Bizpolandmag sept2013 final

September 2013 vol. 6 no. 6(37) Price: 20 zł

Turmoil in energy market

Government and energy companies scramble for solutions Equities:

BPO:

Cities:

TVN says market weak but improving

RWE to move thousands of jobs to Poland

Kraków bids on 2022 Winter Olympics

Powering Creation

Powering Creation

Independent Poland’s chemical industry was born in Tarnów in 1927. Since then, history has come full circle.

Polish chemistry is being reborn in Tarnów these days – conscious of its strength and fully secure. Grupa Azoty is the fusion of everything that we, the Poles, have been able to do best in this industry.

We are ready to transcend new boundaries – because Grupa Azoty is a project focused on the future. This is the way it has always been. We’ve come a long way.

We’ve changed. We are now competing with Europe’s largest chemical companies. And thanks to the recently completed great consolidation, we are prepared for this better than ever before.

We have defined our aims in the strategy adopted for the years 2012-2020. Due to the Group’s wellconceived architecture, we are able to offer our clients an even broader product portfolio – from nitrogen and phosphorus fertilizers as well as constructions plastics to OXO alcohols, plasticizers and pigments. We have no competition in this regard as of today. We possess our own logistics infrastructure, as well as research, development and servicing facilities, which also allows us to provide services.

We want to use these assets in further building the Group’s value and that of the companies which form part of it – keeping our shareholders, employees and the local communities in which we operate in mind. The two main lines of our current strategy are taking advantage of the increased scale of operations and maximizing the effects of synergy – this means full use of the potential gained through consolidation.

We are chemists. We are the architects of matter. The architects of the future.

We know what we are due to those who have come before us. We know what we owe to those who will follow us.

We owe them a world which will be a better place to live.

grupaazoty.com

Table of Contents September 2013

vol. 6 no. 6(37)

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Cover Story

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Turmoil in energy market

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Food Exports

(10) Astarta expects higher margins in sugar segment; EconMin: Foodagricultural goods exports rises the most in H1/ 2013 (11) KSG Agro completes third stage of breeding animals

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Equities News

(12) Broadcaster TVN says market weak, but improving (14) Biedronka retailer sales growth significantly slower than expected (15) Agora sees no positive signs of advertising market improvement; Bus and coach output seen up by 10% in 2013 on exports orders; PGNiG gas posts net profit of PLN 352 mln in Q2 vs. PLN 393 mln expected (16) KGHM copper on guidance revision, metals prices, costs et al. (18) Pekao bank on 2013 outlook, T-bond portfolio, M&A, client acquisitions (19) Cinema City to launch multiplex in IKEA new centre in Lublin (20) PZU looks closely at expansion into Croatian insurance market; BRE Bank CFO on results and trends and interest income (21) Olympic gaming company expands to Latvia, with new online games as of Aug 1; Feerum: Investment plans of PLN 34mn; Vantage Development has PLN 20mn from bonds issue for projects in Wrocław (22) Komputronik shares jump, as sales rises by 21.7% y/y to PLN 8.7mn in July; Polish Investments PIR may buy stake in PGE power’s Opole project; Elemental Holding guides higher profits in the recycling sector (26) Fashion retailer LPP nets PLN 120 mln in Q2, sales up 30% y/y

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BPO/Shared Services News

(27) RWE to move jobs from Germany to Kraków (28) Bayer employs 250 people in Gdańsk; Skanska has leased half of Malta House office building

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FDI and PAIZ Investment News

(30) Poland-Turkey aim to increase trade volume to $10 bln; Penta Investments to buy Polish pharmacy chain Mediq for €70 million (31) EIB boosts Polish science with loans (32) German injection molder Wirthwein to invest in Polish plant; Heli-One Poland: Work Begins on Customised Facility (34) Plastic Factory Cobi to expand Polish toy plant (35) Poland–Thailand

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Cities Investment News

(36) Gdańsk/Gdynia (37) Łódź (38) Wrocław (39) Poznań (40) Szczecin (41) Katowice (42) Kraków

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Chambers of Commerce News

(43) Britain, Spain (44) Belgium, United States, Australia

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Business Calendar

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Cover Story

Turmoil in energy market Government and energy companies scramble for solutions to 12 problems

Poland faces unpleasant choices in every direction, as it seeks to secure longterm solutions to its growing demand for energy. Boxed in by the EU’s green energy agenda, the powerful coal lobby, energy market forces and urgent budgetary constraints, the government must make fast decisions that will surely alienate entrenched interests.

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Yet the EU’s precedence for “exceptions” and Poland’s natural abundance of coal means that Poland will soon test its EU green commitments, as it falls back on its cheapest and safest source of energy: coal.

“Looking at Poland’s limited reserves of gas and oil, lignite coal has to be perceived as the stabilizing factor for Poland’s energy safety,” said Economy Minister Janusz Piechocinski, adding that Poland’s lignite reserves will last for 200 to 300 years.

Lignite is a soft brown fuel, considered to be the lowest and cheapest grade with a carbon content of around 25-35 percent – the dirtiest.

“Lignite is the cheapest fuel at the moment. Moreover, its price is the most stable and predictable compared to hard coal, gas or oil. I think lignite is becoming Poland’s raison d’état,” said Zbigniew Bryja, the head of ZE PAK’s mining unit.

ZE PAK, Poland’s second-largest lignite power producer, has an exploration license for a part of a lignite field whose potential reserves together with smaller neighboring fields total 3 billion tones, more than Poland’s total lignite output since World War Two. Poland already relies on coal to produce more than 90 percent of its electricity and is home to the European installation that emits the most carbon dioxide - utility PGE’s lignite power plant in Belchatow.

Its choice of fuel now could determine its energy and environmental future for decades to come, given that Poland needs to build new power stations to replace aging plants and cope with future demand as its power system operates close to capacity.

The role of lignite in Poland’s energy mix will be defined in its new energy policy to 2050, to be published by the end of this year. That role will depend on the development of renewables and nuclear energy and the opening of new coal mines.

“Lignite will stay,” said Pawel Smolen, head of the European Association for Coal and Lignite and former PGE management board member. “I definitely believe in lignite in countries like Poland ... because you have open cast mines in place,” he added.

The government and utilities, encouraged by firm popular support, are looking to domestic lignite reserves as a cheap way to fuel new energy capacity and reduce imports of Russian gas. “Lignite costs some 6.5 zlotys per gigajoule and hard coal 10 to 11 zlotys,” said Maciej Hebda, equity analyst at Espirito Santo.

State-controlled PGE, Poland’s biggest utility, plans a couple of new lignite projects including a power plant in Turow, with the lignite fields in Legnica as a potential fuel source.

Power production at lignite plants in Poland already increased by 3.7 percent yearon-year in 2012, while hard coal-fired plants lowered their output by almost 7 percent, data from Polish grid operator PSE shows.

Yet the Ministry for Economy has warned that growing demand for electricity is not being met by an increase in power generation and the situation will be greatly compounded by the expected closures of 4,400 MW of existing capacity by the end of 2017.

A new Ministry report outlines how more than half of Poland’s power plants are more than 30 years old, with plans to decommission over 12,000 MW of that by 2030. More than one third of that will be shut down between 2014-17.

According to data from the country’s grid operator, PSE, it can boost the amount of available capacity in the coming years by another 1,500 MW by increasing reserves and through importing but the Ministry claimed that despite this, the risk shortages in 2016-17 remained high.

The power sector requires investments of some PLN 60-70 billion, excluding nuclear energy, in the coming five years.

Investments into transmission network alone require spending at the level of PLN 20 billion.

While the demand for energy will grow as the Polish economy expands, here are 12 key issues the Government must address in the short term:

Weak economy means cuts, cuts and cuts

1.

Polish utilities want to curb spending at a time of weak economic growth that has dented wholesale power prices, and lignite is their cheapest fuel by far.

Poland on collision course with EU The European Union has set a target of cutting carbon emissions across the 28-nation

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www.bizpoland.pl bloc by 20 percent from 1990 levels by 2020. Poland could risk financial penalties imposed by Brussels should it miss these targets because of a lignite boom.

Euro MPs and environmentalists are urging the European Commission to take rapid action to prevent Poland from building two huge new 900MW units at a coal plant, in violation of EU laws on Carbon Capture and Storage (CCS).

The Polish Prime Minister, Donald Tusk, has said that he will build the €2.7 billion units in Opole, even though they have not been assessed for CCS-readiness, as required by an EU directive that Warsaw currently faces infringement proceedings for defying. “The government will find the funds and a way for this investment to be carried out,” Tusk said.

Any Polish success in facing down Brussels on the issue could affect the fate of other European climate laws which the country has not ratified, such as the renewable energy and emissions trading directives.

Jo Leinen, a Socialist (S&D) MEP, said that the proposed build at Opole was “illegal” and should not take place without adequate modern standards for climate protection.

“It is very urgent that the Commission gets active and puts some pressure on the Polish authorities to follow EU rules,” he

Cover Story said. “Opole is a test case for whether our policies are valid or existing only on paper.”

Emissions from Opole are expected to top 1.5 billion tonnes of carbon dioxide over the next 55 years and could prevent Poland from meeting its target of generating 15% of its energy from renewable sources by 2020, according to a study by the Polish Climate Coalition (PCC).

The Polish government says that tighter European Commission emissions controls require it to shut down or upgrade up to 5GW of old polluting coal-fired plants by 2016 and so new capacity is needed to prevent power shortages.

But the PCC study found that renewable energy on the Opole plant’s 1.8GW blocks would produce 60% more energy, while reducing carbon emissions six-fold.

The carbon compromise between coal and renewables – CCS technology that could capture and store undergroun planet-warming emissions – is not on the Polish table.

Poland is the only EU state not to have notified the Commission of any measures it has taken to comply with the CCS directive, which compels space for future technology to be left vacant next to any new coal plants.

Two years ago, the Commission launched infringement proceedings against Poland as a result.

But the Polish prime minister, Donald Tusk, has made new construction at Opole a litmus of his energy policy – despite concerns about its profitability – and confrontation with Brussels seems likely.

That in turn has called into question the writ of the EU’s law, with potentially serious financial consequences for Warsaw. In the EU’s case against Poland’s non-transposition of the renewable energy directive, Brussels has asked the European Court of Justice to fine Warsaw €133,000 a day until it complies.

No ruling has yet been handed down.

“The European Commission must move quickly to ensure that facts on the ground are not created while the specific conditions of the CCS directive remain unmet,” Julia Michalak, a spokeswoman for Climate Action Network said.

Once construction of the two new units has begun, it is unlikely to be reversed.

2.

Coal-fired power generation faces capacity constraints in 2015-2018 In June, Poland’s largest power company, Polska Grupa Energetyczna said it may yet build two new coal-fired units in southern Poland, just two months after cancelling the €2.7 billion project. In April, PGE pulled

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Cover Story the plug on the Opole II project blaming falling electricity prices, weak demand and that the project would be a risky investment for its shareholders. Government pressure has forced the re-think.

The Opole project is considered a strategic investment for the country’s energy sector in light of expected power shortages. PGE had previously balked at building the project because of low energy prices.

Kompania Weglowa is to supply coal to Opole between 2018 and 2038 worth 16 billion to 22 billion zlotys.

A report from the Polish ministry of economy has outlined the potential for a power supply deficit in 2016-17 due to a lack of new generation capacity coupled with ongoing plant decommissioning in the coal power sector. The report reveals that Poland needs to decommission 4.4 GW of existing capacity by the end of 2017, leading to a scenario whereby Poles face a power capacity deficit of up to 1100 MW during peak periods in the winter of 2017.

Transmission system operator, PSE, is attempting to head off a potential energy gap through raising the amount of available cold reserve capacity, speeding up unit maintenance and boosting imports.

“It can be said that despite PSE’s planned management activities the risk of a shortage of available capacity in the coming years, especially in the period 2016-2017, is realistic,” the report said, according to Platts.

The deficits could begin appearing as early as 2015 but should cease by 2019, the ministry said, as 6.7 GW of new hard coal, lignite and gas-fired capacity comes online between 2015-2019.

There are plans to decommission 12.26 GW of generation capacity by 2030, with 36 per cent of the total, or 4.4 GW, to go between 2014-2017, it said. Of the total withdrawals, 80 per cent will be old hard coalfired plant. The report said there are plans to build 28 GW of new capacity by 2030, of which almost half will be built by 2020.

However, it adds no significant new capacity will be added in 2013 and 2014.

State investment support scheme PIR may help power companies to manage some aspects of risk elements, by taking a part of the risk on PIR. PIR is in talks with PGE over possible engagement of PIR into PGE’s Opole project, according to the Treasury Minister.

3.

Coal prices collapse – yet costs remain high

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Power prices on average have fallen by some 8 percent so far this year compared

to 2012. “We know more or less what the average level of prices is that guarantees profitability at Jaworzno, for example PLN 200, 200+, no lower than that. The current level of prices is too low to guarantee profitability of investment in any generation capacities”, said Tauron CFO Krzysztof Zawadzki. “We are approaching renegotiation of coal contracts for next year, which is another stimulus for where to look for efficiency improvement, and I know that the mining sector is already generating a negative margin, so the situation isn’t comfortable for either sector”, said Zawadzki.

Hit by plunging coal prices over the past year, Kompania Weglowa, the biggest hard coal producer in the European Union, is considering asking a state agency for a bailout, two sources familiar with the matter said in late August.

Like other state miners, the company also has to contend with high extraction costs in Poland. The combination of high costs and low prices has served to make domestic coal more expensive than the imported variety, resulting in the company’s large stockpiles almost doubling in the past year.

The sources said that Kompania Weglowa could soon turn to the Agency for Industrial Development (ARP), which most recently bailed out troubled builder Polimex. “Such talks are being held at the agency, but the technicalities are not clear at this stage”, a person close to the matter told Reuters. A second source confirmed that discussions were taking place.

4.

Capital markets not kind to power producers: Energa IPO in danger Poland’s plans to list its last remaining state utility on the stock market may be derailed by government indecision over future renewable energy subsidies, which analysts say makes the company extremely hard to value.

The initial public offer for Energa, Poland’s biggest seller of energy produced from renewable sources such wind farms and hydro-electric plants, could still raise up to 2 billion zlotys based on analysts’ assessments of the sector, making it one of this year’s largest on the Warsaw bourse.

“I do not understand how they plan to float Energa this year with no law on renewables,” said one analyst who asked not to be named. “It is impossible to value the company without this and no one believes the new regulations will be adopted this year.”

The sale of a minority stake in Energa was expected to make a significant contribution to the government’s privatisation plan, which had a target of 5 billion zlotys, but to date has booked only 1.9 billion zlotys.

Given the uncertainty over subsidies, Energa, the smallest of Poland’s power companies, could be worth about a third less than it was three years ago, when its bigger state-controlled sibling PGE offered to pay 7.5 billion zlotys for an 84 percent stake, analysts say.

The Polish government, which owns 84 percent in Energa, could sell as much as 34

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www.bizpoland.pl percent and retain majority control, which would value the flotation at some 2 billion zlotys.

“The seller will have to accept a relatively low price, implicated by the current valuation of its peers and low power prices,” Pawel Puchalski, head of equity research at BZ WBK brokerage said.

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Cold reserve Implementing cold reserve will settle the issue of financing fixed costs and will enable Poland to go through the period of expected power capacity shortage in years 2016-18, when the old blocks will be switched off, while new projects will not be ready yet. “We are currently working with PSE on a solution which will pay for a certain level of power reserve in the system on the balancing market . . It would be about transferring a budget of several hundred mln PLN. We are wrapping up details so that as of January 1, 2014 this service functions based on new rules. New regulations require no changes in existing legal framework”, said Treasury Minister Pawel Tamborski. “These are tools which would function until we have mature solutions,

Cover Story that is until power capacity market is implemented. The mechanism will apply both to existing blocks but also to new projects which will be realized”, according to URE President MarekWoszczeyk. The tender for cold reserve blocks has already been launched, and the first stage has already been completed – in mid-September there will be another stage, i.e. asking for prices expected by power firms. PSE operator believes it will be possible to conclude it within a month.

6.

Coal mining lobby and unions restrict government choices and harm Polish coal producers.

The strong lobby for coal mining successfully blocked the future development of energy sector for many years, and continues to send chills down the spines of Polish politicians. The Polish energy mix is still close to 90% based on coal, an early 20thcentury source of energy. In addition, the Polish energy mix leads to an increased dependence on imports, since black coal from Polish deposits, due to the EU requirements in terms of environmental protection and safety of workplace as well

as due to the depth of the black coal layers, cannot compete with the imported coal, in particular from Eastern Europe. Market prices for hard coal at the European markets are 10 to 15% lower.

Polish mines, forced to dig deeper for coal, also face politically powerful unions that have helped to keep their workforces at unsustainably high levels compared with more nimble foreign rivals.

With local power plants preferring to buy coal abroad, domestic players have been forced to stockpile the coal they produce. At the end of June, coal stockpiles at Kompania Weglowa and its state-owned peer KHW had increased by more than 90 percent year on year to 7.2 million tonnes.

Though Kompania Weglowa has not released any financial data for this year, smaller KHW said it lost 70 million zlotys in the first six months of 2013.

7.

Renewable Energy Law still on the horizon. Wind developers getting squeezed.

Economy Minister Janusz Piechocinski said in late August that he expected the new law to be signed by the president this

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Cover Story year, but market players and analysts are sceptical.

Local media said in late August that after months of work on the new energy law, the ministry has come up with a completely new set of ideas concerning the system of subsidies.

“The package of new energy laws is extremely important from the point of view of shaping Poland’s energy policy,” the ministry said, adding that a new draft bill should be published “within weeks”.

Poland continues works on large energy law package, which will include a bill on renewables. The government has agreed that renewable energy sources will be supported at the level of investment and construction, while their functioning later on should be based on maximally market conditions. According to other sources, the government would like the package to go to the President “by the end of the year.”

Christian Schnell of law firm DeBenedetti Majewski Szcześniak: “Poland is going to change its RES support system to FiT based on auctions.

The auction system will be similar to the Dutch system, the transition similar to the Italian experience. One should expect a first official presentation of the new support system by end of September and an implementation by Jan 1, 2015 earliest.

