poland today business review+ no. 017

No. 017 / 7th January 2014 / www.poland-today.pl / magazine, conferences, portal, newsletter

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

MANUFACTURING & PROCESSING

German ood packaging firm Weidenhammer to produce Pringles cans in Kutno page 2 Industry sentiment worsens in December page 3

BANKING & FINANCE

Competition watchdog disciplines cash loan company Provident page 4 EBRD announces new strategy and bond buying program in Poland page 4

ENERGY & RESOURCES

Mining technology giants Famur and Kopex mulling merger page 5

State-sponsored shale alliance falls through, nuclear energy deal remains in force page 6

PROPERTY & CONSTRUCTION Construction market to rebound in 2014 page 6

Ghelamco, Immobel and Penta competing for top Warsaw site page 7

SERVICES & BPO

Shell's Kraków centre to recruit 150 new employees page 8 Top staffing company Work Service acquires Hungarian peer page 9

CONSUMER GOODS & RETAIL

GTC & Avestus close sale of Kraków retail center to Invesco page 10

HEALTHCARE

Hospital operator EMC to pay PLN 30m for Lubin healthcare unit page 11

POLITICS & ECONOMY

Investment in special economic zones sees 26% growth in 2013 page 13 Unemployment tops 13.2% in November page 14

KEY FIGURES

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

With its 3,500-km backbone network, Hawe is a "carrier for carriers." Photo: Hawe SA, A Bogdański

HHHHAWEAWEAWEAWE finds ally for huge FTTH projectfinds ally for huge FTTH projectfinds ally for huge FTTH projectfinds ally for huge FTTH project Poland's state-owned investment vehicle PIR will invest PLN 120m into a fiber-to-the-home network developed by Warsaw-listed telecommunications company HAWE. With an estimated price tag of PLN 560m, the project is to bring ultra high-speed Internet access to 870,000 Polish households by 2019. page 12

President signs pension reform billPresident signs pension reform billPresident signs pension reform billPresident signs pension reform bill President Bronisław Komorowski has signed the new pension reform bill and sent it to the constitutional tribunal for review, citing "conflicting opinions" on the controversial law. page 13

weekly newsletter # 017 / 7th January 2014 / page 2


Food packaging firm Food packaging firm Food packaging firm Food packaging firm Weidenhammer to Weidenhammer to Weidenhammer to Weidenhammer to produce Pringles cans produce Pringles cans produce Pringles cans produce Pringles cans in Kutnoin Kutnoin Kutnoin Kutno

The Łódź special economic zone has issued an invest-ment permit for German packaging company Weidenhammer Packaging Group, which seeks to build a factory of composite cans for snacks and other foodstuffs in Kutno (110km west of Warsaw). The PLN 25m project is to reach completion by the end of 2015 and initially create 31 new jobs. With 12 production sites, over 1,100 employees and annual sales of EUR 245m in 2012, the Weidenhammer Packaging Group is one of the world's two leading suppliers of composite cans, composite drums and rigid plastic containers. Founded in Hockenheim, Germany in 1955, the family-owned en-terprise has since evolved to become a market and technology leader in its segment. Weidenhammer cus-tomers include international brand product manufac-turers Nestlé, Unilever, Kellogg, Procter & Gam-ble, Rügenwalder Mühle, Imperial Tobacco and BAT. Since Weidenhammer is the company that supplies the trademark cardboard tubes for Pringles snacks, its decision to invest in Kutno is hardly a surprise. After all, Pringles' owner, the US food giant Kellogg is cur-rently gearing up to launch production of savory snacks in the same location in 2014 (see PT Business Review+ No. 008 page 13). The Kellogg Company be-came the world's number two savory snack producer in 2012 with the USD 2.7bn acquisition of the Pringles

snack business from FMCG giant P&G. Starting from this year, the Pringles snacks, which are now Kellog's 2nd largest brand after Special K, will be made also in Poland.

Weidenhammer supplies composite cans to top global consumer brands. Photo: Weidenhammer "We are rolling out the production in the second half of 2014," Eugene Evans, who heads Kellogg's Polish operations, told Poland Today back in October. "We have already hired 50 people and we aim at doubling that number by next summer." UMA acquired the Kutno site in 2007 and completed a factory building of approximately 15,000 sq.m shortly after. The project had been sitting idle for nearly half a decade before Kellogg returned to Kutno in 2013 with new plans. In early 2013 the Łódz Special Economic Zone said UMA promised to invest a further PLN 225.8m (approx. EUR 54.8m) in the Kutno project that were to create a minimum of 40 new jobs. Company representatives said the investment was for a 10,000 sq.m extension to the existing building which will con-tain a raw material area, process, packing and ware-house.


Gorenje's Warsaw Gorenje's Warsaw Gorenje's Warsaw Gorenje's Warsaw listing disappointslisting disappointslisting disappointslisting disappoints

Slovenia's Gorenje, one of Central and Eastern Eu-rope's top household appliance makers, fell 9% at its Warsaw bourse debut on January 30th, 2013, after it raised far less than planned at its secondary listing on the region's largest equity market. Gorenje, already listed in Slovenia, raised nearly EUR 17m on the War-saw Stock Exchange, well below the EUR 45m it was hoping to get (see PT Business Review+ No. 012 page 2). Market insiders said Slovenia's economic problems were a factor in putting off investors. According to World Bank projections the Slovenian economy is to shrink by 1% this year, as the country is struggling to avoid following Cyprus, Ireland, Greece, Portugal and Spain in seeking an international bailout to keep its economy afloat. Gorenje, a manufacturer of energy-efficient appliances under multiple brand names, had intended to use most of the proceeds from its second equity boost to delev-erage, with the rest being earmarked for strategic in-vestments. The Gorenje group generates 95% of its revenue outside Slovenia. "Entry to the Warsaw Stock Exchange is an important step in Gorenje's development strategy, which will improve Gorenje's reputation as an international play-er both with our customers and our business partners. Moreover, it is yet another step in the internationaliza-tion of all aspects of our business. Following the inter-nationalization of downstream trade some 40 years ago, and internationalization of manufacturing, the


cross listing and admission to trading on the WSE fur-ther internationalizes our financing as well," com-mented Gorenje President and CEO Franjo Bobinac. Following the two recent rounds of Gorenje's equity boost, Japan's Panasonic Corporation is the second largest shareholder with a 10.5% share, behind state-owned fund Kapitalska družba with 18.09%. Gorenje and Panasonic are bound by a strategic part-nership that involves cooperation in development, manufacturing, and sales. The Japanese giant acquired EUR 10m worth of the Slovenian appliance maker's shares in the first offering. The third largest share-holder is the International Finance Corporation, a World Bank member, which subscribed Gorenje shares in 2010 and holds an 8.49% share. The biggest buyer during the Warsaw issue was Universal In-vestment Capital S.L., an international private in-vestor of Spanish and German origin, which purchased an 8.4% stake in Gorenje for EUR 8m.


Plastic parts maker Plastic parts maker Plastic parts maker Plastic parts maker Nifco to create 180 jobs Nifco to create 180 jobs Nifco to create 180 jobs Nifco to create 180 jobs in Świdnica in Świdnica in Świdnica in Świdnica

Japanese manufacturer of plastic parts and compo-nents Nifco has obtained an investment permit for its 4th project in the Wałbrzych Special Economic Zone Invest-Park. The company, which has operated a fac-tory in Świdnica since 2007, will spend PLN 60m on new production lines for plastic ventilation ducts and storage compartments for motor vehicles. The project is to reach completion before the end of 2016 and cre-ate 180 jobs.

"We are very pleased with Nifco's decision on a fur-ther expansion of their Polish plant, as their invest-ment in Świdnica will create new jobs. It is also a clear indication that the cooperation between our town and the Wałbrzych special economic zone is mutually ben-eficial," commented Świdnica's mayor Wojciech Murdzek. Industrial plastic parts and components represent some 86% of Nifco's global turnover, which totaled nearly JPY 140bn in 2012 with a net income of JPY 5.35bn. The company makes also bedding and furni-ture. Japan and Asia generate more than 80% of Nifco's sales, with Europe contributing merely 6%. Its product range spans plastic fasteners, rivets, clips, buckles, clamps, bands and dampers.


