Poland Today Business Review+ No. 023 by Poland Today Business Review+

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. 023 / 17th February 2014 / www.poland-today.pl / magazine, conferences, portal, newsletter

HEALTHCARE British firm McKinlay Development open their first Polish retail park page 11

GM makes Opel Astra and Cascada cars in Gliwice and diesel engines in Tychy. Photo: GM Company

GM to invest EUR 250m in engine plant

US carmaker GM has decided to allocate production of a new diesel engine range to the Polish factory in Tychy, which will be expanded at the cost of EUR 250m. The investment is very good news for the company's 3,500 employees in Poland. page 2

Integer.pl seeking seeking new investors

After installing 3,000 self-service parcel terminals across 19 countries, Polish postal services company Integer.pl is raising up to EUR 150m to finance rollout in America and Asia. page 8

tel. +48 881 650 600

MANUFACTURING & PROCESSING Finnish Cargotec to relocate Hiab crane production from Sweden to Poland page 3

CONSUMER GOODS & RETAIL IKEA boosts sales in Poland but faces delay on Lublin project page 10

BANKING & FINACE Top lender PKO BP seeks to launch new mortgage banking unit page 4

Polish developer Napollo to expand shopping centre chain page 11

WSE gets green light to acquire UK-based Aquis Exchange page 5

HEALTHCARE Tar Heel Capital buys diagnostic imaging company KIE page 11

ENERGY & RESOURCES Finnish Fortum in talks on EUR 150m CHP project in PĹ&#x201A;ock page 5

TECHNOLOGY Belgium's Materialise acquires Polish 3D printing company page 12

EBRD provides EUR 22m loan for large new wind farm in Eastern Poland page 7

IT & TELECOM Regulator cancels LTE spectrum auction page 13

TRANSPORT & LOGISTICS Parcel delivery innovators Integer.pl seek financing for US and Asia entry page 8

POLITICS & ECONOMY Q4 2013 GDP growth below expectations page 14

MEDIA Swedish Bonnier Group buys Polish book publisher page 9

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

Conference:

Hub Silesia â&#x20AC;&#x201C; logistics as a driver of the region's economic growth 26 March 2014, hotel Silvia Gold, Gliwice

During the 3rd logistics conference in Gliwice, representatives of the City, sector experts, investors interested in the region, as well as those who have already put their money in, will discuss how to maximise the potential of the city and its surroundings.

Organizer

Registration till 20 March 2014: www.prospectsinpoland.com

Media Patrons

weekly newsletter # 023 / 17th February 2014 / page 2

MANUFACTURING & PROCESSING

GM announces announces new investment in Tychy; Tychy; price tag - EUR 250m

outstanding 40% last year. According to the company, the transaction underlined Europe's importance of Europe for GM, as "one of the most competitive car markets in the world with highest customer demands in terms of fuel economy and CO2 standards." With a staff of just over 500, the Tychy factory currently makes the Circle L 1.7l diesel engines. Since its founding, the plant has turned out more than 2.5m engines.

hope that similar decisions will follow in the future," Rafał Orłowski of automotive industry think tank AutomotiveSuppliers.pl tells Poland Today.

Automotive industry in decline Passenger & LCV production in Poland and automotive exports Auto mot ive ex po rt s in EURbn, left ax is Vehicle out put in '0 00 , r ight ax is

Last year when General Motors acquired full control of the former Isuzu engine plant in Tychy and later merged it into a single business unit with the Opel factory in Gliwice, it seemed only a matter of time before the US carmaker would reveal its true intentions. The big announcement came last week, with GM saying it would launch production of a new generation midsize diesel engine family at the GM Manufacturing Poland plant in Tychy. The related capital expenditure is to reach EUR 250m, making it the largest investment the Tychy plant has seen to-date, and bringing total GM investments in Poland in excess of EUR 1bn.

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"The new midsize diesel engine family is an important part of our engine offensive. We appreciate the good quality and high efficiency of our Polish location and look forward to implementing this exciting project,” says Peter Thom, Member of the Management Board, Adam Opel AG and Vice President Manufacturing Europe.

The new investment will enable the extension and modernization of the plant’s infrastructure. The building's surface area will increase by 30% with the addition of the storage area as well as high tech production and testing lines. This expansion takes the plant's technological competence to the next level and transforms the assembly facility into a full production plant, GM said. Construction and installation of the new production equipment will continue until 2016.

GM's main Polish production unit is the Opel plant in Gliwice, which made some 108,500 cars last year, down by some 16,800 units from the 2012 level and well below its total annual capacity of 207,000 units. Opel employs some 3,000 staff in Gliwice and cooperates with an estimated 100 suppliers in Poland. The Polish plant manufactures the Astra IV compact in several versions (hatchback, sedan, GTC, and OPC). Recently it has added the new Cascada convertible to the mix, which required investments to the tune of EUR 55m. The Cascada is part of Opel's multibillion euro model offensive introducing 23 new vehicles and 13 new powertrains from 2012 through 2016. In mid2015 GM seeks to launch production of the next generation Astra V in Gliwice, which will require capital expenditures to the tune of EUR 200m.

Launched in 1999 and located in the Katowice special economic zone, the Tychy engine factory used to be part of Japan's Isuzu Motors. GM acquired a 60% stake in the business back in 2002 and purchased the

"The Tychy plant had been awaiting GM's decision on the new engine range with much anticipation because the investment defines the future of this factory. Looking at GM's investments in Hungary, one can only

Despite a slight improvement in automobile sales, Poland-based car manufacturers turned out 575,117 passenger cars and light commercial vehicles last year, marking a 9.6% drop from 2012, according to market

According to GM, production of the all-aluminum 1.6liter four-cylinder diesel engines is to launch in 2017, with maximum annual capacity being envisaged at 200,000 units. The new engine family, which will meet Euro 6 emission standards, is to be installed in a wide range of Opel/Vauxhall models.

The new diesel unit will replace the Circle L 1.7l diesel engines currently made in Tychy (pictured above), which are slowly becoming outdated due to increasingly strict EU emissions norms. Photo: GM Company

weekly newsletter # 023 / 17th February 2014 / page 3

researcher Samar. Although Fiat Auto Poland retained its position as the country's number one carmaker, its share in the total vehicle output dropped by 3.4 pps, down to 51.4%. The Poznań-based Volkswagen plant came second with a 29.7% share (+4.2 pps), whereas Opel Polska's factory in Gliwice saw its share shrink by less than 1 pps, reaching 18.9%.

to growth in the key product group – parts and components, as well as stabilization in vehicle production. In 2014 we are expecting a further single-digit improvement," Mr. Orłowski tells Poland Today.

The plan is entirely based on the need to improve Hiab's profitability and to reduce our cost structure to a competitive level," says Mika Selänne, Vice President, Hiab Supply.

MANUFACTURING & PROCESSING

Cargotec to relocate Hiab crane production from Sweden to Poland

GM is Poland's No. 3 car manufacturer Car production in Poland by maker in '000 units

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Poland's automotive exports totaled EUR 17.7bn in 2012, 8% down on the prior year, according to estimates by AutomotiveSuppliers.pl. The largest products group were parts and components, representing more than 37.4% of the total figure, followed by passengers cars and LCVs (30.5%) and Diesel engines (12.9%). Besides GM, also Japan's Toyota produces Diesel engines in Poland and their joint exports were worth close to EUR 2.1bn in 2012. "Based on data from the first ten months of 2013 we expect the full-year figure to be slightly better than in 2012. Following a weak beginning of the year, since April 2013 exports have been going up, chiefly thanks

Finnish crane manufacturer Cargotec is relocating more production from Sweden to Poland in a move to "achieve a long-term sustainable profitability level" amid "tightening competition and increasing pressure for cost efficiency." The company plans to shut down all production in Hudiksvall, Sweden, shifting the unit's focus from manufacturing to product development and testing, as well as after sales and spare parts support. The Hiab-branded loader cranes will now be built at Cargotec's multi-assembly unit in Stargard Szczecinski (30km east of Szczecin) in Poland.

