Poland Today Business Review+ No. 047

No. 047 / 11th August 2014 / www.poland-today.pl / magazine, conferences, portal, newsletter

1 year subscription: EUR 690 (PLN 2760)

Newsletter Editor: Lech Kaczanowski

[email protected]

tel. +48 607 079 547

Sales Contact: James Anderson-Hanney

[email protected]

tel. +48 881 650 600

BANKING & FINANCE

More than 2m Poles remain loyal to private pension funds page 2

PROPERTY & CONSTRUCTION

Griffin gets green light for EUR 80m Hala Koszyki mixed-use project in Warsaw page 3 Belgium's Immobel begins work on CEDET project in Warsaw page 5

HOSPITALITY

PURO Hotel opens in Poznań, secures top sites in Warsaw and Łódź page 6

Polish Zdrojowa Invest breaks ground on Radisson Blu Resort in Świnoujscie page 7

SERVICES & BPO

Japanese shipping firm to establish European SSC in Gdańsk page 8

TRANSPORT & LOGISTICS

Immofinanz exiting Poland's logistics sector, sells Warsaw's Bokserska Distribution Park page 8 Panattoni begins new project in Upper Silesia page 9

RETAIL

Lidl building 8th distribution centre in Bydgoszcz page 10 Retail group EM&F suspends bond issue as investors lose appetite for risk page 10

Construction of Outlet Center Białystok begins with Lublin to open by year-end page 11

POLITICS & ECONOMY

Government lists strategic state-held companies page 12

KEY FIGURES

Up-to-date macroeconomic figures, currency & stock market data and lots of other hard-to-find info pages 13-15

Miedzi Copper is competing for a key license with Polish giant KGHM. Photo: KGHM

Canadian Canadian Canadian Canadian firm halts firm halts firm halts firm halts Poland Poland Poland Poland exploration exploration exploration exploration Canadian-owned Miedzi Copper Corp. has suspended explora-tion work in Poland in protest against the government's decision to revoke a strategically important license the company had ob-tained a few months ago. The Canadians had plans for a brand new PLN 12bn-15bn copper mine in Western Poland. page 2

weekly newsletter # 047 / 11th August 2014 / page 2

BANKING & FINANCE

More thanMore thanMore thanMore than 2m Poles 2m Poles 2m Poles 2m Poles remain remain remain remain loyaloyaloyaloyal to private l to private l to private l to private pension fundspension fundspension fundspension funds More than 2.2m Poles have chosen to continue to transfer a portion of their social security contributions to private pension funds OFE under the reformed sys-tem, according to the most recent statement by ZUS, the state social insurance board. As part of a recent overhaul of the country's pension system, ZUS was put back in charge of handling pension premiums, with those willing to have a fraction of their old-age savings managed by the OFEs having to submit special appli-cations, under a default opt-out formula. An advertis-ing ban had also been imposed on the OFE. Some 14m Poles had been given time to end-July to opt into the existing system. Despite the amount of press coverage the "OFE or ZUS dilemma" has received in recent weeks, the choice was merely symbolic in nature, as those, who remained faithful to the OFE, will have only a tiny 2.92% of their gross wages transferred to the privately-run funds, with the bulk of their contributions to be managed by the state fund anyway. Most experts agree that an av-erage saver is unlikely to see any noticeable gains from staying in the OFE, 20-30 years from now, as accord-ing to projections the combined ZUS-OFE payouts will be insufficient to support the elderly who fail to secure other sources of income before retiring. "The fact that so many working Poles chose to retain their premium flows to the partially privatized seg-ment of the pension system virtually guarantees that no politician would risk trying to abolish the system entirely," economist Ryszard Petru said, calling the re-

sult "a success of the capital market." Indeed, since the OFEs have been among the key investors on the War-saw Stock Exchange, their existence and the resources at their disposal are of much greater importance to the stock market than to Poland's future pensioners. The survival of the OFE is also good news to their owners, which include Dutch Aegon and ING, German Allianz, US MetLife, British Aviva, French AXA, Italian Assicurazioni Generali, and Swedish Nordea Bank. Prior to the reform, the OFE had been a goldmine for their managers, who pocketed hefty service fees. The funds will continue to exist, however, in a severely re-duced form. The pension fund reform bill was signed into law by President Bronislaw Komorowski in late December last year but sent for review to the Constitutional Tri-bunal. During the legislative consultation process, concerns about the bill's constitutionality were raised by government agencies and private lobby groups. On 3rd February Poland's private pension funds OFE transferred PLN 153.15bn representing 51.5% of their assets to the state social security fund ZUS, including PLN 134bn Treasury bonds, as part of the overhaul of Poland's pension system. The operation, which had no precedence on Poland's financial markets, also includ-ed PLN 17.2bn in other Treasury-guaranteed papers and PLN 1.9bn in cash. Under the government-approved pension reform, treasury papers have been cancelled and the sums credited to the accounts of pension savers at the state's own social security office ZUS. OFEs have also been banned from investing in Treasuries and Treasury-guaranteed fixed income se-curities, but will be freer to invest in equities and mu-nicipal and corporate bonds. In order to mitigate the impact of the reform on the financial markets, the gov-ernment forced the OFEs to invest at least 75% of all their assets in the stock market until the end of 2014, 55% throughout 2015, 35% until the end of 2016, and 15% until the end of 2017.

Polish government's debt dropped to 49.5% of GDP at end-Q1 from 57.1% of GDP at end-2013, according to the ESA'95 methodology, Eurostat said in a recent re-port, reflecting the effects of the pension reform on the state finances. Nominally, the figure stood at PLN 819bn.

ENERGY & RESOURCES

Canadian Canadian Canadian Canadian firm firm firm firm MiedziMiedziMiedziMiedzi Copper halts Copper halts Copper halts Copper halts exploration works in exploration works in exploration works in exploration works in PolandPolandPolandPoland, blames gov't, blames gov't, blames gov't, blames gov't Resources firm Miedzi Copper Corp. (MCC), a unit of Canada's Lumina Copper Corporation, which has 14 exploration licenses in Poland, has suspended operations in the country in protest against a recent decision by the Environment Ministry to repeat the procedure of awarding an exploration license in the Bytom Odrzański and Kotla areas in western Poland. The said licenses have been a major bone of conten-tion between the Canadians and Poland's state-controlled copper & silver giant KGHM, which has strategic interest in the Bytom Odrzański area, includ-ing the Głogów Głęboki Przemysłowy mining project as well as Gaworzyce and Głogów exploration licens-es. KGHM had applied for the Bytom license alongside MCC but much to its surprise in January 2014 the permit was given to the Canadians. The Polish copper firm appealed from the decision in February, arguing that its application was correct and its offer – better and more rational. According to KGHM, the Canadians won because they promised to make more bore holes over a shorter peri-


od of time – 15 in five years. KGHM wanted to make eight drillings in the initial period and, based on their results, add a further 31, bringing the total number to 39.

Copper is one of Poland's key export commodities. Photo: KGHM

"We conduct serious exploration and mining projects around the world. The way investors are treated at the outset of the investment process is an indicator of how this cooperation will be conducted in the future. The decision of the Minister of the Environment annulling his own earlier decisions has shaken our trust in the Polish government and raised concerns whether in the future, we will be treated in a just and equitable way according to the appropriate Polish and EU laws. We submitted the best offers, confirmed by the Ministry of the Environment itself only in January, as evidenced by the decisions taken at that time. While submitting the offers, we were making the assumption that it is in Poland’s social interest to as quickly and as compre-hensively as possible conduct the exploration of the concession areas, so that they may be developed as quickly as possible which would result in the creation of new jobs and assure additional and substantial in-comes to the regional and national budgets," com-

mented Ross Beaty, the founder and majority share-holder of MCC, in a statement Poland Today received from the company. "We haven’t yet received a formal decision from the Environment Ministry so it's too early to speak of what we do next," Lyle Braaten. CEO of Miedzi Copper Corp replied to our question about their subsequent moves and potential participation in a new tender. "Before we decide whether to take part in the new li-censing procedure we need to know its terms, precise criteria and time line," Braaten added. Protecting a state-owned cash cow Back in February, Prime Minister Donald Tusk asked the country's Internal Security Service (ABW) to look into the circumstances under which the Bytom Odrzański license was given to the Canadians. Adding to the overall controversy was the fact that the manag-ing director of Miedzi Copper is Stanisław Speczik, former head of KGHM and deputy treasury minister. Earlier this year Mr. Speczik told the media his com-pany is likely to begin development of a copper mine based on its Głogów license in southwestern Poland in 2022. "Our intention, as far as its ownership structure, and access to resources are concerned, is to maintain a strong position of KGHM, a company in which the state treasury has a substantial stake and is being con-sidered a strategic national asset," Tusk said at the time. One of Poland's largest corporations, KGHM produced 666,000 tons of copper in its Polish and northern American sites last year. The group posted a net profit of PLN 3bn (EUR 721m) on PLN 24.1bn (EUR 5.7bn) turnover in 2013. The respective 2012 figures stood at PLN 4.3bn (EUR1.1bn) and PLN 267.7bn (EUR 6.4bn). The company has just launched production at its Sier-ra Gorda copper mine in Chile at the cost of USD

