Poland Today Business Review+ No. 007

1 year subscription: EUR 690 (PLN 2760) Newsletter Editor: Lech Kaczanowski lech.kaczanowski@poland-today.pl tel. +48 607 079 547 Sales Contact: James Anderson-Hanney james.anderson-hanney@poland-today.pl

No. 007 / 14th October 2013 / www.poland-today.pl / magazine, conferences, portal, newsletter

MANUFACTURING & PROCESSING Green light for Billfinger Berger's offshore structures factory in Szczecin page 2 BANKING & FINANCE Moody's raises outlook for Polish banks page 3 Number of millionaires in Poland to double by 2018, report says page 4 ENERGY & RESOURCES State investment vehicle cofinances Grupa Lotos' Baltic exploration project page 5 PKP Cargo ranks as number two in Europe, behind Deutsche Bahn AG.

Photo: PKP Cargo

PKP Cargo goes public in PLN 1.6bn IPO Poland's leading rail freight operator PKP Cargo will be floated on the Warsaw Stock Exchange on 31st October in this year's largest initial public offering. By divesting a 50% stake in the cargo business, rail giant PKP aims to cut its huge debt. page 12

Liebrecht & wooD completes completes Plac Unii

Flemish developer Liebrecht & wooD and its Polish partner BBI have completed the PLN 600m retail & office complex Plac Unii in Warsaw's city centre. Buyers are said to be lining up. page 9

EDP Renewables opens third Polish wind farm page 6 PROPERTY & CONSTRUCTION Land buyers in Poland still very cautious, says CBRE in new report page 7 CONSUMER GOODS & RETAIL GTC sells Krak贸w mall, signs key tenants for new Warsaw projects page 10

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SERVICES & BPO Staffing company Work Service acquires Polish arm of Antal International page 11 British Vue completes takeover of cinema operator Multikino page 12 TRANSPORT & LOGISTICS Polish bus producer Autosan goes bankrupt page 13 POLITICS & ECONOMY Government finalizes pension overhaul bill, asset transfer to take place in February 2014 page 14 Warsaw mayor keeps her job after too few voters turn up for recall referendum page 15 Liberal party Palikot Movement changes name, gets facelift page 16 KEY FIGURES Up-to-date macroeconomic figures, currency & stock market data and lots of other hard-to-find info pages 17-19

weekly newsletter # 007 / 14th October 2013 / page 2

MANUFACTURING & PROCESSING

Green light for Bilfinger Bilfinger Berger's offshore structures factory in Szczecin Bilfinger Crist Offshore (BCO), a joint venture of German construction and engineering company Bilfinger Berger, Gdańsk-based shipbuilder Crist and Mars FIZ, and investment fund belonging to the state industrial development agency, ARP has obtained permission to invest in the Szczecin section of the Euro-Park Mielec special economic zone. The investor has pledged to build a factory of foundations and steel structures for offshore platforms and wind parks at the cost of PLN 326m and create 462 jobs at the site.

Located at a plot of land formerly belonging to Szczecin's Gryfia shipyard, the project will include a 30,000 sq.m production building as well as a 4,200 sq.m paint shop. According to plans, it will be operational by the end of 2015, to achieve its target capacity and employment three years later. As far as BCO's ownership structure is concerned, with its 62.5% share Bilfinger Berger is the majority investor, with Crist and Mars FIZ holding the respective 32.5% and 5% stakes. The state investment fund is to exit the joint venture after a certain period of time. Structures made in Szczecin will be exported mainly to Germany and the UK. The investors estimate demand for offshore wind tower structures to reach some 5,500 units over the coming decade and due to Szczecin's logistically favorable location and skilled workforce, the new plant aims to play a major role in this new market segment. The collapse of the Szczecin shipyard a few years ago left

some 5,000 staff, including many experienced welders, without work. Although the city has seen some large investments since, it still has a sizeable pool of qualified employees for new projects to tap into. This explains ARP's involvement in the project. Established in 1990, ARP is a government-run business entity that oversees restructuring of former state-owned industrial giants, allocation of public aid and management of special economic zones. Dealing with the fallout of the Szczecin shipyard's collapse was one of ARP's most challenging tasks to-date.

Crist is a private Polish ship-builder and producer of steel structures. With some 1,700 staff (most of them on temporary contracts), the company turned over PLN 1bn last year, with net earnings reaching PLN 80m. Crist acquired a dock and other key production assets from the closed-down Gdynia shipyard, where it has since restored production. Since its founding in 1990, the company has built some 300 vessels and completed a number of orders for the wind power industry.

Headquartered in Mannheim, Bilfinger Berger is a multinational German company specialized in civil & industrial construction, engineering and related services. In the recent years it has participated in many key infrastructure development projects in Poland.

With approximately 60,000 employees globally, the company turned over EUR 8.6bn last year. Bilfinger Berger is one of Europe's leading builders of offshore wind farms.

Bilfinger Crist Offshore's plant will be located on an island in Szczecin, which by 2015 is to be connected with the mainland by a brand new bridge. Photo: Gryfia "We strongly believe in the offshore market, and we are absolutely sure that offshore wind will play a significant role in the future energy market. Bilfinger Berger has large experience and a strong track record in the installation of offshore foundations. We believe that the extension of our portfolio by not only installing but also producing foundations will give us significant advantage over our competitors," Josef Federl, Head of Bilfinger Berger Ingenieurbau GmbH, BB's Wiesbaden-based infrastructure development unit, told Poland Today's Lech Kaczanowski last year, when the JV deal was struck.

The Crist-ARP-Bilfinger Berger project is one of several investments in the Szczecin area that count on an impending boom in Europe's off-shore wind energy sector. For in-stance, Belgian company Teleskop seeks to build a factory of cranes for offshore applications. The construction of their EUR 20m plant is to launch in November. Polish Tele-Fonika Kable is reportedly mulling production of undersea cables at the former Gryfia yard, also with offshore wind parks in mind.

"The Baltic and North Seas are the target markets for Bilfinger Berger when it comes to offshore wind foundations. Hence the upcoming offshore wind projects in Polish waters are of great interest to Bilfinger Berger, especially since those will be very close located to our new production plant in Szczecin. From today’s perspective Bilfinger Berger is expecting a maximum realizable capacity of 500 to 1,000 MW of offshore wind energy in Polish waters until the year 2020,

weekly newsletter # 007 / 14th October 2013 / page 3

which equals 80-160 OWECs [Offshore Wind Energy Converter; ed] with an average size of 5-7 MW. Those OWECs could be arranged in 1-2 offshore wind parks.

Since from our point of view there are still uncertainties regarding the general framework for off-shore wind energy in Poland, we cannot judge at the moment when the first Polish offshore wind park will be operational," Mr. Federl said last year and considering that the situation on Poland's renewable energy market has since gotten even more complicated, Polish offshore wind parks still seem like a song of a very distant future.

Consequently, Moody's expects a recovery in interest income, the Polish banks' main revenue source. In the improving economic environment, Polish banks are better able to gradually re-price their liabilities and improve net interest margins, towards levels comparable to other regional peers, the rating agency said.

In the first half of 2013 the Polish system has further improved its leverage and capital adequacy ratios, prompted by the Polish Banking Supervisor (KNF)'s recommendations on profit retention.

DATA BOX: BANKS IN 1H 2013 BANKING & FINANCE

Moody's raises outlook for Polish banks Moody's Investors Service has raised the outlook for Poland's banking system from 'negative' to 'stable' on the expectation of a recovery in economic growth and consequent stabilization in bank profitability. The rating agency said that stable outlook also reflects the banks' improved capitalization, increased riskabsorption capacity and largely self-sufficient funding profiles, which make the system resilient to the persistently challenging conditions in international wholesale markets.

Moody's expects that this recovery in growth will translate into a stable operating condition for banks, with improved demand for credit and other banking products, both of which will support core profitability.

After relatively weak GDP growth during 2013, which Moody's estimates will not exceed 1.4%, stronger growth of around 2.5% is likely in 2014, the agency said.

In the first half of 2013 Polish banks posted PLN 8.18bn in net earnings, marking a slight improvement (+1.9%) y/y. However, according to the financial markets regulator KNF, most banks (530 institutions representing 56.2% of the sector's assets) saw their results weaken against January-June 2012. The decline was particularly severe among cooperative banks, which reported a 28.1% drop in profits.

The KNF points to a deepening consolidation of Poland's banking sector, with the top five players controlling 46.4% of assets (up from 45% a year earlier) while the top ten lenders holding a 70.2% (against 64.6% in mid-2012). Total lending increased by 3.4% y/y in 1H 2013, with loans to households rising by 2.8%, and loans to companies going up by 3.4%. Employment in the sector dropped by 1,400, even though the number of bank branches increased by 43.

Source: KNF

Moody's believes that during the outlook horizon, Polish banks' capital resources will remain solid, mainly driven by internal capital creation, with an aggregate capital adequacy ratio expected to rise 1 to 2 percentage points above the ratio of 14.7% registered as at end-2012. The system's resiliency is also boosted by

granular funding sources featuring a domestic deposit customer base with limited reliance on wholesale markets.

Corporate and retail deposits continue to account for a significant portion of total funding with a number of foreign-owned banks relying on medium-term FX loans from their parents. While Moody's expects that parental funding will be scaled-down, this process is likely to be gradual, similar to the trends seen in the past two years.

However, the rating agency added that the current negative pressures on asset quality will continue, at least during the initial period of the outlook horizon, with the non-performing asset quality ratio moving up slightly and nearing the 10% mark on a system-wide basis.

BANKING & FINANCE

Rate setter resigns but monetary policy to remain stable in 2014 Polish President Bronislaw Komorowski has accepted a resignation by Monetary Policy Council (RPP) member Zyta Gilowska. According to unofficial sources, health problems were behind Gilowska's resignation from Poland's interest rate setting body. President Komorowski will have three months to name a replacement for Gilowska, but his spokesperson said a nomination would likely come sooner.

Appointed by the late President Lech Kaczyński, Gilowska had missed council sittings in early 2013 and mid 2012, but records place her on the council's hawkish wing during her term. In the easing cycle just closed, she supported only the December 2012 rate cut

weekly newsletter # 007 / 14th October 2013 / page 4

and has voted against every cut in 2013 for which she was present for voting. The RPP is made up of: Council Leader, who is the governor of the central bank NBP, and nine other members, selected in equal parts by the President, the Sejm and the Senate. Members of the MPC are chosen to serve for six-year terms.

