Poland Today Business Review+ No. 64 by Poland Today Business Review+

1 year subscription: EUR 690 +VAT (23%) 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. 064 / 8th December 2014 / www.poland-today.pl / magazine, conferences, portal, newsletter

BANKING & FINANCE Banco Santander shares debut on Warsaw bourse page 3 Poland's debt market attracts foreign players page 3 PROPERTY & CONSTRUCTION Warsaw IPO to help construction firm Dekpol diversify revenue streams page 5 Developer Euro-Styl begins new office project in Gdańsk page 6 ONLINE MEDIA Top Polish portals boost user numbers through acquisitions page 7

The Bielsko-Biała plant will be GE's first "brilliant factory" in Europe.

Image: GE

GE building new plant in BielskoBielsko-Biała

US industry giant GE has broken ground on a high tech production unit and customer experience center in the southern Polish city of Bielsko-Biała. The facility is to launch by the end of 2015, with the potential of adding up to 400 new positions to the 800 staff the company has in Bielsko. It will focus on the production of electrical distribution and critical power equipment. page 2

TRANSPORT & LOGISTICS PKP Cargo to downsize 1,300 staff through voluntary leaves page 8

tel. +48 881 650 600

RETAIL New grocery chain to launch in January with 170 outlets page 8 RETAIL PROPERTIES Rank Progress opens retail park in Krosno, gets permit for Mielec page 9 POLITICS & ECONOMY Manufacturing PMI shoots up in November page 10 Poland improves its ranking in Transparency International's Corruption Perceptions Index page 11 OPINION The Canadian initiative: connect to innovate page 12 KEY FIGURES Up-to-date macroeconomic figures, currency & stock market data and lots of other hard-to-find info pages 13-15

weekly newsletter # 064 / 8th December 2014 / page 2

MANUFACTURING & PROCESSING

GE breaks break s ground on USD 54m 'brilliant' factory in BielskoBielsko -Biała US industry giant GE has broken ground on a brand new 45,000-sq.m factory in the southern Polish city of Bielsko-Biała. The USD 54m project will include a 45,000 sq.m advanced manufacturing plant, developed in accordance with GE's new "brilliant factory" philosophy, as well as a customer experience center. Developed by industrial property firm Panattoni, the facility will be operational by the end of 2015. Once complete, the new factory will be one of the largest in the region, capable of employing up to 1,200 staff. "Currently our Bielsko-Biała operations are spread across 16 buildings and four sites, which will all be consolidated at the new factory by the end of next year," Monika Doroz, Communications Manager Poland & Baltics at GE tells Poland Today. "Our current 800 staff in Bielsko-Biała will make up the core staff of the new unit and additional placements will be made when necessary." GE's existing Bielsko-Biała operations manufacture electrical distribution and critical power equipment such as low- and medium-voltage switchgear, control cabinets, panels and metal enclosures, as well as AC and DC breakers and uninterrupted power supply products for commercial, industrial, renewable and mission-critical applications such as municipalities, oil and gas, wind turbines, data centers and hospitals. The facility, which is also a center of excellence for GE's IEC low-voltage equipment development, was recognized as one of GE's top performing plants in 2004, 2009, 2011 and 2013. The company's current opera-

tions in Bielsko-Biała, divided between four locations, will all be relocated to the new unit. The new Bielsko-Biala facility will enable GE to accelerate product development and manufacturing by combining engineering, development, testing and manufacturing operations in a centralized, high-tech environment, GE said. In addition, the site will serve as a new regional customer experience center where customers will be invited to interact with GE's latest electrical distribution and critical power products and to share real-time feedback throughout the development process. "Whether it's through exceptional quality, product life cycle management or reduced lead times, this new facility will enable us to deliver simpler, smarter and faster solutions to our customers," said Stuart Thompson, general manager, Power Equipment, GE's Industrial Solutions business.

The new Bielsko-Biała plant will consolidate GE's exImage: GE isting operations in the city.

The Bielsko-Biała plant will be one of the first GE plants worldwide developed in line with chief executive Jeff Immelt’s vision of the "brilliant factory": a dynamic system in which machine parts constantly relay information to operators, who can schedule mainte-

nance before equipment fails, all the while improving the manufacturing process. Over the past years the company has installed thousands of sensors at its factories worldwide, which gather data at each step of the manufacturing process, in order to help GE determine which conditions correlate with the best products. One of the improvements that will be a standard feature at all new GE plants, including Bielsko-Biała, are 3D printers, used to customize and print new components on-site. This is GE’s version of the "Internet of Things", a term often applied to a connected network of smartphones and home appliances; GE executives call it the "Industrial Internet."

SOME KEY FEATURES OF GE'S NEW BIELSKO-BIAŁA PLANT: • Low- and Medium-Voltage IEC Product Certification Lab for sharing prototypes and design concepts with customers. The lab will comply with equipment testing standards to gain third-party approvals, saving both time and money in the development process. • Product Accelerator Lab for rapid prototyping and technology. GE's engineering experts will be able to invent, design and test multiple solutions at once while gaining real-time customer feedback throughout the development process. • Enhanced showroom to engage customers in developing products and technology. • Customer and Employee Training Center for continuous learning opportunities, including new product introductions and processes.

GE has a strong, export-oriented industrial base in Central and Eastern Europe, with 26,000 employees in the region, of which some 10,000 in Poland. GE Power Controls, (part of GE Industrial) has factories in Poland (in Kłodzko, Łódź and Bielsko-Biała), whereas GE Aviation operates a manufacturing unit in Dzierżoniów. With a staff of 1,700 engineers the War-

weekly newsletter # 064 / 8th December 2014 / page 3

saw-based GE Engineering Design Center (EDC) is one of the company's most advanced R&D units, working for the Aviation, Energy, as well as Oil & Gas industries. Last year its unit GE Healthcare set up an It center in Kraków, which has created 50 positions todate. GE's financial services unit GE Capital owns Bank BPH, one of Poland's top banks, although recently the US investor has officially signaled its intention of selling the business. The combined turnover of GE's Polish operations came to PLN 4bn in 2013.

Banco Santander is the largest financial group in Spain and South America, with a market cap of EUR 91.5bn and total assets of nearly EUR 1.3 trillion (compared to Poland largest lender PKO BP's asset portfolio of EUR 47.3bn). It operates also in the UK, Portugal, Germany, and north-eastern USA, and besides Warsaw, its shares are listed in Madrid, Milan, Lisbon, London, New York and Buenos Aires. Santander serves 107m clients via a network of 13,000 branches and a staff of 183,000. The key source of revenues for the group is retail banking.

