BizPoland Magazine_October 2009

Expo Real: “Poland is on everyone’s wish list”

October 2009 nr 4(4)

Sopot and Kraków battle to pry Economic Forum from Krynica

This year’s Forum included 140 debates on key economic and political issues for the region, and an impressive array of top speakers – but poor infrastructure and access means its days in Krynica are numbered

Infrastructure: Consortia compete for multi-billion euro road-building contracts Events: Zebra Tower, Anna Walker fashion, Hong Kong promotes Chinese exports to Poland, Viva Mexico!, French Ambassador… and more…

2009

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October 2009

Table of Contents National:_ 4

Privatization – Eureko to get 12,75 billion pln in PZU settlement

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Business News – – – – –

6–7

Poland sees growth in Q3, IMF positive on rebound The IMF expects Poland’s GDP to grow by 1% in 2009 and by 2.2% in 2010 French GDF asks to look at books of Polish Enea CEDC revises upward its forecasts for the year Polish car sales up 8.1%

Infrastructure – Consortia compete for multi-billion euro road-building contracts

8–9

Cover Story – Sopot and Kraków battle to pry Economic Forum from Krynica – Annual awards distinguish leaders – “Heard in the hallways”

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Regions – Upper Silesia cities join forces to re-assert region’s power

12–15 ExpoReal 2009 12 German investment funds see opportunity in Poland’s property sector 14 „A quiet tone of optimism” 15 Deka’s deal machine gears up in Europe

16–17 Manufacturing 16 Manufacturing activity continues to contract in September

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Energy – –

Kulczyk to construct coal-fueled power plant Poland’s Tauron to trade energy on Czech market

19–23 Events coverage 19 20 21 21 22 22 23 23

BizPoland VIP event Hong Kong promotes Chinese exports to Poland Zebra Tower construction party Viva Mexico!

Point Park Properties re-brands French Ambassador hosts business mixer Anna Walker fashion show Polish Shopping Centre Council holds pre-MAPIC business mixer

Privatization

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Eureko to get 12,75 billion pln in PZU settlement Eureko, the Dutch insurance group, has finally secured a financial settlement and exit strategy from its ownership of PZU following a long-running dispute with the Polish government

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An agreement was signed during the first week of October between the Treasury Ministry and Eureko to pay Eureko an interim dividend in November 2009 worth €1.85bn (PLN12.75bn), and to create a special purpose vehicle (SPV) which will allow Eureko to eventually sell its shareholding. The SPV will hold 10% of Eureko’s total 33% shareholding in PZU while the Treasury will add 5%, and this operation will be sold through an IPO of PZU shares. Although the agreement states that the IPO must be before 1 January 2012, the Treasury intends to do this in mid-2010.

The agreement means Eureko will halt its arbitration, even though Willem van Duin, chairman of the executive board, acknowledged the firm could have gained more financial benefit if it had pursued the action. The advantage of this agreement is that Eureko will unlock its capital from the company, and no longer be entangled in delays related to the arbitration.

The disagreement was sparked after Eureko bought a 30% stake in PZU in 1999 when the firm was privatised - and the Polish government then blocked the sale of a further 21% controlling stake in the company. Eureko started arbitration in 2003 and legal battles have continued since then, after the Polish government failed to adhere to a settlement agreement in 2004.

Under the terms of this settlement which Eureko officials always hoped would provide it with an exit from PZU - Eureko will receive a dividend payment in November for its 33% shareholding as well as receiving 50% of the Treasury’s dividend, in total worth €1.8bn, said Gerard van Olphen, chief finance officer at Eureko.

Eureko is entitled to the economic benefits of the SPV, it can block any fundamental changes to the SPV, and the SPV will pass on to Eureko 100% of the IPO revenues on its

“I see no reason why a company like PZU could not be a leader, not just in this region, but in the whole of Europe,” – Andrzej Klesyk, PZU’s chief executive

10% holding - as well as an unspecified fixed price on the Treasury’s 5%. The agreement provides for guaranteed proceeds should there be no IPO before 2012.

The Dutch insurer has one veto on the timing of the IPO and it has the option to sell a further 5% of its assets at that time, while it can also sell 2% of its shareholding on the market annually prior to the IPO, until it holds 13% of shares.

In response, Eureko has agreed to give up its nomination rights to the PZU management board but it is allowed to have one seat from the seven which will be an independent expert concerning the IPO, and it has agreed it will no longer be active in the Polish financial market.

The entire process, once capital is freed up, is expected to improve Eureko’s solvency

by 18% by the end of 2009 while the settlement should provide total value of €2.2 billion.

PZU’s management believes the settlement allows the firm to move forward with international expansion. “I see no reason why a company like PZU could not be a leader, not just in this region, but in the whole of Europe,” said Andrzej Klesyk, PZU’s chief executive.

The insurer has embarked on two foreign expansions, small ventures in Lithuania and Ukraine. Now that the battle between shareholders is behind him and with a strong financial position, Mr. Klesyk is eyeing acquisitions, particularly the central European portfolio of AIG. “I would really, really like to buy that portn folio,” said Mr Klesyk.

October 2009

Business News

www.bizpoland.pl Poland sees growth in Q3, IMF positive on rebound Poland’s economy may have grown by about 1% in the third quarter, the central bank and the finance ministry said, highlighting the resilience of the only east European country to have avoided recession. A senior International Monetary Fund official also said also that the prospects for Poland remain positive.

“Our GDP estimates from the (inflation) projection for the third quarter will not differ much from what we’ve heard earlier today from the finance ministry”, central bank Governor Slawomir Skrzypek told reporters, echoing earlier comments

by Deputy Finance Minister Ludwik Kotecki.

Poland’s economy grew by a faster-thanexpected 1.1% in the second quarter, up from 0.8% in the first three months of the year. Analysts expect growth in the July-September period to stand at 0.8 percent. Although the pace of recovery hinges on the situation in the wider EU, Poland’s economy is well-placed to profit from the rebound, the director of the IMF’s European department, Marek Belka, told a conference in Warsaw.

The IMF expects Poland’s GDP to grow by 1% in 2009 and by 2.2% in 2010.

In August, Finance Minister Jacek Rostowski said Poland’s growth in the third quarter of 2009 could stand a touch below 1 percent and that for the whole of 2009 the economy should expand by at

least 0.7 percent. The lower house of the Polish parliament has started work on the 2010 budget bill which envisages 1.2 % growth next year. Analysts are more optimistic and forecast 1.8 % expansion.

French GDF asks to look at books of Polish Enea RWE is the sole bidder interested in acquiring a 67 % stake put up for sale by the Polish government and is expected to file a final bid.

“We have said earlier all shareholders that would like to review and analyse the documents previously seen by RWE could do so between Oct. 5 and Oct. 23”, Enea Chief Executive Maciej Owczarek said.

The statement did not mention if GDF, which owns a power plant in southern Poland town of Polaniec, is interested in acquiring the stake.

CEDC revises upward its forecasts for the year Central European Distribution Corporation announced that it is revising full year 2009 net sales guidance from $1.55-$1.68 billion to $1.58 - $1.70 billion and full year comparable fully diluted earnings per share guidance from $2.40 - $2.65 to $2.35 $2.50. The revised 2009 guidance takes into account the Company’s acquisition of additional equity interests in Parliament and the Russian Alcohol Group, which are being consolidated beginning at the end of the third quarter 2009, as well as dilution from the Company’s public offering of common stock in July, and recent exchange rate movements.

William Carey, President and CEO, commented: “The Company has continued to focus on its key objectives of increasing margins, gaining market share as well as improving working capital to continue to reduce our financial leverage. We believe that with the addition of two new lower mainstream brands that we are launching this quarter to our already leading portfolio in Russia, we are well positioned for a strong year in 2010.”