4.16bn. KGHM had initially estimated outlays on the project at USD 2.9bn, later raised its estimate to USD 3.9bn. After the ramp-up period to be completed in early 2015, Sierra Gorda's annual output should reach 120,000 tons of copper, 50 million pounds of molyb-denum and 60,000 ounces of gold, the firm said. MCC began copper exploration in Poland in 2010 and to date, has invested almost PLN 110m in conducting of comprehensive exploration operations in the south-west region of Poland. According to the information Poland Today received from Miedzi Copper's repre-sentatives in Warsaw, by the end of 2015, the Canadian company planned to invest in Poland an additional sum in excess of PLN 250m for conducting the explo-ration of copper and silver ore. After determining the amount of resources necessary to build a mine, MCC forecasted an investment totaling PLN 12-15bn, which would have created directly and indirectly 86,000 jobs in the country. Lumina is a Vancouver based copper exploration company which controls a number of prospecting li-censes in Poland via its subsidiary Miedzi Copper. Lumina's key global asset is the Taca Taca copper, gold, and molybdenum project in Argentina, relatively close to KGHM's Sierra Gorda mine.


Griffin Griffin Griffin Griffin gets green light gets green light gets green light gets green light for EUR 80m Hala for EUR 80m Hala for EUR 80m Hala for EUR 80m Hala Koszyki mixedKoszyki mixedKoszyki mixedKoszyki mixed----use use use use project in Warsawproject in Warsawproject in Warsawproject in Warsaw Griffin Group, a property investment group operating in Central and Eastern Europe, has obtained the much


awaited building permit for one of its flagship projects in downtown Warsaw: Hala Koszyki. Construction of the EUR 80m mixed-use project is to begin this month and reach completion by mid-2016. Last week Griffin chose Polish Erbud as the general contractor for the project under an agreement worth PLN 115.5m. Griffin took over also the Hala Koszyki project in downtown Warsaw from Irish developer Quinlan Pri-vate Golub, which had sought to build retail space and apartments at the site. After demolishing a historic market hall (which is to be reconstructed following completion of an underground parking lot) in 2006, Quinlan (which in the meantime changed name to Avestus Real Estate) changed the project's profile to offices and Griffin plans to follow in their footsteps, aiming to develop 15,000 sq.m of offices and 6,000 sq.m of retail space at the site along with 200 parking spaces and a 600-sq.m public square. "Retail properties are certainly one of our core busi-ness areas, which we intend to develop further. We are interested particularly in buildings with a long history of commerce, located in city centers. This is the type of projects we're looking at," Griffin's CEO Przemysław Krych told Poland Today. Griffin Group was founded in 2006 as a joint-venture between Polish Cornerstone Partners and British Chelsfield Partners, as a platform to manage funds fo-cused on real estate investment in Central and East-ern Europe, mainly in Warsaw. In March 2013 the global private equity giant Oaktree Capital Man-agement joined the project with a view to create a long-term platform for real estate-related investments in Poland, including direct purchases of assets, devel-opment projects and lending activities. Griffin and Oaktree had been cooperating since 2010 with the pri-vate equity partner providing the Warsaw-based prop-erty investor with some EUR 150m for acquisition of several key assets, including Hala Koszyki, Meble

Emilia, Renoma shopping center, office buildings in Warsaw and a land bank for residential development. Following the takeover of Chelsfield's stake in Griffin, as a shareholder, Oaktree pledged to invest a further EUR 200m into their projects.

The historic Hala Koszyki market hall is to be rebuilt, sandwiched between new office buildings. Image: Griffin Real Estate

Earlier this year Griffin has acquired three office buildings in Warsaw for a combined PLN 200m, in-cluding Bliski Office Center (4,900 sq.m GLA), located at Żurawia street in Warsaw’s Central Business Dis-trict, Nordic Park (8,260 sq.m ) on Krzuczkowskiego St., in the Powiśle area, and Company House II (9,379 sq.m) in the Aleje Jerozolimskie office corridor. Fol-lowing the transactions, Griffin's office portfolio in Warsaw includes nine properties. Their most impressive purchase in recent months was the Jupiter shopping centre, which Griffin bought along with 2.5 hectares of land, from Spain's Catalunya Banc for an undisclosed amount. The property in question is located at Towarowa St., right by the Ron-do Daszyńskiego station on the new subway line, in the heart of Warsaw's booming office district of Wola. Although its previous owner secured a planning deci-sion that allows for the construction of two high-rise buildings on the plot, Griffin said it was considering a number of possible options with regard to the future redevelopment of the Jupiter site. For the next two to

three years, the existing shopping centre will continue to operate, Griffin Group said in the statement. Ac-cording to market experts, the company will be able to develop more than 80,000 sq.m of offices or a large mixed-use project at this prime site. Perhaps the most publicized investment by Griffin was its 2012 acquisition of state-owned furniture retailer Meble Emilia, which owns a handful of attractive in-vestment sites in Warsaw, including the Emilia store, located between the Warsaw Financial Center and the Intercontinental hotel. The new owner seeks to knock down the two-story socialist-era building and erect a new skyscraper at the site. Besides a number of office buildings, Griffin's assets include also a 5.5ha site in Warsaw's western Bemowo district together with a zoning permit and plans for a residential development totaling 90,000 sq.m. Togeth-er with Belgian developer Immobel, Griffin acquired seven investment sites from Poland's press distributor Ruch, and the two companies are cooperating on a res-idential project in Wilanów. Other projects include an investment site and a historic tenement house on War-saw's Szucha street, a stone's throw from the Prime Minister's office, a 37ha site in Wilanów district and Prima Court office building in Warsaw. In December last year Griffin obtained PLN 18.2m worth of EU funding that will enable the company to transform a former Polonez Hotel in Poznań (acquired from Orbis for PLN 23m) into a private student dormi-tory. The project is to open by the end of this year and according to Griffin, it will be "competitive in terms of quality and price" in comparison with existing univer-sity dorms. Another high-profile acquisition by Griffin was the Renoma shopping center in Wrocław, which the fund acquired for EUR 117.6m from Centrum Develop-ments&Investments. The recently expanded land-


mark property includes 31,000 sq.m of retail GLA and 10,000 sq,m of office space. In downtown Katowice, Griffin is developing a 21,000 sq.m shopping centre Supersam, with 100 retail outlets, cinema, fitness cen-ter, food court and 400 parking spaces. The project, most of which has already been pre-let, is to reach completion in 2015.


Belgium's Immobel Belgium's Immobel Belgium's Immobel Belgium's Immobel begins work on CEDET begins work on CEDET begins work on CEDET begins work on CEDET project in Warsawproject in Warsawproject in Warsawproject in Warsaw Polish arm of Belgian developer Immobel is gearing up to begin redevelopment and expansion of the CEDET building in central Warsaw (to most Varsovians better known as Smyk) in a mixed-use pro-ject that will deliver 15,000 sq.m of office space and 7,050 sq.m of retail space to one of Warsaw's busiest pedestrian areas. The company, which acquired the building a few years ago from Centrum Develop-ment & Investments (CDI) has just obtained a building permit for the project, aiming to begin con-struction this autumn. Back in 2008, when CDI first announced its plans for Smyk/CEDET, it had put an estimated EUR 100m price tag on the project, which Immobel plans to complete by Q1 2017. Designed by Zbigniew Ihnatowicz and Jerzy Romański, and built in the 1950s in the heart of post-war Warsaw, the original CEDET was one of the city's most distinguished buildings. After a tragic fire of 1975, which completely burned the interior of the structure, the hasty rebuilding altered its unique archi-tecture extensively. Immobel seeks to restore the structure to its original shape as well as develop an en-tirely new building at the intersection of Krucza and

Bracka streets. A underground parking with 140 places will serve the entire complex.