BANKING & FINANCE

BZ WBK is Poland's third largest bank

Banco Santander shares debut on Warsaw bourse

Poland's largest banks; total assets as of end of 2013 in EURbn

Santander, which acquired BZ WBK in 2011 and later merged it with competitor Kredyt Bank SA, has recently cut its stake in BZ WBK stake to comply with another requirement of the Polish financial supervisor. The Spanish bank in 2012 agreed to boost the proportion of BZ WBK shares which are available to other investors, or, in other words, increase its free-float to at least 30% by the end of 2014. It sold a 5.2% stake in BZ WBK on the Warsaw Stock Exchange last year, and a further 2% in October 2014. Following these transactions, Santander holds a 69.4% stake in BZ WBK.

BANKING & FINANCE

Poland's debt market attracts foreign players Poland's debt restructuring market, which has so far been largely the domain of local companies, is beginning the catch the attention of foreign investors. The past few months saw two Nordic players and one private equity investor acquire major Polish debt purchasers and according to market insiders more deals are to be expected shortly.

PKO BP Pekao SA BZ WBK

Shares in Spanish Banking giant Banco Santander gained about 1% on their trading debut on the Warsaw Stock Exchange last Wednesday. Shares were trading at PLN 30.57 against the reference price of PLN 30.26. Santander was requested to list on the Warsaw bourse by the Polish banking sector watchdog KNF. This was one of several conditions under which in 2012 KNF allowed the Spaniards take over the Polish lender BZ WBK and merge it with Kredyt Bank.

groups that were badly hit by the global financial crisis, Belgium's KBC (Kredyt Bank) and Ireland's AIB (BZ WBK). In July 2014 Santander Consumer Bank was incorporated into BZ WBK, which is now Santander's main Polish operation and Poland's third largest bank, with EUR 24.9bn worth of assets as of end of 2013.

mBank ING Getin Bank

Source: KNF, Intelace

In November, Sweden's Hoist Finance, a panEuropean debt purchase company has entered into an agreement to acquire Navi Lex, a Wrocław-based Polish debt collection company, for an undisclosed amount. Navi Lex was established in 2010 and has since grown into one of the major debt collection companies in the Polish market with approximately 130 employees. It has established relations with a large number of originators, predominantly within the financial institutions and telecom industries.

The Spanish bank has been operating on the Polish market since 2002, initially through its subsidiary AKB and later via Santander Consumer Bank, which in 2011 acquired AIG Bank Polska, the Polish arm of the crisisstricken US financial giant AIG. Santander subsequently took over the Polish units of two European

"Through our 11 collection platforms Hoist Finance is present within debt purchase in eight countries. Together with our model for amicable settlements, our local platforms are of benefit to our customers and the international banks and financial institutions we partner with. Having our own collection platform in Po-

Bank Millennium Raiffeisen Polbank Citibank Handlowy BPH 0

weekly newsletter # 064 / 8th December 2014 / page 4

land will increase our operational flexibility and facilitate Hoist Finance to capture the investment opportunities in the Polish market going forward," Charles de Munter, Regional Managing Director of Hoist Finance Belgium, the Netherlands, Italy, France and Poland, tells Poland Today.

12 10 8 6 4 2

*2014

*2013

2012

2011

2010

2009

0 2008

Consolidation gathers pace

Back in July, Norwegian receivables management firm B2Holding acquired Polish rival Ultimo from private equity fund Advent as part of B2Holding's strategy to expand in central and eastern Europe. Advent, which owned nearly 90% of Ultimo before the deal, did not disclose the sale price, but said Ultimo was managing a portfolio of debts with a face value of over PLN 10.5bn making it one of the market leaders in Poland. B2Holding said that the transaction will increase the number of its employees to more than 1,000.

Bank debt sale transactions in PLNbn

Source: Best, Rzeczpospolita

were the largest purchaser of portfolios in Europe within our segment last year, and we continue to see interesting opportunities all over Europe, Poland included."

*) January-October estimate

Following the transaction, NaviLex CEO Tomasz Lebek will assume the position as Head of Hoist Finance Poland. Karol PiÄ&#x2122;tka, currently Head of Operations Hoist Finance Poland, will become deputy CEO with responsibility for sales and investments. Hoist Finance offers solutions for acquisition and management of non-performing unsecured consumer loans to global banks and financial institutions. The total carrying value of Hoist Financeâ&#x20AC;&#x2122;s acquired loans is approximately EUR 810m. "Our ambitions are not contained to any specific market, we will remain a trusted debt restructuring partner to international banks and aim to be one of the leading debt purchasing companies in Europe in our niche, non-performing unsecured consumer loans. We

"B2Holding's strategy is to be the pre-eminent debt purchase and loan servicing platform in the Nordics and CEE," Jon Nordbrekken, chairman of B2Holding, commented on the deal. Also in July, a fund belonging to Franco-Italian private equity group 21 Partners acquired Polish debt collection firm EGB Investments SA. The Bydgoszczbased company manages collection of consumer and corporate debt for banks, financial institutions, telecommunications, and utilities companies in Poland. EGB generates sales in excess of PLN 50m with an EBIDTA margin in excess of 15%. In addition to the core debt collection and receivables management services, the company provides liquidity enhancement solutions for small and micro enterprises through its subsidiary EGB Finanse. The transaction was driven by 21 Concordia, a Warsaw-based fund focused on Polish mid-market companies, set up by 21 Partners in November 2013 with a closing at EUR 60m in aggregate commitments.

Poland's receivables market has been growing steadily since 2009, reaching PLN 20.9bn nominally last year, up from PLN 19.2bn in 2012, including both the debt collection market as well as bank debt portfolio transactions. The latter came to an estimated PLN 12bn in the first ten months of 2014, up from a full-year figure of PLN 9.5bn in 2013. The leading player in the sector is Polish company Kruk, which acquired receivables with a nominal value of PLN 2.2bn in Q1-Q3 2014 for approximately PLN 335m. Last week the company won a tender to buy a mortgage debt portfolio with a nominal value of PLN 443m from the bank BZ WBK.

Top 10 debt restructuring firms Receivables purchased & accepted for collection in PLN m

2013 Kruk Ultimo

2012 5,111

5,474

2,500

900

GK Best

1,124

1,600

Casus Finanse

1,106

1,138

EGB Investments

1,105

491

846

1,315

Navi Group DTPartners

718

534

Kaczmarski Inkasso

633

394

e-Kancelaria

606

1,057

Kredyt Inkaso

374

782

Source: Parkiet

"Banks all over Europe see an increasing need to divest portfolios of non-performing consumer loans, following the increased capital ratios and the implementation of the Basel III regulation. We follow our key debt originator partners across markets and often purchase portfolios in several countries where they have operations. This will create many opportunities in the market and we have positioned ourselves in order to enable us to capture these opportunities as they arise," Hoist Finance's Charles de Munter explains the recent trend towards consolidation in the sector.