Polish car sales up 8.1% Poland’s new car sales rose 8.14 % year-on-year in September and stood at 24,991, according to auto research agency Samar. The agency also estimated that about one fifth of the cars sold could have been exported out of Poland because of the German ‘cash for clunkers’ scheme and relative euro strength against the zloty. ‘Although the activity of German customers has been fallen because the programme of subsidies (for people buying cars) has ended, dealerships are still fulfilling orders from past months when subsidies were still available,’ the report said. ‘Moreover the zloty level makes car prices in Poland still attractive for customers from the euro zone.’

In September 2008 the euro stood at around 3.25-3.50 zlotys while last month it hovered close to 4.05-4.25 zlotys. Samar also said that in January-September period 239,612 new cars were sold in Poland which is 1.7 percent more than in the same period of 2008. n

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October 2009

Infrastructure

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Consortia compete for multi-billion With just over three percent of roadways meeting European Union standards, Poland still faces a long list of improvement and repair projects before the much anticipated UEFA Euro 2012 football championship.

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as reasons, a look at any pre-war map of Poland shows a pattern of infrastructure development in the west, while most of Poland remained an agrarian landscape lacking the infrastructure networks of more industrialised countries such as Germany, England, or the Netherlands.

What little communist authorities did was concentrated in Poland’s industrial south.

There is much to do. Currently Poland has 815 km of modern motorway and about 2000 km of road classified as “dual carriageway” out

of a total of 423,997 km (source: CIA World Factbook). Tiny Belgium, by comparison, has 1,763 km of expressway.

Current efforts are focused on expanding Poland’s motorway network. The core of Poland’s motorway network is made up of three routes: the A1, A2, and A4. The A2 and A4 lead from the German border to Belarus and Ukraine, respectively, with the A1 forming the main north to south axis. The most developed of these to date, the A4, runs from the German border to

Igor Winiarczyk

Percentage chamge in road deaths between 2001 and 2008

The debate whether Poland will finish planned improvement schemes in time for Euro 2012 has become a national sport in itself. Big construction consortia with cost-effective tender offers will still find plenty of opportunities.

The fact that an inefficient and unsafe road network is bad for business is elementary. Firms delivering products and services have just as much difficulty getting to market as do their customers. Travel is slow and tourism suffers. The hordes of football fans plus support staff, officials, and journalists due to arrive in Poland are expected by some to have a difficult time in 2012, although Lech Witecki, director of Poland’s General Directorate of National Roads and Motorways (GDDKiA), is optimistic.

“GDDKiA’s priority at this moment is the completion of the motorways in Poland so that before June 2012 motorists will be able to use the roads which were outlined in the government’s 2008-2012 National Roads Programme,” said GDDKiA director Lech Witecki. “This entails the A2 from Poland’s western border to Warsaw, the A4 between Poland’s eastern and western border, and the A1 from Gdansk to southern Poland.”

Following the National Roads Programme, Poland’s infrastructure ministry has as of April 2009 signed contracts for the construction and renovation of 780 km of road with motorways representing over half of this amount.

Polish roads - as any Pole will tell you - are in poor repair, tragically unsafe, and unbefitting a European Union member state. Recent studies place Poland second-to-last in road safety (just ahead of dead-last Lithuania in a recently published ranking). Last year, 5,437 people died in road accidents in Poland. By comparison, coalition military deaths in Iraq and Afghanistan since 2003 total 6,037.

Although decades of neglect and poor planning by Communist authorities are often cited

Country

Luxembourg France Portugal Spain Latvia Belgium Germany Switzerland Estonia Italy Ireland The Netherlands(1) Lithuania Austria Sweden UK Israel Slovenia Finland Hungary Czech Republic Cyprus Greece Denmark Norway Malta Poland Slovakia Bulgaria Romania PIN EU27 EU25 EU15 EU10 EU2(2)

2001

2002

2003

2004

2005

2006

2007

2008

2001– –2008 (%)

69 8,162 1,670 5,517 558 1,486 6,977 544 199 7,096 411 1,083 706 958 551 3,598 542 278 433 1,239 1,334 98 1,880 431 275 16 5,534 614 1,011 2,454 55,724 54,363 50,898 40,322 10,576 3,465

62 7,655 1,668 5,347 559 1,306 6,842 513 223 6,980 376 1,069 697 956 532 3,581 525 269 415 1,429 1,431 94 1,634 463 310 16 5,827 610 959 2,414 54,762 53,414 50,041 38,886 11,155 3,373

53 6,058 1,542 5,399 532 1,214 6,613 546 164 6,563 335 1,088 709 931 529 3,658 445 242 379 1,326 1,447 97 1,605 432 280 16 5,640 645 960 2,232 51,681 50,410 47,218 36,400 10,818 3,192

49 5,530 1,294 4,741 516 1,162 5,842 510 170 6,122 374 881 752 878 480 3,368 467 274 375 1,296 1,382 117 1,670 369 257 13 5,712 603 943 2,446 48,601 47,367 43,978 33,143 10,835 3,389

46 5,318 1,247 4,442 442 1,089 5,361 409 169 5,818 396 817 773 768 440 3,337 437 258 379 1,278 1,286 102 1,658 331 224 17 5,444 560 957 2,623 46,426 45,356 41,776 31,447 10,329 3,580

36 4,703 969 4,104 407 1,069 5,091 370 204 5,669 365 811 760 730 445 3,300 405 262 336 1,303 1,063 86 1,657 306 243 11 5,243 579 1,043 2,573 44,143 43,125 39,509 29,591 9,918 3,616

43 4,620 974 3,823 419 1,067 4,949 384 196 5,131 338 791 739 691 471 3,056 382 293 380 1,230 1,222 89 1,612 406 233 14 5,583 627 1,006 2,794 43,563 42,564 38,764 28,352 10,412 3,800

35 4,275 885 3081 316 922 4467 357 132 4739 279 750 498 679 397 2718 412 214 343 996 1,076 82 1593 392 256 15 5,437 606 1,061 3,063 40,076 39,051 34,927 25,555 9,372 4,124

-49 -48 -47 -44 -43 -38 -36 -34 -34 -33 -32 -31 -29 -29 -28 -24 -24 -23 -21 -20 -19 -16 -15 -9 -7 -6 -2 -1 5 25 -28 -28 -31 -37 -11 19

(1) Figures have been corrected for police underreporting. In The Netherlands, the reported number of fatalities is checked by Statistics Netherlands (CBS) and compared individually to the Death certificates and Court files of unnatural death. This results in the real number of road traffic fatalities, which is about 10% higher than the police reported number. Undereporting is highest among bicyclists and non-motorvehicle accidents (2) Romania and Bulgaria

October 2009

Infrastructure

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euro road-building contracts Krakow, with development expected to continue to Korczowa on the Ukrainian border.

Another vital stretch which has been developed lately is the A2 from Bolewice near Poznan to Lodz, which will function as an important motorway crossroads once the A1 from Gdansk to Katowice is completed. Once complete, the A2 will serve as Poland’s main motorway route between the German border (and other vital European markets) and Belarus and further on to Russia.

The A2 segment between Lodz and Warsaw (Stryków to Konotopia), representing an important state-funded contract worth PLN 3.2 billion, will be built by DHV Polska, Arcadis, and Egis Poland, with construction expected to last until 2012.

Alcatel and Lucent Polska will introduce a toll collection system along a 103.4 km segment from Konin to Stryków, as delays associated with a tender finally clear.

An offer for a 7.5 km segment from Warsaw’s airport bypass to Puławska has been approved, with the consortium of TEERAG-ASDAG POLSKA Sp. z o.o./ TEERAGASDAG Aktiengesellschaft, Wiedeń / Intop Tarnobrzeg in charge of the project worth PLN 1.12 billion.