Industry sentiment Industry sentiment Industry sentiment Industry sentiment worsens in December, worsens in December, worsens in December, worsens in December, PMI dPMI dPMI dPMI data showata showata showata show Poland's purchasing managers' index PMI, fell to 53.2 points in December from 54.4 points in November, breaking seven months of consecutive gains, report by HSBC and Markit showed. It was the sixth consecu-tive month when the figure remained above the key 50-point threshold, which separates expansion from contraction, indicating improving business conditions in manufacturing. "The rates of growth for output, new orders and ex-ports all remained strong, but were weaker than in November," HSBC and Markit said in their statement. "The underlying strength of demand in the sector was further illustrated by ongoing solid increases in both input volumes and employment."

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

45

50

55

Oct 12 Dec 12 Feb 13 Apr 13 Jun 13 Aug 13 Oct 13 Dec 13

Source: Markit & HSBC

New order growth held for the seventh successive month, albeit at a rate slower than the 34-month rec-ord set in November. Output rose for a sixth straight month, again at a slower pace, the slowest since July. Backlogs fell "solidly" during the month, analysts wrote. "The solid increase in new orders necessitated another sharp increase in purchasing activity in December," analysts wrote, citing the fastest gain in input volume orders since March 2011.


BANKING & FINANCE

Competition watchdog Competition watchdog Competition watchdog Competition watchdog disciplinesdisciplinesdisciplinesdisciplines cash loan cash loan cash loan cash loan company Provident company Provident company Provident company Provident Provident Polska, the Polish arm of British consum-er credit provider International Personal Finance plc (IPF) has been subjected to a PLN 12m (GBP 2.4m) fine by the Polish Office of Consumer Protection and Competition UOKiK for "collective infringement of consumer interests." According to the regulator, the personal home credit service company should include the fee for home col-lection service and an additional preparatory fee asso-ciated therewith in the total cost of credit and, there-fore, the APR (annual percentage rate) figure. IPF ar-gues that the home collection service is optional and therefore does not have to be announced as part of the cost of credit. "On the basis of legal advice received, we believe that we are correctly calculating the total cost of credit and APR and are planning to appeal the decision. The deadline for doing so is 7th January 2014. The deci-sion would then go through the court appeal process and it is likely to be a number of months before a final ruling is received. At this stage, it is not possible to es-timate the impact, if any, a final negative ruling might have on IPF's Polish business. We will continue to re-view the position and a further announcement will be made as appropriate," IPF said in a statement. Listed on the London and Warsaw Stock Exchanges, IPF operates in Poland, the Czech Republic, Hungary Mexico and Romania, with Poland being its largest market. Last year the company launched in Lithuania

and Bulgaria. Their key product are small sum, short-term unsecured cash loans ranging from GBP 50 to GBP 1,000 (in Poland from PLN 300 to PLN 10,000) repaid over a period of around 12 months. Their trademark feature is the personal home collection ser-vice provided by dedicated agents who deliver the loan to and collect repayments from the customer's home each week. Although the home collection service is optional, it forms an intrinsic part of IPF's lending model, which is based on regular face to face contact with customers. According to IPF, weekly home visits by its agents help customers stay in control of their re-payments. Provident agents, who visit their clients' homes, are also best placed to judge potential new loan opportunities. As of end of September 2013, IPF had 2.5m clients, of which 0.83m in Poland. The Polish business contrib-uted more than a half of IPF's profit before taxation in Q1-Q3 2013 (GBP 39.8m of GBP 74.8m). Considering that the underlying profit growth in Poland during that period came to GBP 9.8m, the GBP 2.4m fine im-posed by the UOKiK seems rather substantial. Tighter restrictions on bank lending led to a minor boom in Poland's payday loan market, with many new-comers entering the sector in recent years. Concerned about the rapid expansion of non-banking lenders, in September, Poland's Ministry of Finance published a discussion document including potential changes to legislation of the consumer finance market. The pro-posed measures for consultation include a new licens-ing regime, access to credit bureau for non-banking fi-nancial institutions, a cap on default charges and a 30% cap on non-interest charges connected to the to-tal cost of credit, as defined in the EU Consumer Cred-it Directive.

BANKING & FINANCE

EBRD announces new EBRD announces new EBRD announces new EBRD announces new strategystrategystrategystrategy &&&& bond buying bond buying bond buying bond buying program in Poland program in Poland program in Poland program in Poland In the final days of 2014, the European Bank for Reconstruction and Development (EBRD) an-nounced a new strategy for Poland and a program that aims to support the country's capital market. Branding it as "an advanced transition country," EBRD Board of Directors decided to focus the bank's activities in Po-land over the coming three years on areas where "transition challenges remain the highest and where reforms can be deepened," the institution said in a statement. The number one challenge listed by EBRD is promo-tion of a low carbon economy. "Given Poland’s contin-ued high dependency on coal, low carbon solutions, energy efficiency and reduction of green-house gas emissions will remain a strategic priority for the EBRD. The Bank will continue to support diversifica-tion of energy sources with a focus on renewable ener-gy and improving energy efficiency, both on the de-mand and supply sides," EBRD said. The London-based institution will also seek to en-hance the private sector's role in the economy. "Accel-erating the implementation of the structural reform and privatization agenda is crucial to consolidate sus-tainable economic growth. Moving toward a more re-silient economic model built on private investment and productivity growth increases will also require more innovation, providing risk capital and corporate restructuring, and will include supporting Polish com-panies in their regional expansion and cross-border investments," reads the EBRD communiqué.


Last but not least, the bank aims to assist Poland in the development of a sustainable financial sector and capi-tal markets. Building on lessons learned during the cri-sis, the EBRD will assist in the development of funding mechanisms addressing banks' past balance sheet mismatches, financing small businesses (particularly in poorer regions of the country) and promoting the development of local debt and equity capital markets, to reduce the dependence on foreign financial inflows and to boost the use of local currency instruments. As part of these efforts, on December 20th, 2013, EBRD launched a new framework aiming at supporting the debt capital market in Poland. "The Financial Institutions Debt Capital Market Framework will have a volume of up to EUR 250 mil-lion for investments in medium to long-term senior bonds and structured finance products issued by banks and non-bank financial institutions in the next three years," the statement read. "The aim of the framework is to contribute to the development of the Polish cor-porate bond market, support the diversification of me-dium term funding sources of participating financial institutions and improve the maturity structure of their balance sheets." The first project realized within the framework of the program will consist in the acquisition of up to 20% of senior unsecured bonds issued by BZ WBK bank, the Polish subsidiary of Spain's Banco Santander, for PLN 100m (ca. EUR 24m), the EBRD also said.

IN BRIEF: Poland’s top lender PKO BP completed the sale of a

66% stake in payment card settlement operator eServ-ice to a unit of US EVO Payments International, PKO

BP said. PKO BP reported inking the deal to sell the

66% stake for USD 113 million to EVO in early Novem-

ber, with the price to be adjusted for cash and earn-out

bonus (see PT Business Review+ No. 012 page 3). The

bank eyes PLN 377m gross profit on the transaction..

ENERGY & RESOURCES

Mining technology Mining technology Mining technology Mining technology giants Famur and giants Famur and giants Famur and giants Famur and Kopex mulling mergerKopex mulling mergerKopex mulling mergerKopex mulling merger Two of Poland's top mining technology giants, Famur and Kopex, are embarking on merger talks that may lead to the creation of a major global player in this market segment. The combined capitalization of the two Warsaw-listed firms totals PLN 3.3bn. "Our goal is to establish, together with Kopex, a single global Polish brand and supplier of equipment and services for the underground and open pit mining sec-tor," said Waldemar Łaski, CEO of Famur, who invited Kopex's executives to the negotiating table, proposing a merger though a share swap. "Famur intends to ap-ply to the competition watchdog UOKiK for a permis-sion to merge with Kopex by the end of January 2014." Famur produces highly specialized equipment such as longwall systems used in underground mining. With a turnover of PLN 1.47bn in 2012, the company exports its products worldwide and has local units in Russia, Germany, Ukraine and India. As for Kopex, it produc-es machinery and equipment and offers a range of ser-vices to mining companies around the world. In 2012 its sales revenues came in excess of PLN 2bn. The majority shareholder in Famur is a Polish venture TDJ, which also happens to own a 9.99% stake in Kopex. Under a recent agreement, Famur has been given time until mid-2014 to acquire the Kopex stake from TDJ at PLN 10.75 apiece. This transaction would

lay the foundations for the proposed share swap, with Famur offering two of its own shares for a single Kopex stock.