Immobel seeks to give a new lease of life to one of Warsaw's architectural gems. Image: Immobel

Besides class A+ offices with clear height of 2.90 m, openable windows and terraces available for tenants, the project will create some much needed high street retail space in the centre of Warsaw. All retail units will have an independent entrances directly from the street. The modules of different size - from 67 sq.m to 2,300 sq.m, will be mostly spread over two levels and connected internally by escalators, staircases or eleva-tors. The investor is hoping to obtain a BREEAM "Ex-cellent" certificate for the project. "Already, at this early stage of development, the pro-ject meets with high interest from potential tenants. With regard to office space commercialization, negoti-ations with prestigious companies and institutions, mainly from the financial and legal sectors, are being carried out. Considering future tenants of the retail part, we do not limit ourselves to brands already pre-

sent on the Polish market, says Bartłomiej Hofman, CEO of Immobel Poland. Immobel S.A. has been one of the most important players of the Belgian real estate market for over 150 years. The company has been present on the Polish market since 2011, focusing on development of office and residential projects. Currently, its Polish portfolio includes Okrąglak and Kwadraciak in Poznań, CEDET in Warsaw (all three are based on assets acquired from CDI). Immobel and CDI share the same shareholder, the European Eastbridge group, which holds a major stake in the Warsaw-listed retail giant EM&F Empik Media Fashion. "Immobel has been a Euronext stock-listed company since 1863. Eastbridge is its reference share-holder with 25 % participation. Immobel's core business is the development of offices, residential & landbanking development and, when the opportunity arises, retail. CDI's expertise is more in the retail sector with a view of keeping the developed investments. It is obvious that in the interest of both parties Immobel and CDI will cooperate in order to maximize their strengths and opportunities," Immobel's CEO Gaëtan Piret told Poland Today's Lech Kaczanowski upon the compa-ny's official entry to the Polish market a few years ago. In the residential sector, Immobel is cooperating with Griffin Real Estate, based on a number of acquired from Polish retailer Ruch. Their first joint project is the Eko Natolin city villa complex to be developed one a 36-ha site in the south of Warsaw. The company also holds several investment plots for residential and of-fice projects.


HOSPITALITY

PURO Hotel opens in PURO Hotel opens in PURO Hotel opens in PURO Hotel opens in Poznań, secures sites Poznań, secures sites Poznań, secures sites Poznań, secures sites in Warsaw and Łódźin Warsaw and Łódźin Warsaw and Łódźin Warsaw and Łódź

Following the successful launch of their first two PURO Hotels in Wrocław and Kraków, Norway's Genfer Group have added a third property to the Polish portfolio: PURO Hotel Poznań, which launched in July with 140 rooms and three conference rooms. Similar to the Wrocław and Kraków hotels, the Poznań property enjoys a very central location, near the Old Town Square, at the corner of Wroniecka, Stawna, and Żydowska streets. The 4-star hotel offers 140 guest rooms, three conference rooms, and a res-taurant. According to Rune Askevold, Managing Director of PURO Hotels and the driving force behind the PURO concept, his goal was to offer high quality accommoda-tion at a reasonable price, something which is still a rarity in Poland. PURO Hotels offer comfortable, modern, and well-equipped rooms, but few additional services. The concept emphasizes self-service and re-wards early online booking. Computers replace human receptionists, parking attendants and all redundant personnel. The key member of staff is a concierge, available 24/7, whose responsibilities will be to advice guests where to eat, work out, or rent a car. The con-cept has received plenty of positive feedback from travelers on review sites such as Tripadvisor and earned PURO a number of awards from Polish hospi-tality magazines.

The Norwegian developer is currently working on its fourth project, a 96-room hotel in the heart of Gdańsk, on Stągiewna Street.

Furnished with designer furniture, the hotel's stylish interiors were designed by UK's Blacksheep studio.. Image: PURO Hotels

"We are on track with the construction in Gdańsk and plan to open the hotel 1st February 2015, at the latest," Rune Askevold tells Poland Today. "We have also se-cured a great location in Warsaw. I prefer not to reveal the exact address yet, though. We are working with JEMS Architekci on this project and plan to submit the application for final building permit shortly. Hope-fully we will be able to open this hotel in Q1 2016. It will be a 4-star property with around 150 rooms, great common areas, a restaurant and bar, fitness/spa, roof-top terrace and also good meeting facilities. We have also acquired a very good plot in Łódź for a 148-room, 4-star project with similar amenities as the one in Warsaw that we are hoping to launch in 2016. We are currently looking for further sites in Warsaw and Kraków, mainly. So step by step our presence in the Polish hotel market is getting stronger and stronger." Asked about the overall mood in Poland's hospitality industry two years after the EURO 2012 soccer tour-

nament that was expected to bolster interest in the country among foreign visitors, Mr. Askevold replies:

PURO Hotel Poznań offers 140 stylish rooms. Image: PURO Hotels

"The markets have been performing quite well, in the period after the Euro2012, especially in the bigger cit-ies. The best performing cities the last months have been Gdańsk, Kraków and Warsaw. PURO is only fo-cusing on Warsaw and the main regional cities, so I do not follow the market too closely when it comes to the smaller, regional cities. But in general, I feel there is a lot of optimism within the hotel industry. There have also been a lot of new supply in many markets lately, and I think there is a possibility in some markets, that the new supply will be bigger than the increase in de-mand, thus reducing the RevPar for some operators. Having said that, I also strongly believe that travelers are becoming more and more sophisticated and de-manding, thus choosing newer hotels with higher standard over the older, lower standard hotels. I have an impression that the number of stars is becoming less important than before. More important for the modern traveler is the perception of getting good val-ue for money and a positive hotel experience, I think. So if you have the right product, you can still be very


successful, if introducing a new hotel into a very com-petitive market."

HOSPITALITY

Polish Zdrojowa InvPolish Zdrojowa InvPolish Zdrojowa InvPolish Zdrojowa Invest est est est breaks ground on breaks ground on breaks ground on breaks ground on Radisson Blu Resort Radisson Blu Resort Radisson Blu Resort Radisson Blu Resort in Świnoujsciein Świnoujsciein Świnoujsciein Świnoujscie The northwestern Polish city of Świnoujście will get its first five-star hotel in 2016 with the planned launch of Radisson Blu Resort Świnoujście. The project, which is currently being developed by Polish group Zdrojowa Invest, will be also the first Poland's first hotel bearing the Radisson Blu Resort logo as well as the first hotel property designed and built in line with LEED recommendations. The hotel will offer 340 rooms and suites, as well as restaurants, bars, wellness and fitness facilities and the largest conference center on the Polish coast with a capacity of more than 1,000 people. Attractions will include also a rooftop infinity edge swimming pool, lo-cated some 50m, above sea level. Additional services, such as an aqua park, will be offered under the Baltic Park Molo complex the hotel will be part of. The oper-ator estimates that the investment will create some 250-300 jobs. Zdrojowa Hotels, part of the Kołobrzeg-based Zdrojowa Holding, runs six upscale hotels in Poland's coastal and mountain resorts, including four in Kołobrzeg (Diune Hotel, Sand Hotel, Marine Hotel, Jantar Spa), as well as Boulevard Ustronie Morskie and Cristal Resort Szklarska Poręba. The group em-ploys some 400 staff.

Once completed, Baltic Park Molo will house more than 600 rooms and suites.. Image: Zdrojowa Invest

Baltic Park Molo is Zdrojowa's flagship development. The company owns a premier site located between the city's most popular promenade, concert hall and the beach. Following an architectural competition, a de-sign by Warsaw's Płaskowicki+Partnerzy studio has been selected, that envisages a complex of four build-ings, 150-m pier and public space. Two of the planned buildings will be five-star hotels, and the remaining two will house 61 condos and 16 retail & service units. Once completed, Baltic Park Molo will house more than 600 rooms and suites. The investor has obtained PLN 25m worth of EU funding for the project under the Jessica (Joint Euro-pean Support for Sustainable Investment in City Are-as) initiative. Phase one of the project will include the Radisson Blu Resort hotel, two buildings with holiday apartments, as well as all the accompanying infra-structure. The second five-star hotel is to be added at a later point, with the entire complex to reach comple-tion before 2020.