Cargotec will make its Hiab loader cranes at the Polish factory in Stargard Szczeciński. Image: Cargotec/Hiab

A year ago, when Cargotec began talks with trade unions on restructuring, the company was considering keeping some production (a portion of loader cranes as well as recycling and forestry cranes) in Sweden, but the final decision has been to discontinue all manufacturing operations, resulting in the number staff at Hudiksvall being halved from 300. Assembly operations in Hudiksvall would cease gradually by the first quarter of 2015. Hiab said that it expected to save approximately EUR 11m annually from the changes with full effect from the year 2016. It also predicted to generate restructuring costs of approximately EUR 14m.

Cargotec's multi-assembly unit in Poland started operations in 2010 and it has delivered a wide range of Cargotec equipment to customers globally. Phase one of the investment, started in 2009, cost EUR 35m to complete and the second phase, announced in 2012, came to EUR 20m. In the autumn of 2012, the company decided to relocate production of reachstackers and empty container handling equipment to Poland and let 130 go in Lidhult in Sweden. The Cargotec plant in Stargard has around 550 employees at the moment, up from 300 little more than a year ago. Asked whether the planned relocation of production from Hudiksvall will result in many new positions and require additional investments, Mr. Selänne replies:

"I want to emphasize that this plan is not because of any dissatisfaction with the current assembly work.

"As we are in the start-up mode we expect productivity to increase instead of adding many new staff. How-

weekly newsletter # 023 / 17th February 2014 / page 4

ever the expectation is that by the end of 2014, if we proceed according to the plan, we will have roughly 600 employees in Stargard, both for Kalmar and Hiab. We already have enough assembly space in Stargard and we are just starting up a new paint shop and therefore only some small investments in production and testing equipment will be needed." Cargotec manufactures cargo and load-handling machinery for ships, ports, terminals and local distribution with a portfolio of well-known brands, such as Hiab, Kalmar and MacGregor. The Helsinki-listed company has six factories in Europe, including Stargard, producing reachstackers, heavy forklift trucks, truckmounted forklifts, taillifts, demountables. and loader cranes. Cargotec employs approximately 11,000 people and its revenues totaled EUR 3.2bn in 2013. Hiab, Cargotec's on-road load handling equipment division, employs approximately 2,800 staff at the moment. "At the moment, we produce some 3,000 Kalmar and Hiab products per year in Stargard. According to our plans we expect that number to continue to grow significantly but by how much and how fast depends on market conditions," Mika Selänne tells Poland Today.

sidiary, which may also take on a part of PKO BP's existing home loan portfolio. "The creation of a new mortgage unit is a part of our 2013-2015 strategy," PKO BP's CEO Zbigniew Jagiełło said in a press release. "It should increase the capital group's safety by eliminating the mismatch in the maturities of credits and deposits and opening the door for diversification of long-term financing at lower cost vs. non-secured notes," mortgage bank project head Rafał Kozłowski added. Polish banks have been lobbying over the past months for the introduction of mortgage-backed securities and asset-backed bonds to the Polish market, which would speed up the development of mortgage banking in the country. Commercial banks in Poland keep mortgages on their own books and have no easy legal means of securitizing the exposure. The introduction of mortgage-covered bonds would allow banks to improve their long-term liquidity, thus meeting new standards set by the Basel Committee, Andrzej Reich of the financial market watchdog KNF said during the last year's Retail Banking Congress.

Top lender PKO BP seeks to launch new mortgage banking unit

Although mortgage-backed securities have played a controversial role in the global financial crisis, the bankers as well as many experts, believe they could provide Polish banks with better access to long-term financing and lower borrowing costs, especially for the banks that are heavily involved in mortgage lending. If mortgage-covered bonds financed only 20% of the mortgage portfolio, it would translate into issuance of PLN 50-60bn of such papers, significantly increasing sector stability and releasing capital, bankers say.

Poland"s leading lender, PKO BP has applied to the financial market watchdog KNF for permission to set up its own mortgage bank. The new unit is to be operational at the turn of the year with PKO BP hoping to sell up to a third of mortgages through the new sub-

Polish banks have limited access to long-term financing, which means that in the case of mortgage lending they are forced to finance long-term loans through short-term securities. Creating a market for bonds, including those backed by assets, could remedy the situ-

BANKING & FINANCE

ation to some degree. According to earlier reports, the regulator would like to see these instruments traded on the Warsaw bourse's bond market Catalyst after issuers meet strict regulatory requirements promoting transparency, liquidity and proper guarantees. Back in 2011 the regulator said it was working on the legal framework necessary for such instruments to be introduced in Poland, but little has been done since. At the moment only two banks in Poland are licensed to fund their activities via mortgage-backed securities. They are Pekao SA and mBank subsidiaries. A few months ago mBank said it would direct 30% of its retail mortgage sales through a mortgage subsidiary in an attempt to double sales as it funds retail mortgages with mortgage-backed bonds. So far, their mortgage unit mBank Hipoteczny has been focused on commercial real estate. As of end June 2013, its mortgage covered bonds amounted to PLN 1.85bn and were secured by a cover pool of PLN 2.5bn of assets.

DATA BOX: BANKS IN 2013 • According to preliminary figures published by financial market regulator KNF, Polish banks had a combined net profit of PLN 15.43bn in 2013, which is 0.4% down from 2012. Their Q4 profits came to PLN 3.6bn, marking a 4.8% increase y/y. At • Their total net interest income amounted to PLN 34.14bn last year, down 3.8% y/y, with the Q4 2013 result at PLN 9.2bn, up 7.7% y/y. • Net fee income amounted to PLN 14bnfor the whole year, down by 2.3% y/y. Net fee income in Q4 alone measured PLN 3.5bn, and was down 1.7% y/y. Source: KNF

weekly newsletter # 023 / 17th February 2014 / page 5

BANKING & FINANCE

WSE gets green light to acquire UKUK-based Aquis Exchange Warsaw Stock Exchange received an approval from the UK Financial Authority to acquire 30% stock in the UK-based multilateral trading facility Aquis Exchange Ltd, which launched at the end of November 2013, enabling trading in top British, French and Dutch securities. Back in August, WSE signed an agreement to acquire 384,025 shares, accounting for a 30% stake in the firm, for GBP 5m (see PT Business Review No. 001 page 3).

business diversification at an international level is a must for our company. The recent acquisition of organized commodity markets in Poland and investment in Aquis Exchange are examples of this strategy. Internationalization is also fundamental for the business we run. WSE is already the biggest exchange in the CEE region, with some 65% share in equity turnover (as at June 2013), but we are still looking for new opportunities. Our objective is to do this with brave visionaries such as the Aquis Exchange team," Adam Maciejewski, president and chief executive of Warsaw Stock Exchange, commented on the deal last year.

WSE capitalization in PLNm, year-end*

The team behind Aquis had earlier built Chi-X Europe into a leading platform of that kind in Europe. Their newest brainchild is hoping to shake up its competition by offering a mobile phone-style "pay for what you consume" data fee for traders. Launched in 2007, Chi-X Europe sold to Bats Global Markets in 2011 for USD 365m or approximately 180 times its earnings. "The Polish capital market creates huge opportunities for WSE and is definitely our main focus, however, in a competitive and highly challenging environment,

ENERGY & RESOURCES

Finnish Fortum in talks on EUR 150m CHP project in Płock Finnish energy company Fortum and the central Polish city of Płock have inked a letter of intent regarding the potential development of a brand new heat and power plant at the cost of EUR 140-150m. According to Fortum, the new station could be equipped with a multifuel boiler, enabling the cofiring of certain types of municipal solid waste, or fuel derived from it, alongside biomass and coal.