Nevertheless there is substantial political pressure to implement the system asap.

And the good news: Co-Firing won’t be part of the support system.”

Despite the absence of a clear renewable energy policy, Poland’s large utilities are on the acquisition path for wind projects: “We are preparing to launch 2 wind farms in Wicko and Marszewo. Currently we are carrying out further market analysis

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looking for potential takeover targets in the segment. We have the goal of 800 MW in renewables by 2020. . . Now our unit Tauron Ekoenergia is collecting offers . . . and will present potential projects, in which Tauron could be engaged. Tauron is looking for projects of above 10 MW”, said Tauron CFO Krzysztof Zawadzki.

And smaller developers, with capital, are moving forward. Polish wind power plant developer and operator Polish Energy Partners (PEP) announced in August collaboration with German engineering company Siemens for the construction of two wind power plants totaling capacity of 66.7MW. The two new wind power plants are estimated to cater to the electricity needs of some 43,000 Polish households while at the same time cutting down the greenhouse gas emissions by 140,000 tons per year.

8.

Green certificate price collapse squeezing renewables and incentivizing coal power.

The proportion of Poland’s energy that comes from renewable sources has fallen since 2012 while people who invested in the industry, many of whom took out huge loans, “are in trouble,”, writes Rzeczpospolita.

The reason for this fall is the slump in the carbon credit trading market, which during the last year has seen a 40 per cent fall in prices in these green certificates given to firms investing in renewable energy and which can be traded with other energy companies as part of the CO2 reduction scheme.

According to the Energy Regulatory Office (URE), Poland’s system for promoting renewable energy is expensive and does not work as it has not led to a “permanent increase” in the proportion of electricty coming from renewable sources, and may mean the nation misses the EU goal of having 15 per cent of the country’s energy needs produced by renewable sources by 2020.

But the EU’s Emissions Trading System currently provides little financial incentive for utilities across Europe to stop burning coal. EU carbon permits have lost over half their value over the past year and are now worth under 5 euros a tone. The scheme forces utilities to buy a permit for each tone of carbon dioxide they emit.

Carbon permits would have to cost around 45 euros to make burning natural gas more profitable for them than imported hard coal. Lignite coal sourced domestically would require an even higher carbon price.

9.

Shale gas not an option Poland had aspired to become Europe’s main producer of cleaner shale gas, but its ambitions for a U.S.-style boom were thwarted when estimates of its shale gas reserves were slashed by over 90 percent.

Potential shale investors including Exxon Mobil, Marathon Oil and Talisman Energy quit Poland.

Although Poland has estimated high shale gas reserves, its hopes for a major dash-for-gas have dimmed as such highprofile companies have pulled out of the country, alleging there is too much red tape. Today, Chevron remains one of the largest oil and gas companies still trying to find shale gas in Poland. Poland’s Prime Minister, Donald Tusk, once claimed there would be commercial shale gas flowing in the country by January 2014 but this has failed to materialise.

Over the past years, Poland has been perceived as one of Europe’s most promising locations for shale exploration. The U.S. government’s Energy Information Administration estimated two years ago that the country holds 187 trillion cubic feet shale gas resources, 44 trillion of which are in the Lubin Basin. This year, the body revised those estimates downwards, to 148 trillion cubic feet for the country, after applying tighter methodology.

Facts on the ground are sobering.

Despite around 40 wells being drilled in the country since 2010 (including by Halliburton contracted by Polish state

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company PGNiG S.A.), no company has to date announced that it can extract gas for commercial purposes.

The government appears to be in damage control mode, telling international media that Exxon still holds on to one out of six concessions and that Marathon has not yet submitted official requests to pull out.

Tusk’s team is also working on legislative changes to make the companies’ lives easier: in addition to tax breaks until 2020, firms would have the possibility to turn exploration licences into production licences automatically as well as to increase the depth of drilling without extra permits.

Yet the shale gas lobby thinks changes do not go far enough. According to the Polish Exploration and Production Industry Organisation (OPPPW), clearer wording is needed to ensure those who explore can automatically exploit (without the fields being put up for tender if gas is discovered), longer exploration permits are necessary, and too big a role is envisaged for a state company (PIR) which is planned by Poland to have a stake in all exploitations.

“OPPPW members all wish to progress their projects in Poland,” Marcin Zieba, the industry group’s executive director said.

“But, as demonstrated by ExxonMobil, Talisman and Marathon stopping their operations, they can change their minds.

We have yet to see a project in Poland that has demonstrated commercial flow rates – so this activity remains high risk, with no guarantee of success.”

Meanwhile, local opposition to fracking is posing unexpectedly strong obstacles.

In 2012, Chevron had to stop operations in Zurawlow in the Lubin Basin because locals successfully argued in courts that the company’s operations at the time were breaching the EU Birds Directive. In a controversy that might be telling of the murkiness of the Polish legislative framework, villagers argue that while Chevron has the concession, it has not received supplementary approvals from local authorities to do anything more than seismic testing in the region.

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10.

Nuclear power: Expensive, unpopular – and distant Poland is embarking on its plan to add two nuclear power plants with a total capacity of 6,000 MW, with its first unit scheduled to come online by 2023. Poland has almost set up the necessary regulatory framework and drafted the required legislation. The state-owned energy group Polska Grupa Energetyczna SA (PGE) is working on forming strategic alliances with foreign companies to supply the necessary technology and share in investment costs, which are substantial.

While the costs of developing new nuclear power stations have been spiraling, nuclear energy is perceived as a long-run option for Poland to diversify its sources of energy and reduce its emissions. However, resistance from citizens groups as well as neighboring Germany is likely to emerge as plans progress, making this option controversial and capital-intensive in a capital-starved world.

11.

Effect of US shale gas increased US coal exports to Europe by 250% The terms “game changer” and “disruptive technology” are often reserved for Silicon Valley; however, they are increasingly being applied to the development of North American shale gas and shale oil resources.

At the start of the millennium, the U.S. was facing a growing gap between gas demand and production. Today, some studies predict that North America will soon be a net exporter of natural gas and that oil shale development has the potential to reduce imports to zero within 20 years.

Finding markets to absorb large volumes of natural gas proved daunting because this period included the largest economic decline since the great Depression. Total U.S. energy consumption fell in both 2008 and 2009, impacted in part by business closures and downsizing. Over these same

two years natural gas consumption also showed a net decline due primarily to falling use in the industrial sector. Yet natural gas found a market in power generation.

On a gross basis, the electric power sector increased gas use by about 55% between 2005 and 2012. With net generation roughly flat over this period most of the gain in natural gas consumption was at the expense of coal. This gain in gas share accelerated in 2008, when the market bid down nominal Henry Hub spot gas prices from an $8-handle to a $3-handle. Various estimates have gas-for-coal displacement climbing from near zero in 2008 to roughly 2.5 Bcfd in 2009. By 2012, which saw the Henry Hub spot price fall to $2.00 per MMBtu in April, coal-to-gas switching boosted electric power generation demand for natural gas by nearly 7.0 Bcfd. Of course, coal’s share of the electric generation market plummeted from 50% in 2005 to 37% in 2012. Surplus U.S. coal supplies sent exports soaring over 150% over this seven-year period, with Europe the main recipient (up 250%), driving down coal prices in Europe – and Poland – substantially.

12.

LNG import terminal of Swinoujscie Poland is currently building an LNG receiving terminal in Swinoujscie to give the country greater security against the monopoly of natural gas supply Russia currently holds. While the primary exporter to Poland was assumed to be Qatar, the abundance of US natural gas, sourced from shale, means that Poland has the potential to become an importer of US shale gas.

The major gas suppliers have already seen the United States disappear as a potential export market, and the US is now looking to be a net gas-exporter. Those suppliers – such as Qatar - now have to consider the United States as competition.

This is a major turnaround in the last 4-5 years. Budgets will have been set, spending plans put in place, and income sources established for years to come, but the United States has potentially sent most of these plans into a tizzy. Of course existing sales/ purchase contracts will still be fulfilled, but spot sales (Qatar seems to pick up a lot of these) will begin to have more competition, as will plans to fill capacities created by expansion plans at European terminals/ new terminals being built. The most likely conclusion here is more competitive pricing in Europe, according to Mark Young, an energy analyst with London-based Evaluate Energy. n

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Food Exports

Astarta expects higher margins in sugar segment Astarta Holding N.V. expects its margins to rise in the sugar segment thanks to increase of sugar on the Ukrainian market, the firm’s director Mykola Kovalski told the ISBnews agency. Taking into account that this year Ukraine planted about 45% less sugar beet than in previous year, plenty of sugar plants, including those belonging to big integrated producers, will not operate at least in this season. Consequently, one could expect material drop in sugar production what can result in price increases, he explained. Kovalski stressed that in the first months of 2013, inventories of sugar and need for cash of processors and beet growers put strong pressure on domestic prices. The situation was complicated by high protective barriers for Ukrainian sugar by some traditional importers in the CIS, and high banking interest rates which made loans too expensive for many industry players.

Astarta to launch soybean processing facility at turn of September Astarta Holding N.V. plans to kick off production at its biogas station in September, while the commissioning of soybean processing is scheduled for September-October, the firm’s director Mykola Kovalski told the ISBnews agency.

Implementation of these projects is a significant step in its strategy to diversify and increase energy efficiency, he added.

The soya processing facility is degisned to have capacity of 220,000 tonnes plus a silo with capacity of 42,000 tonnes of soya.

The facility’s cost is estimated at USD 35mn. Astarta Holding N.V. is a vertically integrated agro-industrial holding specializing in sugar and agricultural production operating in Ukraine. In 2012, it reported revenue of EUR 352mn. n

EconMin: Food-agricultural goods exports rises the most in H1/ 2013 10

The most dynamic growth of exports in H1/2013 was noted in relation to food and agricultural products - by 13.8% y/y to nearly EUR 9.3bn, the economy ministry announced, commenting on foreign trade data for H1. Next in line of most dynamic

sectors in terms of exports were: chemicals (up by nearly 8% to EUR 10.6bn) and electromachinery products, Poland’s landmark in foreign trade (up by 6% to over EUR 29.0bn), the ministry said. The Central Statistical Office (GUS) announced that

Poland’s exports rose by 6.0% y/y in 2013 to EUR 74.16bn, while imports decreased by 2.3% y/y to EUR 74.67bn. The negative balance of foreign trade at that time amounted to EUR 505bn vs. EUR 6.5bn deficit a year earlier. n

September 2013

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Food Exports

KSG Agro completes third stage of breeding animals KSG AGRO’s Niva Trudovaya farm in Ukraine’s Dnipropetrovsk Region received 1.5 thousand sows from the Danish company Breeders of Denmark. This marked KSG’s successful completion of the third (and last) stage of acceptance of animals necessary for the establishment of a breeding flock. In total, there are already 4.5 thousand sows in the hog production complex located in the village of Niva Trudovaya. All the newly acquired animals are in good shape after the journey and are now placed in a one-month quarantine under a watchful eye of Danish and Ukrainian specialists.

After the quarantine, the pigs from the most recent third delivery batch will be transferred to the newly renovated hog production facility in the village of Niva Trudovaya. KSG Agro’s hog production complex has already been furnished with facilities for insemination and waiting zones for pregnant sows. In September, facilities for farrowing sows will be completed.

The equipment for KSG Agro’s hog production complex has been delivered by German company Big Dutchman, a manufacturer of hog breeding equipment. The sows delivered in April of this year have already undergone the process of artificial insemination. The births of the first piglets are expected to take place in mid-October 2013. Information about the Company: KSG Agro S.A. is a vertically

integrated company operating in virtually all segments of the agricultural market, including the production, storage, processing and sale of agricultural products. The Company is developing its livestock breeding segment and has launched the production of biofuels.

The total area of the Company’s land bank is 92 thousand hectares. The Company’s shares are listed on the Warsaw Stock Exchange. n

Cheese exports reaches EUR 261mn in Jan-May, may reach EUR 600mn in full-year

244% more than a year ago. The company stressed that it expected the bulk of this year’s profits in H2/2013. In H1/2012, the company earned EUR 117 000, and in the whole 20102 - EUR 3.16mn. Agroliga, incorporated in Cyprus, has five Ukrainian companies, operates in the Kharkov region. The firm focuses on the oils, corns and dairy productions. Since February, 2011, Agroliga has been listed on New Connect.

plant Ostrowia, a Polished-based subsidiary of Milkiland Group. It will be the first shipment of Ostrowia produce to Ukraine after the launch of hard cheese production at this plant at the end of May, commented the Member of Management Board of Milkiland EU, Arthur Czekanowski. High quality European hard cheese of Gauda, Edam, Maasdam types produced by Ostrowia will be available soon to our Ukrainian customers under the new international brand Milkiland, added Director of Marketing Department of Milkiland N.V. Volodymyr Semenikhin. Widening the product portfolio of Milkiland cheese will strengthen the position of the Group as one of the leaders on the Ukrainian cheese market. n

Exports of cheese and curd from Poland amounted to EUR 260.6mn in JanuaryMay, 2013 and may reach EUR 600mn in the whole yearm, the Rzeczpospolita daily reported. In the whole of 2012, these exports rose by 13% y/y to over EUR 550mn.

Last year, the key exports market was the Czech Republic, but it has now been replaced by Russia, the newspaper notes.

Cheese and curd exports to this country rose by nearly 60% y/y in January-May, 2013. Poland is the world’s sixth biggest cheese and curd maker with annual output of nearly 800,000 tonnes.

Milkiland’s to export its Ostrowia cheese to Ukraine On July 30, 2013, the State Veterinary and Phytosanitary Service of Ukraine issued permission for the import of cheese and dry milk products produced by cheese-making

Agroliga ag firm upholds forecast of EUR 3.6mn net in 2013 The Ukrainian agricultural firm Agroliga, which plans to move from NewConnect to the main market of the Warsaw bourse, upheld its full year forecast of EUR 3.6mn net profit and EUR 17.56mn revenue, after results of H1/2013, the company’s CEO Alexander Berdnyk said. In H1/2013, Agroliga reached EUR 7.32mn revenue, up over 20% from a year ago. The firm’s EBIT was EUR 524,000, which means a rise by 93% y/y. The Group’s net profit amounted to EUR 403,000, i.e. by

2013 September

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Equities News

Broadcaster TVN says market weak, but improving Following are highlights from the Q2 earnings conference of listed broadcaster TVN, as hosted by CEO Markus Tellenbach and CFO John Driscoll.

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COST OUTLOOK / PROGRAMMING COSTS - Cost cutting seen H1, especially in programming costs, need not continue into H2 as select programming investments must be made as the ad market turns and competition rises, officials said. - Cost saving efforts

time than just the next couple weeks. On the back of that I would describe the market as having passed its low point, gaining confidence. We have discussed H2 in detail with all advertisers and we are confident on the statement we have made in that we reiterated guidance and believe TVN will outperform. - CEO Tellenbach EBITDA GUIDANCE - Prior guidance for 2013 EBITDA earnings flat to prior year levels is maintained, even though cost cutting put TVN well ahead of the prior year pace to mid-year. - We are reconfirming the guidance and I would also draw attention the fact that it is very likely we will have

have largely been completed. It doesn’t mean a change in approach, but we are in a competitive environment and the second half is very important . . . well support our schedule with adequate investment. - CEO Tellenbach.

He advised analysts be cautious in extrapolating [H1 cost cutting] into a full-year runrate. and Entertainment channel TVN7, now available nationwide, and interactive socialintervention channel TTV were singled out for increased programming spend.

H2 AD MARKET - Tellenbach says the market is normalizing after a period of high nervousness and short-term purchasing. - We’ve seen that H1 performs well within guidance. Looking into the situation right now, I would describe the market as gaining confidence, returning to professional normalized planning cycles. . . . The move from complete uncertainty and nervousness is changing into regular operating mode, a more confident approach leading to committing for larger

to make some investments both for TVN7 and TTV. Guidance has been reconfirmed and that is about all we can say on that.

LEVERAGE TARGET - - I would like to get us in the area of 3x - I hope we can accomplish that over the next few years. CFO Driscoll DEBT REFINANCING - We are constantly monitoring the market in terms of refinancing opportunities. I would say that in the immediate future we are looking to refinance that part of our debt with high interest coupon. We will notify the market when it happens and I would expect it to come quickly. Management is not overly focused on shifting from bond to bank debt for hopes of reduced financial costs, Driscoll said in response to a question. Were that to be pursued, it would be more likely on longer-dated bond liabilities like the 2018 notes. TVN is not hampered in its refinancing abilities by its current high leverage, officials claim, noting that a new revolving credit facility was

signed recently at terms to match the existing bond facility, not tighter.

DELEVERAGING - TVN still plans to put Onet disposal proceeds to debt reduction.

That [Onet] cash was always targeted for bond redemption. That has not changed.

I would expect it would occur within next couple of months. TVN has options coming on line for bonds in November and restricted cash from the Onet disposal will be freed at that time. - We have been actively repurchasing [bonds], where possible, to reduce debt. . . This will continue. We are actively monitoring the markets - both from bond redemption but also a refinancing point of view.

TVN7 - TVN is ready to invest in programming now that the entertainment channel has nationwide reach to give payoff comparable to similar stations. - We like the developments we’ve seen over the past two quarters . . . we continue to believe that TVN7 has substantial growth for years to come . . . so we cautiously but continuously strengthen the schedule and will invest in the schedule. TVN CNBC - The all-business channel is - a beautiful channel but it failed to impress anyone with financial results so far. - CEO Tellenbach. In changes to take place January 1, the program will be bolstered with a heavy dose of world news and synergies with all-news channel TVN24. We believe that with TVN24 in the lead, we have a strong and competent management team and we can draw and leverage these assets for the benefit of this channel.

NC+ OUTLOOK - Mid and long-term guidance holds, but investors are warned against extrapolating from H1 figures for FY2013 results. - There has been no change in the expectations regarding nc+ in the mid to long-term. CFO Driscoll. TVN ran an impairment test on the asset, run internally but consulted with auditors, showing no need to revise valuations. This is a company that is very much in flux . . . It is in the middle of combining operations, with significant nonrecurring costs. We give 6M, but this cannot be extrapolated for full year. and Obviously there will be more costs incurred . . . management continues to remain on target in terms of realization of synergies. Officials admit to initial snags: Bringing the two companies together was always seen as a churn issue.

