Poland Today Business Review+ No. 009

No. 009 / 28th October 2013 / www.poland-today.pl / magazine, conferences, portal, newsletter

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BANKING & FINANCE

Citi Handlowy seeks to sack 800 staff and close down 19 branches in efficiency push page 2

BRE and Multibank brands to vanish from market in November page 2

ENERGY & RESOURCES

Spain's Acciona Energia opens 33MW wind farm, its 2nd in Poland page 3

Coal firm JSW to build PLN 0.5bn co-generation plant in Silesia page 4

PROPERTY & CONSTRUCTION

Czech CPI Group has big plans for Poland, begins with takeover of Orco's office properties page 4

Tristan Capital expands Polish portfolio, acquires five shopping centers page 6

TRANSPORT & LOGISTICS

Ryanair strengthens lead over LOT on Polish routes page 7

SERVICES & BPO

Dutch e-docs company Anachron establishes development centre in Kraków page 8

Security company City Security merges with Czech peer M2C page 9

CONSUMER GOODS & RETAIL

Mayland Real Estate completes EUR 200m shopping centre in Gdynia page 9 Danish Netto opens its 300th discount grocery, wants 50 more in 2014 page 10

Żabka convenience chain acquires 130 stores from Kolporter page 11

POLITICS & ECONOMY

Baby food producer Nutricia expands Polish factory in Opole page 12

KEY FIGURES

Up-to-date macroeconomic figures, currency & stock market data and lots of other hard-to-find info pages 15-17

Poznań City Center houses a shopping mall with a GLA of 58,000 sq.m. Photo: TriGranit

TriGranit completes landmark projectTriGranit completes landmark projectTriGranit completes landmark projectTriGranit completes landmark project Hungarian developer TriGranit and its partners have opened a giant new mixed-use project Poznań City Center. Built in the center of Poznań at the cost of EUR 385m, the investment includes a large shopping centre, train and bus stations. page 9

Innova acquires Wirtualna Polska Innova acquires Wirtualna Polska Innova acquires Wirtualna Polska Innova acquires Wirtualna Polska Private equity fund Innova Capital has teamed up with Polish Grupa o2 to acquire one of Poland's top internet portals Wirtualna Polska from Orange for PLN 375m. The investors seek to create a new leader in Poland's online media. page 13

weekly newsletter # 009 / 28th October 2013 / page 2

BANKING & FINANCE

Citi Handlowy Citi Handlowy Citi Handlowy Citi Handlowy seeks seeks seeks seeks to to to to sack 800 staff andsack 800 staff andsack 800 staff andsack 800 staff and close close close close down 19 branches in down 19 branches in down 19 branches in down 19 branches in efficiency pushefficiency pushefficiency pushefficiency push

Citing a changing customer behavior, dynamic growth of new technologies, and strategic realignment, one of Poland's top lenders City Handlowy, the Polish arm of US Citibank, has decided to downsize 792 staff (approximately 15% of its total workforce) in an at-tempt to "further improve its operational efficiency." The bank seeks to introduce a new "Smart Banking Ecosystem" formula with high-tech units, relying largely on self service terminals as well as mobile and online tools, to gradually replace traditional branches. According to the plan, 25 of the bank's new Smart out-lets are to be operational in Poland's nine largest met-ropolitan areas (G9) by the end of 2014. "This is a con-tinuation of the 2010 strategy that focuses on the bank's presence in the places most frequently visited by the target customers and concentration on the mar-kets with the highest growth potential," Citi Handlowy said in a statement." At the same time, 19 retail bank-ing units located outside the G9 are to be closed down, with customers from those locations being offered ac-cess to banking services through a centralized sales unit, CitiPhone services and internet and mobile plat-forms. The long-term plan is for all the remaining Citi outlets to adopt the new "Smart" formula by the end of 2016 with some being transferred to new locations, such as retail centers, with longer opening hours. The employment restructuring will impact mainly Cit-i's retail banking area (which represents 684 of the

planned 792 redundancies), with the closure of tradi-tional outlets alone resulting in the loss of some 200 jobs. Citi Handlowy aims to complete the restructur-ing by the end of October 2014, following talks with trade unions. The bank said it will seek to support the affected employees by offering them new jobs (accord-ing to the communiqué Citigroup entities operating in Poland and Bank Handlowy are to open more than 1,000 job positions in 2014) as well as providing out-placement program for employees. The one-time re-structuring charge will amount to PLN 62.3m, Citi Handlowy said, estimating its long-term annual sav-ings at PLN 100m. With an administrative reduction of interchange fees, lower profits from bond sales, and additional fiscal pressures all looming over Poland's banking sector, at-tempts by Polish lenders to cut their expense base seem understandable, but Citi's newfound love for technology seems to be somewhat belated. The bank defines its target group as Poland's well-off and rich, for whom high tech gimmicks are hardly a novelty. Certainly, enabling the customers to carry out more business via the internet is a welcome development, but its local competitors had been way ahead of Citi when it comes to introducing all sorts of useful func-tionalities. In the first half of 2013 Citi Handlowy posted PLN 656m in net earnings, marking a 38% improvement y/y and beating even the most optimistic projections. De-spite a lower income from interest, the bank boosted its gains from fees and bonds. Citi Handlowy's share price on the Warsaw Stock Exchange gas been grow-ing steadily since February 2009 and currently the bank's stock trades at around PLN 127 – much higher than in 2007, at the peak of the pre-crisis bull market.

BANKING & FINANCE

BRE and Multibank BRE and Multibank BRE and Multibank BRE and Multibank brands to vanish from brands to vanish from brands to vanish from brands to vanish from market in Novembermarket in Novembermarket in Novembermarket in November

Two well-known local brands will vanish from Po-land's financial services sector on 25th November after Germany's Commerzbank unites its Polish opera-tions under a single logo: mBank. The new brand uni-fication strategy was announced by Commerzbank's Polish subsidiary BRE Bank in 2012, but the bank's managers have made the switchover date public only recently.

mBank will replace all other brands currently used by the BRE Bank group. Image: mBank BRE Bank has evolved from one of Poland's most suc-cessful investment and corporate banks into a key player in retail banking, particularly thanks to the im-mense popularity of its online arm mBank. A separate brick & mortar chain Multibank was created over a decade ago to lure well-off city dwellers. Both the BRE logo (which was used also in the names of subsidiaries such as BRE Leasing) as well as the Multibank brand will now be scrapped, after the German-owned bank decided that mBank offers the biggest growth pro-spects. BRE Bank will therefore change its name to mBank, both in company registers as well as on the


Warsaw Stock Exchange, where BRE has been listed for 21 years. The existing Multibank outlets are to be gradually re-branded, with retail and corporate units to undergo consolidation over the coming four years. Multibank, mBank, and BRE together operate 256 branches, which is a rather small chain compared to the likes of PKO BP (1,177 units), BZ WBK (more than 1,000 in-cluding the former Kredyt Bank outlets), and Pekao SA (839). For mBank users, who access their bank al-most solely via the internet, the small branch network is not an issue, but it does limit the bank's capacity to market more advanced, premium products to its cli-ents. By combining mBank's online prowess with Multibank's high street presence the bank is hoping to squeeze more profit out of its existing infrastructure, at the same time significantly reducing marketing costs. BRE's consolidated net earnings totaled PLN 1.2bn last year. As of end of 2012 the BRE group had 4.1m cus-tomers, most of them mBank users who will be barely affected by the entire operation. Some Multibank cus-tomers, who are used to above-average service stand-ards, might be a bit disappointed to end up in the same bag with millions of mBank users, but they are clearly outnumbered.