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Established in late 2012, Aquis Exchange seeks to establish a pan-European securities trading platform. Back in August last year the WSE said in a statement that the investment aims at diversifying sources of revenues and strengthening its recognition and international position in the global financial markets. The agreement is in line with WSE's strategic interest in developing a financial hub for Central Europe in Warsaw. Any potential plans of Aquis Exchange concerning operations in the region will be settled with WSE.

technological partnership with the global giant. Recently WSE has engaged in talks with the CEE Stock Exchange Group (CEESEG), which unites the stock exchanges of Vienna, Budapest, Ljubljana and Prague, regarding potential consolidation.

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Created in 1991 to facilitate privatization, WSE lists about 450 companies on its main market, including PKO BP, the largest Polish bank, and PZU, the country's biggest insurer, with a combined value of about PLN 841bn (including PLN 593.5bn worth of domestic stocks) as of end of 2013. The number of companies doubled in the last decade, with 81 new listings in 2007 and 23 last year. The main shareholder in the exchange is the Polish Treasury, which holds 35% of its shares and a voting majority. The bourse was privatized in 2010 through an IPO. Since 15 April 2013 the WSE has been running NYSE Euronext's Universal Trading Platform, which allows Warsaw to accept high-frequency orders but also binds it through a

Developed in line with the strictest environmental safety standards, Fortum's new heat & power plant would be connected to Płock's district heating network and cooperate with the existing energy providers. Fortum said it was embarking on the preengineering analyses, based on which a final investment decision will be made. The local authorities will help the investor find a suitable location far from the city center but within Płock city limits. According to Fortum a project of this size normally takes some 2-3 years to complete, following the final go-ahead. "This investment will enable us to increase Płock's energy security and upgrade the municipal waste management system. This is why we can see the space for a new cogeneration plant in Płock, one that would cooperate with the existing local producer."

weekly newsletter # 023 / 17th February 2014 / page 6

Fortum has a number of ambitious projects lined up in Poland, but so far its biggest investment has been the PLN 530m heat & power plant it delivered back in 2010 in Częstochowa. The company had plans to build a 400MW power/290MW heat gas-fired plant in Wrocław at an estimated cost of PLN 1.5bn as well as a multi-fuel cogeneration unit in Zabrze. Fortum operates the district heating network in Wrocław, with France's EDF-controlled Kogeneracja being its main supplier. According to Fortum, the Wrocław unit were to generate more electricity than heat, giving the investor more flexibility in determining heat prices, and improving the overall profitability of the project. The new Fortum CHP in Wroclaw were to go online in 2016, but that deadline seems to be getting increasingly unrealistic, as investments have been delayed due to regulatory uncertainty on the Polish market making it hard to establish benchmarks for different types of renewable energy projects.

Fortum's Polish investments Fortum's heat & power projects in Poland, est. capex in PLNbn *Wroclaw *Zabrze *Płock Czeestochowa 0.0

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A few years ago Fortum closed the acquisition of two cogeneration plants in Zabrze and Bytom. The existing cogeneration plant in Zabrze is to be maintained as a backup power source, but Fortum had sought to develop a brand new coal & biomass-fired facility in the city at the cost of some PLN 1bn. The new Zabrze heat & power unit were to rely on biomass to a much great-

er degree than Fortum's Częstochowa unit, where coal represents 70% of all fuel.

So far Fortum's largest greenfield project in Poland has been the Częstochowa CHP, built at the cost of Photos: Fortum Power & Heat Polska PLN 530m.

The Wroclaw-based Fortum Power & Heat Polska operates district heating network in Płock, Częstochowa and Upper Silesia and a staff of almost 700 in Poland. In recent years, the company has been divesting small local heat & power plants, in a move to strengthen its focus on its few large metropolitan markets. Besides construction of new heat and power units and expansion of its district heating networks, Fortum's strategy for Poland used to include also development of municipal thermal waste treatment plants, but so far the company has failed to achieve much in this respect on the Polish turf. Helsinki-listed Fortum is the world's fourth largest producer of heat. Apart from Finland, Norway, and Sweden, the company has in-vested in Russia, Poland and the Baltics. With 9,900 employees, Fortum turned over EUR 6.1bn in 2013, reaching an operating profit of EUR 1.6bn.

Poland Today talks to: Mikael Lemström, CEO of Fortum Power & Heat Polska

• PT: According to your initial projections, what would be the estimated capacity of the proposed Płock unit? Mikael Lemström: We are still at a very initial stage of the project, so it is premature to estimate the planned capacity. It will be determined at later stages. We assume that the unit may be similar in size to our CHP in Klaipeda, opened last year [the Klaipeda unit produces approximately 140 GWh of electricity and 400 GWh of heat annually; ed.]. • PT: When do you expect the feasibility studies for Płock to reach completion? ML: The first feasibility study has already been done. Next we will enter the pre-engineering phase. Once it is completed, we will make decisions on our next steps. • PT: The press release emphasizes the new plant's complementary role vis-à-vis the existing heat & power suppliers in Płock. How can this cooperation be ensured, considering that Fortum is the network's operator and your new CHP will almost certainly be much more cost effective and environmentally friendly than any existing facilities?

weekly newsletter # 023 / 17th February 2014 / page 7

"We are proud to support the development of the wind farm in Orla as this project is fully in line with our efforts to strengthen green energy in Poland. We have a strong track-record in the sector and with this project will be able to build on our experience and expertise," commented Grzegorz Zielinski, EBRD Renewables Coordinator.

"The project is of special significance. Power generation in Poland remains dominated by coal and lignitefired plants and the country is lagging behind its green energy targets agreed with the European Commission. To reach the 20% share of renewable energy in the total energy mix in 2021 as mandated by the government, a major push to reinvigorate the renewables sector is required," EBRD said in a statement. "Despite general consensus on wind energy as one of the viable green alternatives, the expansion of the sector was severely affected by regulatory uncertainty. The EBRD's loan is intended to overcome the gap in available funds by providing financing and comfort to private investors."

Poland's installed wind energy capacity in MW

At full capacity, the wind farm will consist of 15 N100 2.5 MW Nordex turbines which will be able to generate a maximum of 37.5 MW and will save approximately 57,400 tons of CO2 a year. Construction of the first phase is expected to be finalized in December 2014, while the final phase is scheduled for completion in mid-2015. The entire project is to cost some PLN 269m (EUR 64m).

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• PT: What is happening to your Wrocław and Zabrze projects? Are they on hold? When do you hope to begin construction and commission those CHPs? ML: The projects are not on hold. On the contrary, Wroclaw and Zabrze projects are both still very much under development, but due to uncertainties in the investment environment in Europe and in Poland, we cannot currently give any timetable for the future.

The European Bank for Reconstruction and Development (EBRD) has agreed to co-finance a 37.5MW wind farm project in Orla, eastern Poland, developed by a German consortium including turbine maker Nordex. The loan of up to PLN 94m (EUR 22m) will be used to finance the construction and operation of phase one of the project, with an installed capacity of 22.5MW.

ENERGY & RESORUCES

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• PT: When we spoke a year ago, Fortum's investments were on hold due to regulatory uncertainty in Poland. Have the regulatory situation improved enough since then for Fortum to start planning new investments? The renewables law is still in the making… ML: There are positive signs that the new RES law will be enacted this year and therefore we look positively upon the future. However, as you say, the final investment decisions by Fortum will depend onthe legal environment and the support for renewable energy generation technologies, among other issues. Another positive sign is the new waste law, which is already in place. It has improved opportunities to utilize municipal and industrial waste-based fuels in heat and electricity production, thus creating a positive impact on our investment plans in Plock.

EBRD provides loan for large new wind farm in Eastern Poland

The small village of Orla (50km south of Białystok) gained media attention a few years ago after Swedspan, part of Sweden's furniture, retail, and property giant IKEA, had chosen to build a factory of HDF furniture boards and a sawmill there at the cost of EUR 140m. The factory is operational and continues to grow and the wind farms are to bring about further improvements to the local infrastructure.

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ML: The new CHP will certainly be environmentally friendly, but it will not cover the entire heat demand of Płock. We will need to buy a significant amount from the existing CHP. We have a very good working relationship with the current supplier and we intend to co-operate extensively with them in order to alleviate any possible concerns and ensure continued good cooperation in the future.

