7% monthly decline, Central Statistical

Office (GUS) said. The analyst survey by PAP Polish

news agency had shown consensus expectations for a

2.8% y/y increase on a 1.3% m/m decline. In real terms,

Polish retail sales were up by 3.5% y/y in August after

4.3% y/y increase in July, GUS added.

Retail sales in Poland (y/y)

-5%

0%

5%

10%

15%

20%

Feb 11 Aug 11 Feb 12 Aug 12 Feb 13 Aug 13

Source: GUS


KEY STATISTICS

Consumer PriceConsumer PriceConsumer PriceConsumer Pricessss

Data in (%) May '13 Jun '13 Jul '13 Aug '13

Sector y/y m/m y/y m/m y/y m/m y/y m/m

Food & bev +1.6 +0.7 +0.7 -0.3 2.5 -0.3 2.5 -1.2

Alcohol, tobacco +3.5 +0.2 +3.7 +0.2 +3.6 +0.1 +3.6 +0.2

Clothing, shoes -4.8 +0.1 -4.7 -0.8 -5.0 -2.7 -4.8 -2.7

Housing +1.1 +0.1 +0.9 0.0 +2.0 +1.2 +2.0 +0.1

Transport -4.2 -2.3 -3.5 +0.4 -1.2 +1.1 -1.4 +0.5

Communications -9.7 -2.6 -9.7 0.0 -9.7 0.0 -9.7 0.0

Gross CPI +0.5 -0.1 +0.2 0.0 +1.1 +0.3 +1.1 -0.3

IIIInflationnflationnflationnflation

-1%

0%

1%

2%

3%

4%

5%

Au

g 1

1

Oc

t 11

De

c 1

1

Fe

b 1

2

Ap

r 12

Ju

n 1

2

Au

g 1

2

Oc

t 12

De

c 1

2

Fe

b 1

3

Ap

r 13

Ju

n 1

3

Au

g 1

3

y/y m/m

Retail Retail Retail Retail TurnoverTurnoverTurnoverTurnover

Month Apr '13 May '13 Jun '13 Jul '13 Aug '13

m/m (%) -2.7 +1.6 +1.5 +3.8 -0.7

y/y (%) -0.2 +0.5 +1.8 +4.3 +3.4

Year 2008 2009 2010 2011 2012

Turnover in PLNbn 564.7 582.8 593.0 646.1 n/a

y/y (%) +13.3 +4.3 +5.5 +11.6 +5.6

Residential ConstructionResidential ConstructionResidential ConstructionResidential Construction

Dwellings

(in '000 units)

2008 2009 2010 2011 2012 Jan-Aug

2013

y/y

(%)

Permits 230.1 178.8 174.9 184.1 165.1 91.6 -20.6

Commenced 174.7 142.9 158.1 162.2 141.8 85.4 -18.2

U. construction 687.4 670.3 692.7 723.0 713.1 707.0 -3.9

Completed 165.2 160.0 135.7 131.7 152.5 91.1 -1.7

Source: Central Statistical Office (GUS)

GGGGross Domestic Productross Domestic Productross Domestic Productross Domestic Product

Period Growth y/y unadjusted

GDP in PLN bn current prices

Current account def. in % of GDP

Q2 2013 +0.8% 395,507 -1.9%

Q1 2013 +0.5% 377,815 -2.8%

Q4 2012 +0.7% 442,231 -3.5%

Q3 2012 +1.3% 393,792 -4.1%

2012 +1.9% 1,522,736 -3.5%

2011 +4.5% 1,462,734 -4.9%

2010 +3.9% 1,416,585 -5.1%

2009 +1.6% 1,344,384 -3.9%

Key Economic Data & ProjectionsKey Economic Data & ProjectionsKey Economic Data & ProjectionsKey Economic Data & Projections

Indicator *2010 *2011 *2012 2013 2014

GDP change +3.9% +4.5% +1.9% +1.2% +2.7%

Consumer inflation +2.6% +4.3% +3.7% +1.2% +2.2%

Producer inflation +2.1% +7.6% +3.4% -1.2% 0.6%

CA balance, % of GDP -5.1% -4.9% -3.5% -0.6% 0.3%

Nominal gross wage +3.9% +5.2% +3.7% +3.2% +4.5%

Unemployment** 12.4% 12.5% 13.4% 13.7% 13.2%

EUR/PLN 3.99 4.12 4.19 4.20 4.06

Sources: NBP, BZ WBK, GUS *) actual figures **) year-end

GrGrGrGross Wagesoss Wagesoss Wagesoss Wages A: avg monthly wages in PLN B: indexed avg wages, 100=2005