There were some launch issues but TVN officials believe the decline in subscribers is not out of the range of early forecasts.

Source: PAP

September 2013

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Equities News

Biedronka retailer sales growth significantly slower than expected Portuguese retailer Jeronimo Martins posted an 8 percent rise in quarterly net profit driven by a 14 percent increase in sales in its key Polish market, which still fell short of analysts’ expectations. Net profit in the second quarter rose to 90 million euros ($119 million), roughly in line with forecasts and with sales in recession-hit Portugal edging up, the company said on Wednesday. It kept its earlier estimate for double-digit percentage growth in sales and EBITDA (earnings before interest, tax, depreciation and amortisation) for all of 2013, despite a difficult economic and competitive environment.

Jeronimo Martins, the second-largest retailer in Portugal and Poland’s biggest food retail firm via its Biedronka discount chain, said total sales rose 10 percent in the quarter from a year earlier to 2.87 billion euros, compared with 2.91 billion euros expected by analysts. However, analysts said the pace of sales at the Polish unit showed some signs of weakness, driving the stock down 6.5 percent. Barclays analysts said it was Jeronimo Martins worst ever performance in Poland, with quarter-on-quarter sales up 2 percent, significantly below their 5.7 percent projection. Sales in Portugal at its main Pingo Doce

supermarket chain rose 2 percent to 789 million euros despite the country’s deepest recession since the 1970s, thanks to a growing market share and a discount campaign.

- Pingo Doce had a very strong performance despite the economic conditions which remain weak, the company said. Biedronka sales rose to 1.85 billion euros, making up more than 64 percent of the retailer’s total revenues. - Jeronimo Martins have gotten

us used to being positively surprised every time and that did not happen this time, said Albino Oliveira, analyst at Fincor brokerage. Jeronimo Martins is also expanding to Colombia, where it opened 14 stores in the first half of the year and plans to finish 2014 with 30 to 40 stores. Total EBITDA rose 9 percent in the quarter to 183 million euros, against analysts’ average forecast of 186 million. Source: Reuters n

PKP Cargo trade unions agree deal ahead of IPO

the signing of the contract, the filing read.

industries. Since two months, the firm has been listed on NewConnect. One of its leading shareholders is Aleksander Lesz, the creator of Softbank, Expander and Radio PIN.

To-be-listed rail freight carrier PKP Cargo reached an agreement with its trade unions on the employee guarantees package, the firm announced in a press release. The sides agreed on a one-off bonus in the shape of employee shares and on suspension of collective dispute to end-December 2013, mediator Longin Komolowski said. Talks on wage hikes will be taken up again in January 2014. The agreement opens the door to PKP Cargo’s market debut. The firm filed its issue prospectus with the financial market watchdog in July.

Budimex builder places best bid of PLN 275 mln in tender by Warsaw University of Technology

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Budimex placed the best bid of net PLN 275.1 mln in the tender for the construction of a central laboratory for the Warsaw University of Technology, the firm said in a market filing. Works are due for completion with 24 months from

InfoScope to take over Biside by end-year InfoScope wants to conclude the acquisition of Biside by the end of the year, and at a later date, it plans to switch onto the main market of the Warsaw bourse from the alternative NewConnect market, the company’s CEO Marcin Giedroyc announced. Biside offers business intelligence solutions, which are used by among others Orange, LuxMed. The leading shareholder of InfoScope, Aleksander Lesz, pointed out that the firm still had been looking for new potential acquisition targets - firms with added value, i.e. unique IT solutions. In H1/2013, InfoScope increased its revenue to PLN 13.7mn, EBITDA amounted to PLN 0.8mn and net profit - to PLN 0.2mn. In Q2/2013, the company achieved the revenue at PLN 11.4mn, EBITDA - PLN 0.5mn and PLN 0.19mn net. InfoScope is a technology firm, offering systems and technology services for the fuel, construction and banking

WSE operator signed an agreement to buy 30% in British-based trading platform WSE operator GPW signed an agreement to buy 30% in British-based trading platform project Aquis Exchange Limited for a total of GBP 5 mln, GPW said in a market filing. The acquisition of 230,416 shares is conditional on obtaining the approval of the British financial market watchdog FCA, GPW also said. The assets are regarded as a long-term investment, the filing further reads. Aquis Exchange Limited is a Britain-based firm which, after securing the necessary regulatory approval, intends to build a pan-European Multilateral Trading Facility, GPW said earlier. If the deal is finalized, GPW will be the biggest shareholder of the Multilateral Trading Facility, CEO Adam Maciejewski told radio PiN in early July. n

September 2013

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Equities News

Agora sees no positive signs of advertising market improvement Following are highlights from media group Agora’s earnings teleconference hosted by management board member Grzegorz Kossakowski. AD MARKET: - We do not see these positive signals - on the ad market, which is why the company revised its 2013 ad market forecast. RESULTS: Thanks to cost-cutting measures - we managed to improve group’s operating results. and - Almost all cost lines are lower y/y. The group is satisfied that the share of non-ad revenues in total revenues is increasing.

CINEMAS: - This year we plan to open at

least two cinemas. We had planned four but the openings of two cinemas will likely be postponed- due to delays in the shopping centers where the cinemas are to be located. DAILIES: Agora is pleased with the positive effect of price increase of its main daily Gazeta Wyborcza, which helped to limit the impact of copy sales decline. The effects of the price increase are hard to estimate for the time being but Agora - hopes it will be a positive direction. MAGAZINES: Strong y/y decline of revenues in the segment was to a large extent due to the sale

of Poradnik Domowy in Q1. INTERNET: While ad spending on the internet is rising, Agora is not benefitting from this increase, as the growth comes mainly from - the sub-segment of search engines and video games, where our presence is much smaller. NEW STRATEGY: - As soon as there is a common opinion in this respect we will present our opinion but please be patient. INTEREST IN WIRTUALNA POLSKA PORTAL: “Agora sticks to its policy of - not informing about our acquisition plans until they materialize.” n

Bus and coach output seen up by 10% in 2013 on exports orders

bmp media investors AG announces net loss of €469,000 for first six months

The production of buses and coaches in Poland should increase by around 10% y/y in 2013, according to forecasts of research firm JMK, cited by the Rzeczpospolita

daily. This will be possible chiefly thanks to exports orders as domestic demand in on the downside. In 2012, bus and coach output in Poland amounted to 3,560 vehicles. In H1 2013, it reached 1,496 items, which is down by 102 vehicles in annual terms, but exports rose by 2.5% at that time, JMK’s head Aleksander Kierecki told the daily. The newspaper attributes the exports growth to the EU’s new Euro 6 fuel standard that is due to take effect next year. In Poland, though, demand for buses and coaches fell by nearly 20% y/y in H1/2013 as EU funds for local governments have begun to dry up.

PGNiG gas posts net profit of PLN 352 mln in Q2 vs. PLN 393 mln expected Listed gas monopolist PGNiG posted PLN 352 mln attributable net profit in Q2 2013, below market expectations for PLN 393 mln profit buit well above prior year losses as the group benefits from new import gas prices and improved upstream results, an H1 report out pre-session showed. All Q2 numbers were calculated by PAP on the basis of the H1 report and prior quarter numbers. Group EBIT of PLN 747 mln was 27% above the consensus and up from PLN 322 mln loss in Q2 2012. Group EBITDA of PLN 1.36 bln was six times the prior year take. Financial results were significantly influenced by the launch of crude oil and natural gas extraction at

2013 September

two strategic investments, acting CEO Jerzy Kurella said as cited in the press statement.

- This strengthens our belief that upstream is the area in which we should intensify operations. Of the EBITDA gains, the trade and storage segment swung to a PLN 116 mln Q2 EBITDA gain from a prior year period loss with management still giving credit to a prior year gas import price renegotiation that brought cost of gas sold down 19% y/y.

Upstream operations increased Q2 EBITDA earnings 80% to PLN 929 mln, with management giving credit to new crude oil revenues driven by the LMG and Skarv projects.

Source: PAP

The first half of 2013 closed with a net loss of Euro 469,000 (previous year: Euro -2.2 million). This is almost exclusively attributable to the negative share price development of the listed Polish investment K2 Internet S.A., which resulted in a loss of around Euro 640 Euro the second quarter. K2’s share price has since recovered slightly. Revenue amounted to just under Euro 0.4 million (previous year: Euro 0.05 million) and was primarily due to a partial exit from the investment in Heliocentris as part of a block trade.

Net asset value, which corresponds to IFRS shareholders equity, amounted to Euro 16.5 million as of 30 June 2013 (previous year: Euro 16.5 million) or Euro 0.88/share (previous year: Euro 0.88/share). The equity ratio improved significantly to over 99% at the end of the reporting period (previous year: 92%). There are no liabilities to banks. Due to investment activities and the reduction in liabilities from refinancing activities, cash and cash equivalents amounted to Euro 1.7 million at the end of the first half of 2013 compared with Euro 4.0 million in the same period of the previous year. Listed securities increased from Euro 3.2 million in the previous year to Euro 4.0 million in the period under review.

Following a new investment in ferret go GmbH, bmp media investors AG had a total of 18 investments in its core sector of media and marketing services at the end of the period under review. Two to three new investments are planned for the current financial year. In light of the good development of the portfolio and the strong growth momentum of bmp’s investments, they are still forecasting one or two exits, a net profit for the year and a significant improvement in net asset value. n

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Equities News

KGHM hit by lower copper and silver prices

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Following are highlights of listed copper and silver miner KGHM’s conference for reporters and analysts. Comments come from deputy CEO Grzegorz Kicinski, deputy CEO Adam Sawicki and budgeting director Renata Wiernik-Gizicka.

GUIDANCE REVISION PROCESS: - We are reviewing guidance taking into account copper and silver price changes . . . as we realize what challenges lie ahead in H2. . .

Right now we are conducting a review which will either incline us to revise guidance or keep it. and - Silver prices fell considerably and the divergence from our budget is significant. In the end, such direction in prices leads to deterioration of what we consider macro conditions affecting our company. and - In 2013 despite lower than expected prices the company realized over 50% of the expected financial results.

METALS PRICE TRENDS: - In the long term we believe in copper. H2 market consensus points to prices between USD 7100 and 7300 and these are the data we use but we are watching the market all the time.

2013 PRODUCTION PLAN: - KGHM is producing copper in line with plans. The same applies to silver. and - We plan to realize the volumes budgeted for this year both in terms of copper and silver production, taking into account maintenance shutdown at Legnica and the shutdown at Glogow smelter, which started on July 15 and will take 3 months.

COSTS: - Production cost grew but mainly owing to the implementation of tax on select minerals. C1 cash cost is 33% higher and that is mainly related with the tax, but it is also a result of revaluation of certain revenue categories from the sale of byproducts. The combined effect is visible in C1 cost growth. and - Costs excluding tax and purchased copper-bearing materials grew by a mere 2%. We can say that we are trying to manage our resource more efficiently. External services costs at the parent: An important part of external costs are mining works carried out by firms working for us. We expect that some of those works will not be carried out as intensively in H2.

POTENTIAL DISPOSAL OF UNPROFITABLE MINES: - We are conducting a portfolio review. A year has passed since [Quadra] takeover, the analyses are under way. For now the decision is to keep them in the portfolio. KGHM is now focusing on improving the efficiency of two major mines.

POTENTIAL ASSET IMPAIRMENT AT KGHM INTERNATIONAL: Potential impairments will concern select positions on the list of KGHM International’s assets.

“There is a considerable probability that we will analyze particular assets. This pertains to those mines whose life cycle has come to an end. We can limit production or apply new valuation reflecting the physical state. But this concerns a marginal part of the assets.” EBITDA: Decrease in EBITDA to PLN 2.8 bln reflected the negative effect of copper and silver prices, deterioration of macro conditions and a spike in costs, while on the positive side, of FX differences and lower production for stockpiles.

- That’s our justification as well as impairments on financial assets in other costs.

CASH POSITION: - In H1 we repaid over PLN 1 bln debt and we also managed to rebuild our cash pile and carry out investments. We think that the cash position will allow us to realize payments this month as well as those tied to the payment of the second tranche of dividend this year.

KGHM INTERNATIONAL: Production growth mainly resulted from the increase at Robinson mine . . . which also contributed to the growth of precious metals production. That was mainly a consequence of higher output and higher content of gold. . . and - Revenues decreased by 10%, which was mainly tied to metal price declines.

The sales volume was on the level from last year. So was EBITDA. On DMC mine: We expect growth in the subsequent months.

On Morrison mine: We expect higher results in H2.

PROJECTS ABROAD: Vale agreement opens the door to negotiations of the third project. . . we are intensifying exploration works . . . we have a few contracts for the sale of the whole ore output. Vale will receive royalties but that means that we are the sole owner, which is what we cared about the most.

Ajax has additional potential and additional exploration works will be carried out. We are also working on an alternative location for certain mines we have secured acceptance of our motion we are waiting for the completion of the detailed program of additional works.

KGHM was supposed to submit documentation in September but additional works will likely postpone that it won’t happen this year.

Too early to discuss capex. Sierra Gorda: We are half way through, on track to launch production in Q2 2014. Of the PLN 3.9 bln initial capex plan, we have signed deals for 89%. Of annual production plan: Assumptions don’t change. and The full effect will be visible in Q4.

HEDGING: - We hedge consistently. We managed to close some of these positions in Q2. The impact on the P&L was negative, but - it’s worth it to analyze the balance sheet, where the value in equity increased. and - We do not signal changes in hedging policy.

STRATEGY UPDATE: - We are working on the update all the time. When it’s ready, we will announce it.

Source: PAP

September 2013

www.bizpoland.pl Polish investment funds record PLN 0.8 bln net inflows in July, as retail investors continue - but pros reducing exposure Polish investment funds enjoyed PLN 0.8 bln net inflows in July, which proved the tenth consecutive month of inflows, mainly on account of new capital inflow to retail funds, market researcher Analizy Online said in a report. - Despite the fact that the PLN 0.8 bln sales balance is the lowest this year, it is worth mentioning that the inflow to retail funds was higher than in June, the report reads. “These funds attracted almost PLN 1 bln last month.

Non-retail funds recorded a net outflow of just over PLN 100 mln in July.”

TVN & Polsat weekly ad revenues Listed media group TVN’s flagship channel remained the leader in terms of ad revenues in the week ending August 4 with PLN 32.77 mln and 14.14% market share, while rival Polsat, a unit of Cyfrowy Polsat, followed with PLN 28.86 mln and 12.45% market share, pricelist-based estimates by Nielsen Audience Measurement showed. Public broadcaster TVP1 came in third with PLN 16.41 mln ad revenues and 7.08% market share.

AuM of Polish investment funds expand by 1.7% PLN 169 bln at end-July Assets under management (AuM) of Polish investment funds increased in July by 1.7% (or PLN 2.8 bln m/m) to PLN 169 bln, according to a report by researcher Analizy Online and asset management lobby IZFiA. AuM of Polish investment funds grew for the fourteenth consecutive month, the report showed. The July increase came mainly on a good result on management, as well as PLN 0.9 bln in net inflows, the report showed. In the YTD, AuM of investment funds grew by PLN 22.8 bln or 15.6%, Analizy Online said.

Agroton’s bondholders agree for change of bonds terms The bondholders meeting has agreed for amending the terms and conditions of bonds issued by Agroton, the company announced.

Thus, the amendments, as presented on Jul 17, will be implemented. Agroton had earlier asked its bondholders to agree to amend the terms and conditions of the USD 50mn bonds so as to extend their maturity by 60 months to Jan 14, 2019. The company had around USD 4.5mn in its account with the Bank of Cyprus on Mar 26, 2013. However, as a result of the bank bail-in, it lost access to those resources. Agroton is a diversified vertically integrated agricultural producer in Eastern

2013 September

Equities News Ukraine. It has been listed on the Warsaw bourse since 2010.

be divested. A preliminary deal on the sale had been signed on July 9.

Vistula fashion issues PLN 32 mln worth of shares and PLN 140 mln worth of bonds

Bank BPH net profit rises y/y to PLN 44.55mn in Q2/2013

Fashion retailer Vistula Group issued 40 mln M-series shares at the issue price of PLN 0.8 and 140k D-series bonds to the total nominal value of PLN 140 mln, the firm said in two separate market filings. The successful issues, which are part of the firm’s debt restructuring program, open the door to the execution of an agreement between Vistula and closed-end investment fund Raport 5 Niestandaryzowany Sekurytyzacyjny FIZ, according to which the fund is to acquire nearly PLN 155 mln of Vistula’s liabilities towards BNP Paribas Bank Polska and BNP Paribas Fortis, and the company is to repay PLN 114.9 mln of the sum by August 14. The remainder of the debt is to be written off.

CCC footwear retailer says sales up 45% in July Listed footwear retailer CCC (formerly NG2) recorded PLN 114.3 mln in consolidated sales revenues in July, up by 45.1% on an annual basis, the company said in a market filing. Retail sales revenues in July amounted to PLN 112.1 mln and were up by 38.6% y/y, the company said.

7M total sales revenues reached PLN 752.1 mln, up by 13.6% y/y, the filing showed.

Food and agro products grow most dynamically in 2012 - by 17.5% The highest growth of exports - by 17.5% to nearly EUR 18bn - was posted by the food and agricultural sector in 2012, the economy ministry said. Such a high growth resulted from a high (35%) rise of exports of vegetable goods.

Imports of food and agricultural products rose by 7.4%, which translated into the trade deficit’s drop by EUR 1.7bn y/y to EUR 4.3bn. The ministry also pointed to exports of chemical products - by 6.3%, coupled with a fall of imports by 1.2%, which brought the trade deficit down to EUR 6.3bn from EUR 7.8bn a year before.