weekly newsletter # 064 / 8th December 2014 / page 5

PROPERTY & CONSTRUCTION

Warsaw IPO to help construction firm Dekpol diversify revenue streams Polish construction, development and production company Dekpol is gearing up for a listing on the Warsaw Stock Exchange in the coming weeks, hoping to raise PLN 70m to finance its market expansion. At the moment, the company operates primarily as a general contractor as well as residential developer with projects in Gdańsk and Tczew. Recently, however, Dekpol has been expanding a third leg of its business a production unit making machinery parts, mainly excavator buckets. The key priority for the company is to raise PLN 15m for boosting the working capital of its general construction unit and PLN 20m for the expansion of its parts factory that is intended to quadruple the latter's production capacity. "We are cooperating with the dealers of CAT, Volvo, Terex and Komatsu building machinery, supplying them with excavator buckets. At the same time, we are undergoing audits by OEM suppliers of the said producers, which we hope will give us a certified supplier status. Our strategy in this segment relies on scheduled deliveries to OEM customers as well as speedy and timely deliveries to machinery dealers of quanities dependent on their sales," Dekpol's CEO and owner Mariusz Tuchlin tells Poland Today. A further PLN 25m is to be used by Dekpol's property development division for site acquisitions. Last but not

least, Dekpol needs PLN 10m to carry out a residential project in Norway. "So far all of our developments have been based in Poland, but we see the Norway project as an opportunity to expand into a market that offers much higher margins. We estimate the Norwegian development to generate combined revenues of PLN 130m from apartment sales, with total costs remaining in the region of PLN 90m. The investment is based on a 1.3ha site in Mandal, southern Norway, and will include apartments with a total floor space of 8,500 sq.m. After obtaining a building permit we will set up a 50/50 joint SPV with a Norwegian partner. Dekpol will be the general contractor, while apartment sales will be handled by the Norwegian company. We are currently in the process of obtaining zoning and building permits, with groundbreaking expected in Q2 2015," says Mariusz Tuchlin.

month lock-up period). Although the maximum price has not yet been disclosed, analysts estimate the IPO's total gross value at some PLN 94m, putting Dekpol's market capitalization in the PLN 280m territory.

Dekpol is the general contractor of Galeria Neptun, a shopping center that will open next year in Starogard Gdański wit ha GLA of 24,000 sq.m. Image: Cushman & Wakefield

Dekpol's key financials Re ven ues in PLNm, le ft axis Net re su lt in PL Nm, right a xis 200

150

100

0 2011

2012

2 013

Source: Dekpol

The IPO encompasses 2.3m new shares (representing 26.4% of the increased equity) as well as 0.65m shares currently belonging to CEO and key shareholder Mariusz Tuchlin (which will be subject to an 18-

Last year Dekpol turned over PLN 194.5m (up from PLN 163m in 2012) and posted PLN 17.8m net profit (against PLN 3.3m in the previous year). Its 1H 2014 results came to PLN 98m (turnover) and PLN 4.8m (net earnings). General contracting services currently represent 80% of Dekpol's revenue. The largest contracts the company is involved in at the moment include Galeria Neptun shopping center in Starogard Gdański as well as the Gdańsk Śródmieście railway station. "According to our assumptions, in a couple of years only around 50% of Dekpol's turnover will be generated by general contracting services, with property development and production of steel assemblies and other products each contributing the outstanding 25%," Mr. Tuchlin says.

weekly newsletter # 064 / 8th December 2014 / page 6

PROPERTY & CONSTRUCTION

Developer EuroEuro-Styl begins new office project in Gdańsk, Gdańsk, signs key lease in Gdynia

Besides attractive rents, the building's key asset is its location in the centre of Gdańsk near 169 Marynarki Polskiej Street (an extension of Jana z Kolna) and good transport links. There is a tram stop in front of the scheme’s entrance as well as an SKM Tricity commuter train stop – Gdańsk Politechnika. The investment is just 3 kilometers from the city's key public transport hub – Gdańsk Główny station - that includes PKP, SKM, PKS as well as bus and tram stops.

Polish developer Euro-Styl, which has built a number of residential and office buildings in the Tricity area in recent years, is beginning another major investment in Gdańsk. The company seeks to redevelop the former Gdańsk shipyard offices on Marynarki Polskiej St. in Gdańsk, built in the 1970s, into a modern class A & B+ office building with a large warehouse area. The project is to be delivered in March 2016 under the "C200 Office" logo. The office building will comprise of 7 floors, and include 17,500 sq.m of class A (ground floor and first floor), and B+ (the floors above) office space, an underground garage and 2,500 sq.m warehouse, as well as large surface parking nearby. According to JLL, which is the project's exclusive leasing agent, rents at C200 will be 10-20% lower when compared to typical office schemes that have been developed in the TriCity area. "The differences between the upper and lower floors are almost negligible. The bottom floors are slightly higher and have a different layout, but we ensure Alevel technical standard in the entire building. Generally, the A-class floors are aimed at larger tenants and the upper ones - at smaller tenants," Euro-Styl's marketing director Bartosz Podgórczyk tells Poland Today.

both Tensor and C200 are being developed on a speculative basis," says Bartosz Podgórczyk. To-date, the company has delivered two office projects: Opera Office and BPH Office Park, completed during the 2011-2013 period with a combined GLA of 28,000 sq.m, which remain in Eury-Styl's portfolio as long-term investments. In the residential sector, it has so far completed apartments with a total floor area of more than 180,000 sq.m, with a further 38,500 sq.m under construction and 52,800 sq.m in projects that will be commenced this year."

Modern office stock in key cities* No. of assets 430

4,200,000

Kraków

102

628,000

Wrocław

100

551,000

455,000

Tri-City

C200's bottom two floors are aimed at larger tenants, while the upper floors offer smaller, B+ class offices . Image: Euro-Styl

Earlier this year, Euro-Styl broke ground on its first office project in Gdynia. Located at 8 Łużycka St. the Tensor office park will include up to 20,000 sq.m of office space in three buildings, the first of which (4,960 sq.m) is to reach completion in 2H 2015. The three buildings will be accompanied by 446 parking spaces. "We are finishing up the underground section of the first building and we have just signed out first lease for Tensor [with Danish shipping giant Maersk; ed]. As a rule, when we introduce our projects to the market we clearly announce completion deadlines, which means

Total area in sq.m

Warsaw

Katowice

317,000

Poznań

303,000

Łódź

297,000

Source: CBRE *) as of June 2014

The Tricity area has emerged in recent years as one of Poland's hottest offshoring destinations and many developers design their projects to match the expectations of BPO/SSC tenants. As of end of Q3 2014, the office space vacancy rate in Tricity stood at 13.1%. "The market is highly competitive but good projects ones that are attractive in terms of design, location or price - are not vacant. Euro-Styl has a fully-leased portfolio of 30,000 sq.m and we are optimistic about C200 and Tensor," says Podgórczyk.

weekly newsletter # 064 / 8th December 2014 / page 7

ONLINE MEDIA

Top Polish portals boost user numbers through acquisitions Poland's online media sector has seen two large takeovers in recent weeks, with top Polish social networking site nk.pl and financial news website Money.pl getting new owners in the shape of rival internet portals, Onet.pl and wp.pl.

the world's top 30 game makers (including EA, Ubisoft, and Wargaming).

ment services platform favore.pl. Overall, the group's many websites get 3.7m visitors a year.