ENERGY & RESOURCES

Spain's Acciona Spain's Acciona Spain's Acciona Spain's Acciona Energia Energia Energia Energia openopenopenopen theirtheirtheirtheir 2nd 2nd 2nd 2nd wind farm in Polandwind farm in Polandwind farm in Polandwind farm in Poland

Spain's Acciona Energía has inaugurated its second wind farm in Poland. Located in Krobia (70km north of Wrocław) and equipped with eleven 3-megawatt

Acciona Windpower turbines, the 33 MW project takes the company's installed wind power capacity in the country to 71 MW. According to Acciona, approx-imately 400 people were involved in the implementa-tion of the investment. The Spanish group is best known in Poland as the investor behind Mostostal Warszawa, one of the biggest construction compa-nies in the country, specializing in large infrastructure developments. Acciona's new wind farm will produce around 82 gigawatt-hours (GWh) of electricity, equivalent to the consumption of over 40,000 Polish households, there-by avoiding the emission of around 79,000 metric tons of carbon dioxide to the atmosphere from convention-al coal-fired power stations. The turbines installed in the wind farm are the AW116/3000 model produced by Acciona Windpower, each with a 116-metre rotor diameter and a surface swept by the blades of 10,568 square meters. They are mounted on 120-metre-tall concrete towers, the tallest model utilized by Acciona in commercial wind farms. An innovative on-site pro-duction system for the tower components has allowed the company to reduce transport costs and minimize the impact of the wind farm on the area. The ceremony was attended by a number of Polish lo-cal and regional authorities, as well as the Mayor of Krobia. Representing Acciona Energía, CEO Rafael Mateo was accompanied by Europe Director Rafael Esteban, Country Director Andrzej Konarowski and Acciona Windpower Operations Director Luis Solla. The Spanish Ambassador to Poland Agustín Núñez and the embassy's economic and commercial adviser Rocío Frutos were also present. In his speech, Rafael Mateo urged that "the positive in-itial drive by the Polish authorities regarding the re-newables sector should be reinforced by the approval of regulations that allow the future development of these energies and provide stability for investments

that have already been made. This is an essential ele-ment to generate confidence among investors and make future projects more likely."

Poland's installed wind energy capacity in MW

0

500

1,000

1,500

2,000

2,500

3,000

2005

2006

2007

2008

2009

2010

2011

2012

*2013

Source: URE *) as of end of June

The wind farm inaugurated last weekend joins the 38 MW facility at Golice, which was grid connected in late 2011. It consolidates the company's presence in the Polish wind power sector, one of the most mature and dynamic in Central and Eastern Europe, with 2,807 MW installed as of mid-2013. Poland's total in-stalled renewable energy capacity came to 4,858 MW in mid-2013 , up by over 1,800 MW com-pared to end-2011, according to energy market regulator URE. Wind power capacity increased the most,, followed by hy-dro-power capacity amounting to 966 MW and bio-mass-fueled plants with 941 MW, the data showed. Besides Acciona, other major foreign investors in Po-land's wind power sector include Portugal's EDPR, Germany's RWE and France's EDF. Spain's Iberdrola and Danish DONG have recently sold their projects in Poland to Polish utility groups PGE and Energa. Poland had previously approved a National Renewable Energies Action Plan (NREAP) with the aim of reduc-ing the strong dependence on fossil fuels in its energy


generation mix (particularly coal), which account for some 90% of the country's electricity generation. The country seems to be way on its way to reach its 15% target for the share of renewable sources in gross final consumption of energy in 2020.For wind power, an objective of 7,000 MW was set for 2020. The Polish Government has been studying new legislation in re-cent months that could modify the focus and objec-tives of the plan.

ENERGY AND RESOURCES

Coal firm JSW to build Coal firm JSW to build Coal firm JSW to build Coal firm JSW to build PLN 0.5bn cogen plantPLN 0.5bn cogen plantPLN 0.5bn cogen plantPLN 0.5bn cogen plant

Polish coalmining giant, the Warsaw-listed Jastrzębska Spółka Węglowa (JSW) has secured financing for a brand-new heat & power station to re-place its EC Zofiówka cogeneration unit in Jastrzębie Zdrój near Katowice. JSW's subsidiary Spółka Energetyczna Jastrzębie (SEJ), which is in charge of the project, has just sealed an agreement with the state-owned BGK bank and private Alior Bank for a PLN 420m bond issue that will provide a bulk of the necessary funding. The lucrative contract for the turnkey delivery of the station, worth PLN 508m net, was awarded earlier this year to a consorti-um led by Polish Energoinstal. The Zofiówka project is part of JSW's PLN 947m in-vestment program aimed at reducing the company's environmental footprint and making it self-sufficient energy-wise. JSW currently produces some 75% of the energy it uses. The government-backed BGK bank is supporting JSW's efforts under the "Inwestycje Polskie" scheme that promotes investment of strategic importance for the Polish economy.

The new EC Zofiówka will include a cogeneration flu-idized power unit with electrical capacity of 75 MWe and a minimum thermal capacity of 110 MWt, which will be adjusted to handle co-combustion of coal and biomass as well as coal slurry. The contractors, who have been given three years to complete the project, will be also responsible for installing all auxiliary sys-tems and connecting the new units to the existing in-frastructure. EC Zofiówka has been in operation for 40 years and its current capacity totals 64 MWe and 280 MWe. The new co-generation plant will be some 30% more efficient and generate way less harmful emis-sions, extending the site's life cycle by another 30 years. The heat generated by the plant will help keep the 100,000 population of Jastrzębie Zdrój warm dur-ing winter months. JSW is Europe's leading producers of hard coal and a major supplier of coke. The company expects its coal output to reach 13.5m tons in 2013 and 14m tons in 2014. Last year, 9.5m tons of coking coal (including 7.7m tons of type 35 coking coal) and 4m tons of steam coal were excavated at JSW mines, while the output of its coke plants came to 3.8m tons. JSW employs close to 30,000 staff and last year it posted consolidated net earnings of PLN 985m on revenues of PLN 8.8bn.

IN BRIEF: Power group Enea intends to spend PLN 20 billion on its 2014-2020 investment program, including PLN 11.8bn

outlays in generation & distribution and PLN 7.7bnin re-

newable energy, heat-and-power cogeneration and

heat grid, the firm said in a market filing on corporate

strategy approved by the supervisory board. The sum

does not include financing costs, Enea said. The

planned investment outlays will be partially financed

with the company's own means and partially with debt,

the filing showed.


Czech CPI Group has Czech CPI Group has Czech CPI Group has Czech CPI Group has big plans for Poland, big plans for Poland, big plans for Poland, big plans for Poland, starts with acquisition starts with acquisition starts with acquisition starts with acquisition of Orco's portfolioof Orco's portfolioof Orco's portfolioof Orco's portfolio

Property investment company CPI Group, belonging to Czech billionaire Radovan Vítek, has acquired the Czech, Polish and Hungarian real estate assets of Sidoti, which formerly belonged to the Luxembourg-registered Orco Property Group's Endurance Funds. Following the transaction, Orco is still regis-tered as owning half of Sidoti. CPI Group now has as-sets under management of CZK 80bn (EUR 3.13bn). The Polish properties in the transaction include the 14,000 sq.m Orco Tower (also known as Comarch Tower after its main tenant) in central Warsaw, and the Prosta 69 building (11,200 sq.m) with notable ten-ants that include Euromoney and a department of the Warsaw University. In the Czech Republic, CPI pur-chased OC Spektrum, Luxembourg Plaza, Arkáda Prostéjov, BesNet Centrum and Rostock Property, whereas in Hungary the company bought buildings occupied by General Motors, Citibank, Vodafone and the Bank of China. Earlier this year Mr. Vítek acquired Hungarian devel-oper Ablon Group Ltd. for USD 47m and in Novem-ber 2012 he bought a 30% stake in Orco Property Group itself, becoming the developer's largest share-holder weeks after the developer finished a bond-for-equity swap to overhaul debt. Both Ablon and Orco, which has one of the largest housing portfolios in Ber-lin as well as a 60-acre residential project in Prague, complement CPI's business, the company said.


Orco is best known in Poland as the developer of War-saw's first serviced high-rise luxury tower, Złota 44, which is nearing completion. Located by the main railways station and designed by Polish-born star ar-chitect Daniel Liebeskind, the project was conceived at the peak of Poland's post-EU accession property boom, but it has since seen several delays with sales of luxury condos in the building having been rather dis-appointing so far. Badly impacted by the financial cri-sis, Orco has been struggling to keep its head above water in the past couple of years. Its gross asset value came to EUR 1.29bn at the end of June, with a loan to value ratio of 51.4%.

CPI Group has big plans for Orco Tower. Photo: Orco Radovan Vítek started his first venture, importing blankets from Germany, as an economics student soon after the collapse of communism in 1989. He set up a fund called Investicni Privatizacni Fond Boleslavsko AS in 1991 and renamed it CPI in 1998, when it began to focus solely on real estate. CPI owns retail and lo-gistic properties, office buildings, hotels, and land val-ued at CZK 80bn (EUR 3.13bn). The company's 12,700 apartments make it the second-largest provider of rental accommodation in the Czech Republic. It gen-erated total rental income of CZK 2.8bn in 2012, unau-dited data show. CPI has been the most active player on the Czech market, where it spent at least EUR 950m, and according to analysts its expansion abroad was a natural move.