Sector Q3 2012 Q4 2012 Q1 2013 Q2 2013

A B A B A B A B

Coal mining 5,920 135 8,427 192 6,060 138 6,290 143

Manufacturing 3,463 151 3,522 154 3,491 152 3,560 155

Energy 5,790 176 6,535 198 6,196 188 5,828 177

Construction 3,709 158 3,829 163 3,556 152 3,693 157

Retail & repairs 3,322 142 3,365 143 3,432 146 3,421 146

Transportation 3,543 125 3,816 135 3,439 122 3,547 125

IT, telecoms 6,493 169 6,379 166 6,685 174 6,707 174

Financial sector 5,875 132 6,044 136 6,356 143 6,712 151

National average 3,690 147 3,878 154 3,741 149 3,613 144

Source: Central Statistical Office (GUS)

Construction OutputConstruction OutputConstruction OutputConstruction Output

Month Feb '13 Mar '13 Apr '13 May '13 Jun '13 Jul '13 Aug '13

m/m (%) -0.3 +20.9 +7.9 +16.1 +19.1 +7.8 -0.8

y/y (%) -11.4 -18.5 -23.1 -27.5 -18.3 -5.2 -11.1

Year 2006 2007 2008 2009 2010 2011 2012

y/y (%) +18.1 +15.5 +12.1 +5.1 +4.6 +11.8 -0.6

Source: The Central Statistical Office of Poland, GUS

Sentiment IndicatorsSentiment IndicatorsSentiment IndicatorsSentiment Indicators

Economic sentiment and consumer confidence indicators

-40

-20

0

20

De

c 1

0

Ma

r 11

Ju

n 1

1

Se

p 1

1

De

c 1

1

Ma

r 1

2

Jun

12

Sep

12

De

c 1

2

Ma

r 13

Jun

13

Se

p 1

3

60

80

100

120 Co nsumer confid ence (left axis)

Economic sentiment (right axis)

The economic sentiment (1990-2010 average = 100) is a composite made up of 5 sectoral confidence indicators, which are arithmetic means of seasonally adjusted balances of answers to a selection of questions closely related to the reference variable. Source: Eurostat

Producer PriceProducer PriceProducer PriceProducer Pricessss

Month Feb '13 Mar '13 Apr '13 May'13 Jun '13 Jul'13 Aug'13

m/m (%) +0.3 -0.3 -0.7% +0.1 +0.7 +0.2 -0.3

y/y (%) -0.4 -0.7 -2.1% -2.5 -1.3 -0.8 -1.1

Year 2006 2007 2008 2009 2010 2011 2012

y/y (%) +2.0 +2.0 +2.2 +3.4 +2.1 +7.6 +3.3

Construction PriceConstruction PriceConstruction PriceConstruction Pricessss

Month Feb '13 Mar '13 Apr '13 May'13 Jun '13 Jul'13 Aug'13

m/m (%) -0.2 -0.2 -0.1 -0.2 -0.1 -0.1 -0.1

y/y (%) -1.6 -1.8 -1.9 -2.0 -2.0 -1.9 -1.9

Year 2006 2007 2008 2009 2010 2011 2012

y/y (%) +3.2 +7.4 +4.8 +0.2 -0.1 +1.0 +0.2

IndustriaIndustriaIndustriaIndustrial Outputl Outputl Outputl Output

Month Feb '13 Mar '13 Apr '13 May '13 Jun '13 Jul '13 Aug '13

m/m (%) +0.3 -0.2 -2.3 -0.7 +2.6 +1.5 -4.5

y/y (%) -2.7 -0.6 +2.7 -1.8 +2.8 +6.3 +2.2

Year 2006 2007 2008 2009 2010 2011 2012

y/y (%) +11.6 +10.7 +3.6 -3.5 +9.8 +7.7 +1.0


TTTTraderaderaderade

Poland exports and imports according to commodity groups, according to SITC classification

EXPORTS in PLN bn IMPORTS in PLN bn

Jan- Jul 2013

y/y (%)

share (%)

2012 share (%)

Jan- Jul 2013

y/y (%)

share (%)

2012 share (%)

Food and live animals 37,974 +9.9 10.5 61,694 10.3 26,750 +3.6 7.4 44,287 6.9

Beverages and tobacco 4,910 +5.9 1.4 7,967 1.3 2,271 -0.1 0.6 3,989 0.6

Crude materials except fuels 9,077 +5.1 2.5 14,024 2.4 12,302 -7.6 3.5 22,053 3.5