Poland Today talks to: Jan Wróblewski, Board Member at Zdrojowa Invest

• PT: At what stage are the remaining segments of Baltic Park Molo and when do you expect to complete them? Jan Wróblewski: As far as the two apartment buildings are concerned, the general contractor entered the site in September 2013 and completed the shells of the buildings in May this year. Currently work is under-way on electrical installation and insulation. The first guests will be able to stay there in the summer of 2015. This part of the project includes 61 condos and a hand-ful of retail and service units. We have only two apartments left, which means that 97% have been sold, but we are in talks with the prospective buyers for the-se two remaining ones. • PT: What is the estimated capex on the entire com-plex and how is Zdrojowa Invest financing the devel-opment? JW: We estimate that it will cost some PLN 250m to complete the entire Baltic Park Molo, excluding the pier. We have so far obtained PLN 25m worth of EU funding for the project, and other sources of financing will include BOŚ bank loans and our own resources.


• PT: How many holiday apartments have you built and sold so far, in total? JW: Our four-star projects in Kołobrzeg, Sand Hotel with 148 rooms and Marine Hotel with 231 rooms have been fully sold-out and currently we are only handling the secondary market on those. The same goes for the Ultra Marine project in Kołobrzeg with 46 rooms. At Cristal Resort in Szklarska Poręba we have 3 units left out of total 61 apartments with kitchenettes. Likewise, three apartments are left at Boulevard Ustronie Morskie, where a total of 48 condos have been built. At the five-star Diune Hotel and Resort in Kołobrzeg, we have so far sold a half of the available 61 condos, but sales launched as recently as November 2013 after Zdrojowa took over the project. And as I mentioned already, we have sold all but two of the 61 holiday apartments with kitchenettes at Baltic Park Molo in Świnoujście, where sales of hotel rooms are yet to begin. Summing up, standard rooms in hotels and two-room condos in holiday apartment buildings sell the fastest and that's why they dominate our portfolio. In-vestments of up to PLN 400,000 are currently the most popular and customers generally spend no more than PLN 550,000 per unit. • PT: Are there many foreigners among your clients? JW: Foreigners represent only a tiny fraction of our customers, although in the case of Baltic Park Molo we are hoping to sell more condo units to buyers from abroad. Holiday home investments attract mainly well-off Poles, usually people who already own a number real estate assets. Most transactions are set-tled in cash, although mortgage loans are available for our product. A lot of new clients come through rec-ommendations, and we also have a number of return-ing customers, some of whom own several apartments in different projects, at the seaside and in the moun-tains.

• PT: What's next in your pipeline? JW: At the moment we are focusing on our flagship project: Baltic Park Molo in Świnoujście. We have a handful of other investment in the pipeline, but we would rather not disclose any details at this stage.

SERVICES & BPO

Japanese shipping firm Japanese shipping firm Japanese shipping firm Japanese shipping firm to establish European to establish European to establish European to establish European SSC in Gdańsk SSC in Gdańsk SSC in Gdańsk SSC in Gdańsk Poland's coastal city of Gdańsk has attracted a yet an-other outsourcing project in recent weeks, this time from as far away as the Far East. One of the world's largest shipping companies, Mitsui O.S.K. Lines has picked Gdańsk as a location for a shared services cen-tre that will serve its European subsidiary MOL Eu-rope. The company will take up 800 sq.m in Aurum Tower, part of the Alchemia business park, built by the local developer Torus, under a five-year lease. Mitsui O.S.K. Lines, Ltd. founded in 1884 from the merger of Mitsui lines and Osaka Shosen Kaisha is one of the largest shipping corporations in the world. Headquartered in Tokyo, the group employs around 10,000 people over 400 locations and operates some 950 vessels with a total DWT of 67m tons. The group’s activities are spread over all shipping sectors such as tankers, bulkers, LNG carriers, container vessels, car carrier ships but also logistics, terminals, real estate and insurance. "The shared service center we are setting up in Gdańsk will be a key part of our operation, handling cargo planning, booking processing and equipment (contain-er) management services for Europe. The choice of Tricity was not a coincidence. There are many profes-

sionals in logistics and shipping on the market, which will enable us to provide a high level of service for our customers," said Reiner Zimbalski, General Manager of the MOL's unit in Gdańsk.

Gdańsk's Alchemia business park has attracted an-other business services centre. Image: Torus


Immofinanz exiting Immofinanz exiting Immofinanz exiting Immofinanz exiting Poland's logistics Poland's logistics Poland's logistics Poland's logistics sectorsectorsectorsector, sells Bokserska , sells Bokserska , sells Bokserska , sells Bokserska Distribution ParkDistribution ParkDistribution ParkDistribution Park As part of its strategic exit from the logistics sector in Poland and the Czech Republic, the Austrian real es-tate group Immofinanz has sold two properties: Bokserska Distribution Park in Warsaw and Westpoint Distribution Park in Prague for a combined EUR 33.2m. "Our investments in the Czech Republic are now con-centrated in the retail and office asset classes. In Po-


land, we currently hold two other logistics properties that are designated for sale over the medium-term," explains Eduard Zehetner, CEO of Immofinanz Group. "Our focus for the development of logistics properties lies on the core markets of Germany, Ro-mania and Russia." Bokserska Distribution Park, which was acquired by a British family office UK & European Investments, is located in a logistics area in the south of Warsaw and has roughly 17,500 sq.m of total space. The build-ing was constructed in 2001, is fully rented and has ex-cellent connections to the traffic network. The 64,000-sq.m Westpoint Distribution Park, which was built in the 1970s, was acquired by Central Group, a Czech investor.

The new owner of Warsaw's Bokserska Distribution Park is UK & European Investments. Image: C&W

Immofinanz focusing on the construction of its flag-ship retail development in Poland – Tarasy Zamkowe in Lublin. Scheduled to open in Q4 2014, the EUR 95m shopping and entertainment project will comprise up to 38,000 sq.m of rentable space divided into ca. 150 retail units. It has also teamed up with Polish develop-er Rank Progress on a 23,800-sq.m retail project in Piła, which will likewise open in Q4 2014. The compa-ny has also announced a new retail project in southern town of Stalowa Wola, 60 km north of Rzeszów, where

they plan to build a shopping center with a GLA of approx. 30,000 sq.m. The investment is expected to total EUR 50m, with completion being scheduled for the first half of 2015, Immofinanz said. Immofinanz's recent completions include a STOP.SHOP. retail park in Mława, their second in Po-land, with another one, in Kętrzyn to be opened in the coming weeks. Overall, the developer seeks to build ten STOP.SHOP. projects in Poland over the coming years. Besides shopping centers, Immofinanz Group's ongoing investments in Poland include the Nimbus of-fice building (19,000 sq.m of GLA) in Warsaw, and res-idential projects Riverpark in Poznań (189 apartments) and Dębowe Tarasy in Katowice (phase three with 317 apartments). The Vienna-listed company, which carried out a sec-ondary listing in Warsaw last year, has recently com-pleted one of the largest ever deals on Poland's proper-ty market with the EUR 412m sale of Silesia City Cen-ter retail property in Katowice to an international con-sortium of investors led by Allianz. Silesia City Center has about 340 stores with combined floor space of 89,000 sq.m, all of which is occupied. Since its founding in 1990, Immofinanz has compiled a portfolio that now comprises more than 1,600 invest-ment properties with a carrying amount of approx. EUR 7.4bn. The company concentrates on develop-ment management and sale of commercial properties in top locations. Immofinanz Group concentrates its activities in the retail, office, logistics and residential segments of eight regional core markets: Austria, Germany, Czech Republic, Slovakia, Hungary, Roma-nia, Poland and Russia.


Panattoni begins new Panattoni begins new Panattoni begins new Panattoni begins new project in Upper project in Upper project in Upper project in Upper SilesiaSilesiaSilesiaSilesia US-owned industrial space developer Panattoni Eu-rope has embarked on a brand new investment in the Upper Silesian town of Sosnowiec. Once finalized, the new Panattoni Park Sosnowiec is to include four buildings with a combined space of 90,000 sq.m.