As for Poland's monetary policy, it should remain stable throughout H1 2014, central bank NBP governor Marek Belka said on Tuesday. In an earlier interview, for Polish news agency PAP rate setter ElĹźbieta Chojna-Duch said that the RPP should maintain interest rates at the current level to end-H1 2014, as inflation will stay below target level and economic recovery will be gradual, and could even consider cuts were that outlook to notably worsen. Another rate setter, Jerzy Hausner, said during last week's debate organized by enterprise development agency PARP that the Polish economy has entered a recovery stage and therefore a GDP growth rate of 3% may be attainable next year.

of Russian millionaires. A millionaire is classified according to US dollars in the report, and Credit Suisse believes that in spite of the credit crunch, Poland's situation echoes a global trend.

According to Credit Suisse, from mid-2012 to mid2013 aggregate global household wealth increased by 4.9% in current dollar terms to USD 241 trillion, or USD 51,600 per adult in the world, an all-time high for average net worth, despite the continuing challenges posed by the economic environment. Inequality remains a huge issue as the top 1% controls 46% of global wealth.

More millionaires in the making Number of millionaires in '000 in selected countries in 2013 and 2018 2013 US

2018

Change (%)

13,216

18.618

+41%

France

2,211

3,224

+46%

UK

1,529

2,377

+55%

Germany

1,735

2,537

+46% +84%

Brazil

221

407

BANKING & FINANCE

Korea

251

449

+79%

Number of millionaires in Poland to double by 2018, report says

Mexico

186

273

+47%

Singapore

174

235

+35%

Indonesia

123

194

+58%

Russia

84

133

+58%

Hong Kong

103

168

+63%

Turkey

102

158

+55%

Poland

45

85

+89%

The next five years are expected to see the number of Polish millionaires grow by 89% to 85,000, according to the 2013 edition of the Global Wealth Report prepared by Credit Suisse. Currently there are an estimated 45,000 people with assets of USD 1 million or more in the country. Among 15 individual countries listed by Credit Suisse, Poland will likely be the largest gainer in relative terms, ahead of Brazil, Korea, and Malaysia (see table) and in 2018 the country's millionaire population will catch up with the current number

Malaysia

38

67

+76%

Chile

54

86

+59%

Source: Credit Suisse Global Wealth Report 2013

"Our research shows that global wealth has doubled since 2000, quite compelling given some of the economic challenges of the last decade. We expect this trend to continue in the foreseeable future, driven largely by Emerging Markets' strong economic growth

and rising population levels," said Credit Suisse Research Institute's Michael O'Sullivan.

Wealth is expected to rise by nearly 40% in the next five years, reaching USD 334 trillion by 2018. Credit Suisse expects that the pace of wealth generation in emerging markets will continue to be greater than that of developed markets. The share of wealth of emerging markets will likely reach 23% by 2018 at USD 76.9 trillion, an increase of 0.5% on average each year. The annual rate of increase is projected to be 9.1% for emerging markets against 6.1% for developed markets.

Estimates by Credit Suisse suggest that the number of global millionaires could exceed 47 million in 2018, a rise of nearly 16 million. While the number of millionaires in emerging economies is still far below the levels in the US (18.6 million) or Europe (15.0 million), it is expected to increase substantially in the next few years. China could see its number almost doubling by 2018, raising the total to 2.1 million. Pushed by Brazil (an extra 186,000) and Mexico (an extra 87,000), Credit Suisse also expects a substantial increase in the number of millionaires in Latin America.

Credit Suisse says its analysis comprises the wealth holdings of 4.7 billion adults across 200 countries – from billionaires in the top echelon to the middle and bottom sections of the wealth pyramid, which other studies often overlook.

IN BRIEF: Poland's top insurer PZU is bidding on a 51.5% stake of Croatian insurer Croatia Osiguranje at EUR 900.9 per share and additionally offers a EUR 50m capital increase of the company, Croatian government wrote on Twitter. PZU's rival in the bid, local tobacco and tourism group Adris, is bidding on a 43% stake, offering EUR 790.27 per share plus EUR 130m capital injection, the

weekly newsletter # 007 / 14th October 2013 / page 5

government said. Croatia currently holds 80.2% in Croatia Osiguranje and plans to retain "a minimum of 25% plus one share" and a "maximum share of 30%," the country's Finance Ministry said back in August.

only in profitable projects, operating on market terms, as an entity supplementing the debt market with additional services.

Poland's only domestic oil producer Lotos Petrobaltic's crude oil production in '000 tons

ENERGY & RESOURCES

State investment fund supports Lotos' Baltic exploration project

Poland

300

Lithuania

"The launch of commercial production from the B8 field is planned for the end of 2015. We estimate the field's reserves at 3.5m tons of crude oil. Lotos Petrobaltic expects to produce approximately 220,000 tons of crude oil per annum from the field," said Zbigniew Paszkowicz, President of Lotos Petrobaltic and Vice-President, Chief Exploration and Production Officer, at Grupa Lotos.

250 200 150 100

Poland's state investment vehicle Polskie Inwestycje Rozwojowe (PIR) is to co-finance an oil exploration project operated by Polish oil refiner Grupa Lotos.

Created last year as part of the government's "Polish Investments" program to stimulate economic recovery by investing future privatization proceeds into projects of strategic importance, PIR has agreed to inject up to PLN 563m in Lotos Petrobaltic's B8 exploration project in the Baltic Sea. "The investment in the B8 development project has an average risk exposure profile, as PIR only invests in low- or medium-risk projects, which usually fall within the realms of infrastructure or private equity funds.

The kinds of high-risk projects that are typical of venture capital, are out of question," said PIR President Mariusz Grendowicz. The Lotos Petrobaltic project is PIR's first ever investment.

Registered in June, PIR will manage about PLN 10bn in assets that are acquired through the privatization of state-owned companies. Later this year Poland plans to sell stakes in its rail freight operator PKP Cargo and utility Energa. The fund acts as a capital investor and a mezzanine finance provider for governmentapproved infrastructural investments. All investments undergo detailed feasibility studies as PIR takes part

50 0 2005

2006

2007

2008

2009

2010

2011

2012

Source: Grupa Lotos

At present, Lotos Petrobaltic holds four production and nine exploration licenses in the Baltic Sea. Last year, the company produced nearly 190 thousand tons of crude oil and 21m cb.m of natural gas from under the Baltic. The B3 field, which is currently in production, will be operational until 2026 and, thanks to the launch of the unmanned PG-1 platform, production in the period is expected to remain stable at 100 thousand tons annually.

As far as the B8 field is concerned, Lotos has so far financed all development from its own coffers. The agreement with PIR provides for the establishment of a special purpose vehicle, a wholly-owned subsidiary of Lotos Petrobaltic, to carry out the remaining work on the B8 field. This includes the conversion of Lotos Petrobaltic's drilling platform into a production unit, the preparation of subsea infrastructure, and the drilling of the last injection wells before the field comes on-stream.

Lotos Petrobaltic's Baltic Beta rig extracts oil from the B3 field.

Photo: Grupa Lotos

The project will be worth about PLN 1.6bn, with PLN 750m provided by Lotos and the remaining PLN 900m coming from PIR and commercial banks. The government will provide PIR with funds before the final deal with Lotos is signed in Q1 2014, Mr. Grendowicz told reporters. The two companies have to yet to arrange bank funding, he said.

"The upstream segment is viewed by Lotos as its strategic priority until 2015. As part of the 'Effective and Rising 2013-2015' program, the Baltic Sea will be the focus of Lotos Petrobaltic’s operations. According to available geological data, potential crude oil reserves in the company’s Baltic license areas are estimated at 30m tons, and making optimum use of these assets will

weekly newsletter # 007 / 14th October 2013 / page 6

allow us to improve Poland's energy security," commented Paweł Olechnowicz, CEO of Grupa Lotos.

In addition to the B3 and B8 fields, Lotos Petrobaltic and its US-owned partner CalEnergy Resources Poland are working together to establish the feasibility of developing and beginning production from the Baltic B4 and B6 natural gas fields. If the results are positive, commercial production is expected to commence in 2016/2017. The estimated aggregate production output of both fields is approximately 250m cb.m. Furthermore, as part of their work with PGNiG, the company is involved in development of onshore licenses in Kamień Pomorski and Górowo Iławieckie..

"Our current installed capacity is 320 MW, which places us on the top of the Polish wind energy sector.

We have installed 130 MW of new capacity so far this year and we are currently constructing additional wind farms with a 60 MW installed capacity. We have a diversified portfolio of projects that are on different stages of development totaling more than 1,000 MW," EDPR's Rafael Solís Hernández tells Poland Today.

portfolio of 555 MW in projects, including 130 MW in advanced projects, while Energa Hydro has acquired a 51 MW wind farm and 220 MW in wind farm projects under development. In the subsequent transaction with Iberdrola (worth PLN 840m), PGE and Energa purchased operating wind farms with installed capacity of 70.5 MW, with contracted off-take of electricity as well as certificates and pipeline of projects with planned capacity of 36 MW at an advanced stage of development.

Poland's installed wind energy capacity in MW 3,000 2,500 2,000

ENERGY & RESOURCES

The new wind farm features 53 wind turbines, each with a capacity of 1.5 MW. According to EDPR, the farm's expected electricity output will be able to supply some 70,000 to 80,000 households. As part of the project, the investor has improved some 27km of local roads in the Pawłowo area. Besides contributing to local infrastructure, the investment will be a long-term source of revenue for the commune as well as landowners.

1,000 500

EDPR is one of merely a handful of foreign investors (the other active ones being Germany's RWE and France's EDF) that seem determined to grab a share in Poland's wind farm market. Earlier this year Denmark's DONG Energy Wind Power and Spain's Iberdrola Renewables sold their wind energy projects in the country to Polish utilities PGE and Energa Hydro. As part of the DONG deal, PGE has taken over 60.5 MW in operating wind farms and a

Source: URE

*2013

2012

2011

2010

2009

The Madrid-based EDPR has seen exceptional development in recent years and is currently present in 11 markets (Belgium, Brazil, Canada, Spain, the US, France, Italy, Poland, Portugal, the UK and Romania).