Source: URE

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. The London-based institution continues to support the renewable energy sector with over EUR 1.1bn invested in nearly 50 projects across its region. In December, EBRD agreed to provide PLN 469m (EUR 112m) in two long-term debt facilities to Portugal's EDP Renewables (EDPR) for the latter's Polish wind farm developments with a

weekly newsletter # 023 / 17th February 2014 / page 8

combined capacity of 130MW. According to EDPR, contracting long-term debt in local currency at competitive prices enabled the company to mitigate the refinancing risk and to reduce the foreign exchange risk by having a natural hedge between revenues and costs. Poland's installed renewable energy capacity came to 5,509 MW as of end of 2013 , up by over 1,093 MW compared to end-2012, according to energy market regulator URE. Wind power capacity increased the most, reaching 3,390 MW as of December, followed by hydro-power capacity amounting to 970 MW and biomass-fueled plants with 987 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.

IN BRIEF: Slovak energy firm GGE, which had been hoping to raise close to PLN 190m from an initial public offering on the Warsaw Stock Exchange (see PT Business Review+ No. 021 page 6), decided to suspend its IPO due to unfavorable market conditions, the firm said in a statement. According to the issue prospectus, published at the end of January, the IPO were to take place on 21st March. GGE, subsidiary of Grafobal Group, set the maximum price of up to 5m new shares at PLN 38. Natural gas firm PGNiG has discovered a deposit of high-methane natural gas estimated at several billion cb.m and expects to launch production from the deposit in H2 2015, the company announced last week. The new deposit was discovered in the Zalesie-JodłówkaSkopów license in Podkarpackie region, southeastern Poland. PGNiG expects gas output from the deposit to reach 100,000 cubic meters daily in the first year of extraction.

TRANSPORT & LOGISTICS

Parcel delivery innovators Integer.pl seek financing for US & Asia entry Polish postal services company Integer.pl is determined to speed up the global expansion of its innovative parcel locker concept InPost. With 3,000 selfservice parcel dispatch and collection terminals in operation across 19 countries, the Kraków-based business is now seeking financing for phase two of its global rollout. "Our goal is to be present in both Americas and Asia over the coming 3-4 years. In the US alone, we plan to launch 10,000 parcel lockers by the end of 2016. We are currently in the process of securing a further 6,000 locations for our terminals," Rafał Brzóska, founder and CEO of Integer.pl tells Poland Today. "The biggest challenge for us is time, as we want to be the pioneer in many markets, which is why we are pushing for rapid rollout." The global expansion, which has taken Integer.pl's parcel lockers to eight CEE markets as well as the UK, Iceland, Ireland, Saudi Arabia, Latin America, and Australia, has been partially financed by PineBridge Investments, the global multi-asset class investment manager. Two years ago the two companies agreed to invest EUR 108m in the easyPack venture that drives the international expansion, with PineBridge contributing EUR 50m, and the Warsaw-listed Integer.pl – the outstanding EUR 58m. But the original funding is beginning to run dry, especially since by 2016 the total investment outlays may reach EUR 1bn.

"Last year alone our capex came to PLN 300m and this year we are projecting a similar amount," CEO Rafał Brzóska tells Poland Today. "This month we are starting a formal search for a second private equity partner for easyPack. However, since we do not want to dilute our shareholding and lose majority ownership, Integer.pl will also take part in the equity boost. Our targets are fully dependent on the kind of financing we manage to attract. I expect the total figure to be somewhere between EUR 50-150m. If we raise less than EUR 100m, our focus will be on Europe and entry to the USA. Should we get EUR 100-150m, Canada, Brazil and China will be added to the mix."

One of Integer.pl's, most recent inventions (developed with the ATM technology giant NCR) are modular terminals that enable collection and dispatch of parcels, letters, and cash. Image: Integer.pl

In recent weeks the Poles have won a tender organized by "4-72", a parcel delivery arm of Colombia's national post operator. Initially, Integer.pl is to install eight of its trademark self-service parcel dispatch and collection terminals in Colombia, but the full-year target is 100 locations. The Polish firm first appeared in South America back in 2011, when it began cooperating with the Chilean national operator Correos de Chile. Integer.pl has since installed several dozen parcel terminals in the country, and customers embraced

weekly newsletter # 023 / 17th February 2014 / page 9

the product. According to a survey by Correos de Chile, as many as 99% of users said they would use the terminals again, with 97% saying they would recommend them to others.

"We are really determined to speed up our global expansion," says Rafał Brzóska, CEO of Integer.pl

services operator. The first batch of 18 parcel lockers is to be delivered to Iceland by the end of this year.

Swedish Bonnier buys Polish book publisher

Integer.pl Group key figures Turno ver in P LNm, left axis Net pro fit in P LNm, right axis 300

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2012

Source: Integer.pl

"South America's e-commerce has been growing at a very fast rate. In Colombia alone it has expanded by an impressive 41% over the past five years - the world's 4th fastest growth, which means that the demand for convenient and fast delivery of goods is enormous there. Our terminals are unique in the sense that they guarantee 24/7 availability in the best possible locations. We are certain that following the planned expansion of our network in that region of the world, InPost parcel lockers will become the basic tool used by e-retailers in South America," says Rafał Brzóska. The company has also sold 10 terminals to Aeropost the leading e-commerce operator from Central America and the Caribbean Region, which will install them in the coming months in Costa Rica, El Salvador and Guatemala. Overall, the Central American operator seeks to launch more than 100 parcel lockers, across 30 countries and islands. Meanwhile, expansion in Europe continues as planned. At the end of 2013 Integer.pl won a tender organized by Íslandspóstur, Iceland's national postal

MEDIA

"We are really determined to speed up our international growth. We have just recently signed contracts with top e-retailers in Norway, France, Italy, and Spain, and we are starting to install our terminals in those markets. Our long-term goal is to have 1,000 machines in Italy, 1,500 in France, 800 in Spain and at least 200 in Norway. At the same time we continue to expand our network in the UK, where we already have more than 800 locations." Integer.pl Group was founded in 1999 and today consists of 10 companies specializing in the distribution of addressed and non-addressed mailing and direct marketing materials. In 2006 Integer.pl started addressed mail handling and delivery services through its InPost subsidiary which is currently the largest, independent postal operator in Poland. The company went public in 2007 and launched the parcel terminal locker business two years later. In the first three quarters of 2013 Integer.pl net-earned PLN 17.3m (down from PLN 49.7m in Q1-Q3 2012) on revenues of PLN 239.7m (PLN 199.5m). The respective full year figures for 2012 came to PLN 47.2m and PLN 281.9m.

Bonnier Books New Markets, a part of Swedish media giant Bonnier, has entered Poland's book publishing sector by inking a joint venture with a Warsawbased publisher Marginesy. Marginesy was founded in 2008 by Hanna MirskaGrudzińska. Since its start, the company has published a considerable number of bestsellers, by authors such as Jaume Cabré and biographies of Polish celebrities, which has enabled the publisher to grow rapidly. Last year Marginesy turned over PLN 4m and posted a net profit. The company publishes an average of 20 titles a year, with estimated sales of 10,000 copies per title. The former owners, Hanna Mirska-Grudzińska and Krzysztof Grudziński, will both stay in the company as shareholders as well as part of the management board. Bonnier, which has been in the book publishing business publishing since 1804, has acquired a 51% stake in Marginesy. The Swedes have ambitious plans with regard to Poland, aiming to introduce more bestsellers, explore the e-book segment, launch new brands and carry out further acquisitions Bonnier Books New Markets was launched last year in Germany with a focus on strategic acquisitions and development of new business areas within the book segment, primarily in Europe with the exception of the Nordic countries, where Bonnier already has a strong presence. So far, Bonnier's key business in Poland has been the business daily Puls Biznesu.

weekly newsletter # 023 / 17th February 2014 / page 10

"We are convinced that joining the strengths and capabilities of old owners and new shareholders will allow us to continue the dynamic development of the Marginesy publishing house," says Krzysztof Grudziński, President of Marginesy. "At the same time, we believe that the mix of local experience with international publishing know-how will open new possibilities of growth to Marginesy."