Largest new leases in 2013 Region Park Sq.m Tenant

Wrocław Amazon BTS 123,000 Amazon

Poznań Amazon BTS 101,000 Amazon

Wrocław Amazon BTS 101,000 Amazon

Poznań Poznań Logistics Centre II 82,000 ITM

Central BTS Castorama Stryków 50,000 Castorama

Wrocław Prologis Park Wrocław V 35,000 Eko Holding

Opole BTS Polaris Opole 34,000 Polaris

Poznań Segro Logistics Park Poznań 32,000 Volkswagen

Source: Jones Lang LaSalle, warehousefinder.pl Q4 2013

Phase one of the project, which is currently under construction, will offer 21,900 sq.m including 900 sq.m of office space. The park is located on the S1 ex-pressway and near the A4 motorway, which makes for a convenient connection to the cities of Southern Po-land and the rest of the country. Another advantage, according to Panattoni, is the park's location just 10km from the Euroterminal Sławków railway hub that links wide gauge track from Russia and China with Europe's narrow gauge network. The highly industrialized Upper Silesia is one of Po-land's fastest developing regions as well as an excep-


tionally attractive logistics hub providing access to the Silesian Agglomeration with its population of 4.5m and other cities of southern Poland, including Kraków. Recent improvement in road infrastructure have pro-vided easy connections to Germany, Czech Republic and Slovakia, attracting scores of new investors. . In the Business FT 2012 ranking, the nearby Katowice Economic Zone was named as Europe's second and the world's eleventh best economic zone.

Once fully built-up, Panattoni Park Sosnowiec will in-clude four buildings with a combined space of 90,000 sq.m.. Image: Panattoni

Including the new project, Panattoni has more than 300,000 sq.m of industrial and warehouse space under construction in Poland in projects with a combined value of roughly EUR 200m, including two facilities for Amazon in Poznań and near Wrocław. Since the beginning of this year, the developer has de-livered more than 100,000 sq.m of space in projects dedicated to such companies as Castorama Polska (50,000 sq.m) and Polaris (33,600 sq.m).

RETAIL CHAINS

LLLLidl idl idl idl isisisis building its 8th building its 8th building its 8th building its 8th Polish distribution Polish distribution Polish distribution Polish distribution centre in Bydgoszczcentre in Bydgoszczcentre in Bydgoszczcentre in Bydgoszcz Work is in full swing on German food discounter Lidl's 8th Polish distribution centre in Bydgoszcz. Located on a 17ha site, the 43,700 sq.m facility will launch at the beginning of 2015 with a staff of 200 as well as a number of related administrative positions. Currently Lidl operates seven distribution centers across Poland, including Jankowice (near Poznań), Rusocin (near Gdańsk), Gliwice (Katowice region), Stryków (Łódź), Legnica (Wrocław), Brzozówka (Tarnów), and Turzyn (Warsaw). As far as its retail network expansion is concerned, Lidl targets attrac-tive locations in towns and cities of more than 8,000 inhabitants. The company prefers investment sites of minimum 3,000 sq.m or buildings with available space of 400 sq.m and parking area for at least 60 vehicles. Lidl operates more than 500 outlets throughout Po-land. With a staff of 13,000 the chain turned over PLN 10.5bn last year, marking a 23% increase y/y. "As part of our expansion plan we are opening a few dozen new stores every year in various locations throughout the country. Our logistics infrastructure is being developed in line with our needs," Lidl's spokes-person Patrycja Kamińska told Poland Today. "As far as new positions are concerned, we are planning to re-cruit a total of 2,000 employees this year alone, in our stores, distribution facilities, and head office." Lidl belongs to Germany's Schwarz group, which op-erates also the Kaufland hypermarkets. In the finan-

cial year ended 28 February 2014, Lidl's global turno-ver totaled EUR 54m, up from EUR 48.9bn in the prior year. As of end of February the total number of Lidl stores worldwide stood at 9,875.

RETAILERS

Retail group Retail group Retail group Retail group EM&F EM&F EM&F EM&F suspends bond issue as suspends bond issue as suspends bond issue as suspends bond issue as investors lose appetite investors lose appetite investors lose appetite investors lose appetite for junkfor junkfor junkfor junk----rated debtrated debtrated debtrated debt

Polish retailer NFI Empik Media & Fashion (EM&F) last week suspended a massive EUR 240m (USD 322m) bond issue due to what the company re-ferred to as "adverse market conditions." The Warsaw-listed was hoping to sell the debt with a yield of 8.5% to 8.75%, which according to Bloomberg would have made them the most-expensive senior-secured securi-ties sold this year worldwide. Unfortunately for EM&F, whose fashion business generated huge losses last year, amid intensifying risks from Ukraine to the Middle East, the investors seem to be losing appetite for junk bonds. EMF, rated six steps below investment grade at Moody’s Investors Service, is seeking to re-finance PLN 1.46bn (USD 470m) in short-term debt, the company said in a July 25 statement. According to observers, EMF missed the best moment to sell Eurobonds. Besides the growing global political risk, investors have been pulling out of higher-yielding assets on concerns over the timing of US Federal Re-serve tightening. The Bank of America Merrill Lynch Global High Yield Index slid 0.9% last month, trim-ming gains for the year to 4.9%. The last time the in-dex fell was August 2013. High-yield, high-risk, or junk, debt is rated below Baa3 by Moody’s and lower


than BBB- by Standard & Poor’s. Global high-yield corporate bonds handed investors a 1.9% loss in the past month, according to Bloomberg. EM&F and its majority shareholders (the Eastbridge Group and the CEE private equity fund Penta In-vestments) postponed the offering ”due to adverse developments in market conditions" and will continue to monitor the situation while it reviews other refi-nancing options, the company said in last week's statement. Overall, the EM&F group turned over PLN 3.037bn last year, marking a 2% increase on the prior year, but its net loss deepened from a mere PLN 6m in 2012 down to PLN 300m in 2013. Their EBITDA on contin-ued operations increased slightly last year and came to PLN 276m. In the January-April period the group's net loss widened to PLN 49.7m from PLN 17.3m a year earlier, the company said on July 25. Besides the Empik stores, which sell books, multime-dia, gifts and home goods, both in brick & mortar out-lets and online,EM&F operates also leading children's goods retailers Smyk (143 stores in Poland, Russia, Germany. Czech Republic, Turkey, and Ukraine) and Spiele Max (56 locations in Germany), 113 language schools, sportswear wholesale business (Optimum Group) and 118 fashion outlets, including 61 in Poland. The fashion arm generated losses of PLN 371m in 2013 and 110m in 2012, prompting EM&F to abandon this part of its business, looking for its franchise partners or new investors to take over the GAP, River Island, New Look, Aldo, Esprit and River Island chains in Po-land, Russia and Ukraine. Apart from the huge losses it generated, the company's fashion business has seen its sales shrink rapidly in recent quarters. Last year it contracted by 19% y/y, down to PLN 307m, including a 45% drop in Q4 2013.

A few weeks ago the Empik chain launched its 200th location and company representatives told Poland To-day they wanted to add a further 15 new locations to the chain by the end of the year, both in large cities such as Warsaw and Kraków, as well as smaller towns, where Empik will make its first appearance (for in-stance Mława, Brodnica, Grójec or Kutno). Empik is pushing a new "Express" format, with stores measur-ing between 100 and 200 sq.m, smaller than traditional Empik outlets. So far the company has opened eight shops under that formula and additional few are to be launched later this year. However, with Amazon launching huge distribution centers in Poland this year and rumors of their imminent entry to the Polish mar-ket, Empik may soon have to face a ruthless global competitor.

RETAIL PROPERTIES

Construction ofConstruction ofConstruction ofConstruction of Outlet Outlet Outlet Outlet Center Białystok Center Białystok Center Białystok Center Białystok beginsbeginsbeginsbegins;;;; Lublin Lublin Lublin Lublin project project project project to open by yearto open by yearto open by yearto open by year----endendendend

This month Polish developer ADV Por Property In-vestment is breaking ground on its second retail in-vestment in eastern Poland, Outlet Center Białystok. The company has just obtained a valid building permit for the project which constitutes part of the city's larg-est retail park that includes also a Castorama DIY store, Biedronka grocery and Makro Cash & Carry wholesale outlet. ADV's first project, the Outlet Centre in Lublin, is nearing completion on Mełgiewska St., one of the city's main thoroughfares. Two years ago, when the investor first announced the two projects, it was hoping to launch them by 2014.