"Online games and related content are highly sought after by Polish internet users. The acquisition of nk.pl is a great opportunity to expand our portfolio and take advantage of the site's current potential in terms of games and entertainment apps," commented Robert Bednarski, CEO of Grupa Onet.pl.

Internet is 2nd key advertising medium Poland's advertising market Q1-Q3 2014; in PLNbn TV Internet Radio

Top online publishers in Poland*

Outdoor Magazines

Go o gle

Newspapers

Facebo o k.co m

Onet.pl, which itself was acquired by Ringier Axel Springer two years ago at PLN 1.3bn (PLN 956m for a 75% stake), purchased nk.pl for an undisclosed amount. Better known under its original name Nasza Klasa, a Polish clone of classmates.com, nk.pl used to be one of Poland's most popular websites, boasting more than 12m users as recently as 2010. Due to the rapid growth of Facebook, which has more than 17m users in Poland at the moment, nk.pl's popularity has since declined dramatically, down to 5.2m users as of September (a drop by 0.4m from the month prior). Although small, nk.pl's user pool includes proportionately more seniors and school-age kids than Facebook, which may be of value to some advertisers. A 70% stake in Nasza Klasa was sold by its original founders in 2008 to Estonian-Russian fund Forticom for an unconfirmed price of PLN 200m. According to estimates, Onet may have bought the business for less than a half of that amount. In 2013 nk.pl posted net earnings of PLN 4.9m on PLN 42m turnover. Onet said what attracted it in nk.pl was the site's online gaming potential. Onet currently runs three gaming sites (gry.onet, gryonline.onet oraz grydlaniej.onet), offering more than 100 games from

Cinemas

yo utube.co m Onet-RA SP

A llegro -GG WP

Source: Starlink

Gazeta.pl Interia.pl Wikipedia.o rg P o lskapresse 0

*) As of September 2014; data includes entire groups Source: Megapanel PBI/Gemius

The price at which wp.pl or Wirtualna Polska, acquired 100% of the Money.pl Group from its founder Arkadiusz Owsiak and German fund Holtzbrinck Digital also remains confidential. The group's key subsidiary Money.pl, which operates nine domains including the popular business news portal Money.pl, turned over PLN 20.3m and posted a PLN 2.3m net loss in 2013. According to data from Gemius, Money.pl is Poland's 4th most popular online service in the business, finance and law category. However, the group owns also a number of subsidiaries, including Business Ad Network, Businessclick, Favore and Legalsupport as well as legal portal e-prawnik.pl and home improve-

"Our ambition and strategic goal was investing in highquality, opinion-forming content. Adding a brand as well known as Money.pl to our portfolio is a natural consequence of this strategy. Our business team is gaining a team of well-known journalists and experts in areas that include capital markets, economic reports, financial anaylytics and law," says Jacek Ĺ&#x161;widerski, CEO of Grupa Wirtualna Polska, created from the merger of the Wirtualna Polska and o2 portals, with financial backing from the private equity fund Innova Capital. Innova and o2 acquired wp.pl from the France Telecom-controlled TPSA group for PLN 375m. Despite all the talk about quality content, the bottom line for the largest portals are user numbers, which translate into their position in the monthly Gemius Megapanel ranking and consequently - their value for advertisers. Onet has long been the domestic leader of this raking and prior to the nk.pl takeover the group had 15.5m visitors, reaching 71.5% of Polish internet

weekly newsletter # 064 / 8th December 2014 / page 8

users. Although the number two spot belongs to the online marketplace Allegro and its internet communicator Gadu-Gadu, Onet's true competitor is wp.pl, ranked as number three with 14.75m users and a coverage of 67.8%. As part of their rivalry, Earlier this year Onet.pl bought price comparison websites Skapiec.pl and Opineo.pl, while WP.pl snatched up thematic portals SportoweFakty.pl, Domodi.pl and Homebook.pl. Rumors have it that South African Naspers, owner of Poland's immensely popular ecommerce site Allegro may is seeking buyers for the communicator Gadu-Gadu. Similar to nk.pl's the latter's best days are long gone, but it has some value as a gaming platform.

"We are sitting on some PLN 800m of cash, which we intend to put to good use by acquiring domestic and foreign businesses that complement PKP Cargo. We are currently in talks on a number of acquisitions, including CTL Logistics and Pol-Miedź Trans in Poland and the Advanced World Transport B.V., which operates primarily in the Czech Republic," PKP Cargo's CEO Adam Purwin told Poland Today in a recent interview. The company is hoping to seal its first deals in the coming months.

Poland's top rail freight operators Share in total cargo transported by rail in Jan-Oct 2014

DB Schenker Rail 19%

TRANSPORT & LOGISTICS

PKP Cargo to downsize 1,300 staff through voluntary leaves Poland's leading railway freight company PKP Cargo has obtained all necessary corporate clearances to initiate a voluntary leave program that aims at reducing employee numbers at the parent company as well as its subsidiary PKP Cargotabor by 1,300 positions. The total cost of the program is being estimated at PLN 87m, as the most experienced employees may count on severance payouts equivalent to as many as 36 monthly salaries. PKP Cargo has to offer such generous perks because 95% of its staff are covered by employment guarantees that make regular redundancies impossible. Although costly, the staff reductions should not put much strain of PKP Cargo's budget, as the company's financial position has been very good recently and it is currently mulling several acquisitions.

CTL 6% PKP Cargo 48%

Lotos Kolej 5%

The company has emerged from the brink of bankruptcy caused by the economic crisis at the end of the last decade. In 2008 and 2009 it posted net losses of PLN 179m and PLN 498m, which prompted an indepth restructuring that saw some 20,000 positions cut, and many redundant side businesses and regional units closed down. The overhaul proved effective as the business is back in the black and expanding abroad. PKP Cargo has obtained licenses to independently operate in Austria, Belgium, the Czech Republic, Germany, Hungary, Lithuania, the Netherlands and Slovakia. 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. That compares with DB Schenker’s 28% and 5.4% shares in the EU and Poland, respectively. In the first ten months of 2014 PKP Cargo had a 47.8% share in the total amount of cargo transported in Poland by rail, followed by DB Schenker Rail Polska with 18.5%.

PKP LHS 5% Other 19% Source: UTK

PKP Cargo is the European Union’s second largest railway freight company after Deutsche Bahn AG and the first publicly listed one, following its recent IPO on the Warsaw Stock Exchange. The state-owned railway group PKP currently holds a 33% stake in the company, which carried around 114m tons of freight last year, mainly hard coal and building materials. PKP Cargo saw its revenues top PLN 4.72bn in 2013, down from PLN 5.16bn in 2012, while its net earnings slumped to PLN 74m from PLN 268m, due to economic slowdown and over PLN 200m worth one-off privatization bonus.