According to Poland’s Transport Ministry, A2’s eastern segment from Warsaw to Siedlce is expected to be completed by 2013, with further development to the Belarusian border expected by 2015.

The A1, the country’s main north-south motorway route, will serve as a vital road connection between Poland’s Baltic ports of Gdansk and Gdynia and the country’s most important industrial centre and most populous urban conurbation. So far the road has been developed from Gdansk to Torun, with a short segment bypassing Piotrków Trybunalski also in operation.

The long list of firms involved in the construction of the A1 includes Budimex Dromex and Mostostal Warszawa (building a 16 km stretch from Pyrzowice to Piekary Slaskie), Dragados SA (leading a project on a 20 km segment from Piekary Slaskie to Maciejow), and a consortium of Polmex, Mostostal S.A., Doprastav, Eurola Polska, and PRDIM S.A (building the segment from Maciejow to Sosnica). A short 2.2 km segment in the vicinity of Sosnica will be built by J&P AVAX S.A. Although motorways represent the most prestigious and most anticipated road building projects (and most badly needed), Poland’s Roads and Motorways Directorate is also very busy organizing the development of 16 express roads. Vital to the road network in their own

October 2009

right as regional highways, the express roads (marked “S” on highway maps) link regional centres and feed traffic into the motorway system.

In addition to regional routes, bridges and drainage systems will also be integral parts of construction, with firms such as Accionas Infraestructuras, Kirchner, Energopol, Eurovia Polska, and Sando involved on a wider range of projects.

As the list of tenders grows gradually, it is clear that cost-competitive bidders will

find plenty to do - before and after Euro 2012.

“We encourage foreign investors to participate in tenders announced by GDDKiA,” said Witecki. “There are not hampered by any barriers and the criteria for choosing a contractor is cost.”

Now if the Polish authorities could just streamline what many perceive to be a Byzantine public tendering process often crippled by appeals, the bulk of the government’s wish list n may be readied in time for kickoff.

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Cover Story “Heard in the hallways” Aleksander Kwaśniewski – Former President of Poland “The past is cruel, and the scars - even if less painful - will always remain as eternal elements of European and world history. However, Europe was able to build constructive dialogues at Krynica.”

Jose Maria Aznar – Former Prime Minister of Spain “Europe has its borders. They do not stop at Ukraine and Georgia - they are based on a system of values.”

Dick Roche – Irish Minister of European Affairs “Thanks to the EU, Irleand achieved economic selfreliance. We have become one of the richest states. Therefore, why did Irish people say “no” to the Lisbon Treaty? 49 percent simply did not understand this treaty! And 46% did note vote at all for the same reason.”

www.bizpoland.pl

Sopot and Kraków battle to pry This year’s Forum included 140 debates on key economic and political issues for the region, and an impressive array of top speakers – but poor infrastructure and access means its days in Krynica are numbered The buzz of helicopter blades spinning in the skies on the first day of the 19th Krynica Economic Forum was the second reminder of the remoteness of this sleepy town nestled against Poland’s mountainous southern border. While Presidents and Prime Ministers were carted in via air, most of the rest of us spent the better part of a full day just to get here. In our case, six hours via road from Warsaw. Many international attendees flew into Krakow, and then drove another 2½ hours to Krynica. The president of Polish Railways (PKP) arrived by car, opting for 6 versus 8½ hours rail travel time.

Annual awards distinguish leaders The Krynica Economic Forum annually distinguishes guests who have made significant contributions to the political and economic development of the region.

This year’s winners:

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Jerzy Buzek, President of the European Parliament The election of Jerzy Buzek to the position of President of the European Parliament in summer 2009 was both a psychological boost to Poles and political endorsement of Poland’s progress since the transition. Although Buzek’s reign as head of the government in 1997-2001 was not considered successful, his recent election has met with near-unanimous praise in Poland.

Jerzy Buzek holds a doctorate in chemical engineering, and he graduated from the Technical University of Silesia. Since 1989 he has been a member of the Solidarity trade/political union. From 1997 to 2001 he was Prime Minister of the government in Poland. After he lost the 2001 election he took a break from political life until 2004, at which time he became a Euro deputy, representing the Civic Platform (he got the most votes in the country with over 173,000 votes). During 2009, more than 393,000 Poles voted for him, and in the European Parliament he received a leading 555 votes from Euro deputies. He is married to professor Ludygarda Buzek and he has a daughter - the increasingly high-profile actress and model Agata Buzek.

Krzysztof Pawiński – CEO of the Maspex Group Distinguised for his success in regional expansion, Krzysztof Pawliński leads the Maspex group, which is now the largest manufacturer of fruit juices for central/eastern Europe. He always emphasizes that the friends he started the business with in 1990 were instrumental in his success. They started by importing coffee and cocoa whiteners and, after a

few years, Maspex opened its first facility in Wadowice. The firm manufactured soluble tea under the Ekoland brand, cappuccino and La Festa chocolate.

In the subsequent years he bought other companies, opened more facilities and started buying companies abroad, such us Walmark, the Czech and Slovak leader in the beverage industry. Last year Maspex’s revenues were 2.51 billion pln and Pawliński expects to grow another 5% in 2009.

Apart from its strong position in the fruit juices market, Maspex is also the leader in the Polish noodle market with its Lubella brand. Exports account for 36% of the group’s turnover. Maspex also sells outside the region, in western Europe, US, Canada and Middle East.

Jacek Podolski – President of the Foundation for Education for Democracy Mr Podolski is renown for spreading the gospels of democracy, free markets and the importance of a civil society. His foundation was set up at the end of the 1980s thanks to cooperation between Polish and American educators. Its first priorities are to provide support for teachers, educators, NGOs and activists from trade unions, youth and local authorities in Poland and other central European countries. The foundation has also established projects in Lithuania (1993), Latvia (1994), Belarus, Ukraine and Central Asia (1995), and in Mongolia, South Caucasus and Russia (1999).

Leszek Balcerowicz – Former Minister of Finance and President of the National Bank of Poland A special award was received by Leszek Balcerowicz, the former head of the National Bank of Poland.

It was almost worth it. Almost.

Despite the long journey, the economic forum has grown to be regarded as one of the strongest in the CEE region. The conference had 13 concurrent panels taking place throughout each day, and included nearly 140 debates on subjects ranging from macroeconomics, the “crisis”, energy security and policy, European Union integration and expansion issues, and feisty debates about the decline of American economic influence in the world. The forum drew about 2,000 participants from governments and businesses across Europe, with Poland being the dominant group, followed by strong representation from Spain and Sweden. Jerzy Buzek, newly-elected President of the European Parliament, attended, as did Leszek Balcerowicz and

He is a doctorate of economics and reluctant politician, and has been awarded the Order of the White Eagle. An adherent of the “monetarist” economic school, he is appreciated and hated for having enough courage to have conducted radical reforms, and leading the economic transformation in Poland.

His “shock-therapy” brought down a beastly inflation rate of 685,8% in 1990 to 60% just 18 months later. He introduced a more realistic exchange rate for the zloty, made it exchangeable, introduced banking reforms, and started fiscal and insurance reforms. He is now 60 years old. He was the first Minister of Finance in the first noncommunist government. He became Minister of Finance once again in 1997 and he held that post until 2000. In the years 2001 and 2006 he was the president of the National Bank of Poland. At present he lectures at the Warsaw School of Economics and at universities throughout the world.