Famur develops and produces advanced mining sys-tems: shearers, roof supports, conveyor belts, etc. Photo: Famur

Famur managers believe that the merger with Kopex will generate a whole range of synergies for the two firms, including a more comprehensive offer for mines, stronger R&D capabilities, better production efficiencies, improved position vis-à-vis global com-petitors, and resources for further growth. In the com-ing weeks Famur will concentrate on negotiations with Kopex and its owners, hoping to reach an agree-ment shortly and finalize the whole transaction by the end of June. "With a capitalization of more than PLN 3.3bn follow-ing the merger, the expanded group may attract the in-terest of foreign investors, which could prove benefi-cial for the current shareholders of both firms," Łaski said.


ENERGY & RESOURCES

StateStateStateState----sponsored shale sponsored shale sponsored shale sponsored shale alliance falls through, alliance falls through, alliance falls through, alliance falls through, nuclear deal nuclear deal nuclear deal nuclear deal pppprevailrevailrevailrevailssss

Back in July 2012, when the five Polish state-controlled companies: natural gas giant PGNiG, cop-per group KGHM and power groups Tauron, PGE and Enea inked a framework agreement on coopera-tion in shale gas exploration and extraction, govern-ment officials made sure the news received wide-spread coverage in all major media. However, the deal expired on December 31st, 2013, and according to sources cited by Reuters it will not be renewed. The arrangement was the brainchild of Poland's for-mer treasury minister Mikołaj Budzanowski, who was dismissed in mid-2013, following the surprising an-nouncement by Russia's Gazprom and the state-controlled Polish company EuRoPol Gaz, regarding a new joint pipeline project. As neither Mr. Budzanowski, nor Polish Prime Minister Donald Tusk had any idea about those plans, the premier sacked the head of treasury for insufficient supervision over state-owned enterprises. Since Budzanowski's depar-ture, many of the otherwise sensible initiatives he ini-tiated, have been dissolved. Based on the deal signed on July 4, 2012, the five com-panies planned PLN 1.7bnoutlays on joint exploration and extraction of shale gas from the first three pads at PGNiG's Wejherowo license on the Baltic coast. But they missed a number of deadlines for mapping out details of the deal and said that they had now let it ex-pire. At the beginning of January 2013 PGNiG admit-ted it had suffered setbacks while conducting a series

of fractures on its first-ever shale gas horizontal well at the Lubocino site, Wejherowo license. PGNiG has recently teamed up with US Chevron (see PT Business Review+ No. 015 page 4) to explore shale fields in south east of Poland and their agreement may signal a new trend, whereby Polish license holders seek support from more experienced global partners to tap into Poland's unconventional gas and oil re-serves more quickly.

Assessing Poland's shale riches Estimated recoverable shale gas reserves in bn cb.m

0

1,000

2,000

3,000

4,000

5,000

6,000

*PIG (2012)

Wood M ackenzie (2010)

EIA (2013)

EIA (2011)

*) Poland's Geological Institute PIG estimates the country's recovera-

ble shale gas reserves at 346-768bn cb.m

Source: EIA, PIG, Wood Mackenzie, PT archives Another alliance between state-controlled energy util-ities PGE, Enea and Tauron as well as copper group KGHM, focused on the development of Poland's first nuclear power station, is to remain in force, despite failure to meet conditions precedent set in the cooper-ation agreement initialed in September, the companies said in separate market filings. On September 23, 2013 the parties agreed that PGE would keep a 70% stake in its nuclear power unit PGE EJ1 and sell the remaining 30% of shares to Enea, Tauron and KGHM with each of the firms taking a 10% stake. PGE EJ1 is a special-purpose unit of PGE,

which has the leading role in the process of building Poland's first nuclear power plant. The government has charged PGE, the country's lead-ing power company, with the task of building the country's first nuclear power plant. According to plans, the first of the planned two nuclear power units (each with a capacity of 3,000 MW) is to go online by 2023. One of the NPPs could be built in Żarnowiec, roughly 100km west of Gdańsk, already housing the ruins of a huge nuclear power plant whose construc-tion was stopped in 1990 through a popular referen-dum.

IN BRIEF: Lotos Petrobaltic, a subsidiary of Poland's number two

oil refiner Grupa Lotos, has purchased an offshore jack-

up drilling platform which will be used for exploration

works on its Baltic Sea exploration licenses, the compa-

ny announced. The platform, currently operating off the

western African shore, is capable of operating at the

depth of up to 105 meters and will be able to reach 120

meters once platform legs are extended, Lotos said. It

will be transported to the Baltic Sea in Q1 2014. The new

rig will replace the group's current Baltic Sea platform

'Petrobaltic' which will be transformed into an extrac-

tion platform and will become the production center at

Lotos' B8 Baltic license where Lotos plans to launch

commercial production at end-2015.

PROPERTY & CONSTRUCTION

Construction market Construction market Construction market Construction market to rebound in 2014to rebound in 2014to rebound in 2014to rebound in 2014

The value of Poland's construction sector is to grow by 3.5% in 2014, following last year's 8.9% decline from


the record level of EUR 48bn, reported market re-searcher PAB-PCR&F Institute. Their projections are seen as optimistic, however, as many analysts expect a further contraction this year, before the sector finally rebounds in 2015, fuelled by a fresh injection of fund-ing from the European Union's new budget. Other negative factors that Polish general contractors may face in 2014 include higher prices of building materials and subcontractor services. The EU has earmarked some EUR 17.5bn on Polish in-frastructure projects in its 2014-2020 financial per-spective, but the money is unlikely to start flowing an-ytime soon, as most of the largest tenders remain at a relatively early stage. Market insiders generally agree, however, that the segments that will see most con-struction activity in the coming years will be road building, railway infrastructure and energy sector. Rail network improvements alone are to cost PLN 9bn in 2014.

Poland's construction market Total turnover, year-on-year change in real terms

-10%

-5%

0%

5%

10%

15%

2009 2010 2011 2012 *2013 *2014 *2016

Source: Euroconstruct *) projected

The past year saw a significant decline in large con-tracts, but when it comes to small (below PLN 5m) and medium-sized projects (PLN 20m), their numbers re-mained relatively unchanged. Although huge infra-structure developments, such as highway or stadium

deals attract most attention, they are also the most risky for builders. Some of Poland's largest and most experienced construction firms (most notably Polimex-Mostostal and PBG), as well as a number of foreign players (for instance Austria's Alpine Bau, Irish SRB) severely miscalculated that risk and failed to finalize some key projects, often ending up on the verge of bankruptcy themselves. Only time will tell whether the painful lesson of the 2011-2012 infrastruc-ture boom will result in more realistic bids in future tenders. Aside from its focus on several key market segments, Poland's construction industry is also showing clear signs of increasing geographical concentration, ac-cording a brand new report by market research and consulting company PMR. The country's top five re-gions (voivodeships) generate a steep 55% of the total construction output. The Mazowieckie province alone contributes more than 18% of the market’s value, ahead of Silesian, Wielkopolskie, Małopolskie and Dolnosląskie, whose combined shares amount to 37%. A review of more than 1,000 planned projects done by PMR researchers reveals that the current trend is un-likely to reverse in the coming years. On the contrary, it may even pick up pace. According to PMR, Poland's construction market will continue to be dominated by infrastructure projects in the near future as the coun-try still has a lot to catching up to do before it reaches the EU average. Improvement of the technical condi-tion of roads and railway lines is at the top of project lists in all the regions covered by the report. Most of the planned road building projects will focus on devel-oping better road connections between the major cit-ies, including Warsaw, Kraków, Wrocław, northern Gdańsk, west-central Poznań and eastern Lublin. Traditionally, the Mazowieckie province will see the strongest construction activity in terms of new devel-opments, with Warsaw being the driving force behind

the region’s growth. Some major projects in the capital city will include: the extension of the city’s ring road and outbound routes (see PT Business Review+ No. 016 page 9), and subway network as well as the up-grade of the Rail Baltica line linking Warsaw and the eastern city of Białystok. Significant funds will also be allocated to development of Warsaw’s railway links to Radom and Łódź in central Poland.