IKEA Retail Polska, which operates eight stores in Poland, was hoping to launch its 9th location this year in Lublin, but the project is yet to get underway due to delaying bureaucratic procedures. According to plans, the two-story retail cluster is to total approximately 80,000 sq.m GLA, and will encompass an IKEA store, shoping gallery (49,000 sq.m), hypermarket (11,000 sq.m), food court, and 3,000 parking spaces.

RETAIL

"In Lublin we are still waiting for final approval of all road construction permits. Afterwards, we will update our work schedule and inform about further developments accordingly," says Evelyn Higler.

IKEA boosts sales in Poland but faces delay delay on Lublin project Despite economic slowdown in the country, the Polish stores of Swedish flat pack furniture giant IKEA welcomed 20m customers and posted robust results in 2013. "Last year and this year, Poland has been within the top three growth countries for IKEA globally," IKEA Poland Retail Manager & Managing Director Evelyn Higler tells Poland Today. "Economic conditions were tough in the beginning of 2013 but the upturn was visible for the rest of the year. IKEA achieved significant growth in Poland in fiscal year 2013 [September 2012 – August 2013; ed.] and the growth pace was similar to previous years. Our sales grew by 9% and amounted to PLN 2bn," she says. Globally, IKEA's sales revenues and net earnings grew by 3.1%, reaching EUR 27.9bn and EUR 3.3bn respectively. Including rental income from retail properties owned by the group, the turnover came to EUR 28.5bn (+3.2%).

"Poland is a priority market for IKEA," says Evelyn Higler, Retail Manager and Managing Director at IKEA Poland

reported a 4% y/y increase in sales, while footfall grew by 3%. IICG's biggest investment last year was the expansion of the Franowo retail park, which opened in September 2013. The company added 14,000 sq.m of retail space to the park, expanding its total area to 80,000 sq.m. This year, their focus will be on Wrocław, where IICG will begin construction of phase two of Bielany retail park. The extension will bring the project's total total size to 145,000 sq.m of commercial space with 200 retail and service units. IICG expects to complete the work in 2015.

Anchored by an IKEA store, the new centre in Lublin were to open in Q4 2014 with a GLA of 80,000 sq.m, but now 2015 seems like a more realistic deadline. Image: Inter IKEA Center Group

A few years ago the company acquired an investment site in Opole and rumors circulated about possible store openings in Szczecin and Rzeszów. Asked about other potential projects in their pipeline, Ms. Higler refrains from disclosing any details. "IKEA is interested in further expansion in Poland and becoming available to more people. Poland is a priority market for IKEA. We will inform about any new developments in due time," she replies. As for IKEA's retail property arm Inter IKEA Center Group (IICG), tenants at its eight Polish retail parks

As part of the IKEA group, IICG Poland is responsible for preparation, implementation and management of commercial property projects. In Poland, the group owns eight shopping centers, which are situated in Gdańsk, Łódź, Poznań, Wrocław, Katowice and Warsaw (three centers: Janki, Targówek and Wola Park). The latter is IICG first acquisition in Poland and also the only IICG project in the country that is not anchored by an IKEA store. The Swedes are hoping to begin expanding Wola Park this year, seeking to transform it into Warsaw's second largest shopping center. The plan is to add 17,565 sq.m of GLA to the project, and IICG has signed up DIY retailer Castorama to fill 10,000 sq.m of it.

weekly newsletter # 023 / 17th February 2014 / page 11

"As part of our long term plan for Poland we are considering further acquisitions of existing shopping centers. As we intend to stay and grow on the Polish market, they should be well established shopping centers in good locations, with good sustainable offers. At this stage we are only looking at a limited number of larger regional capitals, where we believe it is important for us to be present. On the development side, besides the aforementioned projects, such as Franowo, we will continue with more extensions in all our existing retail centers as well as keep working on increasing commercial and non-commercial offers in these locations. Regarding new developments, we are looking at 4-5 new locations around Poland and this includes new enclosed shopping centers as well as retail parks with strip-malls and big box tenants," Mikael Andersson, Managing Director of Inter IKEA Center Group told Poland Today in September 2013.

RETAIL PROPERTIES

Polish developer Napollo expands shopping centre chain Polish developer Napollo, formerly known as Nap Invest Group, is developing a chain of neighborhood shopping centers in medium-sized Polish towns under the "Centrum Zakupów" brand. The company has just unveiled details of two projects in Silesia, in the towns of Żory and Tarnowskie Góry, both of which are to open in 2016. "This February we changed our name to Napollo in a move to emphasize our new, ambitious strategy that prioritizes expansion in the retail property segment. Our goal for 2014 is to secure a land bank that would enable the company to deliver some 100,000 sq.m of

GLA, and since the beginning of the year we have already acquired a quarter of our target volume. We are focusing on locations with high retail potential in cities of less than 100,000 inhabitants as well as large residential areas." " Napollo's Agnieszka Podbielska tells Poland Today.

Centrum Zakupów Świdnik is one of several retail Project Napollo seeks to complete over the coming years. Image: Napollo With a GLA of 15,000 sq.m, Centrum Zakupów Żory will offer up to 50 retail units ranging from 30 sq.m to 1,500 sq.m in size as well as 350 parking spaces. Situated some 40m south-west of Katowice, Żory has a population of 60,000 people. A smaller project (8,200 sq.m GLA, 120 parking spaces) is to be opened in Tarnowskie Góry, a town of 60,000 located just north of Katowice. Napollo's Silesian pipeline includes also a small strip-mall (2,800 sq.m GLA) in CzerwionkaLeszczyny (30km south-west of Katowice). Besides the Silesian projects, Napollo is to break ground this year on Centrum Zakupów Świdnik, which is to reach completion in 2015 with a GLA of 7,200 sq.m. The same year, a project of similar size (6,500 sq.m) is to be launched in Sochaczew, some 50km west of Warsaw. Their long-term strategy is to develop retail properties of up to 20,000 sq.m GLA in the vicinity of large cities.

"Our Centrum Zakupów concept encompasses neighborhood shopping plazas located in densely populated residential areas as well as city centre retail galleries, like our projects in Żory, Tarnowskie Góry, and Sochaczew. Besides their basic retail function, covered by fashion, electronics, or food outlets, they serve as convenience and community centers, offering crucial everyday services and creating local meeting places. Many clients visit such centers regularly, several times a week, without the need to commute by car. Convenient locations are therefore key for such projects," says Agnieszka Podbielska. Nap Invest has been operating since 2007. Its past developments include Centrum Zakupów Zgierz (3,500 sq.m)), Centrum Zakupów Ząbki (3,000 sq.m), both opened in 20111, and Galeria Renova Warszawa (13,000 sq.m), re-launched in November last year as a modernized version of the former Galeria Rembielińska in Warsaw's Targówek district. Besides retail developments, Napollo is active also in the residential sector, with two projects under construction in Lublin and two planned in Warsaw.