Poland Today talks to: Martin Němeček, Deputy CEO of CPI Group Photo: CPI

• PT: Is the CPI Group a long-term investor? What is your general approach? • Martin Němeček: CPI is a private company which has a sole shareholder, Mr. Radovan Vítek. This gives us two very fundamental competitive advantages. The first is the fact that our financial resources and in-vestment horizon are very long. Mr. Vítek is not plan-ning an exit and invests all of the profit back into real estate. He himself says that he is establishing a pen-sion fund for himself and his family. The other ad-vantage is the very quick decision-making process. As a result, we are able to concentrate on the commercial side of investments, at the same time taking advantage of opportunities which large corporations are often unable to handle. In short, CPI combines great re-sources with high flexibility. • PT: Is CPI considering further real estate acquisi-tions in Poland, or was the Orco purchase a one-off move? What role does Poland play in your overall ac-quisition strategy? MN: The CPI Group has purchased real estate in vari-ous CEE countries in recent years, following a strate-gic decision to diversify risk and to take advantage of the opportunities which are offered by various mar-kets in the region. We regard these acquisitions as very successful and we are certainly planning to further ex-tend the portfolio outside of the Czech Republic. We are monitoring the Polish market very closely, we have several offers of interesting portfolios and are analyz-ing them. The transactions could be sealed in 2014.

• PT: Which segments will be your key targets? MN: In Poland, we want to concentrate on retail prop-erties, specifically on retail warehouses. In the Czech Republic, we have an elaborate system of manage-ment, rental and financing for this type of real estate and we want to transfer this experience to the Polish market. This is one of the reasons why we prefer loca-tions near the Czech border, in Silesia and the Kraków region. Lots of real estate is on offer there, but we will be selecting only those items where we are convinced of the long-term success of the project. The office segment is of less interest to us at this point in time. Although the core market does offer very high quality projects, in our opinion the prices are at their upper limit. The non-core market has already experienced adjustment in prices and rents and other changes could evidently still take place. We will continue to monitor the market and will make any potential in-vestments on an opportunistic basis. But we are not ruling out the purchase of a share in a major Polish re-al estate investor/developer and thus acquiring a port-folio of various items of real estate. With such a pur-chase, we would also gain a local team together with its know-how. • PT: From a long-term point of view, which geo-graphical destinations do you see as ideal for devel-opment of the CPI portfolio? MN: Apart from Poland, we are also closely monitor-ing the Hungarian market. We have purchased Ablon, including a very professional team which is capable of managing additional real estate. At the same time, this market offers several opportunities for increasing the value of real estate in the future, this being by either rent increases, additional rental of free space or im-provement of the rate of return. Other investors also view this country in a similar way, although it remains to be seen as risky investment. Another country where we will certainly be investing is Germany. The reason is again regional proximity, a large pool of projects for sale and the availability of bank financing. Outside of


the CEE region, we see great potential in the luxury accommodation and hotel segment in major tourist destinations around Europe, i.e. on the Côte d'Azur and in the Alps. We will soon have completed the Palais Maeterlinck project in Nice, the Crans-Montana project is underway and we are in negotiations with regards to other undertakings. • PT: What share of CPI's foreign assets could be lo-cated in Poland?

MN: Poland is a large and populous country and is re-gionally close to us. We certainly want to extend our portfolio there and become an important player. But we are in no rush. It's all a matter of opportunity and price. • PT: There has been a lot of talk there recently about plans by foreign funds regarding investment in rental flats in Poland. Is CPI one such investor, considering its experience on the Czech market?

MN: We are also considering investment into residen-tial housing. For the time being we see little oppor-tunity for the purchase of a portfolio the size of which would be of interest to us. • PT: The Polish properties you've acquired, for ex-ample Orco Tower, are already getting on in years and could do with an upgrade. Is the CPI Group pre-pared to finance renovation of such projects?

MN: We bought Orco Tower especially due to its unique location. Even in the condition it is in today, the building provides a very good return on invest-ment. But we are counting on its renovation and possi-ble extension over the medium-term horizon. Its value will thus increase significantly. Once the subway and Rondo Daszyńskiego crossroads have been finished, the Prosta 69 building will have superb accessibility. We are also planning reconstruction of this item of re-al estate. Our group has resources for these invest-ments.


Tristan Capital Tristan Capital Tristan Capital Tristan Capital expands Polish expands Polish expands Polish expands Polish portfolio, acquires five portfolio, acquires five portfolio, acquires five portfolio, acquires five shopping centers shopping centers shopping centers shopping centers

The EPISO3 opportunity fund advised by Tristan Capital Partners has acquired a portfolio of five shopping centers in Poland for EUR 174.5m. The seller was Charter Hall Retail REIT, which is exiting Eu-rope to refocus on its core domestic market in Austral-ia. The EPISO3 (European Property Investors Special Opportunities 3) fund was originally set up to target investments and distress opportunities in Europe aris-ing from the shortage of debt and equity capital. The transaction involved five retail projects in Poland with a combined GLA of 66,300 sq.m: the Borek shop-ping center in Wrocław (developed in 1999), Turzyn in Szczecin (2001), Dąbrówka in Katowice (1999), as well as retail parks Zakopianka in Kraków (1998) and Are-na in Gliwice (2006). The five centers are located in affluent and densely populated neighborhoods in each of these large Polish cities and average occupancy lev-el across the portfolio is 94%. All five centers are an-chored by hypermarkets owned separately by Carre-four, although these are not part of the transaction. "The sale of the Charter Hall portfolio to Tristan Capi-tal Partners is a strong indication of Poland's continu-ing popularity as a key target market for international investors. The geographical spread of these five assets in some of Poland's major cities confirms that there is still strong institutional investor demand on a regional basis. Each of these centers can demonstrate good growth opportunities through active management and


will continue to trade well in the future, giving a se-cure return on the investment. The core markets are naturally performing well but this transaction clearly shows that the core-plus/opportunistic market is still alive and performing well," commented Mike Atwell, Senior Director & Head of CEE Capital Markets at CBRE, which advised the seller.

Turzyn is one of the five Polish shopping centers acquired by Tristan Capital Partners. Image: CBRE "We like the relative strength of the Polish economy, and believe these are good retail assets that will be en-hanced through further investment," said Daniel Har-ris, MD of Investments at Tristan Capital. In November last year Tristan-advised funds closed the EUR 210m acquisition of the Warsaw Financial Center in a joint venture with Allianz, and in July 2013 their CCPIII core plus real estate fund agreed to

acquire a grade-A office complex Mokotów Nova in Warsaw from Belgium's Ghelamco Group for a net EUR 121m. The 43,744 sq.m office complex is occu-pied by tenants such as Gothaer, BMW Group, and LG Electronics. Tristan Capital Partners manages a number of proper-ty funds with opportunistic/value added and core plus strategies. Its clients include some of Europe's top pension and asset management funds, for instance Finnish Ilmarinen Mutual Pension Insurance, VER, and Suomi Mutual Life Assurance, Dutch APG In-vestments and Stichting Dow Pensioenfonds as well as Germany's Gothaer Asset Management and VPV. Investment market remains buoyant According to Jones Lang LaSalle, the volume of trans-actions completed on the Polish commercial real es-tate market by the end of September hit approximately EUR 2.064bn with Q3 transactions worth EUR 1.04bn. The property consultancy expects the full-year figure to come in excess of EUR 3.1bn, which would be com-parable with 2007 and some 15% higher than last year. When it comes to market segments, the volume of of-fice transactions recorded by the end of Q3 reached approximately EUR 830m, retail: EUR 780m, industri-al: EUR 325m, mixed use: EUR 115m, and hotels: EUR 14m. In Q3 alone, the volume of office transactions came in at EUR 210m, with retail transactions totaling EUR 575m, industrial at EUR 140m and mixed use at EUR 115m. Major deals concluded in each market segment in Q3 include Silesia City Center in Katowice (about EUR 400m - the largest 2013 real estate trans-action in the CEE region), Galeria Dominikańska in Wrocław (approximately EUR 152m) and office build-ings Mokotów Nova in Warsaw (EUR 121m) and Aquarius Business House in Wrocław (EUR 42m). Be-sides the Charter Hall portfolio, transactions to be

concluded in Q4 2013 will include Warsaw's Le Palais office building and Wola Park retail. "Poland, which accounts for 70% of 2013 transactions in Central Europe, remains a leading market in the re-gion. It should be stressed that 2013 is also a very good year for the retail investment market. If investors exe-cute their plans and manage to finalize deals that are scheduled to be concluded in Q4, the total volume of retail transactions may reach EUR 1.7bn, significantly exceeding 2012's EUR 1.07bn," commented Agata Sekuła, Head of Retail Investment, Central Europe, Jones Lang LaSalle.