Fuels etc 17,106 +0.1 4.7 29,389 4.9 41,400 -14.3 11.4 85,280 13.4

Animal and vegetable oils 920 +62.1 0.3 1,342 0.2 1,492 -8.7 0.4 2,887 0.5

Chemical products 33,929 +6.5 9.4 54,295 9.1 53,686 +0.3 14.8 89,140 14.0

Manufactured goods by material 74,733 -0.5 20.7 126,161 21.1 63,760 -6.0 17.5 110,773 17.4

Machinery, transport equip. 136,236 +3.3 37.7 223,646 37.5 120,298 -0.5 33.1 203,718 31.9

Other manufactured articles 45,323 +3.8 12.6 75,925 12.7 31,609 -8.6 8.7 57,646 9.0

Not classified 901 n/a 0.2 2,653 0.5 10,201 n/a 2.6 18,515 2.8

TOTAL 361,109 +3.4 100 597,096 100 363,769 -4.3 100 638,288 100

Poland's ten largest trading partners, ranked according to 2012

EXPORTS in PLNbn IMPORTS in PLN bn

No Country Jan-Jul 2013

share *2012 Share No Country Jan-Jul 2013

share *2012 Share

1 Germany 89,862 24.9% 150,046 25.1% 1 Germany 77,335 21.3% 134,933 21.1%

2 UK 23,427 6.5% 40,184 6.7% 2 Russia 45,944 12.6% 91,033 14.3%

3 Czech Rep. 21,951 6.1% 37,475 6.3% 3 China 32,785 9.0% 57,235 9.0%

4 France 21,017 5.8% 34,862 5.8% 4 Italy 19,010 5.2% 32,782 5.1%

5 Russia 19,345 5.4% 32,290 5.4% 5 France 14,267 3.9% 25,303 4.0%

6 Italy 16,368 4.5% 29,067 4.9% 6 Netherlands 13,837 3.8% 24,543 3.8%

7 Netherlands 14,129 3.9% 26,678 4.5% 7 Czech Rep. 13,374 3.7% 23,327 3.7%

8 Ukraine 9,940 2.8% 17,213 2.9% 8 USA 10,628 2.9% 16,436 2.6%

9 Sweden 9,729 2.7% 15,811 2.6% 9 UK 9,314 2.6% 15,509 2.4%

10 Slovakia 9,370 2.6% 15,288 2.6% 10 South Korea n/a n/a 14,619 2.3%

Source: Central Statistical Office (GUS) *) preliminary estimates, full year

CurrencyCurrencyCurrencyCurrency

Central Bank average rates

as of 27 September 2013

100 USD 313.28 ↑

100 EUR 423.10 ↑

100 GBP 503.33 ↑

100 CHF 345.06 ↑

100 DKK 56.73 ↑

100 SEK 48.83 ↓

100 NOK 52.31 ↓

10,000 JPY 317.58 ↑

100 CZK 16.49 ↑

10,000 HUF 141.07 ↓

100 USD/EUR against PLN

300

350

400

450

15 O

ct 12

21 Dec 12

4 M

ar 13

14 M

ay 13

22 Jul 13

27 Sep 13

USD EUR

MMMMoney Supplyoney Supplyoney Supplyoney Supply

in PLN m May '13 Jun '13 Jul '13 Aug '13

Monetary base 150,475 144,260 155,767 153,867

M1 508,299 523,783 530,666 531,124

- Currency outside banks 109,312 112,815 112,565 114,083

M2 920,112 927,345 921,662 928,359

- Time deposits 425,740 418,252 405,900 412,407

M3 941,791 946,586 945,077 949,988

- Net foreign assets 176,278 160,267 159,749 154,035 Monetary base: Polish currency emitted by the central bank and money on accounts held with it. M1= currency outside banks + demand deposits M2= M1+ time deposits (inc in foreign currencies) M3= the broad measure of money supply Source: NBP