RETAIL

New grocery chain to launch in January with 170 outlets Polish company market-Detal will launch a brand new grocery chain from January 2015, starting with 170 locations across the country and 5,500 employees. After launching the initial 170 outlets, the new chain is to grow at the rate of 30 new locations per annum. Besides organic growth, the company may also consider acquisitions to speed up expansion. Established in 1997, market-Detal has been one of the driving forces behind the POLOmarket supermarket

weekly newsletter # 064 / 8th December 2014 / page 9

chain, which currently includes some 420 locations across the country. market-Detal's CEO Artur Kasner, POLOmarket's co-founder, has decided to create his own retail concept Mila, focused on fresh grocery products, and conveinence. Consequently, some 40% of the former POLOmarket outlets (170 stores) are being currently rebranded to launch in January under the Mila logo, forming the core of the new chain.

Goodman. The distribution centre comprises 38,100 sq.m of warehouse space and 1,600 sq.m of office space. The building has an internal height of 10.8 metres and 28,000 pallet spaces for market-Detal’s specific storage needs. The logistics centre will feature 84 docks and an additional access road to facilitate the efficient movement of goods. market-Detal plans to hire 400 people to fill various positions at the facility.

With a GLA of 26,000 sq.m and 1,100 parking spaces, the planned Galeria Aviator will be the largest shopping and entertainment center in Mielec and the region. Besides H&M, Briju, CCC, Deichmann, Martes Sport, Rossmann, Pepco, supermarket and home improvement anchors, and a number of other outlets, the project will house the first multi-screen cinema in the region.

"We clearly see the need for a nre retail concept that would combine the advantages of a traditional grocery store with those of a discount supermarket. We have defined the categories that have been the most important for our clients, including fresh fruit and veg, meat and cold cuts, and baked goods, in which we will continue to specialize," Kasner says.

The new distribution centre for market-Detal will be situated in Krągola, 11km from the centre of Konin. Its location, with direct access to the A2 motorway and several national roads, provides the site with ideal road transport connections to Poland’s most important commercial markets.

"We are currently in the process of selecting a general contractor for Galeria Aviator, after which we wil be able to publish a detailed timeline of the project," says Łukasz Gruszczyński, marketing director at Rank Progress.

RETAIL PROPERTIES

Rank Progress opens retail park in Krosno, rosno, gets permit for Mielec

According to warehouse giant Goodman, which developed the facility in less than 7 months, the biggest challenge on the part of the builders was to adapt the building to the needs of large-scale food storage operations. Specifically, 40% of warehouse space will be cooled to between 0 °C and 8 °C and a separate 1,100 sq.m freezer provides storage at a constant temperature of -24 °C.. Image: Goodman

The chain's expansion will be supported by a custombuilt logistics centre in Krągola near Konin, which was delivered last month by industrial property developer

Warsaw-listed property developer Rank Progress opened its project, Miejsce Piastowe retail park near Krosno, south-east of Poland, and obtained a buiulding permit for Galeria Aviator shopping center in Mielec. Both investments are part of the company's ambitious development pipeline that focuses on neighborhood shopping centers in smaller towns (below 50,000 inhabitants). Built in little more than half a year by general contractor AMB Group Polska, Miejsce Piastowe opened on 28 November with 4,700 sq.m of lettable space and 230 parking spaces. Its key ternants include food discounter Biedronka, electricals retailer Media Expert, as well as Martes Sport and Centrum Chińskie.

Rank Progress is currently seeking a general contracImage: Rank Progress tor for Galeria Aviator in Mielec.

Based in Legnica, Rank Progress had long specialized in development of shopping centers for international retail chains, such as Tesco, Carrefour, Castorama, Leroy Merlin, or Jeronimo Martins. The company also carried out a number of highly-profitable short-term projects that typically encompassed site acquisition, permitting, and design, and eventually sale to renowned domestic and foreign buyers. However, in the past couple of years their key focus have been large

weekly newsletter # 064 / 8th December 2014 / page 10

shopping centers and retail parks in medium-sized cities.

Targeting medium-sized towns Rank Progress and its retail center projects

City

Name

GLA sq.m Opening

Legnica Kłodzko* Zgorzelec* Jelenia Góra Kalisz* Zamość* Świdnica Grudziądz Chojnice Oleśnica Piła* Krosno

Completed Galeria Piastów Galeria Twierdza Park Handlowy Eden Pasaż Grodzki Galeria Tęcza Galeria Twierdza Galeria Świdnicka Pasaż Wiślany Brama Pomorza Pogodne Centrum Galeria Piła Miejsce Piastowe

15,600 31,000 8,500 10,500 16,000 24,000 15,600 5,400 25,600 7,700 28,750 5,600

2006 2009 2008 2010 2011 2011 2012 Q2 2013 Q4 2013 Q2 2014 Q4 2014 Q4 2014

Olsztyn Kielce Warsaw/Duchnów Mielec Wejherowo

Planned CH Jaroty Regional Center S7 Warszawa Wschód Galeria Aviator n/a

30,000 97,800 62,300 26,000 18,200

TBA TBA TBA TBA TBA

Source: Rank Progress *) sold

Since 2001 Rank Progress has completed 52 investments, including 13 proprietary shopping centers, located in Legnica, Jelenia Góra, Świdnica, Zgorzelec, Kłodzko, Zamość, Kalisz (the latter three were sold to Blackstone Real Estate), as well as Grudziądz, Chojnice (which opened last year), Oleśnica, Krosno and Piła (delivered in 2014). With a GLA of 23,800 sq.m, the Piła project has been sold to Austrian property giant Immofinanz for PLN 58m net. Back in mid-2011 Rank Progress has announced plans to build 16 new retail centers at the cost of PLN 2.2bn over the 2011-14 period. The company is currently working on a retail center in Mielec, and its future pipeline includes also schemes in Olsztyn, Kołobrzeg,

Kielce, Duchnów near Warsaw, Kielce and Wejherowo. Overall, by 2015 the company plans to launch 10 shopping centers with a total floor space of 340,000 sq.m. and a GLA of 275,000 sq.m.

lysts said. New orders rose for the second straight month, accelerating to the fastest rate since March, boosted by new export business, up for the first time in seven months.

Rank Progress posted a PLN 11m net loss on continued operations last year against a PLN 23.7m profit in 2013. As of end of December its total assets were worth close to PLN 1.02bn, up from PLN 859m a year earlier.

"A number of firms reported successful entry into new markets, including other Central and Eastern European economies. Input prices rose at an increasing rate in November but the output prices continued falling and at a faster pace in November than in October," Urbańska-Giner added.

POLITICS & ECONOMY

Manufacturing PMI shoots up in November Poland's purchasing managers' index PMI, a gauge of manufacturing, increased to 53.2 points in November, from 51.2 in October rising well above the 50 points level separating growth from contraction, a report by HSBC and Markit showed. The PMI rose for the third month running, signalling a robust overall improvement in manufacturing business conditions in Poland, and a turnaround from August’s 15-month low of 49.0 points, the report's authors said.