PROPERTY & CONSTRUCTION

Ghelamco, Immobel Ghelamco, Immobel Ghelamco, Immobel Ghelamco, Immobel and Penta cand Penta cand Penta cand Penta competing ompeting ompeting ompeting for top Warsaw sitefor top Warsaw sitefor top Warsaw sitefor top Warsaw site The coming weeks will see Poland's state railways company PKP select a partner to develop a new Dworzec Gdański station, just north of Warsaw's city centre along with the surrounding area. Regardless of which option is selected, the project, estimated at PLN 1.2bn, is likely to become one of the largest and most attractive mixed-use developments in the Polish capi-tal, mainly due to the size of the plot (4.7ha) as well as its unique location with direct access by rail, subway, tram, buses and cars. Besides Dworzec Gdański, only the Central Station and its surroundings offer equally wide selection of transportation options. Back in autumn, PKP shortlisted three parties for the project: Belgian developers Ghelamco and Immobel as well as a consortium led by Czech private equity fund Penta Investments. The latter has sizeable in-vestments in different sectors in Poland and abroad, but so far it has had little exposure to Polish real es-tate. Outside Poland, however, Penta is no stranger to property investments. PKP rejected initial offers from Poland's Echo Investment and Marvipol and Slo-vakia's HB Reavis. According to the railway operator,


its selection criteria included experience in similar projects, deadline and project profitability guarantees, as well as the manner in which the new project incor-porates the transport function of Dworzec Gdański, which is both a railway and subway station.

Ghelamco envisages nine office buildings at the site, one sitting on top of the station that is to be moved underground. Image: PKP/Ghelamco Without a doubt, Flemish developer Ghelamco has the most experience of the three rivals, at least as far as property development in Poland is concerned. Over the past 22 years Ghelamco has built nearly 0.5m sq.m of offices and warehouses in Poland. Their ongoing projects include the BREEAM-certified Warsaw Spire complex, which will consist three office buildings (the main 220-metre tower plus two 55m-tall blocks) with a combined office space of 100,000 sq.m. and an un-derground parking lot for 1,200 vehicles. Their other major recent and ongoing developments include Łopuszańska Business Park with 17,000 sq.m, and the new T-Mobile HQ, a 40,000 sq.m office com-plex on Marynarska 12. Outside of Warsaw, Ghelamco is developing a 60,000 sq.m. class A project Synergy Business Park in Wrocław. Earlier this year the com-pany sold its Warsaw office projects Mokotów Nova (to Curzon Capital Partners III fund for EUR 121m) and Senator (to Union Investment for EUR 120m).

The Belgians have also made inroads into the residen-tial segment with and upscale Warsaw project Woronicza Qbik (350 soft lofts), and they are about to break ground on their first retail projects in Warsaw (see PT Business Review+ No. 015 page 11.)

Immobel wants to place the train station between large office blocks. Image: PKP/Immobel Despite its 150 years of experience on the Belgian market, Immobel is still a relative newcomer in Po-land. The company entered the Polish market in 2011 with a focus on office and residential projects. It's pro-jects to-date include the Okrąglak and Kwadraciak of-fice buildings in Poznań (with a combined GLA of nearly 8,000 sq.m), as well as the Cedet project in Warsaw, which will involve the redevelopment and extension of one of the city's best known buildings, the former Smyk kids department store, to create a 21,000 sq.m retail & office complex. Immobel acquired the three properties from Centrum Development and Investments, which manages more than PLN 1bn worth of retail property assets in key Polish cities. The company also owns development sites in Warsaw and Gdańsk. Listed on Euronext Brussels, Immobel focus-es on office and residential and landbanking segments, and, occasionally, retail projects.

Penta seeks to build three giant office buildings, in-cluding one taller than 100 meters, as well as a brand new train station at the site. Image: PKP/Penta/Epstein Established in 1994, Penta is a Central European in-vestment group operating in the private equity and re-al estate sectors. In private equity, it manages an ever-green fund of its partners, the company's only share-holders. Its portfolio companies provide jobs to more than 30,000 people and reported revenues of EUR 4.4bn in 2012. Penta invests into retail, healthcare, aerospace industry, mechanical engineering, utilities, entertainment and banking projects.

SERVICES & BPO

Shell's Kraków centre Shell's Kraków centre Shell's Kraków centre Shell's Kraków centre to recruit 150 new to recruit 150 new to recruit 150 new to recruit 150 new employeesemployeesemployeesemployees Oil giant Shell seeks to recruit a further 150 staff at its Polish business service centre. The Kraków Technolo-gy Park, where the Shell Business Service Centre Kraków is located, has just awarded a third operations permit to the British-Dutch energy company. The Kraków centre provides its customers with services in four main areas: finance operations, HR services, cus-


tomer service and supply & distribution. Shell offers development opportunities for both graduates and ex-perienced professionals. "Shell Polska employs close to 2,000 in the Kraków special economic zone, and as such it is one of the largest centers operating in the area," said Wiesława Kornaś-Kita, head of the Kraków Technology Park, which was established back in 2005 to attract business process outsourcing and shared services projects. Be-sides Shell, the Zabierzów sector of the Kraków spe-cial economic zone has since attracted the likes HSBC Service Delivery, Affiliated Computer Services, HCL Poland, UBS Service Centre (Poland), Luxoft Poland and Sabre Polska.

Kraków Technology Park issues 32 permits last year. Investors promised to spend PLN 647m on new projects in the zone and create 1,287 jobs. Photo: KPT

Shell is one of the most active foreign investors in Po-land's fuel retail sector. As of end of 2012 Shell had 309 proprietary and 69 franchise stations in Poland. Shell Polska turned over PLN 7.4bn in 2012, up from PLN 4.83bn and its workforce stood at close to 2,000 as of end of last year. The company has recently acquired a chain of 105 unmanned gas stations in Poland from Finland's Neste. The EUR 80m acquisition has made

Shell the number two player on the market after Polish giant PKN Orlen and number one among for-eign operators, with a 7% market share. Shell is currently in the process of rebranding and up-grading the newly-acquired network, with most of the Neste stations to be transformed into regular manned Shell outlets, some with full-scale shops onsite and others with "walk-in" or "walk-to" counters. According to Shell, the operation is to create some 1,000 addi-tional jobs. In addition to the fuel retail business, Shell is develop-ing its aircraft refueling operations in Poland, as the first foreign operator to have entered this market seg-ment. Since the beginning of the year its subsidiary Shell Aviation has launched operations at the air-ports in Katowice, Kraków and Warsaw. At the latter airport, Shell is relying on infrastructure provided by Polish PKN Orlen subsidiary Petrolot, which until recently had monopolized Poland's aviation fuel sec-tor. Besides Petrolot and Shell, other aircraft refuellers currently operating in Poland are Lithuanian Baltic Ground Services, and Polish Lotos Tank.

SERVICES & BPO

Top staffing company Top staffing company Top staffing company Top staffing company Work Service acquires Work Service acquires Work Service acquires Work Service acquires Hungarian peerHungarian peerHungarian peerHungarian peer

Poland's leading temporary staffing and personnel outsourcing company Work Service has acquired a 75% stake in its Hungarian peer Prohuman. The EUR 16m transaction brings the Polish company one step closer to becoming the top human resources player in Central and Eastern Europe.