PSA telco sells assets to refocus on core business Listed telco TPSA closed the sale of the 100% stake in corporate purchases service provider ORE Marketplanet to Avallon MBO fund, TPSA said in a press statement without disclosing the value of the deal. The sale of Marketplanet stems from Orange Polska [TPSA’s operating brand] strategic plan, which assumes focusing on core activity, the statement reads. TPSA made no mention of the price for the asset to

Bank BPH posted PLN 44.55mn of consolidated net profit in Q2/2013 vs. PLN 35.58mn a year earlier, the bank announced. The result on interest margins amounted to PLN 244.12mn vs. PLN 320.95mn a year earlier. The result on commissions and fees reached PLN 114.94mn vs. PLN 128.47mn a year earlier. The bank’s assets in total reached PLN 34.41bn at the end of Q2/2013 vs.

PLN 34.42bn at the end of 2012. In the period of Q1-2/2013, the bank posted PLN 86.39mn of consolidated net profit, attributed for main unit’s shareholders vs. PLN 96.54mn profit a year earlier. The standalone net profit, during the period of Q1-2/2013 amounted to PLN 190.12mn vs.

PLN 91.93mn profit a year earlier.

Netia wants to increase dividend, feels ready for big-scale acquisitions Netia is sure it will be able to pay out dividend next year to the tune of PLN 142mn and sees a chance to increase that amount in subsequent years, its CEO Miroslaw Godlewski announced. Such a plan is possible thanks to the telecom’s current debt level, he explained. The debt ratio also means that Netia has a potential to finance big-scale acquisitions, Godlewski stressed. The CEO said that the debt was at 0.72x of the revised forecast of adjusted EBITDA (of PLN 550mn) in 2013. In H1/2013, the company posted PLN 21.73mn of consolidated net profit attributable for main unit’s shareholders vs. PLN 11.17mn profit a year earlier, on the revenue on sales at PLN 968.18mn vs. PLN 1080.75mn a year earlier. Netia S.A. is the biggest alternative fixed-line telephony operator in Poland.

Treasury selects financial advisors for Energa’s IPO In relation to Energa’s pending initial public offering, the treasury ministry has selected a financial advisors consortium, the ministry announced. The treasury ministry said that it intends to conduct the IPO this year, however, it will depend on market conditions. The role of global coordinators will be performed by UBS and JP Morgan, and the remaining institutions involved are: Citi Handlowy, Bank PKO BP, UniCredit CAIB, Banco Espirito Santo, Merrill Lynch Bank of America, Ipopema Securities, DI BRE Bank and BNP Paribas. The planned IPO will sell shares owned by the current owner (the Treasury Ministry) but also newly-issued shares. The treasury plans to keep the majority stake in the firm. n

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Pekao bank: Mortgage and consumer loans sales remain our priority

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Following are highlights from Pekao Bank H1 earnings press conference, analyst conference and comments for reporters.

Unless otherwise stated, comments come from Pekao CEO Luigi Lovaglio’s press conference.

NET PROFIT OUTLOOK - I think we will manage to contain to a single the difference versus the last year’s profit. In 2012, the bank netted PLN 2.96 bln.

NIM & NII OUTLOOK - I think that H2 will be a period when we will see stabilization and a gradual rebound in net interest income, i.e. a slight improvement in margin. AND: If we look at the whole system, net interest income fell in Q2, won’t improve in Q3 and could improve in Q4. - CEO Lovaglio told reporters postconference. and: There is no chance for growth [in NII] unless you increase client counts . . . but that won’t show up the P&L until the end of the year. Of deposit funding costs: Repricing is a flexible concept on this market. . . rather than repricing, we simply never overpaid. - CEO Lovaglio told reporters on the sidelines of the earnings conference. AND: I still believe the NIM [forecast] for FY of around 3.3% is still valid. - CEO Lovaglio told an analyst conference.

COSTS - Our constant goal is to maintain the cost level below inflation. In H2 we will manage to maintain costs at the level not exceeding the level from H1.

RETAIL LOAN SALES - Step by step we are realizing the goal of PLN 10 bln [in retail loan sales] which we set for this year. . . Sales of consumer and mortgage loans remains our priority. CORPORATE LENDING OUTLOOK - I think we are seeing in some of the regions . . . a pick up in mid-cap corporate lending or at least inquiries for new financing . . . this reflects some needs for rebuilding capacity but also maybe some new plans. It is a rather positive sign. Q2 corporate segment volume gains were driven by - a few transactions, but also the behavior of mid-caps is healthy. - deputy CEO Andrzej Kopyrski told PAP. CORPORATE ASSET QUALITY - Quality in mid-cap exposures is not a problem.

Quality issues remain driven by sector conditions. - deputy CEO Andrzej Kopyrski told PAP. M&A - I think that it is our duty to analyze every opportunity that appears on the

market and if we are convinced that it will create added value to us, will allow us to reach synergies, will fit our strategy and the price will be adequate, then we will do everything to reach our goal.

T-BOND PORTFOLIO - The unrealized gains amounted to more than PLN 100 mln [at end-H1], while as of today this value is even higher. We treat it as a source of securing our interest revenues. AND: The portfolio policy is hedging the lack of possibility to decrease the [cost of] deposits on current accounts. It is a solid policy . . . of hedging this cost [of deposits] through the portfolio available for sale. . . The market at a certain point reacted or overreacted to the level of interest rates: it was clever to take advantage of this window of opportunity [and sell a part of portfolio] . . . We are not keeping the portfolio for a gain on investment. . . There is no strategy to look

every day on quotations of the portfolio [with a view to sell it]. - CEO Lovaglio told an analyst conference.

CLIENT ACQUISITIONS The ’Klientomania’ project is running at full steam. We have acquired nearly 100k new clients in Q2, which constitutes an over 50% growth over Q1. what the aim of these six banks is. . . If the aim is to secure an effective service at the moment of making a payment with a mobile phone, I cannot imagine a bank which would not want to participate in such an initiative. In such a case it is hard to imagine the absence of big international players such as Visa and MasterCard. If the aim is self-defense . . . then Pekao is not interested in such a solution as it does not fit our philosophy.

BUSINESS GOALS FOR 2013 - The bank’s priorities include strengthening the bank’s leading position in the corporate and public sector segments, as well as increasing the number of acquired clients and higher market share in consumer loans, the CEO indicated.

BANKING SECTOR NET PROFIT - The forecast [of a 10-15% decline in net profit of the sector] is correct. We have a slightly different set of results [published so far], but if you look at operating income of the sector, this 10-15% is confirmed. - CEO Lovaglio told an analyst conference.

PROVISIONING - The market is showing a much better trend in provisions and this is the only line where our performance is worse than the sector. I am not convinced that our quality is worse than the sector.

- CEO Lovaglio told an analyst conference.

CASH LOAN SALES - Up to now [i.e. in H1, we sold] PLN 2 bln in consumer loans. . . The plan [for H2] is to sell more than we sold in H1. The PLN 4.2 bln [FY 2013] aim is a challenging target but one we want to achieve. This is the plan in order to have a level of NII targeted for the year. - CEO Lovaglio told an analyst conference.

- We will never change our policy in terms of risk as this is fundamental.

RISK APPROACH IN CORPORATE SEGMENT principle in our bank. . . We have to be more active in commercial activity, never give up our risk principles. - CEO Lovaglio told an analysts conference.

ADVANCE DIVIDEND - As of today we have no plans of an advanced dividend. CEO Lovaglio told an analysts conference.

SALE OF UKRAINIAN ASSETS Transaction will be neutral from the P&L point of view. and: Overall impact marginal: PLN 5-6 mln per quarter. We will have a positive impact in terms of CAR. AND: As of July there will be no consolidation. We will have . . . around USD 200 mln that will increase our liquidity and which we can keep investing into something interesting.

PIONEER PEKAO ASSET MANAGEMENT - Pioneer is still one of our strategic subsidiaries. . . If the economic recovery materializes in H2, and at this level of interest rates, asset management is a way of recording growing revenues; it is crucial for the time being. [The sale of the asset is] not in the agenda today.

Source: PAP

September 2013

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Equities News

Cinema City to launch multiplex in IKEA new centre in Lublin Cinema City International (CCI) and Inter IKEA Center Polska SA have signed a binding lease agreement for cinema space in the new IKEA center in Lublin, CCI announced. The cinema will have 9 screens and will be fully digital with the top 3D projecting equipment. Cinema City in IKEA center will be the firm’s second multiplex in Lublin. The new IKEA center in Lublin will be constructed on a 29 ha plot and will be composed of the Swedish furniture shop and a modern shopping gallery with 150 shops and service points. The total leasable area of the center is 80 000 sqm. IKEA plans to start construction in summer 2013 and to open the center towards the end of 2014. Cinema City is the third largest cinema operator in Europe and the largest multiplex cinema operator in Central & Eastern Europe and in Israel. It operates 100 multiplexes with 974 screens, in 7 countries (Poland, the Czech Republic, Hungary, Romania, Bulgaria, Slovakia

and Israel). There are 35 more multiplexes under development, which will offer over 370 new screens. In addition,

Cinema City is actively involved in cinema related advertising and film distribution. n

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2013 September

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Equities News

PZU looks closely at expansion into Croatian insurance market Listed insurer PZU saw Croatia invite potential investors to submit nonbinding bids for the purchase of shares in Croatian leading insurer Croatia osiguranje, Croatian Finance Ministry said on its website. Croatia currently holds 80.2% in Croatia osiguranje and plans to retain a minimum of 25% plus one share and up to a maximum share of 30%, the ministry also said. Expressions of interest are to be filed by August 31, while non-binding offers are then to be submitted by September 20. PZU earlier expressed interest in the purchase of a majority or a minority stake in the Croatian firm. n

BRE Bank CFO on results and trends and interest income

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Following are highlights from BRE Bank analyst teleconference as hosted by CEO Stypulkowski and the bank’s CFO. INTEREST PRICING OUTLOOK - the deposits garnered in the major deposit drive in late 2012 maturing October and November will be subject to repricing, but BRE believes the easing cycle is over. - So there is no need to further reprice to adjust to changes in the market environment, that is done. We attempt to increase our NIM moving forward, but to be realistic, this also has its limits. Today the cycle is driven by the market environment and from our offering last year and now it is more business as usual in terms of trying to improve our P&L. INTEREST INCOME DEFENSE - The 6% q/q gain was - strongly driven by our repricing our retail deposit offerings. . . where I think we were one of the most pro-active banks this year. Yes, we came from a high base after the deposit campaign last years.

But we were one of most active banks on the street for repricing offer for the end of the rate cycle. Deposit margins currently go up month by month.

FUNDING & REFINANCING - Asked about refinancing a series of obligations facing maturity: - I think we will have a diversified approach to our financing challenges, it’s not too much to call it that for the next quarter. The bank has done the

eurobond, done a private transaction, honored a liability in July, has an additional CHF 700 mln due to end-year, but the net financing need is lowered following CHF mortgage repayments and BRE is swell set with longer tenor swaps. We intend to tap the euro market with what will likely be a CHF-denominated transaction in H2. the exact timing and price will depend on opportunities and if the market looks pre tty bad, we are not forced to do anything as we have already done som nice transactions in H1 at a very nice cost for us, o we are rather looking for pre financing funding needs of 2014. - CFO. PROVISIONS - The swing in LLP figures Q1 to Q2 comes on opposing one-offs in the two quarters. Q2 brought additional LLPs for legacy nonperforming loans in the mid two digit figure in corporate. Q1 releases had followed collections.

When you combine both quarters, you get a good story about the state of asset quality in our bank. - CFO. RETAIL BOOK PROVISIONING Provisioning in the mortgage book was very stable q/q at around PLN 10 mln.

Non-mortgage retail provisions saw an uptick by about PLN 15 mln in Q2 from Q1 partially driven by an attempt to increase our coverage for a new type of exposure there. We saw a worsening of credit parameters to limited extent. The CFO’s example of a worsening is an uptick

in 30-day past-due levels, which he feels are understandable given the stage of the economic cycle with the uptick in unemployment. For non-mortgage retail provisioning moving forward: - The number of Q2 can be benchmark for Q3 and Q4 - but this depends a bit on the pace of recovery we will see in the recovery. COSTS - The increase is put largely to rebranding and new platform costs. HR costs are - basically stable - q/q and amortization and depreciation haven’t moved, and - The only moving element Q2 were material costs - partially on the back of the starting of the rebranding, partially on back of new mBank launch in June and associated IT costs. COST GUIDANCE - - for the rest of the year, [our guidance that] we try to manage the cost base within the boundaries of 2011 and 2012 remains intact. Investors are asked to bear in mind investments tied to further expansion of the business in Czech and Slovakia, the rebranding, the internet launches, etc. So having that in mind, I think it is fair to say we stick to our conscious approach to costs for the rest of the year.

EFFECT OF PENSION FUND REFORM - The profile of the brokerage business is heavily retail and only includes some institutional sales, thus - I don’t think it is critical to our stream of revenues, even under the most advanced scenario. n

September 2013

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Equities News

Olympic gaming company expands to Latvia, with new online games as of Aug 1 Olympic Casino Latvia SIA, the subsidiary of Olympic Entertainment Group (OEG), was licensed to offer online gaming services in Latvia. The company will start providing online gaming services from Aug 1, 2013, OEG announced. Olympic Casino Latvia SIA has the second online gaming license in Latvia and will open the first official online poker room in Latvia. OEG said it will also introduce a new platform for online gaming and brand from Aug 1, 2013, which will allow the company significantly expand its online gaming services. Olympic Entertainment Group has been listed on the Warsaw bourse, since 2007. This is the biggest casinos operator in the region, performing under the brand of ’Olympic Casino’. At the end of 2012, the group holds 63 casinos. n

Feerum: Investment plans of PLN 34mn Feerum will invest PLN 34 million during 2013-2014, as published in the IPO prospectus. The strengthening of the production capacities is to absorb PLN 26.36mn in total, and investing in higher sales will consume PLN 3mn. Further investments are IT system, rebuilding of the examination and development department and building

up the sale network in Poland and abroad.

In June, the company CEO Daniel Janusz told the ISBnews agency that Feerum was to spend on investments PLN 20mn by the end of the current year. Feerum posted PLN 5.37mn of consolidated net profit in H1/2013 vs. PLN 3.32mn profit a year earlier, the company announced. The

operating profit amounted to PLN 5.89mn vs. PLN 3.77mn in 2013 vs. PLN 19.39mn a year earlier. The standalone net profit was PLN 3.96mn in H1/2013 vs. PLN 3.32mn profit a year earlier. Feerum is one of the biggest producers in Poland of complex grain elevators. The company debuted on the Warsaw bourse on May, 2013. n

Vantage Development has PLN 20mn from bonds issue for projects in Wrocław Vantage Development is launching subsequent investment projects in Wroclaw, which partially will be covered by proceeds from the bond issue worth of PLN 20mn, the company announced. The bonds will be traded on the Catalyst market. In the range of the planned diversification of its business activity, Vantage Development, which has so far been focused on activity in Wroclaw, plans to enter new markets, launching projects in Warsaw and Poznan. Bonds of D series will be traded on the Catalyst market. By the end of the year, Vantage Development plans to obtain next proceeds from the share issue, or from the issue of more debt instruments. Vantage Development is a developer, with both residential and commercial office projects. n

2013 September

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Equities News Libet expects strong rebound on market in 2015 Libet expects a strong rebound in its sector (paving blocks) in 2015 and estimates that the current year will not be worse than the previous year, despite the long winter and sales limitations for clients, Libet’s CEO Thomas Lehmann said in an interview with the Parkiet daily. Libet expects to post growth of premium products by the end of 2015 in its sales structure. The management assumes that is will be 50%. For the whole of 2012, the premium sector accounted for 37% of total sales. In the nearest time, Libet is to develop sales on the Czech and Slovakian markets, and in 3-5 years, the company wants to achieve PLN 15-18mn turnover per year from these markets and assumes that the sales will concern only premium products, where margins are significantly higher than in the case of classic products, i.e. above 20%. Libet plans also to purchase facilities in the Czech Republic and Slovakia. During last months, the company’s sales increased by 20% y/y. The company launched sales process in Slovakia, and now wants to enter the Czech Republic, as there are no products which Libet offers. The firm is also to enter the German market. Libet has a 19% share of the paving blocks market in Poland, and 32% share in premium sector. n

Troubled Polimex lays out plan to return to profitability in 2015

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Polimex-Mostostal wants to end the year 2014 with a zero result, and to post net profit as of 2015, company CEO Gregor Sobish told the Rzeczpospolita daily in an interview.

In 2016, the company wants to post a profit that will satisfy its shareholders, he added. Sobish deems that the firm’s assets sales, worth of several million zlotys, will help achieve these results and an additional impulse is to come from the settlement of the construction of power plant in Kozienice and Opole. The CEO stressed that Polimex intended to develop in the industry construction, especially in the power, chemistry and petrochemicals. The firm plans to expand abroad - it is interested in Scandinavian and Germany markets. Polimex-Mostostal is the leading construction group on the Polish market. In 2012, the company’s revenue amounted to PLN 4.1bn.

n

Komputronik shares jump, as sales rises by 21.7% y/y to PLN 8.7mn in July Komputronik profit on services and commodities sales rose by 21.7% y/y in July to PLN 8.7mn, the company announced, on the basis of preliminary data. In line with the rise of the sale growth in first months of 2013/2014 financial year, the company’s management board expects the firm’s results to improve, the company’s CEO Wojciech Buczkowski said. In the period Apr-Jul, 2013, the trade profit amounted to PLN 33mn vs. PLN 26.5mn in the same period last year, which means the rise by over 25%. Komputronik, an IT devices distributor, has been listed on the Warsaw bourse since 2007. n

Polish Investments PIR may buy stake in PGE power’s Opole project Poland’s large infrastructural investments vehicle PIR will consider capital engagement in the Opole power project of listed utility PGE, deputy Treasury Minister Pawel Tamborski told reporters. - PIR is considering the possibility of capital participation in the Opole project, Tamborski said. - The project would need to be spun off from the PGE group, an SPV would need to be created. Work is under way. No investment or financing proposal for the Opole project has yet been sent out from PGE, Tamborski claimed, noting that the firm has been tasked with first altering the risk profile of the project, including a long-term coal supply contract. Poland could disclose some particulars concerning the project in the coming days, Tamborski added.