Purchasing Managers' Index (PMI) The 50 mark separates growth from contraction 60

45 Sep 13 Nov 13

Jan 14

Mar 14 May 14

Jul 14

Sep 14 Nov 14

Source: Markit & HSBC

"The November manufacturing PMI surprised with a second consecutive strong reading. The survey showed improving business conditions in the manufacturing sector at the fastest rate since March this year. The strong November reading also cements the return of the PMI index above the 50 points threshold compared to the contraction through Q3 2014," commented Agata Urbańska-Giner, Economist, Central & Eastern Europe, at HSBC. Crucially, all five components of the indicator made a positive contribution to the headline figure, the first such homogeneous move since December 2010, ana-

Growing new orders led to a further increase in production, also at the fastest pace since March, albeit not fast enough to keep pace with orders and backlogs grew, Markit wrote. Also on the rise in November: hiring, to keep pace with production demands and input purchases, the first such gain since April and leading to the first rise in input stocks since March 2012. "We are cautiously optimistic and expect GDP growth to consolidate at 3%+ y/y in the coming quarters leaving Polish interest rates on hold," Ms. Urbańska-Giner concluded.

weekly newsletter # 064 / 8th December 2014 / page 11

Upcoming events:

POLITICS & ECONOMY

Poland moves up three spots in Transparency International's Corruption Perceptions Index Poland moved up three places to number 35 in Transparency International's 2014 Corruption Perceptions Index (CPI), which ranked 175 countries and territories based on how corrupt their administrative and political institutions are perceived to be on a scale from 0 (highly corrupt) to 100 (very clean). The country scored 61 points, ranking way ahead of its regional peers such as Hungary (47th place), Czech Republic (53) and Slovakia (54). Compiled from a combination of surveys and assessments of "the abuse of entrusted power for private gain," the CPI is the most widely used indicator of corruption worldwide. The lowest ranked countries are perceived as "plagued by poor governance, and untrustworthy and badly functioning public institutions like police or media, whereas the top performers are found to have "high levels of press freedom, open budget processes, and strong accountability mechanisms." More than two-thirds of the 175 countries in the 2014 index score below 50. The average country score this year is 43/100. Seychelles, Malta, Latvia, and South Korea are listed at 43. The four least corrupt countries are Denmark (92), New Zealand (91), Finland (89), and Sweden (87), while the US came in 17th — along with Barbados, Hong Kong, and Ireland — with a rating of 74.

January 14 (NEW DATE!) Sala Sesyjna, Town Hall, ul. Sukiennice 9

Wrocław

PRIMETIME WROCŁAW Poland’s entrepreneurial capital? Wrocław, under open and steady political leadership, has blazed a business trail in Poland. But with others catching up fast, can the city maintain its entrepreneurial edge?

Corruption in Poland is lower than in most of its CEE neigbours, according to Transparency International's 2014 Corruption Perceptions Index (darker colors indicate higher levels of perceived corruption).

The event will include a special "Fireside Chat" with Wrocław Mayor Rafał Dutkiewicz, in which he will discuss the city's rising expectations and the challenges it faces Ryszard Petru, president of the Association of Polish Economists.

Image: Transparency Internatioinal

In the CEE region only the tiny Baltic state of Estonia (ranked at number 26) beat Poland in this year's edition of CPI report. Poland's eastern neighbor Ukraine, which is fighting a Russian-backed separatist rebellion, came in 142nd with a score of 26. Russia's score is 27.

Poland Today Events For more information about Poland Today events, please visit: www.poland-today.pl/events To sponsor or attend any of Poland Today events, please call Magdalena Gawlikowska on +48 602-223-634 or e-mail magdalena.gawlikowska@poland-today.pl

Panel discussion topics will include innovation, sustainability, as well as cooperation between business and education. Speakers include: - Krzysztof Sachs, Partner, Director of Wrocław Region, EY - Tomasz Gondek, Director, EIT+ - Karol Patynowski, Associate Director, Tenant Representation, JLL - Marcin Kozłowski, Global Manager, AIP Business Link - Jarosław Prawicki, Head of Sales & Marketing, UBM Polska There will also be an "Open Forum" where participants will have the opportunity to discuss other issues, as well as a "speed dating" session.

Partnership opportunities still available!

weekly newsletter # 064 / 8th December 2014 / page 12

OPINION

The Canadian initiative: connect to innovate by Poland Today Editor Andrew Kureth

In Poland, ‘innovation’ has been the buzzword of 2014. “If I hear the word innovation again, I’m going to be sick,” a contact told me earlier this year. For fear of contaminating my food, I didn’t mention it again, but I understood her view. Just about everybody seems to be jumping on the innovation bandwagon, whether they understand what it means or not. Nevertheless, we at Poland Today have focused a great deal on it, and for good reason. The country’s economy cannot continue to grow with the model it has used thus far: low-cost labour, simple manufacturing, parroting Western processes and a flood of EU funds. Sooner or later, the benefits of all of those things will end – and they will never get Poles to Western European living standards. That will require higher wages. To obtain them, Poland will have to grow high-tech industries, build global brands and develop its entrepreneurial ecosystem. In other words, Poles will have to innovate.

Those things are already happening to a certain degree, thanks in large part to the hullabaloo around innovation. Polish companies and local authorities may not have thought about innovation before, but all of them are thinking about it now. The government is encouraging high-tech investment, Polish brands are expanding abroad, and its startup scene is exploding: witness StartUp Hub Poland, which launched last week. It aims to bring startups from around the region, especially from countries where there is little support for entrepreneurship, to Poland and match them with the funding and expertise they need to succeed. For more on that business, check out the next issue of Poland Today magazine, due out in February. Still, more needs to be done, especially when it comes to know-how. Reams have been written about Poland’s entrepreneurial spirit, and there is no lack of ambitious young businesspeople with clever ideas for new products and services here. But often they don’t have the business skills or the experience to move their ideas forward. This is especially true for highly innovative sectors like biotechnology, where there are precious few resources for guiding businesses through the regulatory hoops they encounter when developing, testing and marketing their products. That’s why it is so encouraging to see the initiative being put forward by the Canadian embassy here in Poland. The Canadians have made it their focus to reinforce business ties between their country and Poland through cooperation in innovation. In short, the Canadians want to bring their experience to bear in boosting Poland’s innovative businesses. One element of this project was to bring members of the Polish and Canadian innovation communities together during Canadian Governor-General David Johnston’s visit to Poland in October. That meeting has already yielded some initial results. In late November one attendee, a Polish venture capitalist with a

backlog of projects, was so inspired by what he heard that he took time out of the US-Poland Innovation Week in California to fly to Toronto. He found the Canadians much more receptive than the Americans. “In Silicon Valley, there are too many projects, it’s like every kid in the classroom is screaming for attention. In Canada, their pipeline of projects isn’t so full, so it’s easier to find people willing to cooperate,” he told me. On November 28 I had the pleasure of enjoying lunch with some Polish innovators at the Canadian Ambassador’s residence here in Warsaw. Ambassador Alexandra Bugailiskis made it clear from the beginning that she was there to listen. What more could she and her colleagues at the embassy do to help engage Polish and Canadian innovators? Many ideas were discussed but the common theme was this: the embassy should continue to provide platforms to make it easier for innovators in the two countries to connect and work together. The businesspeople would do the rest. It really is as simple as that. The ideas are there. So is the money. But what Poland’s innovation ‘ecosystem’ really needs is experience, know-how, and a gateway to markets outside of Europe. Canada stands ready to provide those, and I’m sure both countries will benefit. For our part, Poland Today will publish a ‘Canada in Focus’ supplement in our upcoming issue. Innovation will be a key topic. However, we hope that more countries will follow Canada’s lead. People in Poland may be tiring of hearing about innovation, but that’s a small price to pay for benefits that will last generations.