Gunter Verheugen – EU Commissioner for Enterprise and Industry Today, he is an EU Commissioner for Enterprise Industry and Vice-President of the European Commision. Previously, at the time of Poland’[s entry into the European Union, he was the Commissioner for Enlargement. He was born in 1944 in Bad Kreuznach and moved skillfully through many levels of German politics. After quitting his job as secretary of the Liberal Party (FDP), he joined the Social Democratic camp (SPD). In 1998 he became the Deputy Minister of Foreign Affairs in Germany. A year later he was appointed EU Commissioner for Enlargement. He was the first foreigner to be chosen ‘man of the year’ by Polish weekly magazine Wprost in 2002 and this year President Lech Kaczyński awarded him the Order of Merit of the Republic of Poland. He frequently visits Poland and is a big supporter of the country. “It is important that such sympathies are possible regardless of past Polish-German relations”, he said. n

October 2009

Cover Story

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Economic Forum from Krynica Edmund Phelps, winner of the 2006 Nobel Prize in Economics.

Disappointingly for the Forum, the conference has been shunned over the past few years by Poland’s president, Lech Kaczynski, and also this year

by PM Donald Tusk (allegedly, due to him being afraid of questions on last year’s announcement at the World Economic Forum that Poland will join the euro in 2011). Therefore, unlike previous years, the top political elite from the region didn’t attend the conference. However, the CEOs of the majority of Warsaw’s blue-chip companies - especially those with government-ownership or subject to political influence - attended. Missing from the event are the small and medium-sized companies that are driven by pure entrepreneurs - perhaps they are just too busy to invest in the tiresome journey.

Next year’s event - the 20th - is already in the early planning stages, and insiders are saying that the organizer (The Eastern Institute) is weighing proposals from Sopot and Krakow to host the event. It may be already too late to change the venue for 2010, but the organizer would be wise to address the „remoteness” problem soon. Both Sopot and Krakow are impressive to international visitors, and would mean larger numbers of international attendees.

Chairman of the National Bank of Ukraine Petro Poroshenko was also cautiously optimistic, “September 11th last year marked the date for Ukraine when the media started to talk about economic crisis,” he said.”The effectiveness of the global anti-crisis measures means that one year on, we can now start to see some light at the end of the tunnel, but there is still a long haul ahead.”

Poroshenko appealed to Vice-President Verheugen for European solidarity. “We overcame the calls for protectionism in Ukraine, and this has helped to prevent a deeper downturn,” he said.”But we need to get out of this crisis together, and it is crucially important that we complete our work on the negotiations for a EU-Ukraine Free Trade Agreement, and also liberalise the EU visa regime for Ukraine.”

Commissioner Verheugen voiced full support of EU visa liberalisation for Ukraine. “Ukraine belongs to us,” he said, “It is in the EU’s interest to help Ukraine to come closer to the levels of stability that we enjoy in the EU. We need to have a deepening of relations with Ukraine. The lifting of visa requirements would have pragmatic benefits to business, but would also have a tremendously important psychological effect. I fully support it.” n

“Heard in the hallways” Filip Thon – President of RWE in Poland “A combination of private business with state-owned enterprises can have excellent results. Private companies focus on know-how, development and technologies. And, Europe needs particularly investments in new technologies, environmental protection or green energy.”

John Monks – Secretary General of the European Trade Union Confederation “Perhaps, next generations will have to pay for the crisis. Although the idea of a social welfare state was something we fought against, now, thanks to elements of a welfare state we can help people.

A welfare state is a stabilizing factor in Europe.”

Sebastian Mikosz – President of LOT Airlines “The state should first make necessary investments in companies, and later allow successful managers to manage them effectively. Only then can these companies be effective.”

Igor Barat – Plenipotentiary of the Government of Slovakia on the introduction of the common Euro currency “For a hundred years, we have shared with Poles the legend of the famous outlaw Janosik. I hope that soon we will also share the same European currency.”

Silesia

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Upper Silesia cities join forces to re-assert region’s power The newly-created Metropolitan Association of Upper Silesia (GZM) unites an amorphous region to better brand it as a base for modern manufacturing, a deep source of human capital, and with an unrivalled transport infrastructure

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Katowice has changed its game plan for building its image as a favored destination for foreign investment. Instead of going headto-head with rivals Wroclaw, Gdansk, or Warsaw, the city has pioneered the creation of a regional brand - Upper Silesia - that unites the 14 adjacent cities and re-asserts the region as a powerhouse in Poland.

With a population of 2 million in an area of 1218 square kilometres, the region boasts the highest population density in Europe. The human capital of the region is both a deep source of well-educated, skilled labor that supports a robust and increasingly-sophisticated manufacturing base - as well as a source of sales for major retailers, shopping centre developers, and residential real estate investors.

As western European manufacturers accelerate the long-term trend of relocating manufacturing to lower-cost central and eastern Europe, many are finding that Upper Silesia has the right mix of transportation infrastructure, deep labor pool, and regional government enthusiasm for new investment.

The sometimes tongue-twister names that make up the Metropolitan Association of Upper Silesia include Swietochłowice, Siemianowice Slaskie, and Piekary Slaskie, as well as Bytom, Chorzów, Dabrowa Górnicza, Gliwice, Jaworzno, Katowice, Mysłowice, Ruda Slaska, Sosnowiec, Tychy, and Zabrze.

The region has long played a significant role in Europe’s energy sector, with 60 coal mines in the region, including Kompania Weglowska, Europe’s largest coal producer. Industries such as coal, metallurgy, and manufacturing conti-

nue to dominate the region, providing a healthy tax base that supports its continued infrastructure development. Yet the region’s historically important industries are giving way to more hi-tech and human resource-intensive sectors, such as outsourcing centres and IT and software development. Display Link, for example, is a privately-held company with venture funding from Atlas Venture, Balderton Capital, Benchmark, DAG Ventures, and DFJ Esprit Capital. The company has opened its Research & Development centre in Katowice, attracted by the good quality of Polish engineers.

Other companies, such as Kroll OnTrack, have tapped the local labor pool - the region has more than 28 universities and 143,000 students - to help develop IT and software solutions that are sold world-wide. Labor costs are approximately 5 times lower than in Germany.

The region’s road infrastructure is probably the best in Poland - and the rail and air links are developing quickly. The TransEuropean Corridor III (Berlin-Wroclaw-Katowice-KrakowLvov) (A4 in Poland) passes through the region from west to east, and the TransEuropean Corridor IV (Gdansk-Katowice-Zylina-BratislavaVienna) (A1) runs south to north, linking Vienna to the Baltic sea port of Gdansk. The raw numbers support the theory that the region is becoming a major transportation corridor - cargo transport at the Katowice International Airport has grown 95% in the last two years. Passengers can connect to 34 international destinations on 170 flights per week.

Cities in the Silesia region are increasingly recognizing the value of their industrial heri-

tage, and are planning to redevelop large, postindustrial sites. For example, in Bytom, the property of the former “Powstancow Slaskich” coal mine, on an area of 298,000 square metres, is a prime candidate for development. “Our post-industrial mining properties, once a complicated issue for Silesian governments, are now a bargaining card in attracting investors, due to their advantageous locations and available utilities”, said Piotr Koj, mayor of Bytom.

The Katowice train station - long the black sheep in Poland’s rail-station family - has entered into a major redevelopment plan with Spain’s Neinver to transform the station from shame to fame. Due to re-open in spring 2012 - just before the Euro 2012 football championships - the station’s redevelopment plans include a complete rebuild of the passenger station, development of modern retail services, and erection of a major modern office building.

The region’s cities, the Metropolitan Association of Upper Silesia, and the Katowice Special Economic Zone are supporting development, through a combination of tax subsidies and incentives, and intensive support of investors who create jobs and opportunities for the region. The Katowice Zone was established in 1996, and many automotive, computer, and building companies, such as GM Opel, NGK Ceramics and TRW Braking Systems have their offices in this tax-advantaged zone, and its subzone in Gliwice.