Its key shareholder, Energias de Portugal is Portugal's largest industrial group and the only Portuguese company to form part of the Dow Jones Sustainability Indices (World and STOXX).

0 2008

Photo: EDPR

2007

EDPR's wind farm in Margonin.

2006

Portugal's EDP Renewables (EDPR), the world’s third-largest wind energy producer, has launched a new wind farm in Pawłowo near Gołańcz, some 70km north of Poznań. With a target capacity of 80 MW, Pawłowo is EDPR's third Polish wind farm after Margonin (also near Gołańcz) and Korsze (60km northeast of Olsztyn, near the Russian border).

1,500

2005

EDP Renewables opens third Polish wind farm

*) as of end of June

"EDPR is committed to Poland and the Polish wind energy market. We believe that wind energy is a competitive source of energy and we look forward to execute additional projects. However, the regulatory uncertainty in the Polish energy market results in lower availability of finance for wind power projects, thus limiting the number of new investments. The introduction of the new law on renewable energy sources, which is currently being postponed, will potentially allow EDPR to move forward with additional investments," says Rafael Solís Hernández. "The regulatory changes are a key risk and play a vital role in decision making. We detest lack of stability and transparency as far as regulations are concerned, and according to the

weekly newsletter # 007 / 14th October 2013 / page 7

current new draft the latter are likely to change quite seriously, resulting in more risk aversion among investors."

Poland's installed renewable energy capacity came to 4,858 MW in mid-2013 , up by over 1,800 MW compared to end-2011, according to energy market regulator URE. Wind power capacity increased the most, reaching 2,807 MW as of June, followed by hydropower capacity amounting to 966 MW and biomassfueled plants with 941 MW, the data showed. Renewable energy currently represents slightly over 10% of Poland's energy supply. The country seems to be way on its way to reach its 15% target for the share of renewable sources in gross final consumption of energy in 2020.

ENERGY & RESOURCES

EBRD supports wind farm projects in Poland Polish Energy Partners (PEP), a Warsaw-listed renewable energy developer, majority-owned by Kulczyk Investments, has inked a major loan agreement with the European Bank for Reconstruction and Development (EBRD). The Londonbased institution is to lend up to PLN 292m (EUR 69.5m) to a group of three special-purpose companies fully owned by PEP for the construction of three wind farms in Poland.

The EBRD finance will support the construction and operation of three wind farms in northern and northeastern Poland - Gawłowice with a capacity of 41.4 MW, Rajgród with 25.3 MW and Skurpie with 36.8 MW, adding up to a combined a capacity of 103.5MW. According to estimates, the resulting reduction in

CO2 emissions in Poland should come to approximately 179,000 tons per annum.

EUR 1.1bn in nearly 50 renewable energy projects across its region so far.

The total capex on the three projects is to reach PLN 835m (EUR 198.8m). This includes an EBRD commitment of PLN 242.7m for phase one (creating a capacity of 66.7MW) which can, with the bank’s consent, be increased by an additional PLN 49.3 million to be used for the third wind farm (phase two). The first phase of the project should be completed by the end of 2014 and the second by September 2016, the EBRD said.

Besides development, management, and sales of wind farms, PEP specializes in outsourcing of industrial energy, particularly in the paper industry, as well as production of pellets from agricultural biomass. The company had sales revenues of PLN 132m last year (down from PLN 147m in 2011) with an EBITDA of PLN 45.7m (against PLN 59.8m in the prior year.

"Today’s signing represents a milestone for the financing of renewable energy investments in Poland. Given the challenging regulatory and financial environment in the sector the loan is expected to give a boost to PEP's ambitious initiatives. The EBRD is proud to be associated with this effort to increase renewable energy production, which we consider very important for Poland to meet the EU target for the renewable energy share in the country’s energy mix," commented Lucyna Stańczak, EBRD Director for Poland.

PROPERTY & CONSTRUCTION

PEP develops and sells wind farms.

Land buyers in Poland still very cautious says CBRE in new report According to the latest Expert’s View report by property consultancy CBRE, after years of slowdown, the number of transactions involving land lots is gradually on the rise, although it remains below the 2005-2008 level. According to CBRE experts, investors are much more prudent as far as site selection is concerned, and tend to put more effort into analyzing its development potential. Unlike during the boom years, developers are interested chiefly in the most attractive plots of land for medium-sized projects. Very large parcels of land sell rarely, as making proper use of them would require substantial capital expenditures.

Photo: PEP

To date the London-based institution has invested more than EUR 6.3bn in all sectors of the Polish economy with a combined project value exceeding EUR 33bn. The energy sector is one of the EBRD's top priorities in Poland and according to the bank the loan to PEP illustrates its commitment to the decarbonization of the Polish economy. The EBRD has invested over

"When determining the attractiveness of a property, investors have two ways of looking at it, focusing either on the value of each sq.m of the plot, or, more importantly, on its value per sq.m of residential or lettable space that can be developed there. This factor is critical when determining the feasibility of an investment," said Grzegorz Woźniakowski, Associate Director at Valuation Team in CBRE Warsaw office.

weekly newsletter # 007 / 14th October 2013 / page 8

The most attractive areas for office developers are the centers of large cities, mainly Warsaw and the most dynamic regional capitals, such as Kraków and Wrocław. The highest rents can be obtained in the centre of Warsaw, but land prices per sq.m tend to vary depending on its characteristics. Retail centre developers look mainly for sites in areas where competition is weak and the amount of available modern retail space remains low. A deciding factor for this investor group are often valid planning permissions. Those purchasing land for industrial facilities are mainly interests in locations in the vicinity of both existing and planned major highway junctions near large cities, such as Stryków near Łódź, Gądki near Poznań, Upper Silesia, and the greater Warsaw area (Ożarów, Pruszków).

and Tri-City, the potential of the sector in other Polish cities is being assessed more critically, CBRE said.

Land prices in Poland

"At the same time we are observing an increase in supply prompted by sale of properties by large State Treasury companies, such as PKP and Poczta Polska, and by perpetual lessees who run unprofitable business at high quality land and are unable to pay the fees for perpetual usufruct after the latter have gone up significantly in the years 2011-2012," added Grzegorz Woźniakowski.

Prices of land per sq.m of possible GLA (offices, retail, warehouses) or usable floor space of a dwelling (residential) Parcel use

Offices (EUR)

Major

Warsaw

Warsaw

central

non-central

regional cities

Smaller cities

700-1500

150-400

100-300

<100

>500

400-500

300-400

*200-300

-

<100

***20-50

<20

>1,500 600-1,500 400-1,000

<500

Retail (EUR)

The price discrepancy between very good and medium-quality parcels of land has increased considerably since the boom years. While the best plots in the centers of large cities have managed to maintain their value, discounts on less attractive parcels happen to reach even as much as several dozen percent. The recent drop in construction prices may positively affect the demand for land, but restricted access to financing remains a major factor inhibiting growth in the sector, as apart from meeting strict credit criteria, investors have to finance the purchase of land themselves, since loans typically cover only the construction costs.

**100-250 Warehouses (EUR) Residential (PLN)

*) over 300,000 inhabitants **) other cities ***also areas of large cities or near transport junctions ****) prime locations in city centre or in best non-central areas

Source: CBRE

The most attractive sites for housing projects are those situated in well-known or dynamically developing residential districts – in Warsaw these are Mokotów, Żoliborz or Wola. Other key factors include proximity to parks and other green areas, good transport connections to the city centre and relative distance from major transportation arteries. Although developers are still interested in land for housing projects in Kraków

IN BRIEF: Dutch real estate investment trust firm Meridian Properties is cancelling its IPO on the Warsaw Stock Exchange (see PT Business Review No. 005, page 6) due to adverse market conditions, the firm said in a press statement. Meridian Properties planned to issue 18m shares plus up to 900,000 papers in optional additional pool with bookbuilding to be held on October 1-8, expecting some EUR 170.1m in gross receipts from the offering. The debut was slated for around October 24.

weekly newsletter # 007 / 14th October 2013 / page 9

CONSUMER GOODS & RETAIL

Liebrecht & wooD's Plac Unii shopping center opens in Warsaw Plac Unii City Shopping, the latest addition to Warsaw's retail centre market, opened on Saturday 12th October just off the Plac Unii Lubelskiej roundabout in the city centre. Developed by Belgium's Liebrecht & wooD (majority investor with a 60% share) and Polish BBI Development, the 15,500 sq.m shopping center is part of PLN 600m mixed use development Plac Unii that comprises three buildings with a total GLA of 56,800 sq.m, and includes also 41,300 sq.m of class A+ office. In 2012, both the office and retail sections of Plac Unii were awarded a coveted BREEAM certificate with a "very good" grade.

Spread across three levels, the retail part of the project is almost fully rented to dozens of fashion and lifestyle brands, some of which are debuting on the Warsaw market. Tenants include Armani Jeans, ZARA, Massimo Dutti, Deni Cler, Liu Jo, Liu Jo Accessories, Manila Grace, E-go’, Stradivarius, Cubus, Furla, Marella, and United Colors of Benetton. The centre houses also a drugstore, bookstore, interior design shop, along with numerous service points, cafes and restaurants.

Level -1 is occupied by Supersam delicatessen, operated by a local cooperative grocer which used to occupy the Plac Unii site for more than half a century.

One of Plac Unii's strongest point is its location, at a key transit point at the border of Warsaw's Śródmieście and Mokotów districts. A number of tram and bus lines stop directly by the building and the

Politechnika station of the Warsaw subway is just a short walk away. Designed by Warsaw's APA Kuryłowicz & Associates and Prof. Stefan Kuryłowicz, an award-winning Polish architect, the black & white complex with a characteristic triangular tower, can be easily spotted from different areas of the city.

Plac Unii benefits from a great location at one of Photo: Liebrecht & wooD Warsaw's key intersections.

"The retail section of Plac Unii is 96% occupied at the moment. We are still negotiating leases of retail units with a combined floor area of 700 sq.m," Kamila Zębik, managing partner at Liebrecht & wooD tells Poland Today. "As for the office section, its first tenants will start moving in already this month. The project is 60%-leased, with key tenants including ING Group companies, Dalkia Polska, HRS, and WeCare."