CCCCreditreditreditredit

The financial sector's net lending in PLN bn,

loan stock at the end of period

Type of loan May '13 Jun'13 Jul '13 Aug '13

Loans to customers 887,960 900,999 896,635 901,863

- to private companies 259,593 263,453 261,000 263,491

- to households 549,117 553,055 552,503 556,027

Total assets of banks 1,622,666 1,634,587 1,616,221 1,627,182

Source: Central Bank NBP

IIIInterest ratesnterest ratesnterest ratesnterest rates

Average weighted annual interest rates

on loans to non-financial corporations

Term / currency Feb '13 Mar '13 Apr '13 May '13 Jun '13 Jul '13

PLN (up to 1 year) 5.9% 5.6% 5.4% 5.3% 5.0% 4.7%

PLN (up to 5 y ) 6.4% 6.2% 5.9% 5.7% 5.4% 5.1%

PLN (over 5 y) 6.3% 6.0% 5.7% 5.6% 5.3% 5.3%

PLN (total) 6.3% 6.0% 5.8% 5.6% 5.3% 4.9%

EUR (up to 1m EUR) 2.1% 2.3% 2.1% 2.3% 1.9% 2.3%

EUR (over 1m EUR) 2.8% 3.6% 2.9% 3.2% 2.9% 3.5%

Warsaw Inter Bank Offered Rate (WIBOR) as of 27 Sep 2013

Overnight 1 week 1 month 3 months 6 months

2.58%% 2.57% 2.60% 2.67% 2.70%

Central Bank (NBP) Base Rates

Reference Lombard NBP deposit Rediscount

2.50% 4.00% 1.00% 2.75%

Stock ExchangeStock ExchangeStock ExchangeStock Exchange

Warsaw Stock Exchange, rates in PLN

WIG-20 stocks in alphabetical

order

Price 27 Sep '13

Change 20 Sep

'13

Change end of '12

↑ Asseco Pol. 48.85 +3% +8%

↓ Bogdanka 110 -1% -19%

↑ BRE 467.75 +8% +43%

↑ BZ WBK 350 +6% +45%

↓ Eurocash 49 -4% +12%

↑ GTC 7.24 +1% -27%

↑ Handlowy 113 +5% +15%

↓ JSW 75.9 -6% -18%

↓ Kernel 50.2 -3% -25%

↓ KGHM 124 -2% -35%

→ Lotos 37.01 0% -10%

↑ Pekao 182 +3% +9%

↓ PGE 17.05 -3% -6%

↓ PGNiG 6.07 -2% +17%

→ PKN Orlen 45 0% -9%

↑ PKO BP 37.29 +3% +1%

↓ PZU 431.9 -2% -1%

↓ Synthos 4.85 -6% -10%

↓ Tauron 4.79 -1% +1%

↑TP SA 8.36 +7% -32%

Source: Warsaw Stock Exchange

Key indices

as of 27 September 2013

WIG Total index

50505050,,,,819819819819....81818181 Change 1 week +1% ↑

Change end of '12 +7% ↑

WIG-20 blue chip index

2,2,2,2,444422222222....44446666 Change 1 week +1% ↑

Change end of '12 -6% ↓

WIG Total closing index

last three months

44000

46000

48000

50000

52000

28 Jun 13

22 Jul 13

13 A

ug 13

5 Sep 13

27 Sep 13


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New Business Consultant

Tomasz Andryszczyk

RRRRegional Dataegional Dataegional Dataegional Data

Poland's regions

(main cities indicated

in brackets)

Industrial output

Jan-Aug 2013 *

Monthly wages (PLN)