"The outlet centre market has its own dynamic as the number of stores a given retailer can open in this for-mula depends on the size of their store network for each brand. Outlets grow gradually as retail networks expand. This is why we had to alter our initial plan of launching both centers in one year. We had to adjust to our tenants and their capabilities as well as the availability of collections and we decided to spread the openings over time. As a result, Lublin will welcome its first clients this year, with Białystok to follow later," Ewa Spychalska, property management director at ADV Por Property Investment tells Poland Today.

Two-thirds of available space at Outlet Center Białystok was pre-leased before the start of con-struction. Image: CBRE

The Lublin project will house a total of 70 stores across 12,500 sq.m of GLA. Phase one, to be opened by the end of 2014, will include approximately 50 outlets. The adjacent parking lot will offer 800 spaces. The 13,300 sq.m Outlet Center Białystok is part of a 36,000 sq.m retail park with 1,500 parking spaces. According to estimates, some 1.2m potential clients live within a 90min drive from the planned Outlet Białystok, which besides local shoppers will target also customers from Russia, Lithuania and Belarus.


"In Lublin an estimated 70% of GLA has been pre-leased to-date, and we are in talks with further ten-ants. In Białystok the figure tops 65% even before the start of construction, which we regard as a huge suc-cess considering the current market conditions. Alt-hough initially we had intended to split the construc-tion in Białystok into three stages, due to high demand on the part of prospective tenants, the first two phases will be delivered simultaneously," says Ms. Spychalska. In Białystok ADV has inked lease deals with the likes of Adidas, Cat, Converse, Cropp, Dajar, Diverse, Hexeline, Lavard, Merrell, McArthur, Mohito, Adidas, Ochnik, Puma, Reebok, Reserved, Sinsay and Tup Tup, many of which will also open stores in the Lublin cen-ter.

Outlet Center Lublin will open this year with 50 stores. Image: CBRE

Both outlet centers (Lublin & Białystok) are being commercialized by the property consultancy CBRE, with AGMET as general contractor and Tebodin providing project management services. ADV Por Property Investment belongs to the FIZ FORUM XVIII investment fund.

"We are planning further outlet center projects in Po-land. Their locations will be selected based on market research as well as the feedback we get from tenants. We have very advanced expansion plans for this con-cept, which we plan to unveil at September's edition of Shopping Center Forum."

POLITICS & ECONOMY

Government names Government names Government names Government names 22 strategic state22 strategic state22 strategic state22 strategic state----held held held held companiescompaniescompaniescompanies

The Polish government has identified 22 companies that will remain under the Treasury control due to their strategic importance, as well as 190 fully and par-tially-state-owned businesses that are designated for sale, a document published last week by the Treasury Ministry shows. "The ministry's priority will be, on the one hand, to professionalize supervision and build value of entities that are crucial to the country's economic security, and, on the other, reducing state exposure in those ar-eas where it is no more essential," the ministry's com-muniqué reads. The strategic assets include industrial development agency ARP, banks BGK and PKO BP, defense group PGZ, refiners Grupa Lotos and PKN Orlen, energy groups PGE and Tauron, insurer PZU, oil logistics firms PERN Przyjaźń and Naftoport, gas company PGNiG, fertilizer maker Grupa Azoty, copper miner KGHM, security printing works PWPW, broadcasters Polskie Radio and Telewizja Polska, lottery opera-tor Totalizator Sportowy, seaport operators in Gdańsk, Gdynia and Świnoujście as well as investment

firm PIR. There are no surprises on this list save for, perhaps, Grupa Azoty, which recently has been subject to hostile takeover attempts by a Russian competitor. As far as the remaining state-held assets are con-cerned, the government will prioritize IPO-based pri-vatization via the Warsaw Stock Exchange. The most prominent items on the list of 190 businesses that are still up for grabs, are listed power groups Enea and Energa, along with listed coal miner Bogdanka, a coking unit of listed coking coal miner JSW, listed re-al estate group PHN and airlines PLL LOT & Eurolot.

IN BRIEF: Standard & Poor’s affirmed its rating at A-/A-2 for long-

and short-term foreign currency and A/A-1 for long-

and short-term local currency sovereign credit for Po-

land, with stable outlook on the country’s steady

growth prospects, the agency said in a statement is-

sued last week.

“The ratings on Poland are supported by its strong, in-

creasingly open, and competitive economy. We esti-

mate GDP per capita at USD 14,500 in 2014 and expect

this to rise consistently on the back of broad-based and

balanced economic growth”, S&P said in the statement.

The rating agency expects Poland's real GDP growth to

reach 3.1% in 2014, and accelerate to 3.8% from 2015,

assuming the fallout from the Ukrainian civil war and EU

sanctions on Russia remain limited.


KEY STATISTICS

Consumer PriceConsumer PriceConsumer PriceConsumer Pricessss

Data in (%) Mar '14 Apr '14 May '14 Jun '14

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

Food & bev +1.2 -0.3 +0.3 -0.5 -0.8 -0.4 -0.9 -0.3

Alcohol, tobacco +3.7 +0.7 +3.9 +0.3 +3.9 +0.2 +4.0 +0.1

Clothing, shoes -4.3 +0.8 -4.4 +2.8 -4.6 -0.1 -4.7 -0.8

Housing +1.8 -0.1 +1.7 0.0 +1.6 0.0 +1.6 -0.1

Transport -2.7 +0.1 -2.1 -0.1 -0.1 -0.4 -0.6 -0.2

Communications -0.3 +0.6 -1.7 -1.5 -1.1 -0.1 +1.3 +2.4

Gross CPI +0.7 +0.1 +0.3 0.0 +0.2 -0.1 +0.3 0.0

IIIInflationnflationnflationnflation

-1%

0%

1%

2%

3%

4%

5%

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

Oc

t 13

De

c 1

3

Fe

b 1

4

Ap

r 14

Ju

n 1

4

y/y m/m

Retail Retail Retail Retail TurnoverTurnoverTurnoverTurnover

Month Feb '14 Mar '14 Apr '14 May '14 Jun '14

m/m (%) -0.6 +12.5 +2.3 -2.7 -1.1

y/y (%) +7.0 +3.1 +8.4 +3.8 +1.2

Year 2009 2010 2011 2012 2013

Turnover in PLNbn 582.8 593.0 646.1 676.0 n/a

y/y (%) +4.3 +5.5 +11.6 +5.6 +2.3

Residential ConstructionResidential ConstructionResidential ConstructionResidential Construction

Dwellings

(in '000 units)

2009 2010 2011 2012 2013 Jan-Jun

2014

y/y

(%)