TRANSPORT & LOGISTICS

Ryanair strengthens Ryanair strengthens Ryanair strengthens Ryanair strengthens lead over LOT on lead over LOT on lead over LOT on lead over LOT on Polish routesPolish routesPolish routesPolish routes

Irish low-cost Ryanair beat flagship Polish carrier LOT in the first half of 2013, becoming the number one passenger airline on the local market. According to data provided by the aviation watchdog ULC, Rya-nair carried 3.057m passengers in January-June 2013, some 0.95m more than in the corresponding period of last year, which translates into a 30% share in flights to and from Poland. Its main competitor LOT wel-comed aboard only 2.75m passengers, some 63,000 fewer than in 1H 2012, even though the market ex-panded by 140,000 passengers, reaching 10.2m. The Polish airline is currently struggling to keep its head above water, after requesting PLN 400m worth of public aid last year to avoid bankruptcy. The EU has permitted Poland to inject up to PLN 781m into the company as long as the latter implements a drastic cost cutting program that involves the closure of many


routes and group layoffs. So far, LOT has not asked for the remainder of the public aid, but the cost cutting measures continue to undermine its market position, and create new opportunities for rivals such as Rya-nair.

Ryanair is Poland's top airline Passengers on routes to and from Poland incl. domestic, in million

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5

Air Berlin

KLM

SAS

Air France

Norwegian

EasyJet

Lufthansa

WizzAir

LOT*

Ryanair

1H 2013

1H 2012

Source: ULC *) including Eurolot

The Irish carrier owes its remarkable growth in Po-land to last year's launch of flights to Warsaw's newly opened Modlin airport. Following Modlin's temporary closure in December 2012, Ryanair relocated to War-saw's main Chopin airport, but a few weeks ago the airline moved back to Modlin, from where it flies to 30 European destinations. Over the first three weeks since its return to Modlin Ryanair carried 80,000 pas-sengers. Starting from March next year the company will be flying also on domestic routes, from Modlin to Gdańsk and Wrocław, further undermining LOT's al-ready weak position.

"We expect our traffic to grow to 1.5m passengers to/from Modlin in 2014," commented Ryanair’s CEO Michael O’Leary. "We have no doubt that Warsaw Modlin’s location allied to its low cost base, cheap car parking and easy bus transfers, will make it the airport of choice for passengers flying on Ryanair’s first two Polish domestic routes from Gdańsk and Wrocław to Warsaw. These first two domestic routes will deliver significantly lower air fares for Polish consumers, and finally free them from LOT’s high fares on domestic routes." Time will tell whether domestic passengers will find Modlin, which is located some 40km north of Warsaw, a convenient enough gateway to the Polish capital, be-cause access to the airport by public transport still leaves a lot to be desired and taxis are not an option for price-conscious travelers. Hungary's WizzAir ranked as number three in 1H 2013, with 1.9m passengers, which represents a decline by 120,000. WizzAir, which used to fly to Modlin alongside Ryanair last year, has Germany's Lufthansa came 4th with 717,000 passengers. None of the re-maining airlines has more than a 2% share in the Polish aviation market.

SERVICES & BPO

Dutch eDutch eDutch eDutch e----docs company docs company docs company docs company Anachron establishes Anachron establishes Anachron establishes Anachron establishes development centre in development centre in development centre in development centre in KrakówKrakówKrakówKraków

Dutch e-documents service provider Anachron Technology has obtained permission to operate in the Kraków special economic zone. Anachron's

Kraków unit will be responsible for software innova-tion, development and providing electronic archiving, presentation and e-payment services for businesses and consumers in over 70 countries worldwide. "Following an extensive review we have specifically chosen Poland and Kraków because the city has a Technical University that provides excellent human resources, it can be easily reached from the Nether-lands, and offers introduction and support to investors via the Economic Zone," Rick Bergsma, Product Man-ager & International Marketing at Anachron, tells Po-land Today. "We are looking for Medior and Senior Java Developers with a technical background and/or scientific degree." Anachron's office in Kraków has been operational since the beginning of September. The Dutch company has pledged to spend PLN 0.5m on the Polish project and create 24 jobs. "These figures are definitely just for the initial start-up period. As Anachron has been growing ever since its launch in 2000, we expect more of our business to go to Poland in the future. In the long term we foresee the Kraków office to operate as a regional develop-ment center," Mr. Bergsma says. "Anachron brings the latest knowledge and technology to the Economic Zone and offers high quality jobs. With our interna-tional innovative approach we have already won sev-eral awards, and we will add value to the business in Poland, way beyond the initial investment plans." Anachron was founded over a decade ago and current-ly it is the market leader in the Netherlands and one of Europe’s leading e-invoicing service providers. It spe-cializes in high volume, user-friendly, sophisticated presentation of confidential documents that meet complex international legislation and VAT regulations. The company develops software-as-a-service (SAAS) applications for businesses worldwide and its custom-ers include over 250 SMEs and more than 60 interna-


tional corporations across 70 countries worldwide. It has a staff of 45 with a headquarters in Amsterdam (NL), and offices in Joure (NL), Brussels (BE) and Kraków (PL). "In Poland we currently serve International Paper with an extensive e-Invoicing solution, used around the globe. As a rapidly expanding market, Poland of-fers many opportunities for the upcoming e-Invoicing market, and we expect to increase our business in the whole region," adds Rick Bergsma.

SERVICES & BPO

City Security merges City Security merges City Security merges City Security merges with Czech peer M2Cwith Czech peer M2Cwith Czech peer M2Cwith Czech peer M2C

City Security, one of Poland's top security companies is merging with M2C (Mark2 Corporation), the lead-ing player in the Czech Republic. With a combined turnover of PLN 370m the merged company M2CS will rank as number two in Poland by turnover and dominate the shopping center security sector in the CEE, guarding 120 retail properties in seven countries: Poland, Russia, Hungary, Slovakia, Ukraine, Turkey, and the Czech Republic. City Security made headlines in recent months due to allegations of bribery in the tender for provision of se-curity services to the military airport in Malbork, which the company won. CEO Beniamin Krasicki told reporters his company is cooperating with the investi-gators to help them clarify the issue as soon as possi-ble. Currently the number one security company in Poland is Konsalnet, which under the ownership of private equity fund Value4Capital has completed a number

of takeovers in recent years, including the acquisition of the Polish arm of global giant G4S. Value4Capital is reportedly seeking buyers for the Polish company, which has an annual turnover of PLN 770m, with Spain's Prosegur and Swedish Securitas being men-tioned as the potential suitors. Following G4S's recent exit from Poland, and the Swedish operator is the last foreign security firm still operating on Poland's ex-tremely competitive but also highly fragmented mar-ket. US cash handling company Brink's has also sold its Polish unit to local services provider Impel. With some 3,000 companies that give work to an esti-mated 250,000 people and generate annual sales of some PLN 7bn, Poland's security and protection sector offers an enormous potential for consolidation. How-ever, the fierce competition is keeping margins at an extremely low level, and corruption and poor quality standards are not uncommon. Besides Konsalnet and Impel, the third top security company in Poland is Solid.


TriGranit opens TriGranit opens TriGranit opens TriGranit opens landmark mixedlandmark mixedlandmark mixedlandmark mixed----use use use use project in Poznańproject in Poznańproject in Poznańproject in Poznań

Two years and three months after Hungary's TriGranit Development Corporation and its part-ners broke ground on their giant mixed-use project Poznań City Center (PCC), the impressive EUR 385m complex was officially opened last week. With a gross building area of 140,000 sq.m, the investment com-prises a multifunctional and fully integrated shopping centre with a new train station, bus station, three-storey car park, as well as new road network and pub-lic transport links.

TriGranit's partners in this undertaking were Europa Capital, an international property fund, as well as Po-land's state-owned railways operator PKP, which con-tributed the site. The new city centre consists of a three level shopping centre with a leasable area of 58,000 sq.m with 230 shops and 35 bars, restaurants and cafes arranged into two large food courts. There is also a fully integrated transport hub, which includes a new train station built for the EURO 2012 soccer tour-nament, new bus station with 19 bays and a three-story car park for 1,500 cars. Additionally, a spacious bicycle parking, a 3km network of bicycle lanes and 2.5 km of new roads have been developed to improve access to the property.