Debt financing from state bank BGK would be

limited as BGK recently took up PLN 500 mln in PGE bonds and has a total exposure cap for PGE at under PLN 1.5 bln, BGK’s recently appointed CEO Dariusz Kacprzyk added. At issue is PGE’s plan to build two 900 MW blocks for an estimated at PLN 9.4 billion, which the group had suspended citing reduced economic viability of the project following changes on the energy market and in macroeconomic environment. PM Donald Tusk declared Poland would find money and means for the Opole project to proceed. Potential scenarios mentioned by the press included engagement of Poland’s investment vehicle PIR or cooperation with listed copper giant KGHM. The project was revived in June, when PGE signed a letter of intent on cooperation with coal miner Kompania Weglowa. n

Elemental Holding guides higher profits in the recycling sector Elemental Holding assumes achieving revenue of PLN 860mn and net profit of PLN 24.31 mn in 2013 vs. PLN 895 mn revenue and PLN 18.5 mn profit a year earlier, the company announced. By the end of 2013, Elemental Holding plans its swich from the alternative NewConnect market to the main market of the Warsaw bourse, the company

announced. Earlier, the company planned its debut on the main market at the turn of H1/2013. Elemental Holding is a capital group operating in the recycling sector and also the provider of these materials to mills and foundries. Since 2012, Elemental Holding SA’s share have been listed on the New Connect market in Warsaw. n

September 2013

www.bizpoland.pl Spare parts firm Inter Cars sales up 22.7% y/y to PLN 325mn in July Inter Cars sales increased by 22.7% y/y to PLN 325.7mn in July, 2013, the company announced. The sales of the parent company Inter Cars S.A. rose by 24.9% y/y to PLN 289.4mn in July. The foreign distribution firms of Inter Cars increased sales in July by 34.8% y/y, achieving revenue of PLN 86.6mn. The highest revenues, among foreign distributors, were posted by Inter Cars Romania – PLN 18.4mn in July. Since the beginning of the year, the sale of Inter Cars increased by 15.0% to PLN 1,929.1mn. Inter Cars S.A. is the biggest distributor of spare parts for passenger cars, delivery vans and lorries in Central Eastern Europe. The company debuted on the Warsaw bourse in 2004.

Neuca pharma to buy ACP Pharma for PLN 432 mln; sell retail wing for PLN 229 mln Listed pharmaceutical distributor Neuca signed preliminary deals to buy ACP Pharma for PLN 432 mln from Mediq International, then sell off the retail segment of the firm to private equity firm Penta Investments for PLN 228.7 mln, Neuca said in a market filing. Penta Investments will offer Neuca financing for the retail part of ACP Pharma that Penta will acquire, then take over the 250 pharmacies operating under the Mediq brand, Neuca said. Following the transactions Neuca will have no retail operations, the filing showed. DM BZ WBK ANALYST TOMASZ SOKOLOWSKI: I view this transaction positively, the price paid for the wholesale assets is not high. In my view, it will pay back in one or one and a half years. . . . In a precise move Neuca took advantage of a market opportunity, it acted like a market leader, bought a player with 7% market share for a small amount of money, increasing its share to around 34% and obtaining a higher share in wholesale market than any other entity has ever had. As far

Equities News as Neuca’s share price is concerned, out target price is PLN 230 and I wouldn’t change it.

Bank Handlowy’s net profit is PLN 300.35mn in Q2/2013 Bank Handlowy posted PLN 300.35mn of consolidated net profit vs. PLN 230.75mn a year earlier in Q2/2013, the bank said in a communique, presenting the preliminary data. The result is better than the market consensus, which amounted to PLN 236mn profit. Analysts surveyed by the ISBnews agency had expected the net profit in the range of PLN 201-253mn. Net interest result amounted to PLN 310.54mn vs. PLN 368.84mn a year earlier. The result on commissions and fees reached PLN 165.13mn vs. PLN 151.25mn a year earlier. The bank’s assets in total reached PLN 46.28bn at the end of Q2/2013 vs. PLN 43.51bn at the end of Q2/2012. In the period of Q1-2/2013, the bank posted PLN 655.80mn of consolidated net profit, attributed for main unit’s shareholders vs. PLN 474.30mn profit a year earlier. The bank will publish the consolidated half-year report for H1/2013 on Friday, on Aug, 30,2013.

Asbis upholds forecasts for whole year after H1/2013 results After H1 2013, Asbis upheld its forecast of USD 11.0-12.5mn net profit in 2013, with sales of USD 1.85-1.95bn, the company announced. Later in the day, company CFO Marios Christou did not rule out raising the forecasts at the turn of October. In May, Christou said that Asbis would mull the financial forecasts upgrading if subsequent quarters post similary high dynamics. In H1 2013, the company posted USD 4.70mn of consolidated net profit attributable for main unit’s shareholders vs. USD 2.55mn profit a year earlier, on the revenue on sale at USD 908.48mn vs. USD 744.94mn a year earlier. Asbis Group is one of the leading distributors of Information Technology products in Europe, Middle East and Africa Emerging Markets: Central and Eastern Europe, the Baltic States, the Commonwealth of Independent States, the Middle East and Africa

Redan revenue rises by 3% y/y to PLN 34.8mn in July The consolidated revenue on sales of Redan rose by 3% y/y and amounted to PLN 34.8mn in July, the company announced. For the first seven months of 2013, Redan’s group sales amounted to PLN 243.6mn and was 7% higher in annual terms. The area of its whole network amounted to 99,700 of sqm at the end of July, which means 4% growth of the trade area y/y, the company announced. Redan sales on the fashion market amounted to PLN 16.1mn in June, 2013 and was higher by 10% y/y. The sales in H1/2013 reached PLN 103.0mn, and were higher by 12% y/y, the release reads. The sales area of the Top Secret, Troll and DryWash brands totalled 39,000 m2 at the end of June, up by 10% on the year.

Budimex, Mirbud, Mostostal Warszawa bid for next stages of major road construction The General Directorate for National Roads and Motorways (GDDKiA) in Olsztyn city received 21 motions from companies which want to take part in the tender to build S7 motorway strips. The GDDKiA branch in Zielona Gora accepted motions for three stages of S3 motorway; 22, 24 and 24, respectively, the GDDKiA announced. The construction of S7 motorway Milomlyn - Olsztynek, in the ‘A’ section i.e. Milomlyn –Ostroda, is popular among Budimex (with Ferrovial Agroman), Mirbud (with Erbedim) and Mostostal Warszawa, GDDKiA Olsztyn announced.

The above-mentioned firms, in the same lineup, applied to build the second strip of the S3 motorway, between Sulechow and Nowa Sol (three sections in the separate tenders, with the length of 13-17 km), GDDKiA Zielona Gora announced. Apart from the abovementioned companies, several of the biggest European companies are trying to win the tender - they include: Eurovia, Porr Polska, Dragados, Astaldi, Strabag, Skanska, Aldesa Construcciones.

CEE Outsourcing and Shared Services Awards 6th February 2014 | Hotel Intercontinental, Warsaw

www.CEEOutsourcingAwards.com 2013 September

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FDI Poland Investor A

17 October 2013

BizPoland Magazine and BiznesPolska are proud to host the inaugural FDI Poland Investor Awards Gala, an evening dedicated to recognizing top foreign companies operating in Poland.

With more than 200 international executive guests from more than 25 countries expected, the awards gala will be preceded by a half-day of discussion panels covering key issues and practical experiences related to direct investment in Poland.

Poland has emerged as a world-leader for inward Foreign Direct Investment (FDI), and continues to attract top global investors, from a wide range of sectors including car and white-goods manufacturing, aviation, business services, energy, retail, and pharmaceuticals.

Poland’s top international direct investors will be presented with awards of acknowledgment – by an independent Jury – for their economic commitment to the Polish economy, judged by size of investment, employment levels and strategic importance.

This event will attract top international executives in charge of investment decisions related to Poland, with support from more than 15 international Chambers of Commerce, representing a broad mix of top executives from amongst Poland’s largest and most economicallyimportant foreign investors.

Chambers of Commerce that are supporting the event include: Britain, USA, Canada, France, Spain, Portugal, Holland, Italy, Ireland, Germany, Austria, Switzerland, Scandinavia, Czech, Australia, Japan, Korea, China, and Brazil.

FDI Poland Investor A Joseph Wancer

Steve Rank

Ernst Kopp

Antoni F. Reczek

G

Advisor to the Management Board of Deloitte, Poland Chairman of the Board of Directors of American Chamber of Commerce in Poland

Senior Trade Commissioner – Central Europe Australian Trade Commission

Commercial Counselor Austrian Embassy in Warsaw

Chairman British-Polish Chamber of Commerce

C C E

Sławomir Majman

Carsten Nilsen

Chi-young Chen

Martin Oxley

E

President PAIZ

Chairman Scandinavian-Polish Chamber of Commerce

Director Economic Division of Taipei Economic and Cultural Office in Poland

Director UKTI Poland

H E

www.FDIPolandAwards.pl

r Awards 2013

3 Hotel Intercontinental, Warsaw FDI Poland Investor Awards Forum 17 October 2013, 8:45-14:30 A day of discussion panels related to FDI investment in Poland. Case studies, lessons learned, and investors’ suggestions and advice for investing in Poland.

FDI Awards – Forum Agenda 8:45–9:15

Registration and Coffee

9:15–10:00 Case studies of successfully Restructuring investments in Poland – or growing the business via bolt-on Acquisitions.

10:00–10:45 “Made in Poland – Sold Elsewhere”: Business models for building significant long-term value for investors.

10:45–11:15 Coffee Break 11:15–12:00 “Made in Poland – Sold in Poland”: Tapping Poland's consumer, retail and hotel markets.

12:00–12:45 Cultural perspectives on investing in Poland - and case studies of practical solutions to growing and managing your business. Topics: Taxes, Regulations, and other traps that lurk beneath the surface. Selling the business wisely. Financing the business wisely. “Think Global; Act Pocal”.

12:45–14:30 Lunch and Networking

or Awards Jury Members Greg Houlahan

Michael Kern

Tal Harmelin

Donato Di Gilio

Counsellor (Commercial) and Senior Trade Commissioner Embassy of Canada

Chairman Polish-German Chamber of Industry and Commerce (AHK Poland)

Director for Economic Affairs to Poland and Czech Republic Embassy of Israel to Poland

Partner and CEO of Core sp z o.o , Business and Advisory Company President of the Italian Chamber of Commerce and Industry

Ernesto Malda

Marek Kondrat

Michel Oldenburg

António Castro

Head for Commercial and Economic Affairs Embassy of Mexico to Poland

Chairman Polish-Swiss Chamber of Commerce

Senior Trade Commissioner Embassy of France

Vice-President Polish–Portuguese Chamber of Commerce (PPCC)

Time: 18:30-24:00 | Attendees: 200+ | Dress Code: Black Tie (formal attire)

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Equities News

Fashion retailer LPP nets PLN 120 mln in Q2, sales up 30% y/y Fashion retailer LPP posted a net profit of PLN 119.9 mln in Q2 2013, matching expectations for PLN 119.5 mln as sales grew 30% year on year. Group revenues of PLN 991.0 mln lightly exceeded the preliminary figure of PLN 985 mln calculated by PAP on the basis of preliminary H1 sales pre-releases.

Like-for-like sales were said to be up 8.8% year on year excluding FX changes, management said in comments to results. H1 likefor-like sales are up 4.2%.

RAIFFEISEN BROKERS (market note): LPP results for Q2 are in line with expectations. A slight positive divergence is the operating profit, which beat consensus by 5% .It is worth noting that in Q2 2013 the group realized a good gross margin on sales at the level of 59.2% (compared to 57.9% in Q2 2012).

Additionally, the net margin hit 12.1% compared to 10.2% a year before. Compared to Q1 2013 net debt declined by PLN 39 mln to PLN 179.9 mln, so to almost 0.9 EBITDA for Q2, i.e. a very safe level. Historically Q2 is the second-best quarter of the LPP group. n

Seco/Warwick builds up foreign subsidiaries and implements savings Seco/Warwick, having completed its geographical expansion, is focused on building up its market position and optimizing costs within the Group.

Seco/Warwick’s management board is optimistic about its financial results, the company’s CEO Pawel Wyrzykowski told the ISBnews agency. The major clients of Seco/Warwick commodities are the aviation industry, automobile and power sectors. However, the second half of the year and subsequent periods will be rebound time and will impact the improvement of remaining sectors, which will be reflected in the company’s positive results. Wyrzykowski said that despite the current slowdown, the company had not yet decided to decrease margins and profitability, while the level of offers stayed on the same value. Seco/Warwick S.A. is one of the biggest producers of stoves used for metals processing. The Seco/Warwick Group consists of 6 production firms on four continents: Poland, U.S., China, Brazil and India, and two sale and servicing firms in Germany and Russia. The company has been listed on the Warsaw bourse since 2007, and its consolidated revenue reached PLN 498mn in 2012.

affic rise on A4 motorway means Stalexport profits up in H1 2013

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The revenue and profit growth of Grupa Stalexport Autostrady was achieved in H1 2013 mainly due to higher traffic on the A4 motorway and lower costs for the company’s management board, the company announced. The traffic’s intensity on the A4

motorway’s section Katowice-Krakow, managed

by Stalexport Autostrady Malopolska rose by 7.74% y/y in H1 2013. The situation concerns both passenger cars (up 8.6%) and long vehicles (up by 3.7%), the company announced. Stalexport Autostrady is active in the construction and servicing of motorways.

Ronson wants to sell over 500 housing units in 2013 Ronson Europe wants to sell over 500 housing units and to deliver 450 housing units in the whole of 2013, but due to margins fall, its financial results may be worse than last year, the company’s CFO Tomasz Lapinski announced. After a good Q1 2013, the gross margin fell below 20% in Q2 2013 and in Q3 2013 this situation may be repeated. However, the implementation of new projects during the last three months of 2013 may lead to a rebound and in the whole of 2013, the firm will not post lower margin than 20%, Lapinski argued. In H2 2013, the company intends to launch two new projects and three new stages of currently realised investments, as well as to purchase a land plot in Warsaw. The CFO stressed that if the Verdis project in Warsaw were to be handed over this year, the company’s financial results would not diverge significantly from last year. Ronson posted PLN 4.1mn of consolidated net profit, in Q2/2013 vs. PLN 2.99mn profit a year earlier, the company announced. The operating profit amounted to PLN 4.99mn vs. PLN 2.08mn profit a year earlier. Consolidated revenue on sales reached PLN 56.53mn in Q2/2013 vs. PLN 34.60mn a year earlier. During H1 2013, the company posted PLN 13.21mn of consolidated net profit

vs. PLN 1.91mn profit a year earlier, on sales of PLN 110.68mn vs. PLN 41.87mn a year earlier. Bond offerings: Ronson does not plan more bond issues in the near future, after issues conducted in June and July, the company announced. In mid-July, Ronson issued non-secured, three years bonds of series E, worth PLN 9.25mn. This situation was the answer for the additional demand, after placing bond issues of series C and D. Proceeds from the three issues amounted to PLN 116.3mn.

Hawe may issue Hawe Telekom shares worth up to PLN 100mn Hawe is considering a capital increase of its subsidiary Hawe Telekom, after the latter’s floating or merger with another company listed on the Warsaw bourse, Hawe’s CEO Krzysztof Witon told the ISBnews agency. This issue’s value may reach PLN 100mn maximally. The transaction’s detail will be published after negotiations with financial institutions, who may be interested in financing FTTH project. Hawe signed an agreement with Huawei and Alcatel-Lucent to construct the FTTH network. The new deputy CEO Jaroslaw Bauc will be responsible for the financing of the project, Witon said. Hawe wants to provide fibre-optic cables to 700,000 households and offices within five years. The capital Group Hawe provides service on basis of its own fibre-optic cable, provides also the design and constructing service for the telecommunication, electro-energetic sectors and regional authorities. The company has been listed on the Warsaw bourse since 2007. In 2012 the firm posted PLN 108 mn of consolidated revenue. n

September 2013

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BPO/Shared Services News

RWE to move thousands of jobs to Kraków German energy company RWE, under severe pressure to cut costs and improve its profitability, will shift jobs from Germany to Poland, according to economic newspaper “Handelsblatt”. The firm is seeking cost savings of 2 billion euros.

Due to “drastically” falling profits, RWE’s CEO Peter Terium said in August that he is seeking cost savings of 2 billion euros per year, two times more than originally planned. According to the Dusseldorf-based newspaper, Terium will inform the supervisory board of the company’s plans in September, after a twoday meeting in Warsaw.

Officially, RWE has no comment, clearing fearing the backlash from German employee unions.

In 2012, RWE announced “RWE 2015”, a plan to cut costs by € 1 billion per year.

The cuts were to affect mainly IT departments, administrative staff, and accounting. The plan was to eliminate 2400 jobs in Germany and move the services to Krakow.

RWE is under pressure with too much energy-producing capacity in a weak economy, and further squeezed by the abandonment of nuclear energy, and the abundant production of energy by renewable sources. Prices of electricity produced by coal and gas has fallen in the last two years by 33%. n

CEE Outsourcing and Shared Services Awards 6th February 2014 | Hotel Intercontinental, Warsaw

www.CEEOutsourcingAwards.com 2013 September

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BPO/Shared Services News

Bayer employs 250 people in Gdańsk Bayer continues to develop its activities in Poland, specifically in Gdansk. After opening a finance and accounting (F&A) center in Gdansk in March 2013, the firm is well on its way to employing 250 people. The F&A center in Gdansk, located in the Olivia Business Centre, is one of just four such centers in Europe. “Gdańsk was chosen after fierce competition between many European cities, and we are very happy. Within two years of opening, we will have more than 250 people employed here”, said Christophe Dumont, President of Bayer Ltd. Gdańsk beat out Polish cities Poznan, Wroclaw and Katowice, and Baltic cities Vilnius and Tallinn.

Dumont said that Bayer will develop its people: “Some of these people have been trained in Germany. For us it is important that we have a chance to recruit really good people who have been educated in Poland, but they have a chance to develop abroad, namely in Germany and our second financial center in Spain. This gives them a wider perspective, and they become more valuable workers.