HEALTHCARE

Tar Heel Capital buys diagnostic imaging company KIE Polish private equity firm Tar Heel Capital has acquired an 85% stake in medical diagnostic imaging firm KIE. The company operates 12 computed tomography and magnetic resonance facilities – under the TOMMA brand – and offers maintenance and teleradiology services to nearly 40 other centers.

weekly newsletter # 023 / 17th February 2014 / page 12

Over the past 12 months KIE has invested in excess of PLN 15m in the opening of four new facilities and development of proprietary medical IT solutions. According to Tar Heel Capital, the exceptional expertise of KIE's team in medical equipment and IT solutions was one of the key drivers behind their investment. "Last year KIE carried out more than 32,000 tests at its proprietary centers, and an even bigger number of checkups was performed by external clients using KIE's equipment. With five new proprietary centers in its network the company is bound to see a significant growth this year," Andrzej Różycki, Partner at Tar Heel Capital, tells Poland Today. "We believe that our experience in financing growth and acquisitions will help speed up KIE's organic growth and play an active role in the consolidation of this market segment," says Mr. Różycki. "We are ready to invest a further tens of millions PLN into the project, and additionally support its growth also with credit and leasing. Our goal is to boost the number of tests carried out at existing centers as well as opening new locations. As far as acquisitions are concerned, we are interested in all good diagnostic centers, both independent ones as well as companies much larger than KIE. Our investment horizon for this project is 5-8 years." The investment was made via the firm’s Tar Heel Capital II FIZAN vehicle, with KIE founder Karol Konieczny remaining a minority shareholder. KIE is the second investment from the fund which raised EUR 50m in 2013 dedicated to investments in Polish SMEs. Last year the fund acquired Polish industrial hydraulic systems specialist Rockfin. Founded in 2008, Tar Heel Capital had previously invested in Euroad, Radpol and Apreo Logistics, while the Fund I portfolio currently includes LiveChat, Greenbet, Ekobet-Siekierki and FAM GK.

According to market research companies PMR and Dr. Kalliwoda Research, Poland's medical imaging market, which remains relatively fragmented, is likely to see more mergers and acquisitions in the near future with a number of private equity firms and strategic investors seeking to secure a solid foothold in the sector. Last year saw Lux Med, the Polish arm of UK healthcare giant Bupa, acquire Toruń-based Tomograf as well as the imaging units of Szpital Swissmed in Gdańsk and CM Św. Jerzego in Poznań. Asked whether the big healthcare players do not pose a threat to independent operators, Mr. Różycki replies: "The economy has always evolved towards specialization. The only reason why this trend could be reversed is legislation that favors one business model over another. I strongly believe that companies that specialize in a given field are more effective than universal providers. Which does not mean both types of firms cannot share the same building." PMR estimated the value of Poland's diagnostic imaging market (measured as the value of diagnostic equipment sold) at PLN 1bn in 2012, following a few years of double digit growth. The sector has seen some large-scale investments over the past decade, largely thanks to EU funding.

TECHNOLOGY

Belgium's Materialise acquires Polish 3D printing company Belgian 3D printing company Materialise has acquired e-Prototypy, Poland's leading provider of rapid prototypes and 3D printing. e-Prototypy has been

active in the Polish market since 2008 and has grown to become the market leader in the region. e-Prototypy offers a broad range of 3D printing solutions, with a specialization in the production of laser sintered components, and has invested in scanning and reverse engineering services in recent years. The Leuven-based Materialise has been an active player in the global additive manufacturing (popularly known as 3D printing) market since the early 1990s. Besides Europe's largest 3D printing capacity, Materialise also provides software solutions for 3D printing. The Belgian firm is a major provider of prototyping and simulation services for the medical and industrial markets. Its clients include automotive, consumer electronics, and consumables companies, hospitals, research institutes, and clinicians, as well as to consumers interested in bringing their own unique creations to life through the company's online suite. Materialise has been a market leader in the Czech market, through its subsidiary in Usti Nad Labem, since 2004. "With the acquisition of e-Prototypy, Materialise shows its commitment to further invest in the eastEuropean market," says Bart Van Der Schueren, Vice President Industrial Production, Materialise. "Thanks to the acquisition, Polish customers will be gaining access to the vast production capacity of Materialise. Furthermore, current Materialise customers will benefit from access to the scanning and reverse engineering services of e-Prototypy." e-Prototypy is Poland's first comprehensive prototype center specializing in the production of fully functional prototypes using 3D printing and 3D scanning and in the direct production of small series (Direct Digital Manufacturing) . Additionally, the company provides 3D scanning services - color deviation maps, reverse engineering, dimensional control of the physical detail with documentation. Dimensional scanning allows for the creation of a digital model using a physical object

weekly newsletter # 023 / 17th February 2014 / page 13

(Reverse Engineering), which e-Prototypy can then edit or change as well as make copies using incremental technologies.

Poland Today talks to: Bart Van der Schueren, Vice President Industrial Production at Materialise

• PT: Who have been the main clients of e-Prototypy so far and will the target group change following the ac-quisition by Materialise? Bart Van der Schueren: e-Prototypy has been working primarily for industrial customers in different sectors like automotive, consumer goods and aerospace. Since mid-2013 the company has also targeted creative professionals through its web platform www.personalise.pl. These are also the clients that also Materialise is working with, and therefore the target group will not change, on the contrary, Materialise will offer its full product portfolio to these Polish customers. • PT: e-Prototypy's scanning and reverse engineering services – are these capabilities new to Materialise? BS: These capabilities are not new to Materialise. But until now we haven't been able to exploit these services in full. At the moment we use scanning technologies primarily for internal quality control purposes. Since about 2 years ago we have been offering engi-

neering services to our customers. Through these engineering services we aim to help our customers who are developing products that will be produced in low volumes. If these products are produced by 3D Printing technologies they need dedicated engineering which takes knowledge of those printing technologies into account. Scanning and reverse engineering are important tools in these engineering services. So, the acquisition of e-Prototypy offers us the chance to develop this activity further. • PT: What are your plans with regard to the Polish business? What role will it play within Materialise? BS: During the next year we will work on the integration of the Polish services into the broad portfolio of Materialise services and in this period we will develop the strategy for further growth. The activities of ePrototypy fit in the industrial production segment of Materialise. This segment is one of the three segments in which Materialise is active. Although e-Prototypy is relatively small compared to Materialise, it has developed a significant market share in Poland. As such the Polish branch of Materialise has a high importance in the group.

The auction notice was published on 30 December 2013. The original deadline for the submission of preliminary bids was 13 February. Through the planned sale of 800 MHz and 2.6 GHz bands, UKE sought to support the further development of LTE networks, which have already started in Poland in the 1.8 GHz band. The cancelled auction will included five lots or 50 MHz total in the 800 MHz band and 14 lots or 140 MHz total in the 2.6 GHz band. In accordance with the regulations, operators who paid for the auction documentation could ask the UKE president to clarify details the auction, no later than 21 days before the deadline for submitting offers. Although UKE published the requested clarification before the 6th February deadline, the text was temporarily inaccessible on that day due to technical problems, which prompted the regulator to extend the deadline for initial offers to 14 February. This, in turn, was not to everyone's liking. Polish mobile operator Polkomtel, which has been critical of the auction from the start, said UKE's actions lacked transparency.

Polkomtel (Plus) is No. 4 player Mobile operators in Poland, market shares as of Q2'13*

IT & TELECOM

Regulator cancels LTE spectrum auction Poland's telecommunications watchdog UKE has cancelled the much-awaited albeit controversial LTE frequency auction last week citing legal uncertainty. UKE boss Magdalena Gaj said the regulator wanted to eliminate any doubt about the legality of the proceedings that had been the target of heavy criticism by one of Poland's four leading mobile operators.

Orange 27% T-Mobile 29%

Plus 25%

Other 2%

Play 18%

Source: Telepolis *) based on SIM card numbers

weekly newsletter # 023 / 17th February 2014 / page 14

According to Ms. Gaj, although the auction process and all accompanying documentation had been properly prepared in accordance with the law, as a regulatory authority, UKE had to ensure that all market participants were given equal treatment and therefore decided to revoke the auction. This decision means that the procedure will have to be repeated, with UKE already working on a new schedule. In accordance with the law, the first step in this process will be an announcement of the auction documentation for consultation with stakeholders. This notice will be published in the next few days. According to Polkomtel, the terms of the original tender favored its competitors Orange Poland and TMobile. In a recent letter to UKE, Polkomtel's owner Zygmunt Solorz-Żak argued that certain provisions of the LTE auction (mainly the spectrum cap for the 800 and 900 MHz bands) drastically reduced Polkomtel's chances vis-à-vis its rivals. In his opinion, that spectrum cap should apply only to the 800 MHz band, and not the 900 MHz band, which supports both 2G and 3G technology, while the 800 MHz band is intended for LTE only. Moreover, the spectrum cap should apply to any form of shared use of frequencies, Solorz said. Otherwise, the ban on holding two blocks in the 800 MHz band would apply only to one mobile operator in Poland - Polkomtel. Polkomtel demanded UKE cancels the auction and holds a new consultation once T-Mobile and Orange provide proper disclosure on their shared use of spectrum in the 900 and 1,800 MHz bands. Polkomtel said their infrastructure-sharing joint venture should be investigated, as it is distorting competition. The Polish operator warned it would take the issue to the competition watchdog UOKiK as well as relevant government and parliamentary bodies.