Established in 2004, Prohuman is part of Prohume Group that includes five ventures operating across a broad range of segments (HR services, merchandising, sales promotion, marketing events and telemarketing). One of Hungary's top staffing companies, Prohuman recruited more than 6,000 temporary employees in 2012. To-date, the Wrocław-based Work Service has ac-quired seven staffing and recruitment companies at the combined cost of PLN 164m. In Q3 2013, the Polish firm bought the Polish arm of global recruitment con-sultancy Antal International for PLN 27.1m as well as a Katowice-based staffing company Work Ex-press. The key financial investor in Work Service is the glob-al private equity firm PineBridge Investments, which last year acquired a 20% stake in the company for EUR 26m to support its ambitious investment pipeline. Work Service has been listed on the Warsaw Stock Exchange since May 2012. The company is the market leader in Poland, has a strong presence in Rus-sia and continues to increase its market share in the Czech Republic, Slovakia, Germany and Turkey, boast-ing a market share of 15.4% in the CEE region. The long-term plan is to make Work Service one of Po-land's 100 largest companies in a couple of years and with PineBridge's help its management is well on track to achieving that goal. The private equity fund con-firmed it was ready for further capital injections, should Work Service indentify further attractive take-over targets. Company representatives said recently they hope to end the 2013 with a turnover of PLN 1bn, but thanks to the ongoing and planned acquisitions this year the fig-ure is likely to reach PLN 1.8bn. In the first half of 2013 the group posted a consolidated net profit of PLN 10m (+8% y/y) on sales revenues of PLN 410m (+16% y/y). With approximately 27,000 employees on a monthly


basis, Work Service serves more than 1,000 clients through several business lines: recruitment and per-sonnel consultancy; temporary staffing; short-term specialist contracting for the IT, financial and medical sectors; quality control outsourcing; and merchandis-ing processes. With close to USD 70bn under management, PineBridge is an independent asset manager with over 60 years of experience in developed and emerging markets. Their global platform for institutional and individual offers solutions across asset allocation, eq-uities, fixed income, private equity and hedge funds. In 2012 PineBridge agreed to invest EUR 50m into a EUR 108m roll-out of an EasyPack parcel network devel-oped by the Warsaw-listed postal services firm Inte-ger.pl. PineBridge company belongs to Hong-Kong billionaire Richard Li, son of the world's 9th richest person Li Ka-shing, whose wealth Forbes estimates at some USD 25.5bn. Thru Hutchison Whampoa Limited and Cheung Kong Holdings, Li Ka-shing is the world's largest operator of container terminals and the world's leading health and beauty retailer (of the Rossmann and Watson's fame).

CONSUMER GOODS & RETAIL

GTC & Avestus close GTC & Avestus close GTC & Avestus close GTC & Avestus close sale of Kraków retail sale of Kraków retail sale of Kraków retail sale of Kraków retail center to Invescocenter to Invescocenter to Invescocenter to Invesco Just before Christmas, following a green light from the Polish antitrust authority UOKiK, the Warsaw-listed developer GTC and European real estate private equi-ty firm Avestus Capital closed the EUR 180m sale of their Galeria Kazimierz shopping mall in Kraków, to a subsidiary of Invesco Group. Each of the sellers re-ceived EUR 90m, according to a GTC communiqué,

and the transaction, which follows the preliminary sale agreement signed at the beginning of October (see PT Business Review+ No. 007 page 10), will generate EUR 50m in net cash proceeds for the Polish develop-er. The decision to sell the stake in Galeria Kazimierz is in line with GTC’s strategy to generate net cash from disposal of assets, as announced in 2012.

Galeria Kazimierz is one of Kraków's most popular shopping destinations. Photo: GTC "We are continuing to refresh the company's portfolio by selling maturing assets and replacing them with new developments that offer attractive return. Those new developments include two shopping malls planned in Warsaw’s districts of Wilanów and Białołęka. These projects are progressing on sched-ule," said Alain Ickovics, President of GTC Manage-ment Board. Galeria Kazimierz shopping mall is located in the his-toric centre of Krakow, by Podgórska street. While be-

ing one of the most popular shopping centers in city and its metropolitan area, the mall offers almost 40,000 sq.m of leasable space. Galeria Kazimierz an-chor tenants include companies such as: Alma, Cinema City, EMPiK and Reserved. GTC, which developed one of Warsaw's most popular shopping centers Galeria Mokotów, is currently get-ting ready to break ground on two new massive retail projects in the Polish capital's fastest growing residen-tial districts of Wilanów and Białołęka. GTC estimates that phase one of Galeria Białołęka will open its doors in 2015 with a GLA of 64,000 sq.m, whereas Galeria Wilanów is to welcome its first customers in 2016 with an initial GLA of 61,000 sq.m. Established in 1994 in Warsaw, GTC currently oper-ates in Poland, Hungary, the Czech Republic, Roma-nia, Serbia, Croatia, Slovakia, Bulgaria, Russia and Ukraine. The company develops new projects and manages completed properties in three key sectors of real estate: office buildings and parks, retail and enter-tainment centers and residential. To date, GTC has developed approximately 950,000 sq.m of net com-mercial space and 300,000 sq.m of residential units. The company currently manages a combined 602,000 net sq.m of completed and operational commercial space and holds a large portfolio of investment pro-jects at various stages of development that will enable it to develop of 1.1m sq.m of commercial space and 615,000 sq.m of residential space. GTC's total assets exceed EUR 1.9bn. A few weeks ago (see PT Business Review+ No. 012 page 5), Israeli Kardan NV, a company linked to GTC's original founders, sold its 27.75% stake in the company to Lone Star Real Estate Fund III for EUR 160m. Kardan booked GTC Poland at a value of EUR 194m at the end of June 2013.


DATA BOX: RETAIL SALES Poland's retail sales increased more-than-expected in

November, data released by the Central Statistical Of-

fice GUS showed. Retail sales rose 3.8% y/y in Novem-

ber, following a 3.2% gain in October. Economists had

expected sales to rise 3.2%. On a monthly basis, retail

sales shrunk 5.8% in November, after a 3.6% rise in the

previous month.

Retail sales in Poland (y/y)

-5%

0%

5%

10%

15%

20%

May 11 Nov 11 May 12 Nov 12 May 13 Nov 13

Source: GUS

HEALTHCARE

Hospital operatorHospital operatorHospital operatorHospital operator EMC EMC EMC EMC to pay PLN 30m fto pay PLN 30m fto pay PLN 30m fto pay PLN 30m for or or or Lubin Lubin Lubin Lubin healthcare healthcare healthcare healthcare unitunitunitunit One of Poland's leading private hospital and clinic op-erators, EMC Instytut Medyczny, majority-owned by the Czech private equity company Penta Invest-ments, has inked a preliminary agreement to acquire a PLN 30m stake in a regional healthcare unit in the western Polish town of Lubin from local authorities.

The company hopes to seal the deal by the end of Jan-uary, following a green light from the competition watchdog UOKiK. Located some 70km north-west of Wrocław, Lubin boasts one of the highest disposable incomes in Poland, as the town is home to the coun-try's copper and silver mining conglomerate KGHM. EMC Instytut Medyczny operates 8 hospitals and 16 outpatient specialty and primary care clinics. In mere-ly a decade, the company has developed from a local firm operating a hospital in Wrocław into a network of medical centers, being expanded consistently throughout Poland and abroad. Since 2005, EMC has been listed on the Warsaw Stock Exchange. In the first three quarters of 2013 EMC saw its sales revenues go up 5.5% and reach PLN 126m, while its net earnings came to PLN 1.75m. Its ongoing investments include modernization of the geriatric hospital in Katowice (from 38 to 88 beds), expansion of Bukowiec hospital (new operating theater and a central sterile services department), and redevelopment of outpatient clinic in Piaseczno (10 new rooms). Penta launched a public offer for the 85.4% of shares and 79.51% of voting rights in EMC Instytut Medyczny at the end of May 2013. The bid, which valued EMC at about PLN 157m (EUR 37.4m), closed in July and boosted Penta's stake in the Wrocław-based business from 14.6% to 68.41%. Polish insurer PZU remains the second major shareholder with a 27.12% share. When Poland Today spoke to Eduard Maták, partner respon-sible for Penta's healthcare projects, back in August 2013, he confirmed the fund would support EMC's ac-quisition policy. "The company is a well established hospital operator in Poland and our aim is to take a very active part in the consolidation of the hospital segment through EMC," Eduard Maták, who is responsible for Penta's healthcare portfolio, told Poland Today. "Our main goal was to gain control over EMC which was con-

vincingly achieved. Currently, the shareholding struc-ture is consolidated and we are glad that such a repu-table brand as PZU has decided to stay with us and support the development of EMC."