Local authorities recognize that quality-oflife translates into better long-term profits.

The region’s initiatives, such as plans to build Poland’s largest water park, and the Museum of Silesia, continue to expand its appeal to families and young professionals. The city of Katowice has initiated a major city-centre re-development scheme, due to start in 2011, and transform the city centre into a pedestrianfriendly zone. And the city of Dabrowa Górnicza is also focused on converting antiquated sites into leisure projects - the city plans to construct a 60-metre pier into a major local lake, and will include a huge playground and volleyball courts. While Warsaw’s residents lament the distance to sea or mountains, Silesia’s citizens can be climbing the Carpathians within an hour of leaving the office.

Lastly, the supply of modern office space is set to double in the next two years, as Swedish, Dutch, and domestic developers recognize the region’s demand for quality offices. New Aclass office projects that are being developed, in stages, include Atrium (11800 GLA square metres), Reinhold Center (44000 sm), Centrum Biurowe Francuska (21500 sm), Katowice Business Point (17500 sm), Silesia Towers (76200 sm), and Silesia Business Park (41000 sm). n

October 2009

ExpoReal 2009

www.bizpoland.pl

German investment in Poland’s property The shift from „opportunistic” short-term investors to „core” long-term investors is just one of the conclusions from the recent ExpoReal real estate trade fair held during the first week of October in Munich. And one institutional investor said that „Poland is on everyone’s wish list”.

Pension and open-ended investment funds from Germany are the new power-players in Poland’s real estate financing sector.

The rapid retreat of traditional banks - Polish and foreign - has created a vacuum in the market for real estate development finance, and opportunities for long-term, patient investors.

The crisis has crushed opportunistic investors in real estate - but patient investors with long-term perspectives now see a silver lining in the crisis.

Adrian Karczewicz, head of finance and development at Echo Invesment: „The buyers used to be Anglo-Saxon groups with expectations of 25% annual returns, but now we are seeing more German buyers with a much longer-term perspective.” He said that this reduces the volati-

lity of the market. „Less opportunistic buyers is good for the sector, and suggests a more mature market. We are seeing more core investors coming in”, said Karczewicz.

Echo chose the Expo Real venue to announce its newest financing deal - a 100 million euro bank financing facility to be provided by EuroHypo AG to finance construction of the shopping centre-entertainment centre in Kielce. (The facility will be drawn down in installments to March 2012, with a repayment date of 2020). This is the largest real estate financing deal of the year, and suggests that strong developers with solid projects will be able to get finance for real estate development.

“We’ve also re-started our office project in Szczecin, and we have 10 shopping cen-

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ExpoReal 2009

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funds see opportunity sector tres in the development pipeline”, said Karczewicz.

Karczewicz said that the ability to finance a project is based on current cash yields - a distinct shift from two years ago, when projected (and usually overly-optimistic) exit valuations helped convince investors and bankers to finance a project. „The exit-case is now heavily-discounted.

It’s a new game, focused on current cash yields from the project”, he said.

Brian Patterson, managing partner and co-founder of AIG/Lincoln Poland, said that „if you can get the financing now to develop offices in Poland, you’re gonna make a killing in two years”. He added that yields/cap rates have decreased by 50 basis points over the last six months, as the panic of the first quarter has abated.

Patterson also dismissed the importance of exit scenarios in the current market. „I don’t care if I can’t sell right now. We have projects generating cash. My office building in Moscow (about 75,000 sm) is generating $50 million in cash - and we’ve got tenants like Microsoft and PWC in 11 year leases. I can wait”.

In fact, Patterson is one of the few developers „doubling down” on the Polish market - with plans to build an enormous „spec” office project in Warsaw that he hopes to bring to market in 2011.

*** Expo’s special conference dedicated to investment potential in Poland featured Michael Kroger (Helaba Landensbank of Frankfurt), Alan Aleksandrowicz of the Gdansk Economic Promotion Agency, Adrian Karczewicz of Echo Investment, and David Yearn of First Title insurance firm. Kroger said that open-ended pension and investment funds are increasingly targeting Poland as an investment destination.

Aleksandrowicz of Gdansk said that the impact of EU funds for Poland may be under-estimated. „EU funds of more than 65 billion euro, plus another 10 billion + euro of support funds from Norway and

October 2009

Switzerland, will generate enormous results, especially in consumer consumption”.

Gdansk’s biggest priority is selection of an investor to develop the area of „Hay Market and Crayfish Market” in the city centre. Tender documents must be submitted by 30 November. The project comprises development of approximately 5 ha of land owned by the Municipality of Gdańsk, and adjacent land held in perpetual lease by PKP SA (Polish State Railways). The area is to be developed into a multi-functional urban and architectural complex combining trade and services, residential, recreational and entertainment functions, offices, and hon tels.

Expo by the numbers As generally expected, this year’s Expo Real, the 12th, showed a decline in attendance of around 15% to 21,000 visitors from 73 countries (24,800 from 78 countries in 2008). In addition to the visitors, the exhibiting companies brought 14,750 representatives to the trade fair. Expo Real 2009 thus hosted over 35,000 participants. 1580 companies from 34 countries exhibited at Expo Real 2009. The top ten visiting countries next to Germany were in order - United Kingdom, Austria, the Netherlands, Switzerland, Poland, France, the Czech Republic, USA, Russia and Luxembourg.

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ExpoReal 2009Ω

www.bizpoland.pl

„A quiet tone of optimism” Certainly the Expo heard some sobering news about the European commercial sector, in a report from property consultancy Savills. Although some national sub-markets had a pick-up in leasing activity over the early summer, the overall European market still suffered from low leasing activity and falling rents, said the report. Take-up dropped 44% versus the same period in 2008, and prime rents fell by a whopping 10.5% in the third quarter of 2009.

Rising unemployment is still the biggest obstacle to recovery of the property market and demand is expected to drop further over the next six months in scores of locations across the continent identified by Savills.

Rents are predicted to drop in 70% of locations and office rents should be down by

11% over the course of 2009. Another survey by JonesLangLasalle shows direct industrial real estate investment across all of Europe down 45% from the second half of 2008, and a 50% drop from the first half of last year.

These surveys paint a depressing picture, yet there has been some better news from Expo. Several surveys suggest Germany may be the first sub-market within Europe to witness a full recovery of the commercial property market, that French banks are returning to the commercial sector with funding for a string of high-profile projects, and that Spanish and Portugese property firms frustrated with their own domestic banks are now selling buildings for good prices in a bid to generate cash for new schemes.

But perhaps the best news of all came from central and eastern Europe. The region suffered rapidly in late 2007 and throughout 2008. Most investors, being based in the west of the continent, simply retreated to their home market, or simply sat on their hands and did not invest at all.

Yet they are now returning to CEE, according to Doug Hardman, European Investment Director for DTZ. He says the region’ s most developed countries - such as Poland and the Czech Republic - are poised to benefit more than emerging countries such as Bulgaria. „Poland is on everyone’s wish list, and recent major investments in Hungary are a sign that the appetite for risk is increasing n there”, said Hardman.

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October 2009

ExpoReal 2009

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Deka’s deal machine gears up in Europe The downturn has forced many players to take a time-out, but Deka’s investment team is still actively hunting for deals.

Buoyed by a return to strong inflows, German open-ended funds have been able to flex their muscles more than ever in the European real estate investment markets in recent months, led by Deka Immobilien - the largest provider of open-ended real estate funds. Both the volume and scope of Deka Immobilien’s investments this year have been prodigious, and managing director Thomas Schmengler says the acquisitions will continue. “I would say we have invested 1-1.2 billion euro so far this year, and I expect we will remain an active buyer, investing 2- 2.5 billion euro for the whole year.