DATA BOX: JANUARY INFLATION

POLITICS & ECONOMY

Q4 2013 GDP growth below expectations Poland's economy accelerated for a third quarter, though less quickly than economists estimated, according to Friday's flash estimate from the central statistical office GUS. Gross domestic product, unadjusted for seasonal effects, rose 2.7 % y/y in Q4 2013 after a 1.9% gain in the previous three months. That’s below the 2.9% median estimate of 34 economists surveyed by Bloomberg. Seasonally adjusted GDP grew 0.5% from the previous quarter, slowed from 0.7% in Q3.

Poland's January consumer prices were flat at 0.7% y/y and up by 0.1% m/m versus consensus expectations for 0.9% y/y growth, stats office GUS informed in a statement. Analysts surveyed by Polish press agency PAP expected consumer prices to rise by 0.3% m/m in January.

CPI inflation in Poland (y/y) 5% 4% 3% 2%

Gross Domestic Product (y/y)

Seasonally unadjusted

Seasonally adjusted

Jul 11

Source: GUS

Jan 12

Jul 12

Jan 13

Jul 13

Jan 14

3% 2%

IN BRIEF:

1% 0% Q4'09 Q2'10 Q4'10

Q2'11

Q4'11

Q2'12

Q4'12

Q2'13

Q4'13

Source: GUS

"The result was weaker than expected after the stronger-than-expected 2013 flash GDP published in late January boosted Q4 growth expectations. The rising pace of growth through 2013 bodes well for 2014 and we see upside risk to our 2014 GDP growth estimate of 3.0% y-o-y compared to 1.6% in 2013," commented Agata Urbańska, CEE Chief Economist at HSBC.

Poland's Prime Minister Donald Tusk dismissed the head of Poland's anti-monopoly and consumer protection office UOKiK Malgorzata Krasnodębska-Tomkiel, who has been in the office since June 2008, UOKiK said in a press statement. Krasnodębska-Tomkiel will be acting head of UOKiK until her replacement is appointed. Government spokesperson Małgorzata Kidawa-Błońska said that Krasnodebska-Tomkiel’s dismissal is continuation of government’s reconstruction started in autumn last year. “Prime Minister made some changes in the government lineup last year and now is looking at the offices under his supervision. We face new challenges and they have to be met”, Kidawa-Błońska said.

weekly newsletter # 023 / 17th February 2014 / page 15

KEY STATISTICS Consumer Prices Prices

Inflation

+0.1 +3.7

+1.4

0.0 +4.2 +0.8

Clothing, shoes

-4.8

+3.5

-4.9

-0.2

-4.9

-0.6

Housing

+1.8

+0.2

+1.8

+0.1

+1.8

0.0

Transport

-5.3

-3.9

+2.1 +0.2

-2.3

-1.0

-2.3

-1.2

-0.9

0.4

-1.2

-1.0

Communications -7.2

+2.8

-11.7

-4.9

-11.6

0.0

n/a

Gross CPI

+0.2 +0.6 -0.2 +0.7 +0.1 +0.7 +0.1

+0.8

y/y

m/m

Aug '13

Sep '13

Oct '13

Nov '13 Dec '13

m/m (%)

-0.7

-0.9

+3.6

-5.8

y/y (%)

+3.4

+3.9

+3.2

+3.8

+17.3 +5.8 2013

Year

2009

2010

2011

2012

Turnover in PLNbn

582.8

593.0

646.1

676.0

n/a

+4.3

+5.5

+11.6

+5.6

+2.3

y/y (%) Jan 14

+0.1 +3.6

+1.6

Nov 13

+1.5 +0.7

Sep 13

Alcohol, tobacco +3.6

+1.9 +0.3

Jul 13

-0.1

May 13

+1.9

Mar 13

Food & bev

Month

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

Jan 13

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

Nov 12

Sector

Retail Turnover

Sep 12

Jan '14

Jul 12

Dec '13

May 12

Nov '13

Jan 12

Oct '13

Mar 12

Data in (%)

Residential Construction Dwellings

2008 2009 2010

2011

2012

2013

y/y

230.1

178.8

174.9

184.1

165.1

138.7

-16.0

142.9

158.1

-10.2

(in '000 units)

Producer Prices Prices

Industrial Output

(%)

Permits Commenced

174.7

162.2

141.8

127.4

m/m (%)

+0.7

+0.2

-0.3

+0.1

-0.7

-0.3

0.0

m/m (%)

+2.6

+1.5

-4.5

+9.6

+6.0

-6.2

-9.7

U. construction

687.4 670.3 692.7 723.0

713.1

694.0

-2.6

y/y (%)

-1.3

-0.8

-1.1

-1.4

-1.5

-0.9

y/y (%)

+2.8

+6.3

+2.2

+6.2

+4.4

+2.9

+6.6

Completed

165.2 160.0 135.7

152.5

146.1

-4.4

Year

2007

2008

2009

2010

2011

2012

2013

Year

2007

2008

2009

2010

2011

2012

2013

Source: Central Statistical Office (GUS)

y/y (%)

+2.0

+2.2

+3.4

+2.1

+7.6

+3.3

-1.3

y/y (%)

+10.7

+3.6

-3.5

+9.8

+7.7

+1.0

+2.2

Gross Domestic Product

Jun '13 Jul'13 Aug'13 Sep'13 Oct'13 Nov'13 Dec'13

-0.2

-0.1

-2.0

-1.9

-1.8

-1.7

2007

2008

2009

2010

2011

2012

2013

+7.4

+4.8

+0.2

-0.1

+1.0

+0.2

-1.8

404,310

-1.9%

Q2 2013

+0.8%

395,657

-2.3%

Q1 2013

+0.5%

377,815

-3.1%

2013

+1.6%

1,628,200

n/a

2012

+1.9%

1,522,736

-3.7%

Sentiment Indicators

2011

+4.5%

1,462,734

-5.0%

Economic sentiment and consumer confidence indicators

2010

+3.9%

1,416,585

-5.1%

+9.4

+14.3

-2.9

+21.5

y/y (%)

-18.3

-5.2

-11.1

-4.8

-3.2

-8.9

+5.8

Year

2007

2008

2009

2010

2011

2012

2013

y/y (%)

+15.5

+12.1

+5.1

+4.6

+11.8

-0.6

-12.0

8,427

192 6,060

138 6,290

143 6,061 138

Manufacturing

3,522

154

3,491

152 3,560

155 3,625 158

Energy

6,535

198 6,196

188 5,828

177

152 3,693

157 3,766 160

Construction

3,829

163 3,556

Retail & repairs

3,365

143 3,432 146

3,421

6,021 183

146 3,408 145

Transportation

3,816

135 3,439

122 3,547

125 3,589 127

IT, telecoms

6,379

166 6,685

174 6,707

174 6,654 173

Financial sector 6,044

136 6,356

143 6,702

151 6,109 137

National average 3,878

154

3,741 149

Source: Central Statistical Office (GUS)

3,613

144 3,652 145

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

120

100

-20

-40

60 J an 1 4

Q3 2013

Oct 13

Q2 2013

J ul 1 3

Q1 2013

Apr 13

Q4 2012

J an 13

Coal mining

n/a

+1.9%

-0.8

Oct 12

Sector

Current account def. in % of GDP

+2.7%

+7.8

J ul 12

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

GDP in PLN bn current prices

Q3 2013

+19.1

Source: The Central Statistical Office of Poland, GUS

Gross Wages

Growth y/y unadjusted

131.7

Q4 2013

m/m (%)