Poznań City Center is a landmark project for both TriGranit and the City of Poznań. Image: TriGranit The key tenants in PCC include H&M, TK Maxx, Roy-al Collection, Martes Sport, Cubus, Reserved, Mohito, House, Cropp, Sinsay, Home&You, Bershka, Pull& Bear, Stradivarius, Carry, Terranova, Rossmann, Douglas, Superpharm, Saturn, Piotr i Paweł, Mango, CCC, Centro and Deichmann. Toys"R"us and SporstDirect.com opened their first outlets in Poznań at the new mall. Among the restaurants, most popular


international and Polish chains will be represented, including Pizza Hut, McDonald's, McCafe, KFC, Burg-er King, Guac'n'Ole, North Fish, Subway, Sphinx and Pizza Dominium. There will also be a number of snack bars and cafes. The architects behind the Integrated Transport Cen-ter and the retail complex in Poznań are Bose Interna-tional Planning and Architecture and Poznań's Penta-gram Architekci. According to the investors, some 70 contractors and 6,000 workers participated in the construction of PCC, and the project is to create an es-timated 2,500 jobs. The investor has contributed some PLN 65m worth of assets, including the infrastructure, roads, stormwater sewer, underground crossing, a tram stop and bicycle paths to the Poznań municipali-ty. A possible extension of the project including recon-struction of the old train station building is planned for 2015. "It is worth mentioning that Poznań City Center has been built on a 9ha site that was previously owned and left unused by the PKP. These brownfields will now become a truly modern new city centre," commented Tomasz Lisiecki, head of TriGranit Development Polska. The Hungarian developer has invested more than EUR 1bn and completed in excess of 500,000 sq.m in Poland to-date. Their first project, opened seven years ago, was the Silesia City Center in Katowice, and four years later the company completed its residential pro-ject Oak Terraces in the city. In 2009 TriGranit launched the Bonarka City Center mixed use project in Kraków, which has since been expanded to include Bonarka 4 Business, a complex of four class A office buildings. "With our Poznań project, we can truly demonstrate our experience in reshaping existing central train sta-tions into new city centers. This unique know-how

was gathered at the development of WestEnd City Center, Budapest and at the planning of Emonika City Center in Ljubljana," said Sandor Demjan, the Chair-man of TriGranit Development Corporation. Europa Capital is a real estate fund manager focused on European markets. Since 1995, Europa Capital’s Principals have collectively raised seven real estate funds and committed to over 75 transactions totaling some EUR 7bn across 18 European countries. Europa Capital is a member of The Rockefeller Group a subsidiary of Mitsubishi Estate Co.. Last year Euro-pa Capital acquired the 27,000sq.m Twarda Tower in Warsaw from a fund managed by BPT Asset Man-agement A/S. Warimpex Polska has been con-tracted to carry out a comprehensive refurbishment program on the property, which has been vacated by its previous tenant, the Orange / TPSA group. Previ-ously, Warimpex and Europa Capital have together undertaken two successful Warsaw investments at the Sobieski Hotel & Offices and at CityPoint Distribution Park in Targówek.


Mayland completes Mayland completes Mayland completes Mayland completes EUR 200m shopping EUR 200m shopping EUR 200m shopping EUR 200m shopping centre in Gdyniacentre in Gdyniacentre in Gdyniacentre in Gdynia

Mayland Real Estate, the Polish property of French retail giant Casino, has launched its 4th shopping cen-ter in Poland, the giant CH Riviera mall in Gdynia. CH Riviera has evolved from a much smaller (21,000 sq.m) CH Wzgórze into the largest retail project in the TriCity region, with a GLA of nearly 70,000 sq.m, 238 retail outlets and 2,500 parking spaces.

"The capital expenditures have come to approximately EUR 200m," Mayland's Anna Skrocka tells Poland To-day. "The project is now 96% let and we are hoping to seal the remaining leases shortly." Located near a major bus & trolleybus station as well as the SKM commuter train that connects key loca-tions in the region and boasting a catchment popula-tion of more than 736,000 people, CH Riviera has at-tracted a huge range of tenants, some of whom are de-buting on the TriCity market. Key lease deals have been signed with Spain's Inditex (which has brought all of the brands it currently has in Poland, including Zara Home, to Gdynia), Polish LPP (Reserved, Sinsay, Mohito), as well as Swedish H&M. Besides a clothing store, the latter has opened one of Poland's first H&M Home stores in CH Riviera. Overall, fashion outlets take up a half of CH Riviera's floor space. The project is anchored by a 12,800 sq.m Real hypermarket and 3,500 Saturn electronics store, which will open in ear-ly 2014. It will also be home to a six-screen cinema op-erated by Helios.

Mayland's new project in Gdynia is the largest retail center in the region. Image: Mayland Real Estate Mayland Real Estate was formed in 2006 to manage shopping center development operations for the Ca-sino group, which had sold its retail chains in Poland (Geant & Leader Price). A year later the company teamed up with the Whitehall fund managed by Goldman Sachs and announced an ambitious EUR 1bn


investment program for the CEE region. Mayland Real Estate representatives told Poland Today's Lech Kaczanowski at the time that some EUR 750m of that amount would be spent on new shopping centers and mixed-use projects in Poland.

The developer has since completed three retail prop-erties in Poland: Jantar in Słupsk, Karolinka in Opole, and Pogoria in Dąbrowa Górnicza, with a combined GLA of 150,000 sq.m. Mayland had intended to deliv-er a further 10-15 projects to the market by 2012, but the financial crisis seems to have thrown a wrench in their plans. In 2009 the company sold Karolinka and Pogoria to Australian fund MGPA for EUR 187m, and three years later the two centers were bought by Heitman European Property Partners IV. MGPA passed up on the opportunity to acquire Jantar in 2009 for a further EUR 49m and the Słupsk property re-mains in Mayland's portfolio.

Plenty of work ahead of Mayland Mayland's Polish projects, completed & planned

City Name GLA sq.m Opening

Completed

Słupsk Jantar 46,000 2008

Opole Karolinka 70,000 2008

Dabrowa Górnicza Pogoria 36,000 2008

Gdynia Riviera 70,000 2013

Planned

Kraków Serenada 42,000 2015/16

Wrocław Idylla 40,400 TBA

Rzeszów Bella Dolina 53,000 TBA

Bielsko-Biała Koniczynka 30,000 TBA

Piła Nimfea 30,000 TBA

Szczecin Aleja Slonca 38,000 TBA

Przemyśl Karmina 35,000 TBA

Warsaw Libretto* 190,000 TBA

Warsaw Fort Wola 40,000 TBA

Zabrze n/a 9,500 TBA

Tarnobrzeg n/a 30,000 TBA

*) a mixed-use project combining offices and retail

Source: Mayland, PT archives

"We are hoping to break ground on a new project in Kraków, Serenada, at the beginning of 2014," says An-na Skrocka. According to plans the project is to reach completion in late 2015/early 2016 with a GLA of 42,000 sq.m, 170 shops and 1,700 parking spaces.


Danish Danish Danish Danish Netto opens its Netto opens its Netto opens its Netto opens its 300th discount grocery 300th discount grocery 300th discount grocery 300th discount grocery in Polandin Polandin Polandin Poland

Danish discount supermarket chain Netto has marked another milestone with the opening of its 300th Polish outlet last week in the northern town of Kwidzyn. The Danish retailer, which for many years used to focus its operations on western Poland, has recently decided to speed up its conquest of the rest of the country. As part of this expansion, earlier this year Netto launched a new distribution center in Smętowo (70km south of Gdańsk, right by the Kopytkowo exit from the A1 highway). Built at the cost of PLN 75m, the 25,000 sq.m proprietary project was Netto's third distribution hub in Poland after Motaniec near Szczecin and Domasław near Wrocław. With a staff of 150-200, the new center will support Netto's growth in central and eastern Poland. "The center has been operational since 1st October and it currently employs 75 staff. Starting from November we will be supplying more than 70 stores," Netto Polska's Managing Director Kent Fogh Petersen tells Poland Today, confirming that the company will need to set up a fourth logistics hub, as its geographic foot-print expands. "We need a new distribution center every 150 outlets, so that would be sometime in 2016," he explains.

Netto opened its first Polish store in 1995 in Szczecin. Last year the company launched 35 new locations in Poland and this year so far 25 have been added to the chain. Their earlier plan was to develop at a rate of 75 stores per annum from 2014 onwards, but the reality is proving more challenging.