Asked whether the project is for sale, Ms. Zębik replies. "I can confirm that we are being approached by prospective buyers so a transaction is possible."

A few weeks ago Liebrecht &wooD struck a deal with BBI on another major office & retail project in Warsaw, the Koneser project in the Praga district. Located on a 5ha site between Ząbkowska, Nieporęcka, Białostocka and Markowska streets, the project will

comprise over 300 housing units, 22,500 sq.m of retail and service space and 22,000 sq.m of offices. Liebrecht & wooD joins forces with BBI Development to develop the retail & office section of Koneser, which constitutes around 59% of the total space at the complex.

The investment value is set at PLN 450m, and the completion of the project is planned for 2017. The Flemish investor has acquired close to a 50% share in the commercial section of Koneser.

Over the past two decades the Liebrecht & wooD group has delivered over 440,000 sq.m of commercial space in Central Europe and Russia, and its current portfolio totals 274,000 sq.m and includes Jerozolimskie Business Park, Kopernik Office Buildings, Manhattan Business & Distribution Centre, Flanders Business Park and Batory Office Buildings in Warsaw as well as retail projects, such the Morski Shopping Centre in Gdańsk. The Liebrecht & wooD Group also includes a real estate management company WeCare, and the Fashion House Group, one of the pioneers of Poland's outlet centre sector.

Besides the giant Plac Unii development in the city centre and Koneser in Praga, BBI Development's pipeline includes a number of other, attractively located projects in Warsaw. The company seeks to develop an office and retail building Nowy Sezam at the junction of Marszałkowska and Świętokrzyska streets, at the site of the rundown communist era Sezam department store. Their other major future undertaking will be a 180-metre class A office skyscraper in the very centre of Warsaw, at the corner of Emilii Plater and Nowogrodzka streets. In the residential segment, BBI is developing luxury condos as part of its Rezydencja Foksal project near Warsaw's high street Nowy Świat.

weekly newsletter # 007 / 14th October 2013 / page 10

CONSUMER GOODS & RETAIL

GTC sells Kraków mall, signs key tenants for new Warsaw projects Warsaw-listed property developer Globe Trade Centre (GTC) and European real estate private equity firm Avestus Capital have sold their Galeria Kazimierz shopping mall in Krakow, Poland, to a subsidiary of Invesco Group for EUR 180m. Each of the sellers will receive EUR 90m, according to a GTC stock exchange filing, and the transaction will generate EUR 50m in net cash proceeds for the Polish developer.

Located in historic centre of Kraków at Podgórska St., Galeria Kazimierz is one of the city's most popular shopping centers. The mall offers almost 40,000 sq.m of leasable area with its key tenants including Cinema City, Alma, EMPiK and Reserved. GTC, which owns real estate in central, southern and eastern Europe, said the sale is in line with its strategy to sell mature assets and generate additional net cash through strategic divestments. The deal is subject to regulatory approvals and other standard closing conditions and is expected to be completed later this year or in early 2014. Avestus is a private European real estate investment manager with offices in Warsaw, Prague and Dublin. The firm focuses primarily on three sectors of the real estate market: commercial, retail and hotels.

"Every investment we decide to sell immediately finds renowned buyers, proving that GTC is a company that develops top quality shopping malls," said Alain Ickovics, President of Management Board of GTC. "The decision to divest Galeria Kazimierz is also in line with our policy of refreshing the company's port-

folio by selling maturing regional assets and replacing them with new developments that offer attractive return."

GTC's new shopping center in Warsaw's Białołęka Image: GTC district is set to open in 2015.

GTC, which developed one of Warsaw's most popular shopping centers Galeria Mokotów, is getting ready to break ground on two new massive retail projects in the Polish capital's fastest growing residential districts of Wilanów and Białołęka. GTC estimates that phase one of Galeria Białołęka will open its doors in 2015 with a GLA of 64,000 sq.m, whereas Galeria Wilanów is to welcome its first customers in 2016 with an initial GLA of 61,000 sq.m.

"As far as the Wilanów project is concerned, GTC owns the entire project site, whereas in Białołęka we are in the process of acquiring a few outstanding parcels of land that belong to the city," Małgorzata Czaplicka, investor relations director at GTC tells Poland Today. "We plan to apply for building permits shortly, hoping to obtain them without delay. We will break ground on both projects immediately after getting green light from the authorities, aiming to complete them in approximately 22 months. The capital expenditures, including land purchase costs will reach some EUR 170-180m in each case."

In September GTC signed letters of intent with Poland's top fashion retailer LPP S.A. and Cinema City International, the largest cinema operator in Central and Eastern Europe and Israel, which secured a combined 16,700 sq.m of retail space in the Warsaw projects. Cinema City is to rent more than 4,000 sq.m in Galeria Wilanów for a 12-screen cinema, and more than 3,300 sq.m in Galeria Białołęka, where the operator will have 11 screens. LPP, the owner of popular chains: Reserved, House, Cropp, Mohito, Sinsay and Home&You will take up 4,600 sq.m in Galeria Wilanów and over 4,700 sq.m in Galeria Białołęka.

Established in 1994 in Warsaw, GTC currently operates in Poland, Hungary, the Czech Republic, Romania, Serbia, Croatia, Slovakia, Bulgaria, Russia and Ukraine. The company develops new projects and manages completed properties in three key sectors of real estate: office buildings and parks, retail and entertainment centers and residential. To date, GTC has developed approximately 950,000 sq.m of net commercial space and 300,000 sq.m of residential units.

The company currently manages a combined 602,000 net sq.m of completed and operational commercial space and holds a large portfolio of investment projects at various stages of development that will enable it to develop of 1.1m sq.m of commercial space and 615,000 sq.m of residential space. GTC's total assets exceed EUR 1.9bn.

Israeli-owned Kardan N.V., which holds a 27.75% share in GTC through its investment vehicle GTC Real Estate Holding B.V., has confirmed recently that it is seeking a new strategic investor for the Polish developer. The company, which is linked to GTC's founders, has hired Citigroup Global Markets Limited to help them find a buyer for the 27.75% stake.

weekly newsletter # 007 / 14th October 2013 / page 11

SERVICES & BPO

Staffing company Work Service acquires Antal's Polish arm Poland's leading temporary staffing and personnel outsourcing company Work Service has inked an agreement to acquire the Polish arm of global recruitment consultancy Antal International. The PLN 27.1m deal will see Work Service, take over the management of Antal International operations in Warsaw, Wroclaw and Kraków. The Polish operation will continue to trade under the same brand name and will have access to the global network of the Antal International Group.

"When I first got on a plane twenty years ago and flew out to Poland to set up a solid brand, it was with the intention of creating a sustainable, long term company which is valuable to the local business and start up community. This is testament to our success in what many would agree has been a tough economy," commented Antal's CEO and founder CEO Tony Goodwin, who secured a similar deal in Russia five years ago.

"By joining Work Service we are diversifying the group portfolio within professional services of mid and high level staff recruitment, based on 17 years of experience and the in depth specialization of our consultants. I'm proud that we are joining such a dynamic and ambitious company with Polish origin. Together we will continue to build a strong Polish brand in the CEE Region," said Artur Skiba, Managing Director of Antal International Poland.

Besides the Antal deal, Work Service has confirmed that it is negotiating the acquisition of an 80% stake in

a Katowice-based staffing company Work Express.

Recently, Work Service has taken over IT staffing company IT Kontrakt.

From IPO to regional expansion

Work Service has been listed on the Warsaw Stock Exchange since May 2012. The company is the market leader in Poland, has a strong presence in Russia and continues to increase its market share in the Czech Republic, Slovakia, Germany and Turkey, boasting a market share of 15.4% in the CEE region. Earlier this year global private equity firm PineBridge Investments took a 20% stake in Work Service for EUR 26m to support the company's ambitious investment pipeline.

"We seek to focus our foreign expansion on Germany – Europe's largest economy, Russia with its giant population of 140m people, and Turkey – another very promising market with 80m people. We want to develop our temporary staffing business there as well as recruit of IT professionals and factory employees, for example," Work Service CEO Tomasz Hanczarek told Poland Today's Lech Kaczanowski back in February.

"Our goals is to solidify our leading position in the Polish HR services market and speed up our expansion into Central European markets," Hanczarek said.

"We seek to grow organically and via acquisitions.

This year alone we hope to seal at least three takeovers."

The final number of acquisitions may in fact be higher.

Company representatives said recently they hope to end the 2013 with a turnover of PLN 1bn, but thanks to the ongoing and planned acquisitions next year the figure is likely to reach PLN 1.8bn. In the first half of 2013 the group posted a consolidated net profit of PLN 10m (+8% y/y) on sales revenues of PLN 410m (+16% y/y). The long-term plan is to make Work Service one of Poland's 100 largest companies in a couple of years and with PineBridge's help its management team is

way on its way to achieving that goal. The private equity fund confirmed it was ready for further capital injections, should Work Service indentify more attractive takeover targets.

With approximately 27,000 employees on a monthly basis, Work Service provides its services to more than 1,000 clients through several business lines: recruitment and personnel consultancy; temporary staffing; short-term specialist contracting for the IT, financial and medical sectors; quality control outsourcing; and merchandising processes.

PineBridge is an independent asset manager with over 60 years of experience in developed and emerging markets. The company manages USD 69.4bn as of 30 September 2012. Their global platform for institutional and individual offers solutions across asset allocation, equities, fixed income, private equity and hedge funds.

The company belongs to Hong-Kong billionaire Richard Li, son of the world's 9th richest person Li Kashing, whose wealth Forbes estimates at some USD 25.5bn.

Thru Hutchison Whampoa Limited and Cheung Kong Holdings, Li Ka-shing is the world's largest operator of container terminals and the world's leading health and beauty retailer. Last year PineBridge agreed to invest EUR 50m into a EUR 108m roll-out of an EasyPack parcel machine network developed by the Warsawlisted postal services firm Integer.pl.

Work Service's key competitors include global and regional giants: Addecco, Randstad, Manpower and Trenkwalder, but their rivalry has been relatively peaceful because the market itself has been expanding.