Recent transactions include the acquisition of an office building in the French city of Lyon for 40 mln euro; a hotel in Got-

henburg, Sweden for 41 million euro, the Rosenquartier in Hanover for 46 million euro and a logistic centre in the Netherlands for 42 million euro. The fact that the investment volumes of these deals were all around the 40-45 million euro mark is concidential, says Schmengler. “It depends on the type of fund. Our Special Funds do deals in the top 20-40 million euro range, and up to 60 million euro in some cases. Our open ended funds can do larger deals of 100-200 million euro depending on the quality and location of the asset”.

Deka illustrated this firepower in July when one of its funds acquired the 21,000 m2 Deloitte House in the central business district of Warsaw from construction company Skanska for 117 million euro. Other recent transactions in Poland include the purchase of Gryzbowska House in Warsaw in the first half of 2009 and the purchase of Andersia Tower in Poznan for more than 80 million euro in February 2008 from Von Der Heyden Group - at a recordn breaking cap rate.

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October 2009

Manufacturing

www.bizpoland.pl

Manufacturing activity continues to contract in September

Kutno has already been chosen by 14 other investors which means it is the second best, after Łódź, sub-zone in terms of attracting investors.

Poland’s manufacturing activity paused in September after increasing month-onmonth in the last seven months, according to the latest survey from Markit Economics and HSBC. The headline purchasing managers’ index stood at 48.2 in September, same as in August, reflecting further worsening in overall business conditions. Moreover, this was the consecutive-slowest rate since May 2008.

A reading above 50 indicates expansion, while a reading below 50 signals a contraction.

Output rose for the second consecutive month, but the expansion was at a marginal pace, reflecting an overall drop in new orders. Further, a fall in new work and spare capacity led to further cuts in the workforce, with employment now declining for the 17th consecutive month. The rate of job-shedding, however, was unchanged from August’s 11-month low. A postive sign is that the backlog of work rose at the fastest pace in three months.

Despite a rise in output, the volume of inputs purchased declined. Average input prices increased at a faster pace in September, due to higher prices of metals and the strengthening of the zloty. The average lead time increased for the first time since March 2008.

Commenting on the latest PMI data Juliet Sampson, Chief Economist for Emerging Europe at HSBC said, “A protracted decline in employment suggests consumption may falter in the months ahead and that 3Q GDP is softer than 2Q. However, Poland appears to have avoided recession nonetheless, and while the recovery may slow, it is unn likely to stop”.

OnetDataCentre - in the Kraków Special Economic Zone Video streaming demand drives Onet.pl to invest in state-of-the-art servers. In midSeptember, the ribbon in front of the building in Pychowice was cut by Łukasz Wejchert, President of Onet.pl’s Management Board and professor Jacek Majchrowski, president of the city of Krakow. The ceremony was also attended by representatives of Krakow Technology Park.

The server centre is one of the most modern in the world. Onet.pl will now be able to transfer video streaming to 200,000 users. Onet.pl Group has obtained permission for another investment - to be located near the server centre. The company has plans to construct a building which will include an office and a TV studio of the group’s TVN station.

The Krakow Technology Park has attracted another investment by Małopolska Information Technology.

Japanese invest 120 million pln in Dolny Śląsk New investments by Lafarge and Procter & Gamble

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Two new production facilities opened in September - and the biggest Procter&Gamble factory in Europe.

An official foundation stone-laying ceremony took place in Cementownia Kujawy (Kujawy Cement Mill) owned by Lafarge Cement on September 15th. The mill is lcoated within the Pomerania Special Economic Zone.

The ceremony was attended by Rafał Bruski, Kujawy-Pomorze Voivode; Piotr Całbecki, Marshall of the Kujawy-Pomorze region; and Barcina Michał Pęziak, mayor.

Lafarge Group was represented by Guillaume Roux, Lafarge deputy president, Nicolas Fourier, head for CEE and Luc Callebat, president of the management board. The ceremony celebrated completion of the first stage of the investment works which were conducted in both Cementownia Kujawy and Cementownia Małogoszcz. Over the last two years 84 million euro has been invested in the two cement mills. Lafarge is a leader on the Polish construction market and produces cement, concrete and plaster.

The official opening ceremony of the new Procter & Gamble production facility took place in late September and was attended by

PAIiIZ President Sławomir Majman. The new facility is the biggest Procter&Gamble factory in Europe and the company’s third investment in Poland. The investor’s first plant was opened in the Warsaw district of Targówek in 1994. The company has 3,200 employees and has invested USD 500 million in Poland. The factory in Aleksandrów Łódzki cost USD 50 million and employs 300 workers.

Motor company TBAI has invested in Nowogrodziec - Wykroty, located within the Kamienna Góra Special Economic Zone. This is the first TBAI investment in the European Union.

Italians invest in Kutno Lampre will construct a 96 million pln production facility manufacturing metal sheets for domestic appliances. The investment will be located in the Kutno sub zone of the Łódź Special Economic Zone.

The new factory will be constructed within the next two years, and is expected to employ 100-120 people.

“At the moment Lampre has been supplying a number of companies from central Europe and transporting its goods from Italian Monza, which undoubtedly is a costly and long process. The city has invested around 15 million pln in the zone’s technical infrastructure so far. The fact that several other Italian companies also opted for Kutno surely influenced the investor’s decision”, said Kutno’ s president Zbigniew Burzyński.

The first constuction project will be on a 8 hectare lot, and is expected to start in October. The production facilities will consist of a stamping press and a paint and welding shop. Starting from June 2011 the new company plans to reach production capacity of 280,000 frames and car-seat coatings a year, which will then be delivered to the assembly plant of Toyota Boshoku Group in Europe.

Iwona Krawczyk, President of the Kamienna Góra Special Economic Zone sees the investment as among the most important projects in the zone. „The Japanese will

October 2009

Manufacturing

www.bizpoland.pl invest here 120 million pln. Chances are that the project will be one of the biggest investments not only within our zone, but also in the whole region”, said Krawczyk.

Masaki Suzuki, President of the TBAI Poland management board, said: „Today we have only a germ of our future plans. We will use and combine state-of-the-art technologies. We will provide our clients from all over the world with products of the highest quality, and we will create 420 new jobs in Poland.”

Car components manufacturer opens new facility in Wałbrzych Special Economic Zone Germany-based Keiper, a producer of car components, has announced the initial launch of a new facility, constructed on a 10ha lot, to produce structures for passenger car seats, complete truck seats and guide rails for heavy goods vehicles. Keiper was granted permission to operate in the Skarbimierz sub zone of the Wałbrzych SEZ „INVEST-PARK” in August 2008. The company said that it will employ at least 400 new workers and will invest 53.5 million pln. The project is expected to be completed by December 2010.

The factory in Skarbimierz is the second, after the Świebodzin-based facility, Keiper investment in Poland. The opening ceremony was attended by company’s representatives from Germany and delegates from the Opole and Brzesko authorities.

SeFaKo invests 70 million pln in the Starachowice Zone “SeFaKo” opened a new assembly hall in the Sędziszów sub zone of the Starachowice SEZ. The investment, worth almost 70 million pln, will create 150 new workplaces. Construction of the assembly hall, which measures 15,500 square metres, was finished in early October. “SeFaKo” will produce boilers and other energetic devices, and the facility will serve as a centre for technical reviews and product shipments to customers. The facility is located on 4.5 hectares and also includes a research laboratory and a multifunctional technical building.