The German company is also developing its research activities in Poland, particularly

the breeding of new varieties of oilseed rape, in more than 20,000 test plots near the Poznan branch of Bayer CropScience. The goal is to improve food yields and winter hardiness of the popular varieties of the crop. “Poland has very severe winters, and the seeds are sown in August and

September. So, in fact, we use this breeding station near Poznan to identify best GM varieties, which can be adapted for Polish agriculture and neighboring countries. For example, farmers in the Baltic countries clearly benefit from the breeding station research”, said Dumont. n

Skanska has leased half of Malta House office building

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Skanska has signed three new leases in Poznan for its Malta House office building.

After the holidays the building – adjacent to Lake Malta - will become home to investment behemoth Franklin Templeton, software company Ciber, and Skanska SA. Ciber, operating globally in the IT industry, will occupy 1,000 square meters, and plans to move in during September.

Malta House Poznan is also the new seat of Franklin Templeton Investments, a global company specializing in the management of investment funds, which has leased 3,200 sqm. Franklin Templeton will move into their new offices in November.

“We opened our first office in Poznan in 2007 and we are very pleased with its development. Although the office was large, increasing the scale of its operations resulted in the need to look for additional space. We are pleased to have signed a lease agreement in Malta House, a modern building designed to a high standard and in a very good location - said Alok Sethi, a board member of Franklin Templeton Investments. n

September 2013

www.bizpoland.pl New service centers in Gdansk and Poznan Propex Global Company has chosen Poznan for the location of their new business services center, and plans to hire 50 people. And Finnish company Kemira will employ 200 people in Gdansk.

Propex Global is a manufacturer of plastic components. The Poznan branch will coordinate the a large part of the company’s services in Europe, including accounting, customer service, supply chain management and HR. The company has taken offices in the Skalar office building.

Finnish company Kemira opeates in the chemicals industry, and will launch its service center in Gdańsk, which will support the firm’s development in Europe, Middle East and Africa. The services center will be responsible for customer services, procurement, accounting, finance and IT.

Infosys BPO Poland continues to develop in Lodz Infosys, the India-based BPO provider, continues to expand in Lodz, with plans to hire another 200 people. In addition, the company will take up another 2200 sqm of office space in Skanska’s Green Horizon – which means that Infosys now occupies about half of the 33,000 sqm building. The company currently employs more than 1,700 people in Lodz.

Infosys BPO Poland specializes in business services in fields such as finance and accounting, handling logistics processes, database management. The Lodz Centre provides services to external clients.

The company in July received a permit to operate in the Łódź Special Economic Zone, which provides further tax breaks in exchange for commitments to hire additional employees.

The company is hiring accountants, experts in purchasing and logistics, as well as specialists in database management, support processes and SAP implementation.

“Infosys has a rapidly growing portfolio of brands, and is increasingly positioned for potential customers on the Polish market,” says Krystian Bestry, CEO of Infosys BPO Europe.

Infosys operates in Lodz since October 2007 when it took over the Lodz-based European Accounting Service Center of

2013 September

BPO/Shared Services News Philips. It is now the largest unit of Infosys outside India, providing BPO services to 28 countries around the world.

Lublin considers construction of office building in PPP framework The Lublin government is considering the construction of an office building within the framework of public-private partnerships. The estimated construction cost of the service center for the judiciary, so far housed within the city hall building, is nearly 80 million zł.

A year ago, the city signed a letter of intent with the Ministry of Justice.

Krzysztof Zuk, president of Lublin, said that the investment is by far the most advanced and likely concept to fulfill necessary conditions for a PPP project. But he added that, although the construction of an office building seemed to be one of the easiest to implement in this formula, potential private partners have found it to be too risky. So for the moment, the plans remain only on paper. Previously, the city resigned from a PPP project for the construction of an expressway for 200 million zł.

Poland eats into India’s BPO pie Language constraints and competitive talent in other countries are resulting in India’s business process outsourcing (BPO) industry losing out to Poland, the Philippines, and even Canada. The $13.3-billion Philippines BPO industry grew 15.6% in 2013, compared with the 8.9% clocked by India’s $20-billion BPO space.

According to industry body Nascomm, in the last five years, India has lost about 10% market share to the rest of the world in the BPO space, most of which is in the voice contract segment. However, India is still the global leader when it comes to non-voice services. The Philippines’ voice industry stands at $8.5 billion while India’s is around $7.5 billion.

Countries such as Poland and Ireland in Europe, the Philippines, Malaysia and China in Asia, Morocco in North Africa, and Brazil, Mexico, Chile and Columbia in Latin America are emerging as attractive destinations for voice contracts.

India’s challenges lies in the language front as, apart from English, the country doesn’t have much talent to support services in German, French, Spanish, Portuguese and Nordic languages.

The Philippines, the second-largest destination for outsourcing, is emerging as a serious competitor and is relevant both for voice and non-voice services.

“In fact, the Philippines’ voice industry overtook India’s last year in terms of

revenue and full-time equivalent (FTE).

Not only does it support English, but the quality of service is better than that of India,” said Salil Dani, practice director, Global Sourcing, Everest Group.

Interestingly, the business process management (BPM) revenue per employee, which is the lowest for India, has risen across countries.

On the other hand, Latin America is emerging as a preferred nearshore destination for IT and BPO services for the US due to its physical and cultural proximity to the US and the presence of a large multilingual population.

“No geography competes with India when it comes to cost-efficiency and quality. Though the loss to other geographies is marginal, we have never lost any seat to a competing geography,” added Sanjay Mehta, managing director, India, Teleperformance.

The $3.02-billion Paris stock exchange-listed Teleperformance is world’s largest contact centre company, with global operations spreading over 46 countries.

“European countries working in multilingual processes find Poland a good option for their medium-term operations involving up to 500 employees. However, not much work has moved away from India to Poland as these countries have a small talent pool. Moreover, India and the Philippines have scale, which no European location can provide,” Dani added.

Those in the know say that clients have started choosing geographies based on the kind of services they offer. Hence, an investment banking platform may involve analytics being serviced out of Central Europe and English-language voice services from India or Philippines.

Kielce lands new investor In August, UCMS Group Poland, announced that it will locate its new financial and human resources services center in the center of Kielce. The city has been working with the city of Kielce to find the best location.

Eastern Polish cities, such as Kielce, Lublin and Rzeszow, have been pushing and promoting to attract more BPO investors. In addition to lower salary expectations in the region, modern offices are finally being developed to accommodate BPO and Shared Services centers.

“Representatives of local authorities, recognizing the opportunity for urban development offered by the BPO industry have created dedicated teams to support investors - and they have begun to actively solicit companies from the BPO sector”, said Iwona Chojnowska-Haponik at PAIZ. n

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Poland-Turkey aim to increase trade volume to $10 billion

The Chairman of the Polish-Turkish Chamber of Commerce, Marek Nowakowski, said they aim to increase trade volume between the two countries to $10 billion within 5 years.

Sii to open service center in Lublin

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The company is planning to invest around PLN 1 million. Sii is a top IT & engineering provider and will open a new Service Center. Located in Lublin, it will be the easternmost office of Sii (other offices are located in Warsaw, Gdańsk, Wrocław, Poznań, Kraków and Łódź).

The company would like to hire around 100 persons in the following year. Sii specialists realize projects for top companies from different sectors, such as banking and finance, securities, telecommunication, hi-tech, energy or industry.

Sii took the 15th place on the Europe’s 500 list of the Top Growth Companies in Europe and is one of only two Polish companies on the list. The study is conducted periodically under the patronage of the European Parliament. n

Nowakowski said that bilateral relations between Turkey and Poland should be not only based on trade but also on investment. Turkish-Poland Business Council aim to bring business people from the two countries together to develop bilateral trade and investment relations, to inform them about market and business opportunities and help firms find right partners, he said. Turkish-Polish Chamber of Commerce was founded in order to

develop and enhance bilateral economic cooperation between both countries’ business circles.

Poland is currently Turkey’s one of the largest trading partner among the EU member states. Poland was Turkey’s 21st largest goods export market and largest supplier of goods imports in 2012. Turkish goods exports to Poland were $1.85 billion and goods imports from Poland totaled $3,05 billion in 2012. n

Penta Investments to buy Polish pharmacy chain Mediq for €70 million

The investment group Penta is set to buy Polish pharmacy chain Mediq Apteka, run by financial group ACP Pharma. After signing the contract with ACP Pharma, Penta Investments will be in charge of running more than 300 pharmacies in Poland and will thereby become the second largest player on the Polish market.

“The transaction is subject to the agreement of the anti-monopoly office and will involve €70 million,” according to a statement from Penta. Penta partner Eduard

Maták said that not only will the acquisition strengthen the position of the company on the Polish market, it will also facilitate its speedy expansion, as Penta already operates another chain of pharmacies called Dr. Max in Central Europe.

Mediq Apteka runs 190 of its own outlets and another 79 franchised branches.

Penta Investments became the owner of the Dr. Max chain in 2005, and now owns 500 pharmacies in several European countries, including 70 in Poland.

Penta has also acquired control of several Polish hospitals. It also wants to buy more hospitals in Slovakia and the Czech Republic; it already owns 10 hospitals in eastern Slovakia. Penta owns just a single health insurer – Dôvera – which brings profits (€50 million last year). n

September 2013

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FDI News

EIB boosts Polish science with loans

The European Investment Bank has loaned nearly €1 billion (£860 million) for research and development in Polish universities, business enterprises and research institutes. A total of €970 million will be loaned in two parts, with the first tranche, €490 million, earmarked for the National Science Centre and the National Centre for Research and Development to fund basic and applied research by doctoral students, postdoctoral fellows and senior scientists.

A further €480 million will fund research at Polish state universities, colleges and research institutes across most scientific disciplines. This stream will also be used to boost capital investment from the Ministry of Science and Higher Education in R&D infrastructure, as well as specialist scientific equipment. The loans will be awarded this year and next, and it is hoped that they will not only maintain current employment levels in research, but also

create more jobs – particularly for young people.

Poland will also benefit from lower financing costs owing to the long-term nature of the loans and the low interest rates charged by the non-profit bank, which already lends to a number of UK universities.

At the signing ceremony for the projects, Anton Rop, the bank’s vice-president, said: “The EIB strongly promotes the European knowledge economy, especially increased R&D investment, downstream applied research and innovation, and the improvement of human capital. We therefore particularly welcome this agreement with Poland, as these projects will support the country’s strategic science and innovation policy. They will strengthen basic research, promote efficiency and competition for grants, and leverage more private investment for applied development and innovation activities.”

Poland has only two institutions in the top 400 of the Times Higher Education World University Rankings: Jagiellonian University in Cracow and the University of Warsaw. But the EIB cash may help it to improve this record. n

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German injection molder Wirthwein to invest in Polish plant German plastic components manufacturer Wirthwein AG plans to invest about 11 million zloty to expand its plant in Lodz.

The company aims to take on at least 20 new employees at the factory by the end of March 2015, reported local news agency PAP. The planned investment will also enable the company to add new machines to its Polish plant. The company has already obtained permission to carry out the project. The production facility is located in a special economic zone. Wirthwein’s Polish plant supplies home appliance, electronics and automotive manufacturers. The plant has injection presses ranging from 80010,000 tons of clamping force, and more than 180 employees. Wirthwein operates production facilities in 17 countries located on three continents. n

US filter group plans new plant in Poland

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US filter specialist Donaldson is planning to build a 10,000m² production plant in Skarbimierz, east of Szczecin in northwestern Poland. Minneapolisbased Donaldson will manufacture heavy duty air filters for on and off-road vehicles at the West Pomerania facility which is set to begin operating in 2015.

The firm aims to serve the needs of customers in Russia and parts of Europe.

When complete, the company’s third plant to serve Central and Eastern Europe, will include additional capacity for future expansion, said Donaldson.

It already has two production facilities in the Czech Republic: in Klášterec launched in 2003 and in Kadaň, opened three years later.

“Based on our company’s strategic growth plan, this new plant will allow us to further increase our filter manufacturing capacity to meet out projected OEM and aftermarket customer demand throughout Europe and Russia,” commented Wim Vermeersch, Donaldson’s vice president for Europe, the Middle East and North Africa. The firm supplies a wide variety of filtration systems globally with a workforce of around 12,500 at 140 production and distribution sites around the world. n

Heli-One Poland: work begins on customised facility

The world’s largest independent provider of helicopter maintenance, repair and overhaul (MRO) services began work on its new facilities in Rzeszow, its fourth major location around the globe. Leaders from Heli-One had an official ceremony to mark the beginning of building work on the new facility, from which the Rzeszow team will provide customers with an extensive range of Base Maintenance services. In its current temporary facility, the Heli-One team has already begun work on its first project - overhaul, modification and painting of a Super Puma AS 332L aircraft for CHC Helicopter - with others to follow soon.

Lars Landsnes, VP, Operations Heli-One, recognized the importance of the event to Heli-One and its customers: “The Heli-One team in Rzeszow is already delivering for customers and will keep doing so while our customised facility is built,” said Landsnes.

“Our team of highly skilled and certified mechanics, working with the latest equipment and technology from our newly renovated facility, will significantly extend the reach of industry-leading MRO services for which Heli-One is known globally.”

More than 60 people have been hired so far for the Heli-One Poland operation, which is adding expertise and access to current and new customers in Central Europe.

“Rzeszow is at the heart of Poland’s Aviation Valley, near major Central European operators and is a solid base for strong talent and education resources,” he said. HeliOne is also partnering with local technical schools to create a stream of talented, qualified employees for the growing business.

“With this operation, we are building on our existing world-class operations and satisfying the growing demand for helicopter MRO services around the globe.”

Heli-One Poland is expected to grow to more than 120 employees by 2014, creating new, high-skill jobs and providing extensive development opportunities for local area professionals. The company expects to invest significantly, above $15 million, on building costs, purchasing, training and other expenses related to the operation. That investment is likely to increase based on future business potential in the region. n

September 2013

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RETN enters Polish market International operator RETN, based in Russia, has opened a sales office in Poland, reports Rpkom.pl. According to Daniel Jasinski, CEO of RETN in Poland, the company will focus on business data transmission services to Ukraine and Russia.

RETN launched the office in Warsaw and already has its first customers. More active promotional activities are planned for the autumn.

Originally, RETN built a line in Poland purely for transit use. However, since this infrastructure is already there, the operator wants to invest in the Polish market and look for customers. The business plan assumes an operating profit within about a year of launch and a return on the investment in about three years.

The Polish office covers also the rest of Central Europe, a total of seven countries.

In Poland, RETN has a hub in the LIM centre and server rooms with Linx and ATM. There is also a PoP in Lebiedzin on the border with Belarus, where RETN maintains a connection with the Belarusian operator Beltelecom. The RETN network goes from Poland to Lithuania, Belarus,

Organizers:

FDI News Ukraine and Germany (in Poland it buys fibre from Hawe). RETN plans a new node in the west of Poland, probably in Poznan, later this year. It also expects to develop the network towards the Czech Republic, probably in 2014.

RETN will provide data services typical for international carriers and will not deal with voice services. Its customers will be primarily other operators. According to Jasinski, Poland is a big market, which attracts many operators. However, it is difficult because customer loyalty, especially in product segments such as IP transit, is very low. n

Arvato moving 140 Irish jobs to Poland A major contractor to the Irish operations of both Google and Microsoft is to shed 140 jobs in Dublin, moving them to a new facility in Poland. Arvato, which supplies financial and consulting services to companies such as Google and Microsoft as well as public sector bodies, is to shift the jobs from Dublin to Poland for “competitive”

reasons. Workers at the company, which will continue to employ over 1,000 people in several Dublin locations, were informed of the decision at a staff meeting in Dublin on Wednesday.

A company spokeswoman said that the firm would try to find other positions for those losing their jobs.

“This decision will impact Arvato’s Irish workforce with around 140 roles supporting global clients to be relocated to this new centre in 2014,” said the spokeswoman. “Driven by a highly competitive market, Arvato is expanding its global service delivery capability with the establishment of a new operations centre in Poland.”

The company last month signed a fouryear contract with a large Polish telecoms company, Netia, to provide logistics, financial and accounting services.

“In recent times, Arvato has employed between 1,000 and 1,400 people in Ireland at any one time, with employment growth strong over the past year in areas such as finance, accounting, consulting and other specialised roles,” said the company’s spokeswoman. “Additionally, operational roles supporting local clients are experiencing strong demand with significant growth in the upcoming months.” n

Under the patronage of: Podsekretarza Stanu Piotra Stycznia:

Partners:

Schedule and registration: www.dnidewelopera.pzfd.pl

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2013 September

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Plastic Factory Cobi to expand Polish toy plant Plastic toys manufacturer Plastic Factory Cobi is planning to invest about 22m zloty in expanding its production facility in Mielec. The factory is located in the Mielec special economic zone (MSEZ), near the city of Rzeszów.

The Polish toy manufacturer aims to add a range of new products to its portfolio, and create at least 15 new jobs at the plant, state-run Agency for Industrial Development (ARP) said in a statement.

The new products will include plastic bricks fitted with electronic components and remotely-controlled. Under the plan, the investment is to be completed in 2018, the statement said. The production facility in Mielec has a total floorspace of about 27,500m² and a workforce of more than 300, according to data released by the toy manufacturer.

Set up in 1987, Plastic Factory Cobi is headquartered in Warsaw. The company says it exports its output to more than 60 countries worldwide. The production facility in Mielec is ISO 9001 certified. n

Vidacolor to build ceramic tile manufacturing capacity Vidacolor produces ceramic tiles based on Italian technologies and using Italian devices, from Polish materials and under the guidance of Polish specialists. The investor will produce glazes and frits and create a new research and development center for the ceramic industry (tiles production technology).

In addition, the investor will collaborate with companies from the ceramic industry, as far as developing coloring technologies, preparing colorants and glazes, as well as storing semi-finished products from ceramic industry. n

Pasta Food Company to build new factory in Opole

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The cornerstone ceremoney for the Pasta Food Company factory took place in Opole in mid-summer. The project, worth PLN 80 million, is the largest investment to be realised in the Walbrzych Special

Economic Zone. Pasta Food Company is a joint venture of Stefano Toselli and Ter Beke. The investor will produce and sell frozen lasagna on the Polish market as well as in Central Europe.

The company decided to locate the factory in Poland due to the weak impact of the recession on the Polish economy. The decision regarding company’s location in Opole is a result of the scale of the Polish consumer market, numerous skilled workforce and business-friendly environment. Marc Hofman, CEO of Ter Beke, also underlines such factors as great support from the authorities of Opole.