Temporary staff represents merely 0.6% of all workers, compared to the European average of 2%. In times of austerity and crisis such flexible employment models gain even more popularity. As for the Polish temporary staffing market, the latter has not been left un-

weekly newsletter # 007 / 14th October 2013 / page 12

scarred by the slowing economy, but forecasts for 2013 remain positive. Polish HR Forum, the country's federation of staffing firms, said that sales in the temporary staffing industry will increase by some 10% this year.

SERVICES & BPO

British Vue completes takeover of cinema operator Multikino At the beginning of October Britain's Vue Entertainment completed the acquisition of Poland's number two multiplex cinema operator Multikino from the media group ITI (which held an 86% interest in the business) and its long-time partner Ares Manegement (14%). The transaction totaled EUR 48m, according to ITI's official statement.

under its ownership from 70 to 146 and nearly doubled its screens from 678 to 1,321. Besides Multikino, Vue's recent acquisitions included Apollo Cinemas in the UK in May 2012 and CinemaxX, Germanyâ&#x20AC;&#x2122;s second largest operator in July 2012. Following the Multikino deal Vue's geographic footprint covers the UK, Ireland, Germany, Denmark, Portugal, Poland, Lithuania, Latvia and Taiwan. In August 2013 OMERS Private Equity, the private equity investment arm of the OMERS pension plan, in equal partnership with Alberta Investment Management Corporation acquired Vue Entertainment for an enterprise value of GBP 935m.

Multikino is Poland's number 2 cinema operator Millions of cinema tickets sold in Poland 2012

Cinema City Multikino Helios

Multikino opened the first multiplex cinema in Poland in Poznan in 1998 and it currently operates a circuit of 28 cinemas with 231 screens across 22 Polish cities and 2 cinemas with 15 screens in the Baltics. The entire Multikino circuit was fully digitalized in 2011. Its main rivals include Warsaw-listed Cinema City and publisher Agora, which runs the Helios cinema chain.

Multikino sold 9.86m tickets last year, marking a 12% increase y/y. The leader, Cinema City International, posted box office sales of 13.5m, while Helios, which focuses on smaller cities â&#x20AC;&#x201C; 7.7m. On the European market, Vue ranks as number two, and the Multikino deal strengthens its lead over Israeli Cinema City, which is fourth.

"The acquisition of Multikino is anther exciting and strategic addition to the Vue Entertainment Group and part of our continued growth into continental Europe through the identification and acquisition of the highest quality assets in each market. With its state of the art multiplex cinemas with 100% stadium seating and strong management team, Multikino perfectly complements our existing business in Europe," Tim Richards, CEO of Vue Entertainment commented on the Polish investment.

Vue was formed in May 2003 with the acquisition of the Warner Village Cinemas in the UK. Over the last three years, it has doubled the number of cinemas

Vue's investment in Poland is not entirely a surprise, as some of its executives used to sit on Multikino's board a few years ago, representing one of the chain's

0

5

10

15

Source: operators

past shareholders United Cinemas International.

The ITI group, owner of Poland's private TV broadcaster TVN, has been gradually divesting its non-core as-sets in the recent years. At the end of 2011 it sold Poland's top online portal Onet.pl to Germany's Ringer Axel Springer and "n" digital-to-home provider to France's Vivendi.

TRANSPORT & LOGISTICS

PKP Cargo's PLN 1.6bn October listing will be this year's largest IPO Polish PKP Cargo, the European Union's second largest railway freight company after Deutsche Bahn AG, will hit the Warsaw Stock Exchange on 31st October in one of Poland's biggest initial public offerings in almost a year. With the maximum price set at PLN at 74, the floatation may total PLN 1.6bn. Poland's stateowned railroad operator PKP, which seeks to use the proceeds to cut its debt and finance investments, plans to sell 50% minus one share of its cargo unit.

The European Bank for Reconstruction and Development announced on 8th October that it would acquire up to 7.5% of shares in PKP Cargo as part of the IPO. The institution said the Polish privatization should encourage other European countries to float their state-controlled railway businesses. To date the EBRD has invested more than EUR 6.3bn in all sectors of the Polish economy with a combined project value exceeding EUR 33bn.

Warsaw-based PKP Cargo had a 60.3% share in the Polish market in 2012 and controlled 8.5% of total rail freight in the EU, the company said in a statement.

That compares with DB Schenker's 28% and 5.4%

weekly newsletter # 007 / 14th October 2013 / page 13

shares in the EU and Poland, respectively. The Polish carrier is set to be the EU's first public rail freight company when its stock starts trading on the Warsaw bourse. The book building will end on 22nd October, according to a prospectus published on the company's website last week. PKP Cargo's IPO is the largest in Poland since December last year when Alior Bank debuted on the WSE with a PLN 2.1bn floatation.

Poland's top rail freight operators 2012 market shares based on freight volume Other, 13.8% PKP LHS, 4.5% Lotos Kolej, 4.5%

PKP Cargo, 50.5%

CTL Group, 6.5%

per giant KGHM. Grupa Lotos has recently confirmed it is analyzing scenarios for its rail freight unit.

more favorable employee benefit package as part of last month's settlement deal with unions.

PKP Cargo saw its revenues drop 9.2% to 2.29bn, in the first half of the year, due to economic slowdown, while its net income slumped 44% to PLN 76.8m. Last year the company carried around 116m tons of freight (mainly hard coal and building materials) and generated net profits of PLN 267m on PLN 5.2bn worth of revenues, down from its record net result of PLN 400m in 2011. PKP Cargo's management will propose spending 35% to 50% of consolidated profits on dividends, according to the prospectus. The PKP Group, which has sped up asset sell-off in recent years to cut its PLN 4bn debt, pledged not sell further shares in PKP Cargo within 180 days after the latter's IPO. The railway will have the right to sell a further stake to a strategic investor if the price offered isn’t lower than in the IPO.

Goldman Sachs Group Inc., Morgan Stanley and PKO Bank Polski SA are joint global coordinators and joint bookrunners in the IPO. Ipopema Securities SA, Raiffeisen Centrobank AG and UniCredit SpA are joint bookrunners, while Dom Inwestycyjny Investors SA and Mercurius Dom Maklerski SA are acting as domestic co-bookrunners.

DB Schenker, 20.2%

Source: Rail Market Regulator UTK

PKP Cargo, which holds licenses to provide services in Slovakia, the Czech Republic, Germany, Austria, Belgium and Hungary, will continue expansion abroad and may consider takeovers of foreign competitors to speed up growth, Chief Executive Officer Łukasz Boroń said a few weeks ago. Currently only 2% of the company's revenue comes from outside Poland. Foreign expansion seems like the only way forward for the firm as due to its dominant position on the Polish market, regulators are unlikely to approve any attempts by PKP Cargo at taking over other local competitors. Besides PKP Cargo and DB Schenker, the Polish rail freight market is divided among several dozen smaller players, including carriers owned by oil refiners PKN Orlen and Grupa Lotos as well as cop-

TRANSPORT & LOGISTICS

Polish bus producer Autosan goes bankrupt Polish bus manufacturer Autosan was declared bankrupt on 7th October by a court in the southeastern town of Krosno. The factory, which belongs to Polish entrepreneur Sobiesław Zasada, has been struggling for years and finally its management filed for bankruptcy in mid-September 2013.

In 2009, second-hand bus imports to Poland and tough competition from other bus makers forced the factory to cut salaries by 10%. While new contracts lifted the company's financial burden, the relief was only temporary. Now Autosan has been forced to go into receivership with an outstanding debt due to arrears in land tax to the town of Sanok amounting to PLN 1.3m. Its total liabilities are unknown.

PKP Cargo is Europe's number two rail freight carrier but only a tiny fraction of its revenues come from Photo: PKP Cargo abroad.

The rail freight operator's 24,000 employees will get PLN 165m of new shares after the IPO free of charge together with a four-year employment guarantee, and

Autosan's 500 employees took home only a half of their salaries in June and July, and received no money at all in August. They picketed the Sobiesław Zasada Group headquarters in Kraków last week, demanding they be paid in full. Autosan is one of the oldest factories in Poland, with its beginnings dating back to 1832.

weekly newsletter # 007 / 14th October 2013 / page 14

from Germany (MAN) and Sweden (Volvo & Scania), as well as domestic Solaris Bus & Coach. In 2001 Polish factories exported merely 373 buses, but by the end of the decade the figure grew nearly ten times, making Poland number three in Europe after Germany and Sweden.

Shrinking domestic bus sales Buses made in Poland: domestic sales vs. exports Exports

Domestic sales

5,000 4,000 3,000 2,000 1,000 0 2007

2008

2009

2010

2011

2012

Source: JMK Analizy Rynku Autobusow

Trade unions at the company, who had long been dissatisfied with its management, have welcomed the bankruptcy, and are now hoping the receiver will be able to find a way to keep at least a portion of the workforce. Besides buses, since 2001 Autosan has been producing bodies for trains and trams, cooperating with top rail stock producers such as PESA Bydgoszcz, NEWAG and PoznaĹ&#x201E;'s ZNTK. Production will continue as long as there are orders, while a courtappointed receiver will be seeking an investor for the business.

Crisis hits bus makers

As austerity spreads across Europe, Polish bus production dropped nearly by a fifth last year, reaching the lowest level in more than five years. According to market researcher JMK Analizy Rynku Transportowego, Polish factories completed 3,838 buses and coaches in 2012, some 938 fewer than in 2011. Domestic carriers purchased merely 1,279 vehicles, 282 fewer than in the year prior.

With skilled labor at a fraction of the Western European costs, Poland has emerged as one of Europe's key bus exporters over the past decade, thanks to investors

In 2012, however, exports plunged 16%, down to some 3,210 units although it's worth mentioning that in addition to complete buses, Polish factories exported 700 chassis and 300 bus bodies as well as 45 trolleybuses.

Still, summer production breaks at Polish bus factories were longer than usual last year, and some producers (most notably MAN in Starachowice and Scania in SĹ&#x201A;upsk) cut their staff. Volvo relocated more production from Sweden to Poland but added no new jobs there.