Packaging firm buys land for 6.2 million pln in Suwałki The Suwałki Special Economic Zone put its first real estate out to tender in the Białystok sub-zone. The properties were purchased

by Masterpress. The company specialises in the production of packages with the usage of flexographic and offset print. The company bought 2 hectares of real estate. The properties were sold at the opening bid price - 6.21 million pln.

October 2009

Danish factory in Gdańsk creates 175 jobs Flügger’s investment is a part of its longterm strategy in which Poland will be the centre for their activities in central and eastern Europe The Danish Ambassador to Poland and top representatives of the cities of Gdansk and Sopot attended the inauguration of a new, technologically-advanced factory of the Flügger company in Gdańsk-Kokosze. The new plant will produce wallpaper, and includes warehousing and storage, technical and training services, administration offices. Production will start in the spring of 2010 in Gdańsk. The central storage warehouse has capacity of 3200 crates and will become Flugger’s main logistics centre for central and eastern Europe.

Cargotec to employ 200 at new plant in Starogard Szczeciński The new plant will play a crucial role in Cargotec’s long-term supply strategy. The plant will supply European markets and will reduce the firm’s costs of production and transportation. It will also enhance Cargotec’s purchase strategy in central Europe.

Cargotec announced the investment plan in April this year and in June bought 41 ha of land. Production should start in the second quarter of 2010. The plant is planned to support other facilities in the production of Cargotec’s appliances for reloading of commodities.

“Stargard Szczecinski offers excellent road and waterway connections to our markets in Europe”, said Axel Leijonhufvud, Cargotec’s Executive Deputy President for Product Supply.

Cargotec offers goods loading and unloading solutions on land and at sea. The firm has annual revenues of 3.4 billion euro.

Cadbury completes extension of chocolate factory in Bielany Wrocławskie The extension of the facility started in February 2008 and was completed in September, 2009. The factory’s area expanded from 13 000 m2 up to 30 000 m2. The facility will now be capable of producing double the amount of products for the brands Cadbury and Wedel.

Cadbury is one of the largest foreign investors in Poland, and has so far invested more than 200 million euro. Newest investments include: extension of the Bielany Wrocławskie factory, modernization of Wedel’s factory in Warsaw and construction of a new chocolate factory in Skarbimierz.

These ventures form part of a complex strategy which makes Poland one of the investor’s major links in the chain of Europe-wide distribution. The factory employs 650 n people.

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Energy

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Kulczyk to construct coal-fueled power plant

Kulczyk Holding, the company controlled by Jan Kulczyk, is planning the construction of a coal fueled power plant in the outskirts of Tczew.

Currently, the representatives of the company are in negations over the purchase of land for this purpose. Between 2010-2011, Kulczyk Holding will carry out geological studies and acquire relevant permits, which are

necessary to carry out the investment. The commencement of construction is planned for 2012, while the operations should be launched within four years.

The cost of the new power blocks, with capacity of 1,600 MW, will amount to some €3 billion. The management of the company has decided to construct the plant in the Pomeran nia district, as it lacks electrical energy.

Poland’s Tauron to trade energy on Czech market Polish state-owned utility Tauron will launch an energy trading unit in the Czech Republic, the first step in a planned expansion to tap regional energy markets

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The company said it wanted to sell energy both to wholesale and retail customers in the Czech Republic, home to the region’s biggest utility power group CEZ. The subsidiary will be called Tauron Czech Energy.

“Thanks to the new company, we can expand our activity on to the markets of Central and Eastern Europe,” Tauron head Dariusz Lubera said in a statement. “We will start with the Czech market as it is geographically closest to our operations.”

Tauron, which produces over one-third of the country’s energy, is almost entirely based in the southern Polish region of Silesia. It did not say when its new Czech unit would begin trading power.

The utility, which mines coal, produces, and sells energy, is set to debut on the Warsaw Stock Exchange to raise about 4 billion zlotys needed for investment in its producn tion facilities and expansion.

Polish regulator paves way for IPO of utility PGE Poland’s markets regulator cleared the prospectus for the share sale by the country’s top energy group Polska Grupa Energetyczna (PGE), paving the way for what is expected to be Europe’s largest initial public offer in 2009.

The listing of new shares worth up to 15 percent of the the state-owned utility is expected to bring in more than 1 billion euros ($1.5 billion).

The issue prospectus for the sale of up to 259.5 million shares will be published in early October.

The deal, arranged by UniCredit and Goldman Sachs, would be Europe’s biggest this year and the second-largest ever in Poland after bank PKO BP’s $2.3 billion listing in 2004.

Sources told Reuters earlier this month bookbuilding would start next week and the IPO would be priced in the week of Oct. 26.

The market debut is expected in early November.

PGE, which is responsible for the country’s plan to build at least one nuclear plant by 2012, needs cash to finance an extensive investment plan aimed at modernising outdated, underperforming and heavily polluting coal-based energy plants.

PGE will join Czech CEZ and Polish Enea as the third listed utility in eastern Europe.

FX Energy Begins Production From Roszkow FX Energy, Inc. announced in late September that the facilities and pipeline are complete and gas production has started on the Company’s Roszkow well in western Poland. The well is currently in the start-up phase. By early October the well was expected to reach its planned daily production rate of 15 million cubic feet of gas per day (mmcf/d) gross, 7.35 mmcf/d net to FX Energy. The well produces from a Rotliegend sandstone reservoir at a depth of 3,000 meters.

Rotliegend wells in Poland and throughout Europe typically maintain plateau production for several years before declining. The Polish Oil and Gas Company owns 51% and operates the Roszkow well. FX Energy owns 49%.

“Roszkow will more than double our daily production. With a strong price environment in Europe, this increased production should provide the discretionary cash flow we need to expand operations in our core Fences area in Poland over the next several years,” said David Pierce, president of FX Energy. “We are working with our partner now on preparations for the next several 3D defined wells. We expect to see the start of drilling in the next 3 to 4 months,” said n Pierce.

October 2009

Events

www.bizpoland.pl

BizPoland VIP event

Business Calendar for_ October–November_ For full details or to add an Event, click on www.BizPoland.pl/calendar

October_

September's event at the Hotel Intercontinental - organized jointly with EuropaProperty.com - focused on Poland's commercial real estate sector, with sponsors including Reinhold, TJL residential developers, and Cameron McKenna law firm. More than 150 guests attended, including top execs from UBM, EHL, Mayland, EC Harris, and Pirelli n Pekao.

13 October 5Th Annual Residental Market Dreamtime Conferences, Intercontinental Hotel, Warsaw, www.eurobuildcee.com Committee on Logistics, Logistics-retail FMCG market in Poland, Piotrkow Trybualski, www.ahk.pl Academy of Creating Capital, Poznań,www.sii.org.pl 15 October Polish - Peruvian Economic Forum, Warsaw, www.kig.pl Polish - Spanish III Renewable Energy Forum, Warsaw, www.phig.pl Academy of Creating Capital, Gdańsk, www.sii.org.pl 16 October Poznan Game Arena 2009 – Fair Multimedia and Entertainment, International Trade Fair Poznań, www.gamearena.pl Symposium and gala – Green Building Council, Krakow, www.wnp.pl 17 October 17 BPCC Annual Ball, www.bpcc.org.pl Wielkopolskie Housing Fair, AWF Hall, Poznań, www.tabelaofert.pl XV Conference on Heating Market – REC 2009, Nałęczów, www.cire.pl 18 October RAT RACE 2009, Park Skaryszewski, Warsaw, www.maraton2009.pl 19 October Tri City – Automotive Fair, Gdansk International Fair, www.gdansk.pl 20 October Discover Poland – workshop, Poznań Congress Centre, Poznań, www.discoverpoland.mtp.pl Reinhold Center, Construction Party, Katowice, 18:30 SURFPROTECT 2009 – International Trade Fair for Security Space, Expo Silesia, Sosnowiec, www.exposilesia.pl Academy of Creating Capital, Krakow, www.sii.org.pl 21 October Tour Salon – Fair of Regions and Tourist Products, International Trade Fair Poznań, www.tour-salon.pl/