Netto will bring its discount groceries to Warsaw by the end of the year. Photo: Netto "We will be opening 50 stores per year from 2014," says Kent Fogh Petersen. "'We are still struggling with all the paperwork. Getting all the permissions is still very difficult and time consuming." Last year Netto's Polish turnover came to PLN 2.38bn marking a 13% increase y/y and following many years of double-digit growth. An average Netto outlet measures 750 sq.m and employs 12 staff. As of end of 2012 Netto employed nearly 4,000 staff, up from 3,500 a year earlier. The Danish retailer is yet to enter the Warsaw region, where its key competitors (Portuguese Biedronka and German Lidl) are growing at a rapid pace. Accord-ing to Mr. Petersen, the first Netto outlets in Warsaw will open in December this year.


Netto is part of the Dansk Supermarked group, which operates under the Netto, Føtex, Bilka and Salling chains with shops in Denmark, Poland, Ger-many, and Sweden. Denmark's second largest retailer, Dansk Supermarked belongs to the A.P. Møller-Mærsk Gruppen and F. Salling groups. Earlier this year Dansk Supermarked began preparations for the relocation of its bookkeeping operations to a newly established shared services centre (SSC) in Poland. Based in Szczecin and initially comprising of Netto's account-ancy team, the center is currently in the startup mode and will be fully operational in mid-2014.

Years of double-digit growth

Netto Polska's sales revenues in PLNbn

1.0

1.5

2.0

2.5

2008 2009 2010 2011 2012

Source: Netto Polska

"We currently employ 33 staff at the SSC and our plan is to increase that number to 90 and possibly even be-yond," Netto's communications manager Mariola Skolimowska tells Poland Today.

DATA BOX: RETAIL SALES Polish retail sales increased at an annual rate of 3.9% in

September, on a 0.9% monthly decline, Central Statis-

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

Polish news agency had shown consensus expecta-

tions for a 4,.6% y/y increase on a 0.2% m/m decline.

In real terms, Polish retail sales were up by 4.1% y/y in

September after 3.5% y/y increase in August.

Retail sales in Poland (y/y)

-5%

0%

5%

10%

15%

20%

Mar 11 Sep 11 Mar 12 Sep 12 Mar 13 Sep 13

Source: GUS


Żabka convenience Żabka convenience Żabka convenience Żabka convenience chain acquires 130 chain acquires 130 chain acquires 130 chain acquires 130 stores from Kolporterstores from Kolporterstores from Kolporterstores from Kolporter

Poland's leading convenience store operator Żabka Polska has acquired a network of 130 groceries from FMCG distributor Kolporter. The takeover of Kolporter's Dobry Wybór chain is Żabka's 4th acquisi-tion in less than a month as only a few weeks ago the retailer bought three local supermarket chains (AGAP, TORG, and PS Food) with 32 stores and a combined

turnover of PLN 200m (see Poland Today Business Review No. 006 page 12). Ranging from 90 to 200 sq.m in size, the Dobry Wybór outlets are located in residential areas and main streets of Poland's large and medium-sized cities. Kolporter decided to divest the chain as part of its strategic refo-cusing on core operations that comprise distribution of consumer goods, press and electronic services. "We have been cooperating with Kolporter for many years and their Dobry Wybór chain has caught our at-tention as the locations of their stores are comparable to those we choose for our own chains, Żabka and Freshmarket. Thanks to the backing from our investor, the private equity fund Mid Europa Partners, we can play an active part in the ongoing consolidation of Po-land's retail sector," said Żabka Polska CEO Jacek Roszyk. "Based on organic growth and acquisitions our goal for Żabka Polska is to reach the PLN 10bn turnover mark in four years. The acquisition of Dobry Wybór is one of several deals we are working on at the moment. We are hoping to sign them by the end of the year," added Zbigniew Rekusz, Partner with Mid Europa Partners. Founded in 1998 by the same people who created Po-land's leading discount supermarket chain Biedronka, and later supported by AIG New Europe Fund, in 2007 Żabka Polska was acquired by the Czech-Slovak private equity company Penta Investments from AIG Global Investment Group and Świtalski & Synowie for more EUR 150m. Under Penta's manage-ment, besides speeding up the expansion of its net-work of small convenience stores Żabka, including their entry to Czech Republic, in 2009 the company created a new chain of convenience outlets in a deli-format under the Freshmarket logo. In February 2011 Penta sold Żabka Polska to private equity fund Mid Europa Partners for EUR 400m. With Penta at its


helm, Żabka Polska saw its gross revenues increase by almost 42% while its EBITDA increased by 62%, mak-ing it the fund's best investment in Poland and one of its top three projects ever. The 2012 was a record year for the company, with 366 new Żabka and Freshmarket outlets opened during the period – an average of one opening per day. With a turnover of PLN 3.3bn in 2012, Żabka Polska ranked as Poland's 10th largest retailer by sales. Żabka stores are operated by independent entrepreneurs, whom the company provides with fully furnished and stocked up retail units. Prior to the recent acquisitions, the com-pany had an estimated 2,800 Żabka stores and nearly 400 Freshmarkets in Poland. "Since the beginning of the year we have launched some 300 new units, divid-ed almost evenly between the two chains," Żabka Polska's Jacek Spychała told Poland Today earlier this month.

FOOD & AGRICULTURE

Baby food producer Baby food producer Baby food producer Baby food producer Nutricia expands Nutricia expands Nutricia expands Nutricia expands Polish factory in OpolePolish factory in OpolePolish factory in OpolePolish factory in Opole

Baby food maker Nutricia, part of France's Danone Group, is expanding its largest European factory in Opole. At the cost of PLN 50m the company is adding a new production unit for modified milk to the exist-ing factory, boosting its total capacity by approximate-ly 25%. "The Opole plant currently employs more than 500 staff and next year we expect that number to go up by 100, of which some 40 will be directly related to the new investment," Małgorzata Kołodrub, corporate communications manager at Nutricia Polska tells Po-

land Today. "We expect the new building to reach completion at the beginning of Q2 2014 with produc-tion set to launch over the subsequent three months." Nutricia is a specialized healthcare division of the food company Danone, focused exclusively on research-based scientifically-proven nutrition, developed to meet the needs of patients and individuals for whom a normal diet is not sufficient or possible. Besides modi-fied milk products (with leading formula brands Bebiko and Bebilon), its Polish production units make a full range of baby food (BoboVita). Globally, Nutricia also manufactures products used in the management of severe allergic and gastrointestinal disorders, meta-bolic conditions as well as other conditions requiring nutritional therapy, including autism and intractable epilepsy. In addition to the Opole factory, Nutricia's largest ba-by food plant in Europe, the company has a small unit in Krotoszyn, which makes raw materials and inter-mediates for the production of modified milk and por-ridges for infants and high-quality dairy products. The Krotoszyn dairy plant employs 85 staff. "We are the leading maker of infant and baby food in Poland and also a major exporter, supplying products to 40 countries. Our Polish factories export 65% of their total output with Turkey, Germany, Netherlands and the United Kingdom being our key foreign mar-kets," says Małgorzata Kołodrub. Founded over a century ago in the Netrherlands, Nutricia was one of the pioneers in infant formulas and specialized medical nutrition. It became part of France's dairy group Danone in 2007. Headquartered in Amsterdam, Nutricia turns over more than EUR 1bn per annum and employs close to 5,300 staff across 34 countries. The Danone Group saw its turnover rise 8% in 2012, to EUR 20.9bn, while its net income remained flat at EUR 1.67bn. Danone Sp. z o.o., their Polish unit,

posted a net profit of PLN 106m on sales revenues of PLN 1.5bn.

IT & TELECOM

Innova Capital buys Innova Capital buys Innova Capital buys Innova Capital buys Wirtualna Polska to Wirtualna Polska to Wirtualna Polska to Wirtualna Polska to create Poland's top create Poland's top create Poland's top create Poland's top internet portalinternet portalinternet portalinternet portal

With the PLN 375m acquisition of Wirtualna Polska (WP) from Poland's top telecom group Orange Polska (formerly known as TPSA), the private equity fund Innova Capital is creating a new leader in the country's horizontal portal segment. Innova is to merge Wirtualna Polska with another key player Grupa o2, establishing Grupa Wirtualna Polska, offer-ing the most comprehensive content on the market, with news, sports, entertainment and lifestyle, as well as other services available via mobile applications or e-mail. "o2 and WP are complementary product-wise. The merger will give the new group the scale of operations and the audience required to accelerate organic growth. We will gain the ability to offer advertising agencies and viewers attractive video content, inter-esting vortals and mobile apps. We believe that given the double investment effort, we will also strengthen the leadership position in the email market in Poland," says Jacek Świderski, board member at Grupa o2, which is Innova's strategic partner in the project. Poland Today asked the parties involved in the merger about its projected impact on financials and staff num-bers, but they chose to remain tight-lipped on any de-tails.