Bus production down 20% in 2012 Leading makers & bus output figures Maker

2012 Units

MAN

2011

Share

Units

2010

Share

Units

Share

1,342

35.0%

1,566

33.8%

1,267

Solaris

939

24.5%

1,140

24.6%

1,022

24.5%

Volvo

699

18.2%

922

19.9%

855

20.5%

Scania

341

8.9%

500

10.8%

658

15.8%

Other

516

13.4%

504

10.9%

366

8.8%

3,838

100.0%

4,632

100.0%

4,168

100.0%

TOTAL

The number one player in Poland was Mercedes Benz with 453 vehicles registered last year (including bodies from other manufacturers mounted on Mercedes chassis), followed by Solaris (257), Autosan (83) and MAN (70). City bus sales dropped from 938 in 2011 down to 559 last year, due to lack of EUsubsidized contracts.

IN BRIEF: US e-commerce giant Amazon has officially confirmed plans to build three logistics centers in western Poland by mid-2015 (see PT Business Review+ No. 006, page 10). The project will create 6,000 permanent jobs and 9,000 seasonal jobs in an investment worth "hundreds of millions euros," Amazon operating director for Europe Tim Colling said during a press conference last week. Two of the centers will be opened by August 2014 and the third by mid-2015. Amazon will employ 2,000 persons on a permanent basis in each facility and will also create 3,000 seasonal jobs ahead of the Christmas season.

30.4%

Source: JMK Analizy Rynku Autobusow

With 1,343 vehicles completed last year Germany's MAN remains the leading bus producer and exporter in Poland, followed by Polish Solaris (939), Volvo (699), and Scania (341). The strategic market for Solaris is Germany, where the Polish producer sold 263 buses and coaches in 2012. The company has recently won a contract to deliver 40 buses to Prague as well as a handful of new orders from Lithuania, Bulgaria, Finland, Spain, and Romania.

POLITICS & ECONOMY

Government finaliz finalizes izes pension overhaul bill, asset transfer to take place in February 2014 Prepared at an express pace, the draft legislation on of the government pension reform, outlining key details of the planned changes, saw the light of day on 10th October. Under the new law, Poland's stateguaranteed private pension funds (OFE) are to transfer 51.5% of their assets to the state pension vehicle

weekly newsletter # 007 / 14th October 2013 / page 15

ZUS on 3rd February next year, after which they will be banned from investing in treasury debt and stateguaranteed bonds. The state pension institution will be also responsible for distributing the pensions, and therefore the funds will also be required to gradually transfer employee assets to ZUS starting 10 years prior to retirement. According to the draft bill, the changes will lower Poland's public debt by 9.2 percentage points from its current level of 55% of GDP and reduce annual borrowing needs by PLN 20-25bnin the years 2014-2017.

The funds held assets worth PLN 292bn in September, corresponding to some 18% of the country's gross domestic product last year. Of that, PLN 124bn was in Polish treasury debt and PLN 18bn in state-backed bonds. Following the partial transfer of assets to ZUS, the pension fund managers will be required to hold 75% of their assets in stocks until 1st July 1, 2014, when their investment policy guidelines will be loosened, the draft legislation also showed. However, the funds will not be allowed to invest more than 10% of the assets in foreign-currency denominated assets, up from 5% currently. This limit will be raised to 20% in 2015 and to 30% in 2016, in line with a ruling of the Court of Justice of the European Union.

What is more, participation in the OFE system has been made optional. While every OFE account remains in place with its rump equity assets, Poles will have three months to determine if the portion of their future social security premium - 2.9% - should continue to go to the OFE funds. Should they fail to declare, their premiums go to a virtual individual account at the ZUS. They will be allowed to review their decision in 2016 and every four years afterward, according to the document posted on the Labor Ministry’s website.

Although the legislation is yet to be approved by the parliament, that should pose little problem as the ruling coalition still enjoys a majority there, and the left-

ist opposition has vowed to support the pension bill.

Theoretically, the president could send the bill back to parliament or submit it to the constitutional tribunal, a move which at least would slow the legislative process. Some lobbyists, including the creators of Poland's current hybrid pension systems, have been trying to exert pressure on President Bronisław Komorowski to question the bill, but due to the crucial role the reform plays in the government's budgetary planning, it seems rather unlikely.

For the past 14 years, Poland has had a hybrid pension system, with part of workers' contributions diverted from the state pay-as-you-go system to private pension funds, known collectively as the second pension pillar.

Shortly after the new system was introduced, the government found itself in a pickle, forced to finance payouts for pensioners covered by the old system at the same time contributing to OFE accounts for would-be pensioners belonging to the new system. Poland ended up borrowing left and right and its debt skyrocketed as a result, from PLN 273bn in 1999 to PLN 888bn in mid-2013, with the pension system being responsible for roughly a half of the new liabilities. In the end, the government admitted the system was too costly for public finances and failed to deliver additional benefits for future pensioners.

Poland will likely reduce its general government deficit from 4.6% of GDP in 2013 to 3.4% in 2014 and to 2.8% in 2015, the International Monetary Fund wrote in the newest set of forecasts, which takes into account the 2013 budget amendment as well as the effects of the planned private pension funds reform.

POLITICS & ECONOMY

Warsaw mayor keeps her job after too few voters turn up for recall referendum Although 95% of those who took part in yesterday's referendum in Warsaw voted in favor of recalling the Polish capital's mayor Hanna Gronkiewicz-Waltz, according to exit polls it looks like the latter will keep her job as the voter turnout was too low to make the whole procedure worthwhile. For the referendum to be valid, three-fifths of the number who turned out for the mayoral elections in 2010, or some 29% of residents had to participate. However, according to exit polls the figure came to 26.8%.

Gronkiewicz-Waltz took over as mayor in December 2006. She then secured reelection in 2010 after winning nearly 54% of the vote in the first round. The key driving force behind the campaign to recall the current mayor, who is a senior member of the governing PO, is Piotr Guział, the mayor of Warsaw's southern Ursynów district. Also, a group of city councilors wanted Gronkiewicz-Waltz out. Parties that have supported the referendum campaign include main opposition Law and Justice (PiS) and the liberal Palikot's Movement (which recently changed the name to Twój Ruch – see next story). As many as 166,726 valid signatures were gathered in favor of the referendum being held, surpassing the requirement of 130,000 signatures.

The referendum was seen as a key test of the popularity of Tusk's governing PO party, which has fallen behind the opposition Law and Justice (PiS) in the opin-

weekly newsletter # 007 / 14th October 2013 / page 16

ion polls. PO saw its voter support decline by 3 pps to 22% in October, the lowest level in several years, while the main opposition party, conservative Law and Justice (PiS) gained 5 pps and took the lead in the poll with 28% support, the latest survey from the CBOS institute shows. Support for junior coalition Polish People’s Party (PSL) remained stable at 6%. Left-wing Democratic Left Alliance (SLD) lost 2 ppt to 8%. The liberal Palikot Movement saw its voter support decline by 3 ppt to 4%, below the 5% threshold required to enter the parliament. The survey was conducted on October 3-9 on a sample of 1066 Poles.

POLITICS & ECONOMY

Liberal party Palikot Movement changes name, ame, gets new allies Poland's fringe liberal party Palikot Movement (RP), which surprised many a commentator during the 2011 elections when it gained 10% support and 40 seats in the parliament, has evolved into a new political grouping Twój Ruch (which in Polish means both Your Move and Your Movement). According to many observers, the transformation seems like a PR stunt designed to reignite interest in the party, which has failed to deliver on many of its promises and become a serious political force in Poland.

The new party will be composed, apart from the RP, of several partners, including the Europa Plus movement led by former Democratic Left Alliance (SLD) member Marek Siwiec and a number of small left wing parties.

Siwiec will be Your Move's deputy leader. The RP attracted some 1.4m votes in the last elections with its libertarian and anti-clerical rhetoric. Its ranks include Anna Grodzka, Europe's first transsexual member of

parliament and Robert Biedroń, Poland's country's first openly gay legislator, "We need this change now," the party's flamboyant leader Janusz Palikot said at the founding congress, as Poland was facing a "gigantic challenge" as well as a unique opportunity to make a developmental and technological leap due to the PLN 300bn in EU funds allocated to Poland for years 2014-2020. In his view, these funds need to be spent on "modern jobs" and the development of knowledge-based economy. The politician also said that the new party was set to create a five-year development plan for the Polish economy.

He pointed to the need to abolish ZUS social insurance board and create a new pension system. According to Palikot neither PM Donald Tusk nor the main opposition leader Jarosław Kaczyński nor the leader of SLD Leszek Miller will be able to make these changes.

POLITICS & ECONOMY

Archbishop's comment on pedophilia sparks sparks nationwide outrage Poland's Roman Catholic Church was featured in all key global media outlets last week due to comments by a top cleric who implied that parents and children share the blame for certain cases of pedophilia, including those involving Catholic priests. The comment comes amid mounting allegations of child molestation involving Polish priests.

"Many of these cases of (sexual) molestation could be avoided given a healthy relationship between parents," Archbishop Józef Michalik, head of Poland's Episcopate told the Polish PAP news agency in Warsaw. "We often hear that this inappropriate attitude (pedophil-

ia), or abuse, manifests itself when a child is looking for love," he continued, adding that a child from a troubled family "seeks closeness with others and may get lost and may get the other person involved, too."

Michalik also spoke out against divorce as being harmful to children. "How many wounds are there in children's hearts, in children's lives, when their parents go their separate ways," he told the PAP. "Today nobody talks about divorce doing great harm to a child. It's obvious that sex abuse does great harm, one can't forget about it, but it's not the only thing" causing harm, he added.

The comments, for which the Archbishop later apologized, calling them a "misunderstanding", sparked widespread public outcry, even among some of Poland's ultra-Catholic commentators. Unlike the United States, Australia or Ireland, child sex abuse by priests in Poland, one of Europe's most heavily Catholic countries, has been a largely taboo subject, but as the loyalty to the church is beginning to wane, a growing number of cases are being unveiled in the press.