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Events

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Business Calendar for_ October–November_ Continued from page 19 DISCOVER Poland – The biggest workshop for the tourism industry, International Trade Fair Poznan, www.discoverpoland.mtp.pl Sienna Rakowy Market in the center of Gdansk, in the heart of Europe, Gdańsk, www.gdansk.pl Joshua Bell concert “Music for the good of the world”, Museum of the History of Polish Jews, Warsaw, www.jewishmuseum.org.pl 22 October Academy of Creating Capital, Warsaw, www.sii.org.pl VI Energy Fair, Jachranka, www.cire.pl Food Business Forum 2009, Hotel Westin, Warsaw, www.foodbusinessforum.pl BizPoland VIP Business Mixer, Hotel Marriott, www.BizPoland.pl 23 October The Gdansk Metropolis: A PR Trick or the next stage of progress? British Polish Chamber of Commerce meeting, Sheraton Sopot Hotel, Sopot, www.bpcc.org.pl XVI International Piano Competition Frederic Chopin (last day), Warsaw, www.infochopin.pl 26 October Investment during the crisis. Construction, infrastructure and municipal investments, Sheraton Hotel, Warsaw, www.wnp.pl 27 October Tax optimisation for business restructuring, Warsaw, www.bpcc.org.pl Barcelona Meeting Point, 27-30 October, www.bmpsa.pl 28 October Globe Forum 2009, Gdańsk, www.gfbn.com Conference “Office buildings in Poland 2009”, Hotel Marriott, Warsaw, www.biznespolska.pl.

29 October Tasty Classics, Hotel Bristol, berkeley@fnok.pl

Hong Kong promotes Chinese exports to Poland

Over 180 exhibitors from Hong Kong and China are looking to drum up new business from Poland, especially looking for distributors and importers of manufactured products, both high-end electronics and simple shoes.

The Fair, which was held from 21-23 September at Warsaw's Expo XXI, was organized by the Hong Kong n Trade Council.

November_ 3 November Nationwide Congress PETROBIZNES Fuels, Chemicals, Gas, Hotel Holiday Inn, Warsaw, www.cire.pl 4 November MeetingsPoland.pl Expo & Forum 2009, Expo XXI, Warsaw, www.expoxxi.pl Facilities and Services Fair and Training Conference CEE BTF, Expo XXI,Warsaw, www.expoxxi.pl

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Zebra Tower construction party Austrian develop S+B Gruppe celebrated the construction of the new Zebra Tower in Warsaw, the company's first project in Poland. The site was purchased in 2006 and was originally a joint venture with Immoeast, but S+B Gruppe bought out Immoeast in December 2008. The office building will have 17,800 square metres of office space, and the cost is approximately 60 million euro. "The project is on schedule and will be ready for occupancy at the end of 2010", said Reinhard Schertler, Managing Director. n

Viva Mexico!

The Mexican Ambassador to Poland hosted the Mexican Independence Day celebration on 16 September. Diplomats and friends of Mexico feasted on tortillas, tacos, and tequila at Warn saw's Hotel Marriott.

Business Calendar for_ October–November_ Continued from page 20 Fairs and events Incentive ADRENALIN, Expo XXI, Warsaw, www.expoxxi.pl Central European Economic Forum, Expo XXI, Warsaw, www.expoxxi.pl International Conference – New Markets, New Opportunities – 20 years of transition in Central and Eastern Europe, Dresden, German-Polish Chamber of Commerce, www.ahk.pl HydroSilesia 2009 – Equipment and Technology Fair Industry water supply – sewerage, Expo Silesia, Sosonwiec, www.exposilesia.pl 5 November 15th Annual Construction & Property Conference, Intercontinental Hotel, Warsaw, www.eurobuildcee.com Economic Forum, Andel’s Hotel, Łódź, British-Polish Chamber of Commerce, www.bpcc.org.pl 6 November Boat Show – Sailing and water sports, International Trade Fair Poznan, www.boatshow.pl 9 November EURO 2012: Benefits versus Costs British Polish Chamber of Commerce Meeting, Sheraton Sopot Hotel, Sopot, www.bpcc.org.pl 12 November Dolny Slask Political and Economic Forum, XI edition, Krzyżowa, 12-14 November, http://wrocek4u.pl/ 17 November “Solvency II – the new regulatory requirements of the European Union”, Warsaw, www.mmcpolska.pl 18 November MAPIC – The International market for retail real estate, 15th Edition, Frances, Cannes, Palais des Festival, www.mapic.com International Fair of Technology and Production PROTECH 2009, Wrocław, www.halaludowa.wroc.pl II Conference ENERGETYKON 2009.

Energy-Climate-Economy-Society, Hotel Victoria Sofitel, Warsaw, www.cire.pl II Lublin Energetics Energy Fair 2009, Lublin International Fair SA, Lublin, www.cire.pl

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Events Business Calendar for_ October–November_ Continued from page 21 19 November EXPO XXI Warsaw International Expocentre, Warsaw, www.bpcc.org.pl Media Summit – how digitization is changing the face of the market CCC, Hotel Radisson Blu, Warsaw, www.mmcpolska.pl NUCLEAR POWER – international conference, Warsaw, www.ciro.pl Scientific Conference “Climate Change and Society”, Warsaw, www.ciro.pl 20 November Conference: Mining / Energy, Katowice, www.wnp.pl 21 November XXVII Winter Housing Fair, “New HOUSE, New APARTMENT 2009”, Torwar, Warsaw,www.targimieszkaniowe.pl 24 November XI WIND ENERGY FORUM, Hotel Marriott, Warsaw, www.psew.pl Trade Fair for Communes, Cities and Regions – Gmina 2009, Poznań, www.gmina.mtp.pl Poleko – International Trade Fair for Environmental Protection, Poznań, www.poleko.mtp.pl InvestField, Real Estate & Investment Fair, Poznań, www.investfield.mtp.pl 26 November Auto Show Poland, Expo XXI, Warsaw, www.expoxxi.pl Engineering for Public Safety 2009, Expo Silesia, Sosnowiec, www.exposilesia.pl 27 November Professional Investor Conference, Władysławowo, www.profesjonalnyinwestor.org.pl

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Point Park Properties re-brands

P3 hosted a gala evening of cocktails, fine food and gambling-tables at Warsaw's Villa Foksal. CEO Ian Worboys flew in from the company's Prague headquarters and Craig Maquire, MD of the Poland operation, briefed guests on the status of the company, n including new name and development plans.

French Ambassador hosts business mixer The French Chamber (CCIFP) held their first post-vacation mixer, featuring the French Ambassador to Poland Francois Barry Delongchamps, and more than 120 members and guests.

Monika Constant, the new General Director, welcomed guests and gave an update of the CCIFP's various activities.n

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October 2009

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Events

Anna Walker fashion show

Anna Walker rolled out her new designs at a private fashion show in Warsaw. Born here, she later studied at New York's prestigious Fashion Institute of Technology. In 1985, she opened her atelier in New York and later in Montreal. For the North American market she created the label Ania Zofia. Her reputation for hand-painted silk's have placed her in top n specialty boutiques throughout the US and Canada.

Polish Shopping Centre Council holds pre-MAPIC business mixer The Polish Shopping Centre Council held its pre-MAPIC business mixer at the elegant Villa Foksal in Warsaw. Patrick Delcol updated the members about the PRCH's development plans, as well as the key annual MAPIC event in Cannes, to be held in n late November.

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