Permits 178.8 174.9 184.1 165.1 138.7 76.5 +12.8

Commenced 142.9 158.1 162.2 141.8 127.4 72.3 +22.5

U. construction 670.3 692.7 723.0 713.1 694.0 700.9 -0.4

Completed 160.0 135.7 131.7 152.5 146.1 66.3 -2.4

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

Q1 2014 +3.4% 397,429 -1.1%

Q4 2013 +2.7% 455,528 -1.3%

Q3 2013 +2.0% 405,554 -1.9%

Q2 2013 +0.8% 296,314 -2.3%

2013 +1.6% 1,635,746 -1.3%

2012 +1.9% 1,596,379 -3.7%

2011 +4.5% 1,528,127 -5.0%

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

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% +1.6% +3.5%

Consumer inflation +2.6% +4.3% +3.7% +0.9% +0.3%

Producer inflation +2.1% +7.6% +3.4% -1.3% -1.4%

CA balance, % of GDP -5.1% -5.0% -3.7% -1.3% -0.6%

Nominal gross wage +3.9% +5.2% +3.7% +3.4% +4.3%

Unemployment** 12.4% 12.5% 13.4% 13.4% 12.2%

EUR/PLN 3.99 4.12 4.19 4.20 4.12

Sources: NBP, BZ WBK, PKO BP, GUS *) projections **) year-end

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

Sector Q2 2013 Q3 2013 Q4 2013 Q1 2014

A B A B A B A B

Coal mining 6,290 143 6,061 138 8,615 196 6,333 144

Manufacturing 3,560 155 3,625 158 3,690 161 3,663 160

Energy 5,828 177 6,021 183 6,736 205 6,358 193

Construction 3,693 157 3,766 160 3,895 166 3,706 158

Retail & repairs 3,421 146 3,408 145 3,456 147 3,544 151

Transportation 3,547 125 3,589 127 3,913 138 3,666 130

IT, telecoms 6,707 174 6,654 173 6,695 174 6,986 181

Financial sector 6,702 151 6,109 137 6,602 148 6,749 152

National average 3,613 144 3,652 145 3,823 152 3,895 155


Construction OutputConstruction OutputConstruction OutputConstruction Output

Month Dec '13 Jan '14 Feb '14 Mar '14 Apr '14 May '14 Jun '14

m/m (%) +21.5 -64.0 +18.7 +24.2 +3.2 +14.0 +16.9

y/y (%) +5.8 -3.9 +14.4 +17.4 +12.2 +10.0 +8.0

Year 2007 2008 2009 2010 2011 2012 2013

y/y (%) +15.5 +12.1 +5.1 +4.6 +11.8 -0.6 -12.0

Source: The Central Statistical Office of Poland, GUS

Sentiment IndicatorsSentiment IndicatorsSentiment IndicatorsSentiment Indicators

Economic sentiment and consumer confidence indicators

-40

-20

0

20

Oct

11

Jan

12

Ap

r 12

Ju

l 12

Oc

t 12

Ja

n 1

3

Ap

r 13

Ju

l 13

Oc

t 13

Ja

n 1

4

Ap

r 14

Ju

l 14

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 Dec'13 Jan'14 Feb'14 Mar'14 Apr'14 May'14 Jun'14

m/m (%) -0.1 0.0 -0.1 -0.2 -0.2 -0.2 0.0

y/y (%) -1.0 -1.0 -1.4 -1.3 -0.7 -1.0 -1.7

Year 2007 2008 2009 2010 2011 2012 2013

y/y (%) +2.0 +2.2 +3.4 +2.1 +7.6 +3.3 -1.3

Construction PriceConstruction PriceConstruction PriceConstruction Pricessss

Month Dec'13 Jan'14 Feb'14 Mar'14 Apr'14 May'14 Jun'14

m/m (%) -0.1 -0.2 -0.2 -0.1 -0.1 0.0 0.0

y/y (%) -1.7 -1.7 -1.6 -1.5 -1.5 -1.4 -1.3

Year 2007 2008 2009 2010 2011 2012 2013

y/y (%) +7.4 +4.8 +0.2 -0.1 +1.0 +0.2 -1.8

Industrial OutpIndustrial OutpIndustrial OutpIndustrial Outputututut

Month Dec '13 Jan '14 Feb '14 Mar '14 Apr '14 May '14 Jun '14

m/m (%) -9.7 +2.9 -1.8 +9.4 -2.3 -1.7 -0.1

y/y (%) +6.6 +4.1 +5.3 +5.4 +5.4 +4.4 +1.7

Year 2007 2008 2009 2010 2011 2012 2013

y/y (%) +10.7 +3.6 -3.5 +9.8 +7.7 +1.0 +2.2


TTTTraderaderaderade

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

EXPORTS in PLN bn IMPORTS in PLN bn

Jan-May 2014

y/y (%)

share (%)

2013 share (%)

Jan-May 2014

y/y (%)

share (%)

2013 share (%)

Food and live animals 30,403 +10.6 10.9 69,304 10.9 20,794 +5.7 7.5 47,906 7.4

Beverages and tobacco 3,667 +10.9 1.3 8,624 1.4 1,612 +1.0 0.6 4,150 0.6

Crude materials except fuels 7,057 +3.4 2.5 15,744 2.5 9,065 -1.0 3.3 21,585 3.3

Fuels etc 11,896 -2.0 4.3 30,013 4.7 31,333 +6.0 11.2 75,539 11.7

Animal and vegetable oils 811 +33.7 0.3 1,864 0.2 1,071 +1.0 0.4 2,646 0.4

Chemical products 25,517 +5.5 9.1 59,103 9.3 41,641 +8.2 15.1 92,917 14.3

Manufactured goods by material 55,193 +3.5 19.8 129,915 20.3 49,473 +8.4 17.7 112,392 17.3

Machinery, transport equip. 107,483 +10.9 38.5 239,434 37.5 91,562 +5.1 32.8 216,608 33.4

Other manufactured articles 36,803 +13.3 13.2 82,816 13.0 26,343 +15.3 9.5 58,210 9.0

Not classified 320 n/a 0.1 1,782 0.2 5,977 n/a 1.9 16,242 2.6

TOTAL 279,150 +8.3 100 638,599 100 278,871 +6.1 100 648,195 100

Poland's ten largest trading partners, ranked according to 2013

EXPORTS in PLNbn IMPORTS in PLN bn

No Country Jan-Jun 2014

share 2013 share No Country Jan-Jun 2014

share 2013 share

1 Germany 86,686 25.9% 162,548 25.1% 1 Germany 72,536 21.6% 142,161 21.7%

2 UK 20,918 6.2% 42,138 6.5% 2 Russia 38,637 11.5% 79,578 12.1%

3 Czech Rep. 20,265 6.1% 40,110 6.2% 3 China 32,589 9.7% 61,127 9.3%

4 France 19,152 5.7% 36,367 5.6% 4 Italy 17,731 5.3% 34,940 5.3%

5 Russia 14,707 4.4% 34,069 5.3% 5 Netherlands 12,512 3.7% 25,409 3.9%

6 Italy 15,552 4.6% 27,958 4.3% 6 France 13,152 3.9% 25,041 3.8%

7 Netherlands 13,366 4.0% 25,707 4.0% 7 Czech Rep. 11,451 3.4% 24,054 3.7%

8 Ukraine 6,174 1.8% 18,020 2.8% 8 USA 8,142 2.4% 17,431 2.7%

9 Sweden 9,661 2.9% 17,581 2.7% 9 UK 8,746 2.6% 17,184 2.6%

10 Slovakia 8,371 2.5% 17,099 2.6% 10 Belgium 8,319 2.5% 15,137 2.3%


CurrencyCurrencyCurrencyCurrency

Central Bank average rates

as of 8 August 2014

100 USD 315.09 ↑

100 EUR 421.84 ↑

100 GBP 529.48 ↑

100 CHF 347.64 ↑

100 DKK 56.59 ↑

100 SEK 45.57 ↑

100 NOK 50.38 ↑

10,000 JPY 309.55 ↑

100 CZK 15.16 ↑

10,000 HUF 133.82 ↑

100 USD/EUR against PLN

300

350

400

450

26 A

ug 13

31 Oct 13

15 Jan 14

24 M

ar 14

2 Jun 14

8 A

ug 14

USD EUR

MMMMoney Supplyoney Supplyoney Supplyoney Supply

in PLN m Mar '14 Apr '14 May '14 Jun '14

Monetary base 173,213 168,511 162,246 173,096

M1 558,954 548,394 557,651 572,376

- Currency outside banks 116,657 119,261 119,649 120,828

M2 964,624 969,754 975,001 980,090

- Time deposits 422,990 439,137 435,386 426,351

M3 980,377 986,142 991,120 996,171

- Net foreign assets 132,849 126,943 142,260 144,033 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 Mar' 14 Apr' 14 May' 14 Jun' 14