Jan-Aug 2013 **

Unemploy-ment

Aug 2013

New dwellings Jan-Aug 2013

Indus-

try

Constru-

ction

Indus-

try

Constru-

ction

in '000 % Num-

ber

Index *

Dolnośląskie (Wrocław) 98.2 87.5 4,169 3,907 149.7 12.9 10,403 115.2

Kujawsko-Pomorskie (Bydgoszcz) 101.3 94.7 3,314 3,239 142.7 17.3 4,138 111.6

Lubelskie (Lublin) 99.5 96.0 3,628 2,999 127.4 13.7 4,021 89.1

Lubuskie (Zielona Góra) 94.3 85.4 3,351 2,974 58.3 15.2 2,020 99.0

Łódzkie (Łódź) 103.7 87.5 3,604 3,000 148.8 13.7 4,150 94.9

Małopolskie (Kraków) 97.6 90.8 3,740 3,295 158.5 11.3 10,314 110.3

Mazowieckie (Warszawa) 107.0 81.1 4,482 4,761 282.0 11.1 17,638 91.6

Opolskie (Opole) 96.0 97.3 3,469 3,128 49.2 13.5 1,093 109.6

Podkarpackie (Rzeszów) 107.6 93.6 3,234 3,024 146.2 15.5 3,991 100.4

Podlaskie (Białystok) 105.4 88.7 3,175 3,754 68.3 14.5 2,230 80.8

Pomorskie (Gdańsk-Gdynia) 101.6 92.2 3,866 3,471 109.7 12.8 7,331 91.4

Śląskie (Katowice) 96.0 87.6 4,445 3,477 205.3 11.1 6,907 116.4

Świętokrzyskie (Kielce) 98.9 87.2 3,339 3,163 85.5 15.6 1,597 87.9

Warmińsko-Mazurskie (Olsztyn) 98.1 85.1 3,163 3,055 107.1 20.2 2,697 88.3

Wielkopolskie (Poznań) 102.7 88.4 3,638 3,584 142.5 9.5 8,905 98.2

Zachodniopomorskie (Szczecin) 110.1 84.7 3,398 3,230 102.1 16.6 3,667 76.5

National average 100.8 86.7 3,873 3,658 2,083.2 13.0 91,102 98.3

Index 100 = same period of the previous year. ** without social taxes

Sources: Central Statistical Office GUS, NBP, C&W

Foreign Direct Investment (EUR m)Foreign Direct Investment (EUR m)Foreign Direct Investment (EUR m)Foreign Direct Investment (EUR m)

Quarter Q4 '11 Q1'12 Q2 '12 Q3 '12 Q4 '12 Q1 '13

in Poland 2,917 -1,808 1,131 1,084 2,048 360

Polish DI -929 1,090 883 -401 -1,197 329

Year 2007 2008 2009 2010 2011 2012

in Poland 17,242 10,128 9,343 10,507 13,646 2,455

Polish DI -4,020 -3,072 -3,335 5,484 -5,276 375

Current Account (EUR m)Current Account (EUR m)Current Account (EUR m)Current Account (EUR m)

Period 2010 2011 2012 Q3 '12 Q4 '12 Q1 '13

Trade balance -8,893 -10,059 -5,313 -445 -1,113 -139

Services, net 2,334 4,048 4,816 1,122 1,073 1,239

CA balance -18,129 -17,977 -13,332 -3,285 -3,329 -2,055

CA balance vs GDP -5.1% -4.9% -3.5% -4.1% -3.5% -2.8%

Source: NBP, BZ WBK

UUUUnemploymentnemploymentnemploymentnemployment

Registered unemployed, in ‘000 and

% of population in working age

1800

2000

2200

2400

2600

Q2 10

Q4 10

Q2 11

Q4 11

Q2 12

Q4 12

Q2 13

6

9

12

15 number (left axis) % (right axis)

Source: Central Statistical Office GUS

IndustrIndustrIndustrIndustrial ial ial ial PropertiesPropertiesPropertiesProperties

by region, 1H 2013

Existing stock, sq.m

Under const ruction, sq.m

Va-cancy ratio

Effective rents EUR/ sq.m/mth

Warsaw central 2,728,000 41,000 15.9%

3.5–5.0

Warsaw suburbs 1.9–3.2

Central Poland 1,021,000 8,000 16.5% 1.9–3.1

Poznań 1,041,000 50,000 3.6% 2.3–2.9

Upper Silesia 1,478,000 33,000 5.8% 2.5–3.1

Wrocław 795,000 84,000 5.5% 2.4–3.0

Gdańsk 192,000 n/a 9.6% 3.2–4.0

Kraków 149,000 n/a 7.6% 4.0-4.1

CommercialCommercialCommercialCommercial PropertiesPropertiesPropertiesProperties

City

New apartments* Offices 1H'13 Retail rents**1H'13

Q1 '13

PLN/sq.m

Change

y/y

Rents** Vacancy Retail

centres

High

streets

Warsaw 8,076 -5.9% 11.5-25.5 10.5% 85 85

Kraków 6,305 -12.1% 13-15 2.71% 41 78

Katowice 5,526 -5.0% 13-14 8.29% 48 56

Poznań 6,412 -13.3% 14-16 14.66% 44 55

Łódź 4,898 -9.2% 12-14 14.97% 31 26

Wrocław 6,031 -13.5% 13-16 12.37% 38 41

Tricity 6,453 -8.1% 13-15 11.24% 39 31

*avg, offer-based ** EUR/sq.m/month; Retail units 100-150 sq.m

Country Credit RatingsCountry Credit RatingsCountry Credit RatingsCountry Credit Ratings

Agency rating outlook

Fitch Ratings A- stable

Standard & Poor's A- stable

Moody's A2 stable

Source: Rating agencies

Real EarningsReal EarningsReal EarningsReal Earnings

Average gross wage vs inflation.

100

120

140

160

180

Aug09

Apr10

Dec10

Aug11

Apr12

Dec12

Aug13

Wage CPI

Index 100 = Jan 2005. Source: GUS

Documents

Poland Today Business Review+ No. 005