Health expenditure* per capita In selected OECD countries as of 2011, in USD PPP

0 1,000 2,000 3,000 4,000 5,000 6,000

Estonia

Poland

Hungary

Slovakia

Czech Rep

Greece

Spain

Finland

UK

France

Germany

Norway

Source: OECD *) public & private

Besides EMC, Penta's healthcare sector acquisitions last year included 250 Mediq pharmacies in Poland from Dutch Mediq International. The PLN 229m takeover made Penta's Dr. Max Poland's 2nd largest pharmacy chain with more than 300 locations, and a 3.5% market share. "We are ready to grow at the annual rate of 20 – 30 pharmacies and Penta is determined to stay with Dr.Max project for at least five years. In Poland, there are many small pharmacy chains that operate less than 10 pharmacies. We consider them as attractive poten-tial targets for Dr.Max," Eduard Maták, told Poland Today. Established in 1994, Penta is a Central European in-vestment group operating in the private equity and re-


al estate sectors. In private equity, it manages an ever-green fund of its partners, the company's only share-holders. Its portfolio companies provide jobs to more than 30,000 people and reported revenues of EUR 4.4bn in 2012. Penta invests into retail, healthcare, aerospace industry, mechanical engineering, utilities, entertainment and banking projects. In 2012 Penta en-tered the hospital segment through acquisition of Svet zdravia, which operates 10 hospitals in Slovakia. The OECD estimates total health spending in Poland at 7% of GDP, compared to 9.6% in the UK, and 17.6% in the USA. According to PMR forecasts, in the years 2013-2015 the country's private healthcare market will be growing at a compound rate of about 5% annually, reaching PLN 39bn in 2015 (up from PLN 33.8bn in 2012).

IT & TELECOM

State investment fund State investment fund State investment fund State investment fund tttto support HAWE's o support HAWE's o support HAWE's o support HAWE's PLN 560m fiberPLN 560m fiberPLN 560m fiberPLN 560m fiber----totototo----thethethethe----homhomhomhome e e e projectprojectprojectproject

Poland's state-owned investment vehicle Polskie Inwestycje Rozwojowe (PIR), has signed an agree-ment with the Warsaw-listed backbone network oper-ator HAWE concerning a potential joint investment in a fiber-to-the-home network that will bring ultra high-speed internet access to 870,000 households in Po-land. According to information Poland Today received from PIR's representatives, the investment will amount to approximately PLN 560m over six years and PIR’s share in the venture is likely to reach close to PLN 120m.

Created last year as part of the government's "Polish Investments" program to stimulate economic recovery by investing future privatization proceeds into pro-jects of strategic importance, PIR has recently agreed to inject up to PLN 563m in Lotos Petrobaltic's B8 exploration project in the Baltic Sea (see PT Business Review+ No. 007 page 5) and possibly take part in a PLN 12bn petrochemical project by Polish refiner Grupa Lotos and chemical company Azoty (see PT Business Review+ No. 014 page 2). Led by Mariusz Grendowicz, the former CEO of mBank, PIR mediates in the allocation of low-cost capital for strategic pro-jects that have a hard time raising commercial financ-ing. The HAWE project would be PIR’s first invest-ment in partnership with a private investor. "Fibre optic networks are the future in Poland. In-vestments in fiber optic infrastructure are necessary, as they will pave the way for unlimited digital services. PIR wants to participate in such investments," com-mented Mariusz Grendowicz, PIR President. "A 10% increase in broadband Internet coverage translates in-to a higher gross domestic product, job creation, en-hanced business effectiveness and a more innovative economy. Advantages for the public sector are also significant, including the possibility to implement electronic ser-vices or data exchange," he added. The FTTH technology, which enables the provision of many innovative services and the fastest symmetrical Internet access, is virtually non-existent in Poland. The FTTH broadband network penetration rate in Po-land amounts to a mere 0.5%, while European leaders such as Lithuania and Sweden boast penetration rates of more than 20%. In October 2013 HAWE started a pilot project involving the construction of a FTTH network in the Ursynów district of Warsaw in cooper-ation with Orange Poland. So far, work on the de-velopment of the FTTH project has been funded by HAWE from its own resources. HAWE's strategy en-visages the construction of FTTH networks in the last

mile and the sale or lease of links to operators serving end-customers. The agreement envisages that later in the project de-velopment process, a special purpose vehicle would be established with shares held by PIR and HAWE. The level of financial commitment of HAWE would amount to PLN 130m, while PIR would be expected to invest almost PLN 120m. The SPV would also acquire debt financing provided by a bank in the amount of ca. PLN 250mand credit from infrastructure vendors, in the amount of ca. PLN 60m. "Initially, the project would be implemented under a partnership scheme, with the network being leased throughout the term of the agreement to a selected Partner and a guaranteed lease level, while after the expiry of the partnership agreement, it would be made available to other telecommunication operators," PIR said. "Ultimately, the network would be constructed in an open model, whereby it would be immediately available to all telecommunication operators without a prior partnership agreement stage. This means that the company would not provide end services to clients at any stage of the FTTH project and that it would not compete with the operators present in the market." The objective of the project would be to ensure long-term development of the broadband Internet network in the country, which fits with the objectives of the European Digital Agenda for Poland. The latter is one of the key pillars of the Europe 2020 strategy, which sets the targets for EU growth until 2020. "The project will enable sweeping pro-consumer changes to be introduced in the Polish telecommuni-cations market," said Krzysztof Witoń, HAWE's CEO. With its own backbone network of 3,500km, HAWE is a "carrier for carriers," with telecoms services to other operators generating more than 80% of its sales reve-


nues, the rest being infrastructure services. In 2012 HAWE turned over PLN 107.9m (down from PLN 140m in 2011) with an EBITDA of PLN 33m (against PLN 69.8m in the preceding year).

POLITICS & ECONOMY

President President President President inksinksinksinks pension pension pension pension reform reform reform reform billbillbillbill andandandand takestakestakestakes it it it it to constitutional courtto constitutional courtto constitutional courtto constitutional court Shortly before the end of last year, President Bronisław Komorowski signed the controversial legis-lation that will force Polish state-guaranteed private pension funds (OFEs) to transfer about half of their as-sets into a state vehicle in an attempt to cut public debt. However, in line with expectations, the presi-dent decided to send the bill to the Constitutional Tri-bunal for review, as opinions on the law are "contra-dictory and even mutually exclusive." Under the new law, the OFEs are to transfer 51.5% of their assets to the state pension vehicle ZUS on 3rd February this year, after which they will be banned from investing in treasury debt and state-guaranteed bonds starting 2016. The state pension institution will be also responsible for distributing the pensions, and therefore the funds will also be required to gradually transfer employee assets to ZUS starting 10 years prior to retirement. According to government estimates, the changes will lower Poland's public debt by 9.2 per-centage points from its current level of 55% of GDP and reduce annual borrowing needs by PLN 20-25bnin the years 2014-2017. Pension funds in the mandatory system held PLN 303.4bn of assets, including PLN 131.1bn of stocks and PLN 125.8bn of bonds as of 31st October, data from Po-