Loans to customers 923,709 928,450 930,652 940,703

- to private companies 267,553 270,886 273,360 276,709

- to households 569,334 573,332 574,800 578,639

Total assets of banks 1,628,519 1,639,359 1,660,583 1,667,783

Source: Central Bank NBP

IIIInterest ratesnterest ratesnterest ratesnterest rates

Average weighted annual interest rates

on loans to non-financial corporations

Term / currency Jan '14 Feb '14 Mar '14 Apr '14 May '14 Jun '14

PLN (up to 1 year) 4.2% 4.5% 4.5% 4.4% 4.4% 4.5%

PLN (up to 5 y ) 4.9% 4.8% 4.9% 4.8% 4.8% 4.8%

PLN (over 5 y) 4.8% 4.7% 4.7% 4.7% 4.7% 4.7%

PLN (total) 4.8% 4.7% 4.7% 4.7% 4.7% 4.7%

EUR (up to 1m EUR) 2.0% 2.0% 1.9% 2.0% 2.0% 1.9%

EUR (over 1m EUR) 3.6% 3.4% 3.3% 3.0% 2.7% 3.4%

Warsaw Inter Bank Offered Rate (WIBOR) as of 8 August 2014

Overnight 1 week 1 month 3 months 6 months

2.63% 2.60% 2.60% 2.67% 2.69%

Central Bank (NBP) Base Rates

Reference Lombard NBP deposit Rediscount

2.59% 4.00% 1.00% 2.75%

Stock ExchangeStock ExchangeStock ExchangeStock Exchange

Warsaw Stock Exchange, rates in PLN

WIG-20 stocks in alphabetical

order

Price 8 Aug '14

Change 1 Aug '14

Change end of '13

↓ Alior Bank 77 -3% -5%

→ Asseco Pol. 41.4 0% -10%

↓ Bogdanka 111.25 -2% -12%

↓ BZ WBK 352 -2% -9%

↓ Eurocash 36.4 -2% -24%

↓ Grupa Lotos 35.22 -3% -1%

↓ JSW 36.01 -13% -32%

↓ Kernel 27.39 -5% -28%

↓ KGHM 127.8 -1% +8%

↓ LPP 7353.1 -4% -18%

↓ mBank 446 -4% -11%

↓ Orange Pol. 9.98 -4% +2%

↓ Pekao 169 -1% -6%

→ PGE 20.91 0% +28%

↓ PGNiG 4.73 -3% -8%

↑ PKN Orlen 37.5 2% -9%

↓ PKO BP 36.79 +1% -7%

→ PZU 443.5 0% -1%

↑ Synthos 4.58 +2% -16%

→ Tauron 4.96 0% +17%

Source: Warsaw Stock Exchange

Key indices

as of 8 August 2014

WIG Total index

49,59349,59349,59349,593....68686868 Change 1 week -4% ↓

Change end of '13 -5% ↓

WIG-20 blue chip index

2,2,2,2,333315151515....65656565 Change 1 week -1% ↓

Change end of '13 -4% ↓

WIG Total closing index

last three months

49,000

50,000

51,000

52,000

53,000

54,000

25 A

pr 14

2 Jun 14

25 Jun 14

17 Jul 14

8 A

ug 14


Poland Today Sp. z o. o.

ul. Złota 61 lok. 100,

00–819 Warsaw, Poland

tel/fax: +48 22 464 82 69

mobile: +48 694 922 898,

+48 602 214 603

www.poland-today.pl

Business Review+ Editor

Lech Kaczanowski

office: +48 22 412 41 69

mobile: +48 607 079 547

[email protected]

Business Review+ Subscription

1 year- EUR 690 (PLN 2760)

6 months- EUR 375 (PLN 1480)

3 months- EUR 245 (PLN 980)

Sales Director

James Anderson-Hanney

mobile: +48 881 650 600

james.anderson-hanney@poland-

today.pl

Publisher Richard Stephens

Financial Director Arkadiusz Jamski

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-Jun 2014 *

Monthly wages (PLN)

Jan-Jun 2014**

Unemploy-ment

Jun 2014

New dwellings Jan-Jun 2014

Indus-

try

Constru-

ction

Indus-

try

Constru-

ction

in '000 % Num-

ber

Index *

Dolnośląskie (Wrocław) 101.5 117.2 4,379 4,173 134.5 11.7 6,561 81.1

Kujawsko-Pomorskie (Bydgoszcz) 106.6 120.7 3,432 3,239 132.1 16.2 2,956 91.3

Lubelskie (Lublin) 105.0 83.8 3,734 3,035 118.8 13.0 2,350 81.1

Lubuskie (Zielona Góra) 115.8 110.0 3,454 3,055 50.5 13.5 1,415 90.9

Łódzkie (Łódź) 100.3 119.1 3,702 3,267 137.3 12.8 3,054 102.6

Małopolskie (Kraków) 99.4 107.8 3,822 3,345 145.4 10.4 7,591 94.6

Mazowieckie (Warszawa) 103.5 112.0 4,628 5,084 261.7 10.2 14,266 109.3

Opolskie (Opole) 106.7 127.4 3,635 3,496 45.3 12.7 896 120.8

Podkarpackie (Rzeszów) 105.5 116.6 3,421 3,086 136.6 14.7 2,943 99.8

Podlaskie (Białystok) 106.6 120.0 3,310 3,768 62.9 13.6 1,950 133.5

Pomorskie (Gdańsk-Gdynia) 110.5 123.6 4,021 3,427 100.3 11.8 4,592 86.4

Śląskie (Katowice) 101.1 110.8 4,588 3,533 189.0 10.2 5,199 100.0

Świętokrzyskie (Kielce) 112.0 104.1 3,414 3,264 79.5 14.8 1,355 119.3

Warmińsko-Mazurskie (Olsztyn) 105.3 104.2 3,292 3,101 98.7 19.0 1,976 92.9

Wielkopolskie (Poznań) 106.9 111.9 3,765 3,662 124.5 8.3 6,709 102.7

Zachodniopomorskie (Szczecin) 102.2 100.5 3,533 3,423 95.2 15.7 2,514 93.9

National average 104.3 112.1 4,009 3,795 1,912.6 12.0 66,327 97.6

*) 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 '12 Q1 '13 Q2 '13 Q3 '13 Q4 '13 Q1 '14

in Poland 2,886 175 -3,020 1,885 -2,899 2,771

Polish DI -1,203 957 2,588 -1,449 1,575 562

Year 2008 2009 2010 2011 2012 2013

in Poland 10,128 9,343 10,507 14,896 4,763 -4,574

Polish DI -3,072 -3,335 5,484 -5,935 -607 3,684

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

Period 2011 2012 2013 Q3 '13 Q4 '13 Q1 '14

Trade balance -10,059 -5,175 2,309 1,094 151 1,159

Services, net 4,048 4,642 5,249 1,032 1,257 1,245

CA balance -18,519 -14,191 -4,984 -2,086 -1,415 -766

CA balance vs GDP -5.0% -3.7% -1.3% -1.9% -1.3% -1.1%

Source: NBP, BZ WBK, PKO BP

UUUUnemploymentnemploymentnemploymentnemployment

Registered unemployed, in ‘000 and

% of population in working age

1,800

2,000

2,200

2,400

2,600

Q2

11

Q4

11

Q2

12

Q4

12

Q2

13

Q4

13

Q2

14

6

9

12

15 number (left axis) % (right axis)

Source: Central Statistical Office GUS

IndustrIndustrIndustrIndustrial ial ial ial PropertiesPropertiesPropertiesProperties

by region, Q4 2013

Existing stock, sq.m

Under const ruction, sq.m

Va-cancy ratio

Effective rents EUR/ sq.m/mth

Warsaw central 563,000 17,000

22.3% 3.6–5.1

Warsaw suburbs 2,063,000 12.5% 2.1–2.8

Central Poland 1,021,000 80,000 15.2% 2.1–3.3

Poznań 1,023,000 215,000 4.4% 2.5–3.15

Upper Silesia 1,431,000 37,000 9.3% 2.4–3.3

Wrocław 780,000 259,000 11.7% 2.6–3.1

Tri-city 184,000 46,000 9.2% 2.8–3.3

Kraków 141,000 0 4.0% 3.3-4.0

CommercialCommercialCommercialCommercial PropertiesPropertiesPropertiesProperties

City

New apartments* Offices 2H'13 Retail rents**2H'13

Q1 '14

PLN/sq.m

Change

y/y

Headline

rents**

Vacancy

ratio

Retail

centres

High

streets

Warsaw 8,005 -0.1% 11.5-25.5 11.75% 80-90 85

Kraków 6,419 +1.8% 13-15 4.90% 35-45 78

Katowice 5,531 0.0% 13-14 7.30% 35-45 56

Poznań 6,666 +4.0% 14-16 14.20% 35-45 55

Łódź 4,808 -1.8% 12-14 14.40% 35-45 25

Wrocław 5,928 -0.2% 13-15.5 11.75% 35-45 40

Gdańsk 6,031 -5.7% 13-15 11.20% 35-45 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

Jun10

Feb11

Oct11

Jun12

Feb13

Oct13

Jun14

Wage CPI

Index 100 = Jan 2005. Source: GUS

Documents

Poland Today Business Review+ No. 047