The company plans to complete the factory building in April 2014 and the production should start in June 2014. Pasta Food Company is planning to create 50 new jobs in the first phase of the investment. n

Next jobs created in Olawa Subzone On 6th August 2013, two companies Helkra and 2P company received business

permissions to expand their factories in Oława. Helkra will invest at least PLN 10 million and employ at least 18 people.

Helkra ltd will produce heating elements and steam generators used mainly in industry sectors. 2P Poland ltd will manufacture stamped and pressed metal components for household appliances. 2P Poland will invest PLN 12 million and create 13 new jobs. n

Poland-Indonesia Economic Forum On 4th September 2013, at the Hyatt hotel in Warsaw, the Poland- Indonesia Economic Forum will be held. The official opening of the Forum will be attended by the President of Poland Bronislaw Komorowski and the President of Indonesia. Among the invited guests there are the representatives of dozens of Indonesian companies and senior officials of government administration. Indonesian business is looking for partners mainly in following sectors: infrastructure, mining, renewable energies. n

September 2013

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FDI News

Poland–Thailand Forum Poland Thailand Business forum took place on 4th July in Warsaw. The official opening of the forum was attended by Thai Prime Minister Yingluck Shinawatra and Thai businesses presented their products on a 100-meter Polish stand. It was the first visit of a Thai Prime Minister to Poland. During the meeting representatives of both countries declared the intention of strengthening economic cooperation in agriculture, energy and tourism. Documents of cooperation were signed between Polish Agency for Enterprise Development and the Department of International Trade Promotion, Polish Chamber of Commerce and Joint Standing Committee on Commerce, Industry and Banking of Thailand, as well as between Polish Information and Foreign Investment Agency and Thailand Board of Investment.

B2B meetings were organised between companies from food, automotive, energy, construction and tourism sectors. In 2012 Poland-Thailand trade amounted to USD 730 million, which means that Thailand was Poland’s second main trade partner in the Southeast Asia. n

Steel structures export ALSTAL Grupa Budowlana operates on the Polish market for nearly 40 years. Years of experience has allowed the company to become the one of the leaders in the Kujawsko-Pomorskie province. The Group operates comprehensively, ranging from the design of the works, through technical consultancy, execution and finishing with obtaining all permits required by law. The structure of the company includes plant producing steel structures that specializes in professional and comprehensive implementation of investments in constructions for various purposes and the production and installation of steel structures. It is this facility that created steel structures for such buildings as MotoArena in Torun, Forest Opera in Sopot, the Baths of Maltese in Poznan. At the end of last year, the company opened its market to European countries. Today we have successfully exported steel structures to Sweden, Switzerland, Denmark, Norway. The potential and experience allows the company to further develop and attract new foreign contracts.

ALSTAL Grupa Budowlana Jacewo 76, 88-100 Inowrocław, Polska

2013 September

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Gdańsk/ Gdynia Wizz Air to link Gdansk and Katowice to Tel Aviv Following the launch last year of services from Budapest, and more recently in June from Bucharest, Wizz Air announced in July its intentions to fly from Katowice (thrice-weekly) to Tel Aviv from this winter season. However, its ambitions to service the Polish market to Israel do not end there, as the airline has also received designation from the Polish CAA to fly from Gdansk and Warsaw Chopin to the Israeli capital.

Oddly, the airline’s other two Polish bases

in Wroclaw and Poznan have so far been left out of this surge of interest in new routes to Tel Aviv. Currently, there are three airlines active in the Polish market to Tel Aviv, with nearly 93% of all seats and 15 weekly flights being offered from Warsaw. A typical startup frequency of twice- or thrice-weekly from Warsaw to Tel Aviv would give Wizz Air a 12% or 18% market share in terms of weekly seats.

Finnish company in Gdansk creates up to 250 jobs

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New jobs in the fields of finance and accounting, customer service, human resource management, and IT will be on offer in Gdansk by the Finnish business services company Kemira. Kemira operates in 40 countries, producing fine chemicals for water-intensive technologies (i.e. the paper industry). “Perhaps the company’s name is not well-known in Gdansk, but it is a global leader in its field”, says Arkadiusz Rochowczyk of Kemira Group. “In Poland we have several factories, including in Swiecie. With the new business services center we want to improve our processes.”

“This investment is very important to us, as the sector shared services is a priority sector in our strategy of obtaining foreign investors”, says Wojciech Tyborowski of Invest in Pomerania, which helps foreign investors set up operations in Pomerania. “In addition to other services centers – such as the recently-established Bayer or Finnish Metsa

Group - we have confirmation that our strategy of consistent economic promotion and incentive marketing is working. It sends a clear message to other potential investors that the region is worth investing in.”

Why Gdańsk? “We looked at several locations - including Czech Republic, as well as other Polish cities”, explains Arkadiusz Rochowczyk. “In Gdansk, we found a large group of potential employees with knowledge of the Scandinavian languages, as well as cultural proximity with the Baltic region.

While the city has some experience in the BPO industry, when it comes to employment, the market is not as competitive.”

“Tri-City last year was awarded the title of Best City of the Year at the Poland Outsourcing & Shared Services Awards Gala as the best location for a services center. That says something”, says Wojciech Tyborowski.

Also, the labor office in Gdansk is organizing specific and specialized training programs to cater to the BPO/SSC sector.

Lidia Metel of the Gdansk labor office: “The vast majority of BPO companies are from Scandinavia, among them the Finnish Metsa Group, the Danish companies Flugger and Danish-Swedish Arla Foods. In order to meet the current needs of the labor market, we have organized specialized courses for corporate accounting for the BPO industry.

Japanese ships dock in Gdynia before naval exercises Two Japanese training ships “Kashima” and “Shirayuki” and destroyer “Isoyuki” entered the port of Gdynia in early August in preparation for the first ever Polish-Japanese joint naval exercises. The Japanese ships were under the command of Rear Admiral Fumiyuki Kitagawa, Before the naval exercises began, the general public was able to enter one of the ships to look around. “The arrival of the three ships of the Japanese Maritime Self-Defense Force

(JMSDF) is the first such visit in the history of cooperation between the two countries,” Lieutenant Commander Piotr Adamczak from the Polish Navy press office said.

Representatives of the Japanese navy laid wreaths at the nearby Monument to the Defenders of Westerplatte, the area on the Baltic coast attacked by Nazi Germans at the beginning of WW II in 1939.

Sopot train station demolished to make way for new 100 million pln complex In August, the Sopot train station was demolished, yet carefully, and under the watchful eye of conservator, as brick-by-brick was deconstructed – which will be components of the newly-constructed station.

Demolition work took about two weeks.

The new station will have underground parking, a shopping center and hotel. The height of the new building will not exceed 21 meters, and the roof will be covered with grass. In addition there will be two new places with greenery. Plans also include the construction of fountains and water cascades, creating a common space for both locals and tourists.

The project is financed entirely by private investor Baltic Investment Group, which won the tender. “Sopot will not spend a dime. Baltic Investment Group will design, finance, construct and fully equip the complex of buildings in the railway station and adjacent areas”, explains Anna Dyksińska, from the office of the mayor in Sopot. In return, BGI has a long-term contract to maintain and manage the complex.

Construction works on the project started in April 2013. The new facility will be ready in time for the the Indoor World Championships in Athletics, which starts in March 2014.

Total costs for the project are estimated at about 100 million pln. n

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Łódź New office building for 58 million pln Strabag will build for Ericpol a new 58 million pln modern office building in Lodz, with opening planned for the end of 2014.

The four-story office building will have a total area of 10,500 sqm with full technical infrastructure and landscaping. The building resembles the shape of an irregular letter H will consist of two wings connected by a glazed lobby.

The contract value is estimated at over 58 million pln. Facility will be located at the intersection of Sienkiewicz and Tymienieckiego. Historically, this area belonged to the former palace garden Scheibler, then to Olympia Basin. To date, there are natural monuments protected by the Historic Monuments conservator.

The new building, located on a 3-hectare plot, will be integrated into the surrounding greenery and will be based on environmentally friendly technological solutions in order to ensure optimal use of energy, including building automation system (BMS), a system of active ceilings and weather sensors to control window shutters.

City Investment News ZUS Social Security to build new 33 million pln office building The Lodz branch of ZUS plans to invest in a new office buildling in Lodz, estimated to cost about 33 million. ZUS is currently looking for a general contractor of the project. The planned office building will have 6 floors and a total of 8,000 sqm. of usable space. The building will be built in 20 months from the signing of the contract with the general contractor.

35 Lodz buildings to be renovated 35 buildings in the city center, including mostly historic buildings, will be revitalized within the city’s renovation program “Mia100Kamienic”. So far, 40 buildings have been completely renovated.

Under the “Mia100Kamienic” program, additional tenders for the re-development of a further 25 buildings will be announced.

The mayor of Łódź Hanna Zdanowska said houses from the nineteenth century will be the first to be revitalized under the program “New Centre of Łódź”. In 2015, the city intends to renew more tenements adjacent to these.

“This is the moment when we start work on the New Centre of Łódź, when it comes

to the revitalization of residential buildings” - said the president of Lodz.

The historic building at ul.

Sienkiewicz 20 was built in 1897 by the couple Hersh and Mindla Talerman in an exceptional neo-Gothic style. The second house was built in 1893 and has a facade in an eclectic style, with neoRenaissance forms.

The Mayor of Łódź indicated that during the time of repairs, residents of the buildings – more than 140 families - will have to relocate.

In addition to these two facilities the city will announce tenders for the selection of contractors working on streets: Gdansk, Linden and Zielona.

The “Mia100kamienic” started in August 2011. In this framework, municipal buildings are completely renovated, with courtyards. Currently in process are more than 70 buildings – of which 40 have been completely renovated already.

The city authorities are hoping that by the end of this year a total of 50 properties will have been renovated.

The renovation of buildings so far has cost over 150 million pln, with an additional 65 mln pln planned for this year, and another 50 million pln in 2014. n

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Wrocław Nestle Purina announces new factory near Wroclaw Nestle Purina PetCare has announced plans to build a new factory and distribution centre in Poland.

The factory, an investment of CHF 93 million, will be constructed near the city of Wroclaw, becoming the tenth Nestle factory in the country and creating 200 jobs.

Work will begin on the building towards the end of 2013 with the goal that the factory will be fully operational by the second half of 2014.

Poland, and the Wroclaw area in particular, were chosen for their strategic position in Eastern Europe. With its estimated 13 million pets, Poland is the biggest pet food market in Central and Eastern Europe.

The investment also supports Nestle Purina’s long-term ambition to bolster its position in Europe.

“We are very pleased to announce this new investment, which strengthens both our industrial and business presence in Poland,” said Pierre Detry, President of Nestle Poland S.A. Nestle has been present in Poland since 1993 and currently operates nine plants in the country. The company is known for its Nescafe coffee, culinary products under the brand Winiary, Gerber baby food products, confectionery brand Princessa and mineral water brand Naleczowianka as well as Purina pet food.

Nestle in Poland currently employs 5,100 people, of which 55 work for Nestle Purina PetCare, present in the Polish market for 16 years.

Grycan invests in Wroclaw buildings Zbigniew Grycan, the owner of Grycan, the iconic ice cream retailer, plans several commercial developments in Wroclaw.

Both offices and retail premises will be developed in two buildings in Wroclaw, including on Plac Teatralny. Over 5,000 square metres of development plans will be carried out, and the architects are 33_03.

Inwestgrupa preparing new office building in Wroclaw

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Incenter Office will be developed with BREEAM certifications in the city of Wroclaw.

“The building is for those seeking flexible office space in the city center, providing a high quality at an affordable price.

The developer is in talks now with banks regarding financing, with an expected completion date of 4th quarter 2015.

“To raise the money we need only the final closure of several points of order”, said Izabela Grochowska of Inwestgrupy.

Incenter Office will be seven floors above ground and a total of 9500 square meters of office space.

“We plan further commercial investments, but we need to cooperate with other companies or individuals”, said Grochowska.

Irish firm sets up in Wroclaw Irish fin-tech software firm Fenergo has announced it is recruiting software developers, technical architects, business analysts and project managers to work in its offices in Dublin and Wroclaw, Poland.

The Irish start-up is seeking both experienced software developers and graduates to join its delivery and engineering teams.

Fenergo provides software solutions for capital market firms and investment banks.

The growth of its team follows significant new client wins in North America. The details of these new clients have not yet been revealed, but Fenergo CEO Marc Murphy assures that several “marquee brands” in the global financial sector will join the firm’s client list over the coming months. n

September 2013

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Poznań DFDS shared services center in Poznań Globe Trade Centre (GTC) and DFDS Poland have signed a lease for 1600 sqm office space in the Globis building. The agreement, with one of Europe’s leading shipping and logistics firm, was concluded for five years.

DFDS was founded in Denmark in 1886, and specializes in maritime and land transport.

It currently supports several connections in the Baltic Sea and the North. It also has a logistics network to enable road and rail transport in most European countries. In Poznan, DFDS will open a new shared services center. This will be the first branch of the company in Poland, which will employ about 150 people.

“Poznań, thanks to its location, developed infrastructure, the availability of transport, and educated people, it is a very attractive place for business. We are pleased that we have won the European contest for the Polish market, said Jacek Wachowicz, GTC board member and director of leasing and sales.

Globis is 95 percent leased. The transaction was brokered by Colliers International.

Other tenants include Arvato Poland, Comarch, BZ WBK, KPMG, GPD Advertising, Luxmed, PKO SA, PTKCentertel and UWI Investments.

City Investment News Propex to open in Poznan U.S. Firm Propex plans to open a new Shared Services center in Poznan, to service company operations across Europe.

Propex specializes in the production of plastic products. The firm will immediately hire 50 people, speciaslists in the fields of accounting, human resources, customer service and supply chain management.

Regus continues its expansion with new Poznan office Andersia Business Centre will be the new home of temporary office space firm Regus. Located in the heart of the city, and close to Stary Browar shopping centre, the center has easy access to the A2 motorway and 10 minutes to the train station. Opening in October, Regus will have a lettable space of 1200 sqm with 120 workstations.

Monday Development is preparing another office in Poznan Monday Development Company is preparing to launch a new office project in Poznan. The building is expected to accommodate more than 1000 square meters of office space and retail. Construction of the seven-storey office building is expected to start in 2014, to be built at ul. Bóżnicza.

Monday’s business model is to develop the offices, and then sell them (as opposed to long-term leases).

Merlin.pl moves headquarters from Warsaw to Poznan More than 100 people will be hired in Poznan

by Merlin.pl - one of the oldest Polish online shops. This is due to the transfer of the company from Warsaw to Poznan. In May, the company was acquired by the Poznan-based firm Czerwona Torebka. Merlin.pl will start operations in Poznan in September.

“We are moving all of our structures and offices to Poznan”, said the director of marketing and sales at Merlin.pl Lukasz Rybczonek.

Currently, the company is looking for people who will work in positions related to sales and marketing.

Czerwona Torebka entered into an agreement concerning the acquisition of Merlin.pl in May, with the value of the transaction set at nearly 51.3 million pln.

“We want to connect the online to the offline world and develop a network of collection points, where you can order and pick up our goods, and by the way stop for a moment and enjoy a good cup of coffee. Changing ownership is not only moving, but also refreshing the whole platform, its functionality and image”, according to Rybczonek.

Merlin.pl offers nearly 320,000 products, has approximately 2.5 million registered customers and nearly 150,000 orders per month. Czerwona Torebka is a company operating in the real estate market.

Its strategic goal is to build a nationwide network of small retails points. n

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Szczecin Lastadia office building soon to open Lastadia office building in Szczecin has applied for an occupancy permit, meaning that new tenants, including Home.pl, will be able to move in soon. At this point, more than 50% of the building has been leased.

The investor is SGI Baltis. Lastadia is a sixstorey building with a total area of 13,600 sqm. It was designed by studio Orlowski, Szymanski - Architects.

Scrap metals firm invests in Szczecin port

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The new terminal for transshipment of Cronimet scrap metals will employ 35 people. Its construction started in midAugust in the port of Szczecin, and will allow Cronimet to export Polish scrap metals to Spanish and Finnish mills. The first stage of investment in the Szczecin operation is expected to cost 20 million pln. “Similarly, in Inowrocław. 10 years ago we started there with just a half-dozen employees, and now the whole plant

in Silesia employs 88 people”, said Gregor Moj, the President of Cronimet Poland.

A section of the port of Szczecin, in the so-called Industrial Canal, will be a place for metals storage of approximately three hectares and a 150-meter quay. “We still have a lot of land for development. It should last for the next 25 years”, said Ryszard Warzocha, CEO of the Port Authority. “We are also working hard to find large investors, and now engaged in many talks. he wharf and storage areas are to be ready for 2014.

Wind power testing firm expands in Szczecin kk-electronic is extending its activities and opening a new investment in Szczecin - a test facility where new control systems for wind power stations will be created.

As a result, the enterprise will shift from producing individual components to creating integrated systems. The value of the investment is PLN 12 million. The production extension will require employment of a larger number of engineers. Traditional products from the plant in Szczecin consist of electrical control panels, control

boxes and switchboards. The new investment will make it possible for the company to create and test the complete control systems for wind power stations - i.e. power units. “Thanks to the creation of a complete system, we will succeed in reducing the costs of electric power trains and making them competitive on the market”, says kk-electronic Managing Director Przemyslaw Szczepaniak. “These are advanced manufacturing processes with the objective to construct and test integrated units for use in the wind power industry”.

The customer for the first turnkey solution is Siemens Wind Power. company is also planning to increase employment to 500 employees – production workers and engineers. At the moment, kk-electronic Polska employs ca. 350 people, who are mainly involved in the assembly of electrical control panels for wind turbines. “The extended production will require new skills and, for this reason, we will increase the employment of engineers who will design and test electrical installations”, says Przemyslaw Szczepaniak. The Polish branch of the Danish concern kk-electronic has been located in Szczecin since 2003. n

September 2013

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City Investment News

Katowice NextiraOne to build facility to harness new energy technologies in science park NextiraOne Poland has signed a contract with Euro-Centrum Science and Technology Park in Katowice to design and build its new data center that will be used for the development of technologies for energy conservation and renewable energy.