weekly newsletter # 064 / 8th December 2014 / page 13

KEY STATISTICS Consumer Prices

Inflation

0.0 +0.6

Transport

-1.0

+0.8

-5.1

-1.5

Communications +2.6

+1.2 +3.9

Gross CPI

-0.2

-2.7

0.0 +3.6

0.0

-4.7

+1.1

-4.6 +3.4

+0.1 +0.5

+0.1

0.0

-1.0

-3.0

-0.8

0.0

-0.4

-0.3

0.0

-0.6

0.0

-3.2

+1.3 +4.0

-0.3 -0.4

-0.3

Jul '14

-1.1

+4.7

Aug '14 Sep '14 Oct '14 -1.1

-0.9

+1.2

+2.1

+1.7

+1.6

+2.3

2% 1%

Year

2009

2010

2011

2012

2013

Turnover in PLNbn

582.8

593.0

646.1

676.0

685.7

-1%

y/y (%)

+4.3

+5.5

+11.6

+5.6

+2.3

Residential Construction Dwellings

2009 2010

2011

2012

2013 Jan-Oct y/y

178.8

174.9

184.1

165.1

138.7

158.1

162.2

141.8

(in '000 units)

Producer Prices

+4.2

y/y (%)

Oct 14

-2.8

+0.6

-0.2

Aug 14

-4.9

Housing

0.0 +3.6

-2.2

Jun 14

Clothing, shoes

+0.1

Jun '14

m/m (%)

m/m

Apr 14

0.0 +3.8

-2,0

Feb 14

Alcohol, tobacco +4.0

-1.6

Oct 13

-2.1

Dec 13

-1.1

Month y/y

Aug 13

-1.7

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

Retail Turnover

Jun 13

Food & bev

y/y m/m y/y

Oct '14

Apr 13

y/y

Sep '14

Feb 13

Sector

Aug '14

Dec 12

Jul '14

Oct 12

Data in (%)

Industrial Output Ou tput

Permits

2014

(%)

133.6

+14.2

Commenced

142.9

127.4

129.0

+15.6

m/m (%)

-0.2

-0.1

+0.3

0.0

-0.3

m/m (%)

-2.3

-1.7

-0.1

+2.0

-8.5

+16.5

+3.5

U. construction

670.3 692.7 723.0

713.1 694.0

709.7

+0.3

y/y (%)

-0.7

-1.0

-1.8

-2.1

-1.5

-1.6

-1.2

y/y (%)

+5.4

+4.4

+1.7

+2.3

-1.9

+4.2

+1.6

Completed

160.0 135.7

152.5

114.2

-2.0

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 (ESA2010)

Month

Apr'14 May'14 Jun'14 Jul'14 Aug'14 Sep'14 Oct'14

Apr '14 May '14 Jun '14 Jul '14 Aug '14 Sep'14 Oct'14

Construction Output

Construction Prices Month

Month

Apr'14 May'14 Jun'14 Jul'14 Aug'14 Sep'14 Oct'14

Month

Period

Apr '14 May '14 Jun '14 Jul '14 Aug '14 Sep '14 Oct '14

m/m (%)

-0.1

0.0

m/m (%)

+3.2

+14.0

+16.9

+0.9

-5.4

+19.8

+7.2

y/y (%)

-1.5

-1.4

-1.2

-0.9

-0.8

-0.7

y/y (%)

+12.2

+10.0

+8.0

+1.1

-3.6

+5.6

-1.0

2007

2008

2009

2010

2011

2012

2013

Year

2007

2008

2009

2010

2011

2012

2013

Year y/y (%)

+7.4

+4.8

+0.2

-0.1

+1.0

+0.2

-1.8

y/y (%)

+15.5

+12.1

+5.1

+4.6

+11.8

-0.6

-12.0

Source: The Central Statistical Office of Poland, GUS

Gross Wages

131.7

146.1

GDP in PLN bn current prices

Growth y/y unadjusted

Current account def. in % of GDP

Q3 2014

+3.3%

426.836

n/a

Q2 2014

+3.5%

418,317

-1.2%

Q1 2014

+3.4%

403,121

-1.2%

Q4 2013

+3.0%

463,855

-1.3%

2013

+1.7%

1,662,052

-1.3%

2012

+1.8%

1,615,894

-3.6%

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

Sentiment Indicators

2011

+4.8%

1,553,582

-5.0%

Sector

Economic sentiment and consumer confidence indicators

2010

+3.7%

1,437,357

-5.1%

163 3,747 164

Energy

6,736 205 6,358

193 6,020

183 6,392 194

Construction

3,895

166 3,706

158 3,884

166 3,872 165

Retail & repairs

3,456

147 3,544

151 3,577

153 3,532

Transportation IT, telecoms

3,913

138 3,666 130 3,650

129 3,710

151 131

6,695

174 6,987

181 6,835

177 6,835 177

Financial sector 6,602

148 6,747

152 6,738

151 6,360 143

National average 3,823

152 3,895

155 3,740

Source: Central Statistical Office (GUS)

149

3,781 154

0 -20 -40

Key Economic Data & Projections

100

Indicator

2011

2012

GDP change

+4.5%

+1.9%

+1.6%

+3.1%

Consumer inflation

+4.3%

+3.7%

+0.9%

+0.1%

+0.6%

Producer inflation

+7.6% +3.4%

-1.3%

-1.2%

+0.7%

CA balance, % of GDP

-5.0%

-3.7%

-1.4%

-1.6%

-2.6%

Nominal gross wage

+5.2%

+3.7%

+3.4%

+3.5%

+4.0%

Unemployment**

12.5%

13.4%

11.8%

11.5%

4.12

4.19

4.20

4.18

4.13

60 Nov 14

145 6,044 137

161 3,663 160 3,743

120

Aug 14

196 6,333 144 6,382

3,690

M ay 14

8,615

Manufacturing

C onsumer confidenc e (le ft a xis) Economic se ntiment (right axis)

Feb 14

Nov 13

Aug 13

Ma y 13

Feb 13

Nov 12

Q3 2014

Aug 12

Q2 2014

May 12

Q1 2014

Feb 12

Coal mining

Q4 2013

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

EUR/PLN

2013

*2014

*2015

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

weekly newsletter # 064 / 8th December 2014 / page 14

55.89 ↓

100 SEK

44.78 ↓

100 NOK

47.29 ↓

10,000 JPY

400

USD EUR 350

300

279.38 ↓

100 CZK

15.06 ↓

10,000 HUF

135.41 ↓

Money Supply in PLN m

Jul '14

Aug '14

Sep '14

4.4%

4.1%

PLN (up to 5 y )

4.8%

4.7%

4.8%

4.7%

4.5%

↑ Alior Bank

PLN (over 5 y)

4.7%

4.5%

→ Asseco Pol.