Apr 12

y/y (%)

-0.1

Period

Jun '13 Jul '13 Aug '13 Sep '13 Oct '13 Nov '13 Dec '13

J an 12

Year

-0.1

Month

O ct 11

y/y (%)

Jun '13 Jul'13 Aug'13 Sep'13 Oct'13 Nov'13 Dec'13

Jul 11

m/m (%)

Jun '13 Jul '13 Aug '13 Sep '13 Oct '13 Nov '13 Dec '13

Construction Output

Construction Prices Price s Month

Month

Ap r 11

Month

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

n/a

Key Economic Data & Projections Indicator

2010

2013

*2014

GDP change

+3.9% +4.5%

+1.9%

+1.6%

+3.5%

Consumer inflation

+2.6% +4.3%

+3.7%

+0.9%

+1.2%

Producer inflation

+2.1% +7.6%

+3.4%

-1.3%

+0.6%

CA balance, % of GDP

2011

2012

-5.1%

-5.0%

-3.7%

-1.6%

-0.8%

Nominal gross wage

+3.9%

+5.2%

+3.7%

+3.4%

+4.5%

Unemployment**

12.4%

12.5%

13.4%

12.8%

3.99

4.12

4.19

4.20

4.07

EUR/PLN

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

weekly newsletter # 023 / 17th February 2014 / page 16

100 DKK

55.66 ↓

100 SEK

47.05 ↓

10,000 JPY

USD EUR 350

300

49.73 ↓ 297.65 ↓ 15.16 ↓

100 CZK 10,000 HUF

400

28 Feb 13

100 NOK

134.49 ↓

Money Supply in PLN m Monetary base M1 - Currency outside banks M2

WIG-20 stocks Price Change Change in alphabetical 14 Feb 7 Feb end of order '14 '14 '13

WIG Total index

Jul '13 Aug '13 Sep '13 Oct '13 Nov '13 Dec '13 4.7%

4.6%

4.5%

4.3%

960,361

- Time deposits

405,703

414,941

412,469

421,160

947,228

955,419

953,446

978,924

- Net foreign assets 147,978 150,517 148,702 143,430 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

↑ Grupa Lotos

38.8

+2%

+9%

WIG-20 blue chip index

→GTC

7.18

-4%

↑ Handlowy

111.9

+5%

+7%

2,4 2,482. 82.75

↑ JSW

4.8%

4.7%

↑ BZ WBK

EUR (up to 1m EUR) 2.3%

1.9%

1.8%

2.0%

1.9%

↓ Eurocash

EUR (over 1m EUR) 3.5%

3.5%

3.2%

2.5%

3.0%

2.9%

→ Asseco Pol.

Warsaw Inter Bank Offered Rate (WIBOR) as of 14 Feb 2014 Overnight

1 week

1 month

3 months

6 months

2.57%%

2.59%

2.61%

2.71%

2.74%

2.50%

934,713

-10%

4.9%

Dec '13

935,095

-2%

5.0%

164,010

931,042

+4% ↑

↑ Bogdanka

PLN (total)

Nov '13

114,401

Change end of '13

4.7%

153,672 113,718

+2% ↑

+7%

4.9%

4.8%

Oct '13

113,174

Change 1 week

+4%

4.9%

4.8%

154,967

113,223

119.6 414.15

4.9%

4.8%

Sep '13

555,851

53,397. 397.03

-5%

4.9%

166,620

538,837

+1%

5.1%

4.9%

Reference

536,237

+1%

5.1%

PLN (over 5 y)

Central Bank (NBP) Base Rates

540,873

46.38

PLN (up to 5 y )

52.5

+3%

-1%

Change 1 week

+3% ↑

→ Kernel

-3%

Change end of '13

+3% ↑

112.55

+5%

-5%

Lombard

NBP deposit

Rediscount

↑ KGHM

4.00%

1.00%

2.75%

↑ mBank ↓ Orange Pol.

535

+2%

+7%

WIG Total closing index

9.95

-7%

+2%

last three months

Credit

↑ Pekao

194

+4%

+8%

The financial sector's net lending in PLN bn,

↑ PGE

18.5

+9%

+14%

loan stock at the end of period Type of loan

5.01

-3%

53,000

40.71

-1%

52,000

↑ PKO BP

43.29

+3%

+10%

259,061

↑ PZU

443.6

+1%

-1%

562,381

↓ Synthos

5.06

-3%

-7%

↑ Tauron

4.82

+7%

+10%

Sep '13

Nov '13

Dec '13

908,106

901,288

906,298

903,890

- to private companies

262,963

260,585

262,396

- to households

560,608

559,965

563,157

1,626,489

1,612,836

Total assets of banks

55,000 54,000

→ PKN Orlen

→ PGNiG

Aug '13

Loans to customers

56,000

1,627,119 1,601,293

Source: Central Bank NBP

51,000 50,000 49,000 14 Feb 14

339.74 ↓

as of 14 February 2014

23 Jan 14

506.74 ↑

100 CHF

14 Feb 14

100 GBP

Warsaw Stock Exchange, rates in PLN

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

4 Dec 13

415.30 ↓

25 Sep 13

100 EUR

Key indices

Term / currency

450

18 Jul 13

303.34 ↓

10 May 13

100 USD

Stock Exchange

Average weighted annual interest rates

27 Dec 13

as of 14 February 2014

Interest rates

2 Dec 13

100 USD/EUR against PLN

Central Bank average rates

7 Nov 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-Nov 2013

y/y (%)

share (%)

2012

IMPORTS in PLN bn share (%)

Jan-Nov 2013

y/y (%)

share (%)

2012

share (%)

EXPORTS in PLNbn JanNo Country Nov share 2013

*2012

Share No

IMPORTS in PLN bn JanCountry Nov share *2012 Share 2013

63,081

+8.5

10.7

61,694

10.3

43,296

+4.6

7.3

44,287

6.9

1 Germany

147,936 25.1% 150,046 25.1%

1 Germany

128,267 21.5% 134,933 21.1%

7,955

+6.5

1.4

7,967

1.3

3,764

+1.7

0.6

3,989

0.6

2 UK

38,640

6.6%

40,184 6.7%

2 Russia

73,484 12.3%

Crude materials except fuels

14,606

+10.1

2.5

14,024

2.4

19,851

-5.3

3.4

22,053

3.5

3 Czech Rep.

36,340

6.2%

37,475 6.3%

3 China

56,314 9.4% 57,235 9.0%

Fuels etc

27,381

+0.6

4.6

29,389

4.9

1,687

+32.5

0.3

1,342

0.2

Food and live animals Beverages and tobacco

Animal and vegetable oils

69,873 -10.4

91,033 14.3%

11.8

85,280

13.4

4 France

33,145

5.6%

34,862 5.8%

4 Italy

30,866

5.2% 32,782

2,430

-9.6

0.4

2,887

0.5

5 Russia

31,656

5.4%

32,290 5.4%

5 France

22,700

3.8% 25,303 4.0%

5.1%

54,529

+6.9

9.3

54,295

9.1

85,948

+2.6

14.4

89,140

14.0

6 Italy

25,415

4.3% 29,067 4.9%

6 Netherlands

22,875

3.8% 24,543 3.8%

Manufactured goods by material

120,946

+1.3

20.5

126,161

21.1

104,027

-1.3

17.5

110,773

17.4

7 Netherlands

23,129

3.9%

26,678 4.5%

7 Czech Rep.

21,954

3.7% 23,327

3.7%

Machinery, transport equip.

221,253

+5.3

37.5

223,646

37.5

198,729

+3.4

33.3

203,718

31.9

8 Ukraine

16,612

2.8%

17,213 2.9%

8 USA

15,956

2.7%

16,436

2.6%