The park was created in 2007 as a base for businesses and the R&D sector to help push new developments around renewables, and to provide training and consultancy services.

The project is financed by the European Regional Development Fund under the Innovative Economy Operational Programme and was won by NextiraOne under a competitive tender procedure.

NextiraOne will build the data center building, which accommodates the latest IT technologies, and is also responsible for providing communications services, and the storage and archiving of data.

Euro-Centrum Science and Technology Park VP Miroslaw Bobrzyński said the data center will be housed in a newly established “passive building” that will also house laboratories and technology rooms.

The Park’s Training Centre operates modern heating technologies and is unique in Poland in using artificial sunlight, designed to test the efficiency of solar panels.

The Euro-Centrum building was awarded the Green Building Award in 2013 as one of the most sustainable buildings in Europe.

“The aim of our investment is to develop the technical infrastructure of the

Euro-Centrum Science and Technology Park in Katowice and to create the first laboratories for the development of energy-efficient technologies and renewable energy sources in the Silesia region,” Bobrzyński said.

“A key element of our project is to create the necessary conditions for the location and development of high technology companies which can benefit from the potential of the business and scientific environments that meet here.”

Skyscraper near Spodek goes on sale With a height of 72 meters, a little over 17,000 sqm of office space, and located in the city center, the office building owned

by Polish State Railways SA (PKP) has been put up for sale along with the full high-rise office complex in Katowice.

The property is situated in a very good location. In the next few years, it will surrounded by high-rise buildings of the former Silesia Regional Directorate of State Railways, as well as new cultural buildings such as the Silesian Museum and International Convention Centre, which also increases its attractiveness to potential investors. Not far away, because at a distance of about 1.5 km is Katowice Main Station.

The building complex was built in 1974, and rests on 0.7246 hectares. In its 18 floors are a total of 17,000 square meters.

The construction of the office building in Katowice LC Corp Wroclaw-based LC Corp plans to build a new 8-story office building (13,000 sm) with underground garage and adjacent retail space in Katowice. In August, the new development was started by general contractor Budimex. Project completion is expected by the end of 2014. The contract with Budimex is for nearly 60 million pln.

Construction of the office building is part of a larger project, which will include a skyscraper of 106 meters height. n

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Kraków Kraków to team with Slovakia on joint 2022 Winter Olympic bid Krakow is ready to submit a bid to host the 2022 Winter Olympics, in which it counts on Slovakia’s ski resort in Jasná in the Žilina Region as the venue for organising the alpine disciplines during the games, according to an agreement reached by a Polish-Slovak committee tasked with preparing the bid at a joint session in Demänovská Dolina in late August.

“It’s essential to take all the steps together,” said president of the Polish Olympic Committee Andrzej Krasnicki. “We want to set an example that such sporting events can be organised in co-operation between two neighbouring countries and nations. The idea is to focus on the Tatra Mountains area [both on the Slovak and Polish side],and so that both sides can benefit permanently from the effort.”

In addition, Juraj Blanár who represents Slovakia on the joint preparation committee disclosed that Krakow is expected to announce its official candidacy on November 14. “It’s subsequently slated to submit the bid supplemented with all the required attachments in March 2014,” said Blanár who also serves as governor of the Žilina Region and as a Smer MP. He also added that the ski resort in Jasná already holds a certificate granted by the International

Ski Federation (FIS). Nonetheless, “it’s up to the state and the regional government to completely develop high-quality infrastructure in the area”, Blanár said.

Philip Morris in 150 million pln office and production center expansion In July, Philip Morris Polska announced its plans to invest more than PLN 150 million in the Malopolska region, for the construction of new manufacturing and office facilities to produce tobacco for roll-your-own cigarettes. PMI said that it expects the construction of the new facilities to be complete by mid-2014 and the investment is expected to create circa 700 new jobs. Managing Director for Philip Morris Poland and Baltic States, Olek Grzesiak, commented, “I am really pleased that Krakow was chosen by Philip Morris International for yet another investment, which will further strengthen the position of our business in Poland and our ability to continue to compete efficiently and effectively in the European market.”

He said the choice of location was based on cost competitiveness, efficiency, availability of qualified staff and years of experience in the tobacco industry. Philip Morris Polska bought a tobacco plant in Krakow in 1996 from the Treasury, and since that time has invested more than $500 million.

In addition to production activities in Krakow, Philip Morris set up in 2009 its European Services Centre, for Europe-wide financial services, information technology and human resources. PMI employs 2400 people in Krakow, and produces more than 50 billion cigarettes per year. Menthol and slim cigarettes represent 33 percent of total production, and 70 percent of production is exported to nearly 70 countries. Labour Minister Wladyslaw Kosiniak-Kamysz estimated that it will bring jobs, not only those directly employed in it, but also to contractors engaged in the process of investment and for Polish tobacco growers.

“During the economic slowdown, it is a positive signal that the Polish economy is still competitive and attractive to foreign investors,” - he stressed.

IThe project will create - over the next few years - nearly 700 new jobs.

ECE to build new offices in Krakow

President of Philip Morris Polska Andrzej Dabrowski said that the new plantwill begin operations in mid-2014. After reaching full capacity it will employ close to 700 people.

“Krakow is a very important place on the map of Philip Morris International.

This factory is one of the most important of our plants and the third largest property of PMI in the European Union”, he added.

On land located at ul. Pawia in Krakow, developer ECE plans a new office building.

ECE already owns the land, and has recently ejected an illegal parking operation there. ECE has already received building permission to build a building of 24 metres height, in the vicinity of the shopping centre Galeria Krakowska. The front width of the building will be 84 metres, and ECE has said that the key target segment will be the BPO and shared services tenants. n

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Britain BPCC 21st ANNUAL BALL Saturday, 26th October 2013, Intercontinental Warsaw The Annual Ball is the BPCC’s signature social event and a highlight in the Warsaw events calendar. It has become one of Warsaw’s best known and prestigious balls, and is now coming into its 21st year.

This year the ball includes dancing to live music and DJ, there will be a welcome and opening by the UK Ambassador, fantastic prizes to be won at the charity auction & raffle. As always, there will be a number of foyer attractions – these have included a casino, cigar lounge, drinks bars, makeup corner, luxury chocolate stand, wine roulette…to name but a few. This is the ideal event for entertaining your clients,

City Investment News rewarding your employees or simply having a great night out with friends. To buy tickets please contact ball@bpcc.org.pl , tel. + 48 604 16 01 16. More information www.bpcc.org.pl/21ball n

Spain 12/09 Seminar: “How to establish a company in Poland and forms of doing business in Poland” The Polish – Spanish Chamber of Commerce and PwC invite you to a seminar: “How to establish a company in Poland and forms of doing business in Poland”. During the meeting we will present themes such as: Forms of doing

business in Poland: their presentation and comparison, registration procedures in case of individual business activity and company, obligations such as: accountancy and audit, sales tax settlement: CIT and VAT, payroll settlements (PIT), as well as other types of reports. n

17/09 Polish-Spanish commercial mission to the Republic of Belarus Polish-Spanish Chamber of Commerce, Ortus Consulting and Chamber of Commerce and Industry of Belarus organize a commercial mission to the Republic of Belarus for representatives of the Polish and Spanish companies and business organizations from different sectors: pharmaceutical, biotechnology, nanotechnology, IT, chemicals, engineering, transport and transport infrastructure, construction, food processing, etc.

In the program: conference with participation of the Chamber of Commerce and Industry of Belarus, the Belarusian Agency of Investments and Privatization, Department of Trade and Investment Promotion of the Embassy of the Republic of Poland in Belarus, Belorussian bank and office of lawyers; then - B2B meetings with Belarusian partners. n

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City Investment News 18/09 Relief from VAT and CIF on bad debts The Polish – Spanish Chamber of Commerce and ASB TAX organize practical workshop: Relief from VAT and CIF on bad debts. The workshop is addressed to management and financial and accounting personnel. The aim of the seminary is to present practical aspects of a new law regulation on bad debts which come into force on January 1st, 2013.

17-18/10 Polish–Spanish Forum of Renewable Energy The Polish-Spanish Chamber of Commerce and the Renewable Energy Association celebrate the 7th edition of Polish–Spanish Forum of Renewable Energy. Every year the event is attended by over a hundred entrepreneurs, experts and delegates from both countries interested in the renewable energy sector.

This year the Forum lasts two days. On 17th there will be a conference with presentations on legal and practical aspects of investing in Poland in the sector, national and European funds, directions of development of the sector both in Poland and in Spain, presentation of active attitude of the proinvestment regions and the profits from investing in renewable energy. On 18th participants can visit the city of Lublin where they will meet with local authorities and representatives of local business to establish new contacts in renewable energy sector.

Belgium Belgian Business Mixer 5 September 2013, Restaurant Batida, ul.

Marszalkowska 53 (Plac Konstytucji) The Belgian Business Mixer in Warsaw where new Members of the BBC will be presented. Special guests from the BelgianSwiss Chamber will also be present.

This event will be a great opportunity to broader your professional network and spend your evening in a very friendly atmosphere. During the event, a selection of delicious Belgian cuisines and Belgian beers will be provided and special activities organised. For more info and registration, please visit www.belgium.pl

International Family Picnic 2013 8 September 2013, ul. Dominika Merliniego 2, Warsaw (next to Warszawianka sports complex) The International Family Picnic is a traditional event organised for the 4th time jointly by three Chambers of Commerce (the Belgian Business Chamber, the PolishPortuguese and the Polish-Swiss Chamber of Commerce) and the Commercial Section of the Austrian Embassy. The event will this time take place at the picnic area of Portucale Restaurant (next to Warszawianka sports complex). We are greatly looking forward to meeting you and your family at the picnic in wonderful surroundings where you will be able to enjoy a wide variety of dishes from the barbecue, as well as taste some delicious Portuguese wines and Polish draught beers, and much more besides.

An entertaining urban game will offer participants the chance to discover more about Austrian, Belgian, Portuguese and Swiss cultures in a very exciting atmosphere. We have also prepared a range of enjoyable activities and attractions for children and adults alike, including tennis games, petanque, contests for children and workshops for adults. For more info and registration, please visit www.belgium.pl

Belgian Days 2013

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From 21 October to 15 November 2013 Location: Warsaw and Poznan From 21st October to 15th November 2013, the Belgian Business Chamber is organising, together with the Belgian Embassy, the annual Belgian Days. This year, the Belgian Days will be combined with the Belgian Escapade and will be held in two cities: Warsaw and Poznan. The undertaking will include

many different meetings with both a cultural and business dimension, such as a “Sharing Experiences” conference, a Gala Dinner, a Belgian Cinema Festival, a Belgian Evening - Mussels & Fries, a Belgian Beer Evening, a CEO Forum as well as a Belgian Music Festival.

United States Transatlantic Trade and Investment Partnership, TTIP The American Chamber of Commerce has released a bespoke report on the economic benefits of the TTIP partnership and its effects on Poland. The report is available via the AmCham website, as well as in distribution at Krynica at the “AmCham Diner”.

Australia Aussie investor and DCT Gdansk Port welcomed world’s largest container ship The first Triple-E class vessel, Mærsk McKinney Møller arrived to DCT Gdansk container terminal on its voyage from Asia to Europe. An Australian company, Macquarie Group (Global Infrastructure Fund II) is the major shareholder in DCT Gdansk, the largest deepwater container terminal in Poland allowing deep sea container vessels from Asia to directly enter the Baltic without the need for transhipment at other European Ports.

Balamara Resources strengthens its position in Central Europe Australian minerals explorer has been recently awarded the exclusive rights to develop the Nowa Ruda coal project in Poland. Balamara flagged this as an important breakthrough in the company’s ongoing search for major resource assets and underlined its focus on the development of this tier-one asset. The company also reported further strong results from ongoing resource in-fill and upgrade drilling Monty project in Montenegro. n

September 2013

Welcome to New York City!

Economic Forum, Krynica 2013

Tuesday, September 3rd

Thursday, September 5th

2:00 p.m. Doors open!

4:30 p.m. Transatlantic Trade and Investment Partnership (TTIP) – AmCham Panel and Report Launch (in partnership with The Kosciuszko Institute) 6:00 p.m. Business Card Lottery

9:00 a.m. Doors open!

10:40 a.m. AmCham Main Panel “Dialogue between government and business – how to bring Krynica to Warsaw?” (see Forum program for location) 2:00 p.m. Business Card Lottery

Wednesday, September 4th 9:00 a.m.

Doors open!

10:00 a.m.

AmCham Panel – Introduction to “Dialogue between government and business”

12:00 noon – Discussion and exclusive interviews with VIPs including continuously representatives of government, politics and business led by Dorota Warakomska 3:45 p.m.

Business Card Lottery

4:00 p.m.

“From manager to owner – how to execute and finance a MBO/ MBI transaction?” – discussion led by Enterprise Investors with representatives of: BRE Bank, Gessel law firm, Harvard Business Review Polska and AmCham.

5:30 p.m.

AmCham Panel - TTIP bis “Business without Borders – what will be the impact of TTIP?” with Elena Bryan, Senior Trade Representative, United States Mission to the European Union

6:45 p.m.

Private Cocktail Party of Bank BPH, GE and AmCham (by invitation only)

Find us in Nowy Dom Forum THE OFFICIAL MEETING PLACE OF THE AMERICAN CHAMBER OF COMMERCE IN POLAND

www.bizpoland.pl

Business Calendar September 2–3 September Investment Forum - Tarnów The Investment Forum in an accompanying event of the Economic Forum in Krynica.

Earlier editions of the Forum have proved that the event has played an important complimentary role in respect of Krynica’s meetings, a perfect introduction to extended discussion about development through investment.

2–5 September The International Defence Industry Exhibition Kielce The International Defence Industry Exhibition is the forum which brings together potential clients and suppliers; this is also the showcase for the latest military technologies, armaments and products for the army.

3–5 September The Economic Forum in Krynica Krynica-Zdroj The Economic Forum in Krynica, held annually since 1991, is a significant event in Central and Eastern Europe. Its mission is to create a favorable climate for the development of political and economic cooperation between the European Union and neighboring countries. Krynica is an important point on the political map of the world where the East meets the West. Every year it is attended by over 2,500 guests – the leaders of political, economic and social life and over 500 journalists from around 60 countries from Europe, Asia and America. It is the largest event of its kind in Eastern and Central Europe.

7th Regions Forum Krynica - Zdroj For the seventh time, leaders of local government will meet in Krynica-Zdroj at the Regions’ Forum. During this year’s conference, topics devoted to the financing, regional growth, cohesion policy, environment, digitalization, international cooperation, waste management and infrastructure investments will be discussed.

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BALTEXPO 2013 Gdansk On 3-5 September 2013 the 17th International Maritime Exhibition & Conferences BALTEXPO 2013 will bring together Polish and international representatives of the maritime economy who will showcase their products, technologies, services, solutions, achievements, potential, and development plans.

BALTEXPO will be a platform of interaction and cooperation.

8 September

25–27 September

International Family Picnic Warsaw The International Family Picnic is a traditional event organised for the 4th time jointly by three Chambers of Commerce (the Belgian Business Chamber, the Polish-Portuguese and the Polish-Swiss Chamber of Commerce) and the Commercial Section of the Austrian Embassy.

Eur opean Forum For New Ideas Sopot The European Forum for New Ideas is an international conference of business communities, also attended by representatives of the cultural sector, scholars and politicians.

10 September

1 October

Investing and Trading in CEE Warsaw The conference will bring leading capital markets and investment experts together for a profound reflection on the most relevant topics in the fields of bonds and equities as well as regulatory changes, data management, indexing and investment funds.

PZFN Developers Forum Wroclaw

12 September International Oktoberfest Wroclaw A joint event of the British Polish Chamber of Commerce, American Chamber of Commerce in Poland, German-Polish Chamber of Industry and Commerce, Irish Chamber of Commerce, and Polish-Portugese Chamber of Commerce.

12–14 September China Expo Poland Warsaw China Expo Poland is Poland’s largest trade fair dedicated entirely for economic cooperation between Poland and China. Three days of events will be accompanied by a number of conferences on effective cooperation with the Chinese.

14 September Rijsttafel Ball Netherlands-Poland Chamber of Commerce www.nlchamber.com.pl Grand Opening of The Four Colors (DoubleTree by Hilton) Lodz

16–18 September European Congress of Small and Medium-Size Enterprises Katowice Challenges and possibilities of development of small and medium-size enterprises will be discussed by the most significant personalities in Poland, representatives of science, politics and economy, as well as numerous foreign delegations.

23–26 September Polagra Food Poznan The biggest international food fair in Poland.

October

2-3 October PSEW Offshore Wind conference Sopot

7-9 October ExpoReal Munich

16–18 October Baltic Business Forum Swinoujscie - Heringsdorf Each year the Baltic Business Forum is becoming more popular among business people and politicians from Poland, Baltic states, and countries covered by the EU Eastern Partnership program.

17 October FDI Poland Investor Awards Warsaw, Hotel Intercontinental FDI Forum and Awards Gala for top foreign direct Investors in Poland, supported by 16 foreign Chambers of Commerce and PAIZ. www.FDIPolandAwards.pl

FDI Poland Investor Awards www.FDIPolandAwards.pl

19 October Caledonian Ball Warsaw The Caledonian Society of Warsaw will be celebrating 600 years of the Scottish Community living and working in Poland.

Details: martyn@saltireinternational.com 602 221509

24 October CEE Manufacturing Awards Warsaw www.manufacturingawards.eu/

26 October BPCC 21st ANNUAL BALL British-Polish Chamber of Commerce Warsaw, Hotel Intercontinental ww.bpcc.org.pl/21ball

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September 2013

the international retail property market 13-15 NOVEMBER 2013

Cannes - France

3 days of exhibition,

conference and networking to build the future of retail

8,200 participants 69 countries 2,300 international developers & owners 2,400 retailers 340 investment companies

MAPIC is a registered trademark of Reed MIDEM- All rights reserved

90 local authorities

REGISTER Before October 10th: â‚Ź 1,295 JoIn uS aT MaPIC 2013 www.mapic.com

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