In an unprecedented move, Polish Church leaders apologized earlier this month over alleged pedophile priests, as prosecutors in Poland and the Caribbean began probes against two high-profile suspects. Archbishop Józef Wesołowski, a 65-year-old Pole who served as a papal envoy in the Dominican Republic's Santo Domingo for around five years, is being investigated for allegedly having sex with teenage boys. Authorities on the Caribbean island nation are also investigating Wojciech Gil, a 36-year-old priest suspected of raping several young boys while serving there. Despite the apology, Church leaders in Poland insist they will not be offering victims any material compensation.

weekly newsletter # 007 / 14th October 2013 / page 17

KEY STATISTICS Consumer Prices Prices

Inflation

2.5

-1.2

Alcohol, tobacco +3.5

+0.2

+3.7 +0.2 +3.6

+0.1 +3.6 +0.2

Clothing, shoes

+0.1

-4.7

-2.7

Housing Transport

-4.8 +1.1

+0.1 +0.9

-0.8

-5.0

0.0 +2.0

-4.8

-2.7

+1.2 +2.0

+0.1

-4.2

-2.3

-3.5 +0.4

-1.2

+1.1

-1.4 +0.5

Communications -9.7

-2.6

-9.7

0.0

-9.7

0.0

-9.7

0.0

Gross CPI

-0.1

+0.2

0.0

+1.1

+0.3

+1.1

-0.3

+0.5

y/y

m/m

Apr '13

May '13

Jun '13

Jul '13 Aug '13

m/m (%)

-2.7

+1.6

+1.5

+3.8

-0.7

y/y (%)

-0.2

+0.5

+1.8

+4.3

+3.4

Year

2008

2009

2010

2011

Turnover in PLNbn

564.7

582.8

593.0

646.1

n/a

+13.3

+4.3

+5.5

+11.6

+5.6

y/y (%) Aug 13

-0.3

Jun 13

2.5

Apr 13

-0.3

Feb 13

+0.7 +0.7

Dec 12

+1.6

Oct 12

Food & bev

Month

5% 4% 3% 2% 1% 0% -1%

Aug 12

y/y m/m y/y m/m y/y m/m y/y m/m

Jun 12

Sector

Retail Turnover

Apr 12

Aug '13

Feb 12

Jul '13

Dec 11

Jun '13

Oct 11

May '13

Aug 11

Data in (%)

Residential Construction Dwellings

2008 2009 2010

2011

2012 Jan-Aug y/y

230.1

178.8

174.9

184.1

165.1

142.9

158.1

(in '000 units)

Producer Prices Prices Month

Industrial Output

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

m/m (%)

+0.3

-0.3

-0.7%

+0.1

+0.7

+0.2

-0.3

y/y (%)

-0.4

-0.7

-2.1%

-2.5

-1.3

-0.8

-1.1

Year

2006

2007

2008

2009

2010

2011

2012

y/y (%)

+2.0

+2.0

+2.2

+3.4

+2.1

+7.6

+3.3

Month m/m (%) y/y (%) Year y/y (%)

Feb '13 Mar '13 Apr '13 May'13 Jun '13 Jul'13 Aug'13 -0.2

-0.2

-0.1

-0.2

-0.1

-0.1

-0.1

-1.6

-1.8

-1.9

-2.0

-2.0

-1.9

-1.9

2006

2007

2008

2009

2010

2011

2012

+3.2

+7.4

+4.8

+0.2

-0.1

+1.0

+0.2

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

Coal mining

Q3 2012

Q4 2012

Q1 2013

Q2 2013

A

A

A

A

5,920

B

135 8,427

B

192 6,060

B

B

138 6,290 143

Commenced

174.7

162.2

141.8

85.4

-18.2

-2.3

-0.7

+2.6

+1.5

-4.5

U. construction

687.4 670.3 692.7 723.0

713.1

707.0

-3.9

y/y (%)

-2.7

-0.6

+2.7

-1.8

+2.8

+6.3

+2.2

Completed

165.2 160.0 135.7

152.5

91.1

-1.7

Year

2006

2007

2008

2009

2010

2011

2012

Source: Central Statistical Office (GUS)

y/y (%)

+11.6

+10.7

+3.6

-3.5

+9.8

+7.7

+1.0

Gross Domestic Product

Month

Period

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

m/m (%)

-0.3

y/y (%) Year y/y (%)

+20.9

+7.9

+16.1

+19.1

+7.8

-0.8

-11.4

-18.5

-23.1

-27.5

-18.3

-5.2

-11.1

2006

2007

2008

2009

2010

2011

2012

+18.1

+15.5

+12.1

+5.1

+4.6

+11.8

-0.6

-2.8%

Q4 2012

+0.7%

442,231

-3.5%

Q3 2012

+1.3%

393,792

-4.1%

2012

+1.9%

1,522,736

-3.5% -4.9% -5.1%

Economic sentiment and consumer confidence indicators

2009

+1.6%

1,344,384

-3.9%

Co nsumer conf id ence (lef t axis) Economic sentiment (right axis)

20

120

Transportation

3,543

125

3,816

135 3,439

122 3,547 125

IT, telecoms

6,493

169 6,379

166 6,685

174 6,707 174

Financial sector 5,875

132 6,044

136 6,356

143

Key Economic Data & Projections

100

Indicator GDP change

+3.9% +4.5%

Consumer inflation Producer inflation CA balance, % of GDP

Sep 13

60 Jun 13

-40 M ar 13

146

Dec 1 2

152 3,693 157

143 3,432

S ep 12

163 3,556

142 3,365

J un 1 2

158 3,829

3,322

M ar 1 2

3,709

Retail & repairs

Dec 1 1

Construction

S ep 11

80

J un 11

-20

Mar 11

152 3,560 155 188 5,828 177

Dec 10

3,491

Source: Central Statistical Office (GUS)

-1.9%

377,815

1,416,585

198 6,196

3,613 144

395,507

+0.5%

1,462,734

154

149

+0.8%

Q1 2013

+3.9%

151 3,522

3,741

Q2 2013

+4.5%

176 6,535

154

Current account def. in % of GDP

2010

3,463

147 3,878

GDP in PLN bn current prices

2011

5,790

National average 3,690

Growth y/y unadjusted

131.7

Sentiment Indicators

Energy

151

-20.6

-0.2

Manufacturing

6,712

(%)

91.6

+0.3

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

0

3,421 146

2013

m/m (%)

Month

Source: The Central Statistical Office of Poland, GUS

Gross Gross Wages Sector

Permits

Construction Output

Construction Prices Price s

2012

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

2013

2014

+1.9%

+1.2%

+2.7%

+2.6% +4.3%

+3.7%

+1.2%

+2.2%

+2.1% +7.6%

+3.4%

-1.2%

0.6%

-5.1%

-4.9%

-3.5%

-0.6%

0.3%

Nominal gross wage

+3.9%

+5.2%

+3.7%

+3.2%

+4.5%

Unemployment**

12.4%

12.5%

13.4%

13.7%

13.2%

3.99

4.12

4.19

4.20

4.06

EUR/PLN

*2010

*2011

*2012

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

weekly newsletter # 007 / 14th October 2013 / page 18

56.12 ↓

100 SEK

47.54 ↓

100 NOK

51.30 ↓

10,000 JPY 10,000 HUF

400

USD EUR 350

300

313.85 ↓ 16.41 ↓

100 CZK

WIG-20 stocks Price Change Change in alphabetical 11 Oct 4 Oct end of order '13 '13 '12

WIG Total index

142.03 ↑

Money Supply

5.6%

5.4%

PLN (up to 5 y )

6.2%

PLN (over 5 y)

6.0%

PLN (total)

6.0%

M3

941,791

927,345

921,662

418,252 405,900 946,586

945,077

928,359 412,407 949,988

- Net foreign assets 176,278 160,267 159,749 154,035 Monetary base: Polish currency emitted by the central bank and money on accounts held with it.

M1= currency outside banks + demand deposits M2= M1+ time deposits (inc in foreign currencies) M3= the broad measure of money supply Source: NBP

+10%

WIG-20 blue chip index

7.91

+6%

-20%

118

+8%

+20%

2,489 2,489.

489.64

4.9%

EUR (up to 1m EUR) 2.3%

2.1%

2.3%

1.9%

2.3%

1.9%

↑ BZ WBK

EUR (over 1m EUR) 3.6%

2.9%

3.2%

2.9%

3.5%

3.5%

↑ Eurocash

↑ Asseco Pol.

↑ GTC

Warsaw Inter Bank Offered Rate (WIBOR) as of 11 Oct 2013 Overnight

1 week

1 month

3 months

6 months

2.58%%

2.55%

2.60%

2.68%

2.71%

2.50%

920,112

+55%

+7%

5.0%

Aug '13

425,740

+9%

48

5.3%

153,867

- Time deposits

374.6

5.6%

Jul '13

114,083

+58%

5.8%

155,767 112,565

+9%

4.9%

Jun '13

112,815

Change 1 week

514

5.1%

4.9%

144,260

109,312

112.1

↑ BRE

5.1%

5.3%

May '13

531,124

↑ Bogdanka

5.4%

5.6%

150,475

523,783 530,666

52,230.

230.47

-18%

5.7%

5.7%

↑ Handlowy

Central Bank (NBP) Base Rates

508,299

+8%

+1%

5.9%

in PLN m

M2

4.6%

+3%

5.0%

Monetary base - Currency outside banks

4.7%

49

5.3%

Reference

M1

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

+3% ↑

Change end of '12

+10% ↑

↑ JSW

74.34

+3%

-20%

Change 1 week

+4% ↑

↑ Kernel

53.42

+6%

-20%

Change end of '12

-4% ↓

123

+2%

-35%

Lombard

NBP deposit

Rediscount

↑ KGHM

4.00%

1.00%

2.75%

↑ Lotos

37.13

+3%

-10%

WIG Total closing index

↑ Pekao

193

+5%

+15%

last three months

17.45

+3%

-4%

5.98

+1%

+15%

Credit

↑ PGE

The financial sector's net lending in PLN bn,

↑ PGNiG

loan stock at the end of period Type of loan

↑ PKN Orlen

45.4

+5%

-8%

39.01

+4%

+6%

May '13

Jun'13

Jul '13

Aug '13

↑ PKO BP

Loans to customers

887,960

900,999

896,635

901,863

↑ PZU

433

+2%

-1%

- to private companies

259,593

263,453

261,000

263,491

↑ Synthos

5.08

+4%

-6%

549,117

553,055

552,503

556,027

↑ Tauron

4.92

+3%

+4%

1,622,666 1,634,587

1,616,221

1,627,182

↑TP SA

8.75

+2%

-28%

- to households Total assets of banks

Source: Central Bank NBP

53,000 52,000 51,000 50,000 49,000 48,000 47,000 46,000 45,000 11 Oct 13

100 DKK

as of 11 October 2013

19 Sep 13

339.77 ↓

11 Oct 13

492.89 ↓

100 CHF

5 Aug 13

100 GBP

Warsaw Stock Exchange, rates in PLN

on loans to non-financial corporations PLN (up to 1 year)