"Of course we do have all the data and simulations but it's way too early for disclosing any of them. The fi-nancial details of the agreement between Innova and o2's founders we also prefer to keep confidential," Mr. Świderski tells Poland Today. "The merger will be a complex, multi-stage undertaking, something no-one has ever done in Poland. Our plans for further acquisi-tions all stem out of an ambition to create Poland's number one portal not only by user numbers by also based on quality of content. As far as the merger and its impact on employment are concerned, all I can say is that there will be a place in the company for anyone with ideas, skills and dedication to create Grupa Wirtualna Polska together with us." Until now, Poland's number one internet portal has been Onet.pl, sold by the TVN media group to Ger-many's Ringier Axel Springer in June last year for a reported PLN 1.275bn (RAS paid PLN 960m for a 70% stake in the business). With 11.65m users and 1.75bn hits as of July 2013 (or 13.08m and 2.39bn including al-so other Orange sites), WP was the leading Polish pro-vider of e-mail services, and the top provider of infor-mation and journalistic content among internet por-tals. It ranked as number two in entertainment, life-style, and sports-related content and third in business and travel. The o2 Group, on its part, boasted 9.94m users as of mid-2013 and it is the most popular enter-tainment portal with dozens of thematic services in-cluding Pudelek, Wrzuta, and Kafeteria as well as in-stant communicator Tlen. "We believe that by combining Wirtualna Polska and o2 we will create the number one player in Poland. We are monitoring domestic and global market trends, and will be looking for add-on acquisitions, also outside the areas both portals have been operating in so far," says Krzysztof Krawczyk, Managing Partner of Innova Capital. "It's been eighteen years since WP was set up. The merger with o2 opens up a completely new chap-ter in the history of WP, which already is the number

one provider of e-mail accounts in Poland. We intend to use this momentum in order to achieve the same position in other categories." Mr. Krawczyk told reporters Innova will own approx-imately 70% of the merged entity, with o2 Group founders holding a minority stake. The private equity company will seek to float the business on the Warsaw Stock Exchange in three years' time, before exiting the investment some two years later.

Grupa Wirtualna Polska will be the umbrella brand for Wirtualna Polska and o2 online services. Image: o2, WP

Orange Polska has been seeking buyers for WP for some time now, and rumors of Innova Capital's chanc-es erupted a few weeks ago when European Media Holding S.à r.l., a special purpose vehicle established by the fund, asked the Polish regulator for permission to take over Grupa o2, which some viewed as a prelude to the latter's future merger with WP. The transaction price (PLN 375m) proved slightly higher than recent estimates by analysts (PLN 320m), but lower than the PLN 450-500m valuations that appeared in the media back in January. Orange expects to seal the deal in Q1

2014, hoping it will contribute an extra PLN 180m to its gross profit. "Consolidation with o2 opens up new horizons for WP – the very first Polish portal. We are combining our competences and potential, products and advertising abilities – all of which guarantees the dynamic devel-opment of the Group. Wirtualna Polska is a leader in the mobile sector and electronic communications. We occupy first place in the categories important to every publisher, such as 'news coverage' and 'opinions'," says Grzegorz Tomasiak, CEO of Wirtualna Polska. Innova Capital is of the leading private equity funds in Central and Eastern Europe investing in mid-sized companies. Since its foundation in 1994 Innova Capital has invested almost EUR 500m in forty companies op-erating in 10 countries in the region. Their current Polish portfolio includes financial services firms Meritum Bank and Expander, telecoms companies GTS and Emitel, paving stone maker Libet, marble bathroom fittings producer Marmite, as well as hospi-tal operator Ujastek.

DATA BOX: UNEMPLOYMENT Poland's registered unemployment rate stayed flat in

September at the prior-month level of 13.0%, accord-

ing to Central Statistical Office (GUS) figures. The

number of registered jobless at end-September meas-

ured 2.083 million. The number of new unemployed

measured 252,500, down 2,800 y/y but up by 48,900

m/m, while 252,600 persons were scratched from job-

less registers, up by 39,300 m/m and 11,600 y/y. Em-

ployers filed 73,500 job offers to job offices, less than

77,200 in August. At end-month, job offices had

50,500 jobs on offer.


KEY STATISTICS

Consumer PriceConsumer PriceConsumer PriceConsumer Pricessss

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

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

Food & bev +0.7 -0.3 2.5 -0.3 2.5 -1.2 2.6 0.0

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

Clothing, shoes -4.7 -0.8 -5.0 -2.7 -4.8 -2.7 -4.7 +0.7

Housing +0.9 0.0 +2.0 +1.2 +2.0 +0.1 +1.8 +0.1

Transport -3.5 +0.4 -1.2 +1.1 -1.4 +0.5 -1.4 +0.8

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

Gross CPI +0.2 0.0 +1.1 +0.3 +1.1 -0.3 +1.0 +0.1

IIIInflationnflationnflationnflation

-1%

0%

1%

2%

3%

4%

5%

Sep 11

Nov 11

Jan 12

Mar 12

May 12

Jul 12

Sep 12

Nov 12

Jan 13

Mar 13

May 13

Jul 13

Sep 13

y/y m/m

Retail Retail Retail Retail TurnoverTurnoverTurnoverTurnover

Month May '13 Jun '13 Jul '13 Aug '13 Sep '13

m/m (%) +1.6 +1.5 +3.8 -0.7 -0.9

y/y (%) +0.5 +1.8 +4.3 +3.4 +3.9

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-Sep

2013

y/y

(%)

Permits 230.1 178.8 174.9 184.1 165.1 104.8 -18.1

Commenced 174.7 142.9 158.1 162.2 141.8 97.9 -16.2

U. construction 687.4 670.3 692.7 723.0 713.1 707.4 -3.9

Completed 165.2 160.0 135.7 131.7 152.5 103.2 -1.5

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% +1.1% +2.0%

Producer inflation +2.1% +7.6% +3.4% -1.3% 0.3%

CA balance, % of GDP -5.1% -4.9% -3.5% -1.2% -0.2%

Nominal gross wage +3.9% +5.2% +3.7% +3.0% +4.3%

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

Gross WGross WGross WGross Wagesagesagesages 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 Mar '13 Apr '13 May '13 Jun '13 Jul '13 Aug '13 Sep '13

m/m (%) +20.9 +7.9 +16.1 +19.1 +7.8 -0.8 +9.4

y/y (%) -18.5 -23.1 -27.5 -18.3 -5.2 -11.1 -4.8

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

Dec 10

Mar 11

Jun 11

Sep 11

Dec 11

Mar 12

Jun 12

Sep

12

Dec 12

Mar 13

Jun 13

Sep 13

60

80

100

120 Co nsumer confidence (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 Mar '13 Apr '13 May'13 Jun '13 Jul'13 Aug'13 Sep'13

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

y/y (%) -0.7 -2.1% -2.5 -1.3 -0.8 -1.1 -1.4

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 Mar '13 Apr '13 May'13 Jun '13 Jul'13 Aug'13 Sep'13

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

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

Year 2006 2007 2008 2009 2010 2011 2012

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

Industrial OutIndustrial OutIndustrial OutIndustrial Outputputputput

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

m/m (%) -0.2 -2.3 -0.7 +2.6 +1.5 -4.5 +9.6

y/y (%) -0.6 +2.7 -1.8 +2.8 +6.3 +2.2 +6.2

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-Aug

2013 y/y (%)

share (%)

2012 share (%)

Jan-Aug 2013

y/y (%)

share (%)

2012 share (%)

Food and live animals 43,520 +9.0 10.5 61,694 10.3 30,470 +3.1 7.3 44,287 6.9

Beverages and tobacco 5,633 +5.8 1.4 7,967 1.3 2,593 +0.1 0.6 3,989 0.6

Crude materials except fuels 10,501 +7.7 2.5 14,024 2.4 14,118 -7.9 3.4 22,053 3.5

Fuels etc 19,670 +1.7 4.8 29,389 4.9 48,392 -12.8 11.6 85,280 13.4

Animal and vegetable oils 1,088 +60.8 0.3 1,342 0.2 1,736 -8.8 0.4 2,887 0.5

Chemical products 38,680 +6.2 9.4 54,295 9.1 61,502 +0.7 14.7 89,140 14.0

Manufactured goods by material 85,413 -0.2 20.7 126,161 21.1 72,837 -5.0 17.5 110,773 17.4

Machinery, transport equip. 155,077 +3.3 37.5 223,646 37.5 137,560 +1.3 33.0 203,718 31.9

Other manufactured articles 52,390 +4.5 12.7 75,925 12.7 36,624 -7.0 8.8 57,646 9.0