land’s financial markets regulator show. The owners of companies running the funds include Dutch Aegon and ING, German Allianz, US MetLife, British Aviva, French AXA, Italian Assicurazioni Generali, and Swedish Nordea Bank. What is more, participation in the OFE system has been made optional. While every OFE account re-mains in place with its rump equity assets, Poles will have four months to determine if the portion of their future social security premium - 2.9% - should contin-ue to go to the OFE funds. Should they fail to declare, their premiums go to a virtual individual account at the ZUS. They’ll be able to review their decision in 2016. The government-sponsored changes to the coun-try’s three-tier pension system have sparked contro-versy, including concern that canceling bonds would amount to uncompensated expropriation. The over-haul is opposed by 53% of Polish voters, according to a recent poll. According to his aides, the president expressed con-cern about several elements of the bill, including the prohibition to invest into Treasury bonds and increas-ing the share of assets invested into equity as well as a ban for OFE to advertise and fines for infringing this ban. During the legislative consultation process, con-cerns about the bill's constitutionality were raised by government agencies and a slew of private lobby groups as well. Komorowski had earlier criticized the bill for increasing risks for future pensioners but also said that he would most likely not block the law, say-ing that the legislation was necessary to preserve Po-land’s fiscal stability. Poland should see the Constitutional Tribunal issue the ruling on the pension reform within four months, the Tribunal's former judge Jerzy Stępien told the broadcaster TVN CNBC. The president's decision means that T-bonds held by private pension funds OFE will be transferred to the social security ZUS and

cancelled, a situation unlikely to be reversed, Stępien said. The government has already included the pen-sion-fund changes in its 2014 budget, which will run a 4.6% of GDP surplus as a result of the asset transfer, according to a November forecast by the European Commission. For the past 14 years, Poland has had a hybrid pension system, with part of workers' contributions diverted from the state pay-as-you-go system to private pension funds, known collectively as the second pension pillar. Shortly after the new system was introduced, the gov-ernment found itself in a pickle, forced to finance pay-outs for pensioners covered by the old system at the same time contributing to OFE accounts for would-be pensioners belonging to the new system. Poland ended up borrowing left and right and its debt skyrocketed as a result, from PLN 273bn in 1999 to PLN 888bn in mid-2013, with the pension system being responsible for roughly a half of the new liabilities. In the end, the government admitted the system was too costly for public finances and failed to deliver additional benefits for future pensioners.

POLITICS & ECONOMY

Investment in special Investment in special Investment in special Investment in special economic zones sees economic zones sees economic zones sees economic zones sees 22226666% growth in 2013% growth in 2013% growth in 2013% growth in 2013 The government's decision to extend the lifetimes of Poland's special economic zones (SEZ) until 2026 seems to have reignited investor interest in the incen-tives they offer. According to preliminary estimates, Poland's special economic zones welcomed PLN 7.14bn in new investment commitments last year, which represents an increase by PLN 1.48bn (26%) against the 2012 level. The number of investment


permits increased by nearly a half, and investors pledged to create a minimum of 8,100 jobs in new pro-jects, some 2,300 more than in the prior year. Statistics provided by the state investment promotion agency PAIiIZ are equally heartwarming, with 53 in-vestment agreements sealed last year for projects worth EUR 902.5m that will lead to creation of 19,000 new jobs, some 90% more than indicated in their 2012 report. PAIiIZ is currently in talks on a further 164 new projects, worth approximately EUR 3.3bn. If im-plemented, they are said to generate employment for some 30,500 individuals.

Special economic zones in 2013 Declared new outlays in PLNm

0 250 500 750 1,000 1,250 1,500

Tarnobrzeg

Warmia-Mazury

Starachowice

Suwałki

Słupsk

Legnica

Kostrzyn-Słubice

Łódź

Kamienna Góra

Kraków Technology Park

Euro-Park Mielec

Wałbrzych

Pomerania

Katowice

Source: SEZ

Traditionally, the automotive sector was the key source of FDI, with General Motors Manufacturing Poland investing EUR 95m to launch the production of the next generation Astra V compact passenger model at its factory in Gliwice. Another major project

was the EUR 75m Solvay plant in Włocławek, which will supply silica to tire makers. In the food sector, US giant Mars is expanding its production complex in Sochaczew, west of Warsaw, at the cost of EUR 60m. As far as job creation is concerned, no-one came close to the e-commerce giant Amazon, which intends to hire more than 6,000 employees at three huge distri-bution hubs near Wrocław and Poznań. In the high-skill segment, IT services company IBM unveiled plans for 2,000 positions at a new business services centre in Katowice. The second half of the year saw much more investor activity than the first six months, partly due to the government's decision to give the SEZ an additional couple of years, which made them more attractive to companies. On the other hand, the current EU-approved regional ceilings on public aid will remain in force only through mid-2014, when they are to be re-placed by new, less generous limits (see PT Business Review+ No. 013 page 15). As a result, the SEZ are ex-pecting to stay very busy in the first half of this year.

POLITICS & ECONOMY

Unemployment tops Unemployment tops Unemployment tops Unemployment tops 13.2% in November13.2% in November13.2% in November13.2% in November;;;; improvement expected improvement expected improvement expected improvement expected by midby midby midby mid----2014201420142014

Poland's registered unemployment rate rose to 13.2% in November 2013 from the prior-month level of 13.0%, according to Central Statistical Office (GUS) figures. There were 2.116m registered jobless at end-November, up by 40,900 from the preceding month. When compared to November 2012, the number of registered jobless was up 57,900.

Employers posted 55,700 new job offers for the month, down from the prior month, but up on corresponding period of last year. Labor offices had 38,500 unfilled posts at month's end. According to a brand new report by the central bank NBP, Poland's labor market is likely to see a more pro-nounced recovery in mid-2014, with the manufactur-ing sector expected to be the main source of employ-ment increase in the coming quarters. Labor demand in Poland has been on the rise since Q2 2013 and the trend is also visible in Q4 data, NBP analysts also said. "That growth most probably means a slow reversal of the hitherto negative tendency observed from the be-ginning of 2011 to Q1 2013," the report said.

DATA BOX: C/A DEFICIT

• Poland's current account deficit in Q3 2013 narrowed

from the same period last year, data released by the

National Bank of Poland showed on January 2nd, 2014.

The current account deficit shrunk to EUR 2.072bn

from EUR 3.606bn in the corresponding period of

2012. Economists had forecast a shortfall of EUR

2.306bn. In Q2, there was a surplus of EUR 486m.

• The merchandise trade showed a surplus of EUR

1.017bn versus a deficit of EUR 419m a year ago. The

surplus in the services trade came in at EUR 1.047bn,

which was slightly smaller than prior year's EUR

1.084bn.

• The income account showed a shortfall of EUR

4.644bn compared to EUR 5.027bn in 2012. Current

transfers revealed a surplus of EUR 508m versus EUR

756m in the same period a year ago.

Source: Central Bank NBP

weekly newsletter # 017 / 7 January 2014 / page 15

KEY STATISTICS

Consumer PriceConsumer PriceConsumer PriceConsumer Pricessss

Data in (%) Aug '13 Sep '13 Oct '13 Nov '13

Sector y/y m/m y/y m/m y/y m/m y/y m/m

Food & bev 2.5 -1.2 +2.6 0.0 +1.9 -0.1 +1.9 +0.3

Alcohol, tobacco +3.6 +0.2 +3.7 +0.2 +3.6 +0.1 +3.6 +0.1

Clothing, shoes -4.8 -2.7 -4.7 +0.7 -4.8 +3.5 -4.9 -0.2

Housing +2.0 +0.1 +1.8 +0.1 +1.8 +0.2 +1.8 +0.1

Transport -1.4 +0.5 -1.4 +0.8 -2.3 -1.0 -2.3 -1.2

Communications -9.7 0.0 -9.7 0.0 -7.2 +2.8 -11.7 -4.9

Gross CPI +1.1 -0.3 +1.0 +0.1 +0.8 +0.2 +0.6 -0.2

IIIInflationnflationnflationnflation

-1%

0%

1%

2%

3%

4%

5%

Nov 11

Jan 12

Mar 12

May 12

Jul 12

Sep 12

Nov 12

Jan 13

Mar 13

May 13

Jul 13

Sep 13

Nov 13

y/y m/m

Retail Retail Retail Retail TurnoverTurnoverTurnoverTurnover

Month Jul '13 Aug '13 Sep '13 Oct '13 Nov '13

m/m (%) +3.8 -0.7 -0.9 +3.6 -5.8

y/y (%) +4.3 +3.4 +3.9 +3.2 +3.8

Year 2008 2009 2010 2011 2012

Turnover in PLNbn 564.7 582.8 593.0 646.1 676.0

y/y (%) +13.3 +4.3 +5.5 +11.6 +5.6

Residential ConstructionResidential ConstructionResidential ConstructionResidential Construction