PLN (total)

4.7%

4.4%

↓ Bogdanka

EUR (up to 1m EUR) 2.0%

1.9%

1.7%

1.6%

↓ BZ WBK

388.7

-1%

EUR (over 1m EUR) 2.7%

3.4%

3.1%

2.5%

↑ Eurocash

+10%

-14%

WIG-20 blue chip index

→ Grupa Lotos

27.05

-24%

↓ JSW

Warsaw Inter Bank Offered Rate (WIBOR) as of 5 Dec 2014 Overnight

1 week

1 month

3 months

6 months

2.11%

2.10%

2.08%

2.06%

2.05%

Lombard

NBP deposit

Rediscount

3.00%

1.00%

2.25%

167,008

166,104

171,649

574,529

578,485

574,606

4.5%

2.00%

164,008 122,209

124,986

124,389

985,769 1,003,128 1,003,354 415,261

428,597

424,867

125,902 1,011,930 437.323

1,002,137 1,020,561 1,021,824 1028,665

- Net foreign assets 301,207 304,359 310,172 311,298 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

53,652. 652 .58

4.4%

Reference

570,507

- Time deposits

WIG Total index

PLN (up to 1 year)

Oct '14

Monetary base

WIG-20 stocks Price Change Change in alphabetical 5 Dec 28 Nov end of order '14 '14 '13

May '14 Jun '14 Jul '14 Aug '14 Sep '14 Oct '14

Central Bank (NBP) Base Rates

M1 - Currency outside banks

as of 5 December 2014

81.9

+4%

+1%

53.64

+17%

Change 1 week

+1% ↑

107.5

-2%

-15%

Change end of '13

+5% ↑

20.12

-4%

-62%

2,4 2,438. 38 . 42

↑ Kernel

30.3

+4%

-20%

Change 1 week

+1% ↑

↓ KGHM

117.3

-5%

-1%

Change end of '

+2% ↑

→ LPP

8,830

-2%

→ mBank

503.9

+1%

WIG Total closing index

9.34

-2%

-5%

last three months

188.95

+2%

+5%

↓ Orange Pol.

Credit

↑ Pekao

The financial sector's net lending in PLN bn,

↑ PGE

+3%

+23%

loan stock at the end of period

↓ PGNiG

4.8

-1%

-7%

56,000 55,000 54,000

Jul' 14

Aug' 14

Sep' 14

Oct' 14

49.05

+9%

+20%

Loans to customers

939,641

950,774

954,978

958,641

→ PKO BP

37.7

-4%

53,000

- to private companies

274,549

277,482

280,248

279,124

→ PZU

479

+7%

52,000

- to households

581,447

587,136

590,208

592,068

↑ Synthos

4.19

+1%

-23%

↑ Tauron

5.30

+2%

+21%

Type of loan

Total assets of banks

1,678,129

↑ PKN Orlen

1,718,251 1,737,728 1,742,288

Source: Central Bank NBP

5 Dec 14

100 DKK

Warsaw Stock Exchange, rates in PLN

on loans to non-financial corporations

13 Nov 14

345.89 ↓

5 Dec 14

526.93 ↓

100 CHF

29 Sep 14

100 GBP

22 Jul 14

415.85 ↓

14 May 14

100 EUR

Key indices

Term / currency

450

5 Mar 14

336.19 ↑

23 Dec 13

100 USD

Stock Exchange

Average weighted annual interest rates

21 Oct 14

as of 5 December 2014

I nterest rates

29 Sep 14

100 USD/EUR against PLN

Central Bank average rates

5 Sep 14

Currency

Source: Warsaw Stock Exchange

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

Poland exports and imports according to commodity groups, according to SITC classification EXPORTS in PLN bn Jan-Sep 2014

y/y (%)

share (%)

2013

EXPORTS in PLNbn

IMPORTS in PLN bn share (%)

Jan-Sep 2014

y/y (%)

share (%)

2013

share (%)

No Country

Jan-Sep share 2014

IMPORTS in PLN bn 2013

share No

Country

Jan-Sep share 2014

2013

110,259 21.8% 142,161 21.7%

54,009

+4.3

10.7

69,304

10.9

36,296

+3.9

7.2

47,906

7.4

1 Germany

7,729

+19.9

1.5

8,624

1.4

3,158

+5.8

0.6

4,150

0.6

2 UK

31,921

6.3%

42,138

6.5%

2 Russia

56,611 11.2% 79,578 12.1%

Crude materials except fuels

12,459

+2.1

2.5

15,744

2.5

16,368

+07

3.2

21,585

3.3

3 Czech Rep.

31,337

6.2%

40,110

6.2%

3 China

51,722 10.2%

Fuels etc

21,003

-6.1

4.2

30,013

4.7

55,523

-0.5

11.0

75,539

11.7

4 France

28,306

5.6%

36,367

5.6%

4 Italy

Food and live animals Beverages and tobacco

130,588 26.0% 162,548 25.1%

1 Germany

61,127 9.3%

27,064 5.3% 34,940 5.3%

1,471

+4.7

0.3

1,864

0.2

1,985

-0.6

0.4

2,646

0.4

5 Russia

22,273

4.4% 34,069

5.3%

5 Netherlands

18,914 3.7% 25,409 3.9%

Chemical products

46,392

+4.3

9.2

59,103

9.3

75,454

+6.7

14.9

92,917

14.3

6 Italy

22,732

4.5%

27,958

4.3%

6 France

19,371 3.8%

Manufactured goods by material

101,308

+2.8

20.1

129,915

20.3

90,508

+6.9

17.8

112,392

17.3

7 Netherlands

20,689

4.1%

25,707 4.0%

7 Czech Rep.

17,731 3.5% 24,054 3.7%

167,104

+4.0

32.9

216,608

33.4

8 Ukraine

n/a

18,020

2.8%

8 USA

51,133 +16.6

10.1

58,210

9.0

9 Sweden

14,417

2.9%

17,581

2.7%

9 UK

10 Slovakia

12,655

2.5%

17,099

Animal and vegetable oils

Machinery, transport equip.

190,119

+5.1

37.8

239,434

37.5