Not classified 1073 n/a 0.2 2,653 0.5 11,273 n/a 2.7 18,515 2.8

TOTAL 413,045 +3.8 100 597,096 100 417,105 -3.1 100 638,288 100

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

EXPORTS in PLNbn IMPORTS in PLN bn

No Country Jan- Aug 2013

share *2012 Share No Country Jan- Aug 2013

share *2012 Share

1 Germany 103,223 25.0% 150,046 25.1% 1 Germany 88,967 21.3% 134,933 21.1%

2 UK 26,788 6.5% 40,184 6.7% 2 Russia 52,447 12.6% 91,033 14.3%

3 Czech Rep. 25,260 6.1% 37,475 6.3% 3 China 38,360 9.2% 57,235 9.0%

4 France 23,321 5.68% 34,862 5.8% 4 Italy 21,213 5.1% 32,782 5.1%

5 Russia 22,508 5.4% 32,290 5.4% 5 France 16,034 3.8% 25,303 4.0%

6 Italy 17,805 4.3% 29,067 4.9% 6 Netherlands 15,726 3.8% 24,543 3.8%

7 Netherlands 16,321 4.0% 26,678 4.5% 7 Czech Rep. 15,426 3.7% 23,327 3.7%

8 Ukraine 11,709 2.8% 17,213 2.9% 8 USA 11,909 2.9% 16,436 2.6%

9 Sweden 11,339 2.7% 15,811 2.6% 9 UK 11,030 2.6% 15,509 2.4%

10 Slovakia 10,673 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 25 October 2013

100 USD 303.26 ↓

100 EUR 419.10 ↑

100 GBP 491.64 ↓

100 CHF 340.05 ↑

100 DKK 56.19 ↑

100 SEK 47.94 ↑

100 NOK 51.46 ↓

10,000 JPY 312.28 ↑

100 CZK 16.26 ↑

10,000 HUF 143.23 ↑

100 USD/EUR against PLN

300

350

400

450

13 N

ov 12

23 Jan 13

2 A

pr 13

12 Jun 13

20 A

ug 13

25 O

ct 13

USD EUR

MMMMoney Supplyoney Supplyoney Supplyoney Supply

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

Monetary base 144,260 155,767 153,867 166,620

M1 523,783 530,666 531,124 540,873

- Currency outside banks 112,815 112,565 114,083 113,223

M2 927,345 921,662 928,359 931,042

- Time deposits 418,252 405,900 412,407 405,703

M3 946,586 945,077 949,988 947,228

- Net foreign assets 160,267 159,749 154,035 147,978 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 Jun'13 Jul '13 Aug '13 Sep '13

Loans to customers 900,999 896,635 901,863 908,106

- to private companies 263,453 261,000 263,491 262,963

- to households 553,055 552,503 556,027 560,608

Total assets of banks 1,634,587 1,616,221 1,627,182 1,626,489

Source: Central Bank NBP

IIIInterest ratesnterest ratesnterest ratesnterest rates

Average weighted annual interest rates

on loans to non-financial corporations

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

PLN (up to 1 year) 5.6% 5.4% 5.3% 5.0% 4.7% 4.6%

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

PLN (over 5 y) 6.0% 5.7% 5.6% 5.3% 4.9% 4.9%

PLN (total) 6.0% 5.8% 5.6% 5.3% 5.0% 4.9%

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

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

Warsaw Inter Bank Offered Rate (WIBOR) as of 25 Oct 2013

Overnight 1 week 1 month 3 months 6 months

2.54%% 2.55% 2.60% 2.66% 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 25 Oct

'13

Change 18 Oct

'13

Change end of

'12

↑ Asseco Pol. 50.61 +3% +12%

↑ Bogdanka 116.95 +5% -14%

↑ BRE 522.5 +2% +60%

↑ BZ WBK 380 +6% +57%

↑ Eurocash 50.3 +3% +15%

↓ GTC 8.1 -2% -18%

↓ Handlowy 122.1 -2% +24%

↓ JSW 66.5 -3% -28%

↓ Kernel 45.49 -10% -32%

→ KGHM 121.8 0% -36%

↑ Lotos 38.2 +3% -7%

↓ Pekao 191.95 -2% +15%

↑ PGE 18.8 +6% +3%

↓ PGNiG 5.65 -2% +8%

→ PKN Orlen 44.84 0% -9%

↑ PKO BP 40.15 +3% +9%

↑ PZU 468 +6% +7%

↓ Synthos 5.15 -3% -5%

↓ Tauron 4.86 -2% +2%

↑TP SA 9.88 +14% -19%

Source: Warsaw Stock Exchange

Key indices

as of 25 October 2013

WIG Total index

55553333,,,,888887878787....13131313 Change 1 week +2% ↑

Change end of '12 +14% ↑

WIG-20 blue chip index

2,2,2,2,537537537537....62626262 Change 1 week +2% ↑

Change end of '12 -2% ↓

WIG Total closing index

last three months

45000

47500

50000

52500

55000

26 Jul 13

20 A

ug 13

11 Sep 13

3 O

ct 13

25 O

ct 13


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Creative Director Bartosz Stefaniak

New Business Consultant

Tomasz Andryszczyk

RRRRegional Dataegional Dataegional Dataegional Data

Poland's regions

(main cities indicated

in brackets)

Industrial output

Jan-Sep 2013 *

Monthly wages (PLN)

Jan-Sep 2013 **

Unemploy-ment

Sep 2013

New dwellings Jan-Aug 2013

Indus-

try

Constru-

ction

Indus-

try

Constru-

ction

in '000 % Num-

ber

Index *

Dolnośląskie (Wrocław) 98.7 90.1 4,199 3,980 148.8 12.8 12,009 117.9

Kujawsko-Pomorskie (Bydgoszcz) 102.0 99.1 3,314 3,235 143.5 17.5 4,618 106.8

Lubelskie (Lublin) 100.5 98.7 3,630 3,014 126.9 13.8 4,435 89.4

Lubuskie (Zielona Góra) 95.9 90.8 3,359 2,975 58.0 15.3 2,239 99.0

Łódzkie (Łódź) 104.3 89.0 3,611 3,024 147.4 13.7 4,537 91.1

Małopolskie (Kraków) 98.0 91.8 3,744 3,313 158.8 11.3 11,234 107.4

Mazowieckie (Warszawa) 107.5 81.0 4,474 4,722 281.0 11.0 20,771 94.9

Opolskie (Opole) 97.3 98.6 3,466 3,147 49.5 13.8 1,324 112.4

Podkarpackie (Rzeszów) 108.1 91.9 3,236 3,029 145.9 15.6 4,388 98.9

Podlaskie (Białystok) 105.4 91.3 3,181 3,769 68.1 14.6 2,801 85.9

Pomorskie (Gdańsk-Gdynia) 102.5 92.5 3,871 3,478 111.0 13.0 8,501 94.3

Śląskie (Katowice) 96.5 89.7 4,465 3,532 205.3 11.1 7,785 115.6

Świętokrzyskie (Kielce) 100.5 88.7 3,339 3,199 86.2 15.9 1,764 84.7

Warmińsko-Mazurskie (Olsztyn) 98.8 84.1 3,160 3,065 107.6 20.4 2,998 84.6

Wielkopolskie (Poznań) 103.5 91.2 3,638 3,589 141.8 9.4 9,791 94.7

Zachodniopomorskie (Szczecin) 111.6 86.7 3,408 3,296 103.3 16.9 4,027 78.4

National average 101.4 87.8 3,880 3,672 2,083.1 13.0 103,222 98.5

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 Q1'12 Q2 '12 Q3 '12 Q4 '12 Q1 '13 Q2 '13

in Poland -1,365 1,861 1,381 2,886 175 -2,883

Polish DI 836 310 -550 -1,203 957 2,719

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 Q4 '12 Q1 '13 Q2 '13

Trade balance -8,893 -10,059 -5,313 -1,050 -139 1,194

Services, net 2,334 4,048 4,816 1,032 1,274 1,652

CA balance -18,129 -17,977 -13,332 -3,368 -2,313 362

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

Source: NBP, BZ WBK

UUUUnemploymentnemploymentnemploymentnemployment

Registered unemployed, in ‘000 and

% of population in working age

1800

2000

2200

2400

2600

Q3 10

Q1 11

Q3 11

Q1 12

Q3 12

Q1 13

Q3 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

Sep09

May10

Jan11

Sep11

May12

Jan13

Sep13

Wage CPI

Index 100 = Jan 2005. Source: GUS

Documents

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