28 May 13

418.61 ↓

18 Mar 13

100 EUR

Key indices

Term / currency

450

9 Jan 13

308.50 ↓

29 Oct 12

100 USD

Stock Exchange

Average weighted annual interest rates

28 Aug 13

as of 11 October 2013

Interest rates

5 Aug 13

100 USD/EUR against PLN

Central Bank average rates

12 Jul 13

Currency

Source: Warsaw Stock Exchange

T rade Poland's ten largest trading partners, ranked according to 2012

Poland exports and imports according to commodity groups, according to SITC classification EXPORTS in PLN bn Jan- Jul 2013

y/y (%)

share (%)

2012

IMPORTS in PLN bn share (%)

Jan- Jul 2013

y/y (%)

share (%)

2012

share (%)

EXPORTS in PLNbn JanNo Country Aug share 2013

*2012

Share No

IMPORTS in PLN bn JanCountry Aug share *2012 Share 2013

37,974

+9.9

10.5

61,694

10.3

26,750

+3.6

7.4

44,287

6.9

1 Germany

Beverages and tobacco

4,910

+5.9

1.4

7,967

1.3

2,271

-0.1

0.6

3,989

0.6

2 UK

26,788

6.5%

40,184 6.7%

2 Russia

52,447 12.6%

Crude materials except fuels

9,077

+5.1

2.5

14,024

2.4

12,302

-7.6

3.5

22,053

3.5

3 Czech Rep.

25,260

6.1%

37,475 6.3%

3 China

38,360

Fuels etc

17,106

+0.1

4.7

29,389

4.9

41,400

-14.3

11.4

85,280

13.4

4 France

34,862 5.8%

4 Italy

920

+62.1

0.3

1,342

0.2

1,492

-8.7

0.4

2,887

0.5

5 Russia

22,508

5.4%

32,290 5.4%

5 France

Chemical products

33,929

+6.5

9.4

54,295

9.1

53,686

+0.3

14.8

89,140

14.0

6 Italy

17,805

4.3% 29,067 4.9%

Manufactured goods by material

74,733

-0.5

20.7

126,161

21.1

63,760

-6.0

17.5

110,773

17.4

7 Netherlands

16,321 4.0%

Machinery, transport equip.

136,236

+3.3

37.7

223,646

37.5

120,298

-0.5

33.1

203,718

31.9

8 Ukraine

11,709

Other manufactured articles

45,323

+3.8

12.6

75,925

12.7

31,609

-8.6

8.7

57,646

9.0

9 Sweden

11,339

2.7%

901

n/a

0.2

2,653

0.5

10,201

n/a

2.6

18,515

2.8

10 Slovakia

10,673

2.6%

361,109

+3.4

100

597,096

100

363,769

-4.3

100

638,288

100

Food and live animals

Animal and vegetable oils

Not classified TOTAL

103,223 25.0% 150,046 25.1%

23,321 5.68%

2.8%

1 Germany

88,967 21.3% 134,933 21.1%

21,213

91,033 14.3%

9.2% 57,235 9.0% 5.1% 32,782

5.1%

16,034

3.8% 25,303 4.0%

6 Netherlands

15,726

3.8% 24,543 3.8%

7 Czech Rep.

15,426

3.7% 23,327

3.7%

17,213 2.9%

8 USA

11,909

2.9%

16,436

2.6%

15,811 2.6%

9 UK

11,030

2.6%

15,509 2.4%

n/a

n/a

26,678 4.5%

15,288 2.6% 10 South Korea

Source: Central Statistical Office (GUS)

*) preliminary estimates, full year

14,619

2.3%

weekly newsletter # 007 / 14th October 2013 / page 19

Industrial Industrial Properties

Regional Data Industrial output Jan-Aug 2013 *

Poland's regions (main cities indicated

Indus-

in brackets)

Monthly wages (PLN) Jan-Aug 2013 **

Unemployment Aug 2013

Constru- Indus- Constru-in '000

try

ction

try

ction

%

New dwellings Jan-Aug 2013

Existing stock, sq.m

by region, 1H 2013

Num- Index *

Warsaw central

ber

Warsaw suburbs

VaEffective Under const cancy rents EUR/ ruction, sq.m ratio sq.m/mth

2,728,000

41,000

15.9%

3.5–5.0 1.9–3.2

Dolnośląskie (Wrocław)

98.2

87.5

4,169

3,907

149.7

12.9 10,403

115.2

Central Poland

1,021,000

8,000

16.5%

1.9–3.1

Kujawsko-Pomorskie (Bydgoszcz)

101.3

94.7

3,314

3,239

142.7

17.3

111.6

Poznań

1,041,000

50,000

3.6%

2.3–2.9

Lubelskie (Lublin)

99.5

96.0

3,628

2,999

127.4

13.7

4,021

89.1

Upper Silesia

1,478,000

33,000

5.8%

2.5–3.1

Lubuskie (Zielona Góra)

94.3

85.4

3,351

2,974

58.3

15.2

2,020

99.0

Wrocław

795,000

84,000

5.5%

2.4–3.0

103.7

87.5

3,604

3,000

148.8

13.7

4,150

94.9

Gdańsk

192,000

n/a

9.6%

3.2–4.0

97.6

90.8

3,740

3,295

158.5

11.3

10,314

110.3

Kraków

149,000

n/a

7.6%

4.0-4.1

107.0

81.1

4,482

4,761

282.0

11.1

17,638

91.6

Łódzkie (Łódź) Małopolskie (Kraków) Mazowieckie (Warszawa)

4,138

Commercial Properties

96.0

97.3

3,469

3,128

49.2

13.5

1,093 109.6

Podkarpackie (Rzeszów)

107.6

93.6

3,234

3,024

146.2

15.5

3,991 100.4

Podlaskie (Białystok)

105.4

88.7

3,175

3,754

68.3

14.5

2,230

80.8

Pomorskie (Gdańsk-Gdynia)

101.6

92.2

3,866

3,471

109.7

12.8

7,331

91.4

Śląskie (Katowice)

96.0

87.6

4,445

3,477

205.3

11.1

6,907

116.4

Warsaw

8,076

-5.9%

11.5-25.5

10.5%

85

Świętokrzyskie (Kielce)

98.9

87.2

3,339

3,163

85.5

15.6

1,597

87.9

Kraków

6,305

-12.1%

13-15

2.71%

41

78

Warmińsko-Mazurskie (Olsztyn)

98.1

85.1

3,163

3,055

107.1

20.2

2,697

88.3

Katowice

5,526

-5.0%

13-14

8.29%

48

56

102.7

88.4

3,638

3,584

142.5

9.5

8,905

98.2

Poznań

6,412

-13.3%

14-16

14.66%

44

55

110.1

84.7

3,398

3,230

102.1

16.6

3,667

76.5

Łódź

4,898

-9.2%

12-14

14.97%

31

26

100.8

86.7

3,873

3,658 2,083.2

13.0

91,102

98.3

Wrocław

6,031

-13.5%

13-16

12.37%

38

41

Tricity

6,453

-8.1%

13-15

11.24%

39

31

Opolskie (Opole)

Wielkopolskie (Poznań) Zachodniopomorskie (Szczecin) National average

New apartments* Q1 '13

City

PLN/sq.m

Index 100 = same period of the previous year. ** without social taxes Sources: Central Statistical Office GUS, NBP, C&W

Offices 1H'13

Retail rents**1H'13

Change Rents** Vacancy y/y

Retail

High

centres streets 85

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

Poland Today Sp. z o. o. ul. Złota 61 lok. 100, 00–819 Warsaw, Poland tel/fax: +48 22 464 82 69 mobile: +48 694 922 898, +48 602 214 603 www.poland-today.pl Business Review+ Editor Lech Kaczanowski office: +48 22 412 41 69 mobile: +48 607 079 547 lech.kaczanowski@poland-today.pl

Foreign Direct Investment (EUR m) Quarter

Q1'12

Q2 '12

Q3 '12

Q4 '12

Q1 '13

Q2 '13

in Poland

-1,365

1,861

1,381

2,886

175

-2,883

310

-550

-1,203

957

2,719

2008

2009

2010

2011

2012

in Poland

17,242

10,128

9,343

10,507

13,646

2,455

Polish DI

-4,020

-3,072

-3,335

5,484

-5,276

375

-5,313 -1,050 4,816

-139

1,194

1,032 1,274

1,652

-18,129 -17,977 -13,332 -3,368 -2,313 -5.1%

-4.9%

-3.5%

-3.5% -2.8%

362 -2.8%

stable

Standard & Poor's

A-

stable

Moody's

A2

stable

9 2000

1800

6

Source: NBP, BZ WBK Source: Central Statistical Office GUS

Wage

180 160 140 120 100 Aug 09

Apr 10

Dec Aug 10 11

Business Review+ Subscription 1 year- EUR 690 (PLN 2760) 6 months- EUR 375 (PLN 1480) 3 months- EUR 245 (PLN 980) Sales Director James Anderson-Hanney

Real Earnings

mobile: +48 881 650 600

Average gross wage vs inflation.

Q2 13

CA balance vs GDP

2,334 4,048

12

Q4 12

CA balance

-8,893 -10,059

2012 Q4 '12 Q1 '13 Q2 '13

A-

Source: Rating agencies

Q2 12

Services, net

2011

outlook

2400

Q4 11

Trade balance

2010

15

2200

Current Account (EUR m) Period

number (left axis) % (right axis)

2600

rating

Fitch Ratings

% of population in working age

Q2 11

836 2007

Agency

Registered unemployed, in ‘000 and

Q4 10

Year

Unemployment

Q2 10

Polish DI

Country Credit Ratings

CPI

Apr 12

Index 100 = Jan 2005. Source: GUS

Dec Aug 12 13

james.anderson-hanney@polandtoday.pl Publisher Richard Stephens Financial Director Arkadiusz Jamski Creative Director Bartosz Stefaniak New Business Consultant Tomasz Andryszczyk