Dwellings

(in '000 units)

2008 2009 2010 2011 2012 Jan-Nov

2013

y/y

(%)

Permits 230.1 178.8 174.9 184.1 165.1 126.3 -17.6

Commenced 174.7 142.9 158.1 162.2 141.8 121.0 -11.2

U. construction 687.4 670.3 692.7 723.0 713.1 706.7 -3.3

Completed 165.2 160.0 135.7 131.7 152.5 129.6 -4.6

Source: Central Statistical Office (GUS)

GGGGross Domestic Productross Domestic Productross Domestic Productross Domestic Product

Period Growth y/y unadjusted

GDP in PLN bn current prices

Current account def. in % of GDP

Q3 2013 +1.9% 404,310 -2.0%

Q2 2013 +0.8% 395,657 -2.3%

Q1 2013 +0.5% 377,815 -3.1%

Q4 2012 +0.7% 442,231 -3.5%

2012 +1.9% 1,522,736 -3.5%

2011 +4.5% 1,462,734 -4.9%

2010 +3.9% 1,416,585 -5.1%

2009 +1.6% 1,344,384 -3.9%

Key Economic Data & ProjectionsKey Economic Data & ProjectionsKey Economic Data & ProjectionsKey Economic Data & Projections

Indicator *2010 *2011 *2012 2013 2014

GDP change +3.9% +4.5% +1.9% +1.5% +3.1%

Consumer inflation +2.6% +4.3% +3.7% +0.9% +1.5%

Producer inflation +2.1% +7.6% +3.4% -1.2% +0.7%

CA balance, % of GDP -5.1% -5.0% -3.7% -1.4% -0.3%

Nominal gross wage +3.9% +5.2% +3.7% +3.2% +4.4%

Unemployment** 12.4% 12.5% 13.4% 13.5% 12.7%

EUR/PLN 3.99 4.12 4.19 4.20 4.06

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

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

Sector Q4 2012 Q1 2013 Q2 2013 Q3 2013

A B A B A B A B

Coal mining 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 6,021 183

Construction 3,829 163 3,556 152 3,693 157 3,766 160

Retail & repairs 3,365 143 3,432 146 3,421 146 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 3,613 144 3,652 145

Source: Central Statistical Office (GUS)

Construction OutputConstruction OutputConstruction OutputConstruction Output

Month May '13 Jun '13 Jul '13 Aug '13 Sep '13 Oct '13 Nov '13

m/m (%) +16.1 +19.1 +7.8 -0.8 +9.4 +14.3 -2.9

y/y (%) -27.5 -18.3 -5.2 -11.1 -4.8 -3.2 -8.9

Year 2006 2007 2008 2009 2010 2011 2012

y/y (%) +18.1 +15.5 +12.1 +5.1 +4.6 +11.8 -0.6

Source: The Central Statistical Office of Poland, GUS

Sentiment IndicatorsSentiment IndicatorsSentiment IndicatorsSentiment Indicators

Economic sentiment and consumer confidence indicators

-40

-20

0

20

Feb 11

May 11

Aug 11

Nov 11

Feb 12

May 12

Aug 12

Nov 12

Feb 13

May 13

Aug 13

Nov 13

60

80

100

120 Co nsumer confidence (left axis)

Economic sentiment (right axis)

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

Producer PriceProducer PriceProducer PriceProducer Pricessss

Month May'13 Jun '13 Jul'13 Aug'13 Sep'13 Oct'13 Nov'13

m/m (%) +0.1 +0.7 +0.2 -0.3 +0.1 -0.7 -0.3

y/y (%) -2.5 -1.3 -0.8 -1.1 -1.4 -1.4 -1.5

Year 2006 2007 2008 2009 2010 2011 2012

y/y (%) +2.0 +2.0 +2.2 +3.4 +2.1 +7.6 +3.3

Construction PriceConstruction PriceConstruction PriceConstruction Pricessss

Month May'13 Jun '13 Jul'13 Aug'13 Sep'13 Oct'13 Nov'13

m/m (%) -0.2 -0.1 -0.1 -0.2 -0.1 -0.1 -0.2

y/y (%) -2.0 -2.0 -1.9 -1.9 -1.8 -1.8 -1.8

Year 2006 2007 2008 2009 2010 2011 2012

y/y (%) +3.2 +7.4 +4.8 +0.2 -0.1 +1.0 +0.2

Industrial OutIndustrial OutIndustrial OutIndustrial Outputputputput

Month May '13 Jun '13 Jul '13 Aug '13 Sep '13 Oct '13 Nov '13

m/m (%) -0.7 +2.6 +1.5 -4.5 +9.6 +6.0 -6.2

y/y (%) -1.8 +2.8 +6.3 +2.2 +6.2 +4.4 +2.9

Year 2006 2007 2008 2009 2010 2011 2012

y/y (%) +11.6 +10.7 +3.6 -3.5 +9.8 +7.7 +1.0


TTTTraderaderaderade

Poland exports and imports according to commodity groups, according to SITC classification

EXPORTS in PLN bn IMPORTS in PLN bn

Jan-Oct 2013

y/y (%)

share (%)

2012 share (%)

Jan-Oct 2013

y/y (%)

share (%)

2012 share (%)

Food and live animals 56,746 +9.4 10.7 61,694 10.3 38,800 +4.3 7.2 44,287 6.9

Beverages and tobacco 7,170 +6.0 1.4 7,967 1.3 3,338 +1.0 0.6 3,989 0.6

Crude materials except fuels 13,343 +10.5 2.5 14,024 2.4 18,009 -6.4 3.4 22,053 3.5

Fuels etc 24,776 +0.6 4.7 29,389 4.9 63,364 -10.0 11.8 85,280 13.4

Animal and vegetable oils 1,484 +36.0 0.3 1,342 0.2 2,213 -9.0 0.4 2,887 0.5

Chemical products 49,367 +6.8 9.3 54,295 9.1 78,196 +2.5 14.6 89,140 14.0

Manufactured goods by material 109,878 +1.3 20.6 126,161 21.1 94,121 -2.1 17.5 110,773 17.4

Machinery, transport equip. 200,458 +5.4 37.6 223,646 37.5 177,909 +3.1 33.1 203,718 31.9

Other manufactured articles 68,214 +5.9 12.8 75,925 12.7 48,271 -3.4 9.0 57,646 9.0

Not classified 1,380 n/a 0.1 2,653 0.5 13,347 n/a 2.4 18,515 2.8

TOTAL 532,816 +4.9 100 597,096 100 537,568 -0.9 100 638,288 100

Poland's ten largest trading partners, ranked according to 2012

EXPORTS in PLNbn IMPORTS in PLN bn

No Country Jan- Oct 2013

share *2012 Share No Country Jan- Oct 2013

share *2012 Share

1 Germany 133,127 25.0% 150,046 25.1% 1 Germany 115,531 21.5% 134,933 21.1%

2 UK 34,789 6.5% 40,184 6.7% 2 Russia 66,670 12.4% 91,033 14.3%

3 Czech Rep. 32,706 6.1% 37,475 6.3% 3 China 50,619 9.4% 57,235 9.0%

4 France 30,127 5.7% 34,862 5.8% 4 Italy 27,799 5.2% 32,782 5.1%

5 Russia 28,841 5.4% 32,290 5.4% 5 France 20,573 3.8% 25,303 4.0%

6 Italy 22,997 4.3% 29,067 4.9% 6 Netherlands 20,271 3.8% 24,543 3.8%

7 Netherlands 20,950 3.9% 26,678 4.5% 7 Czech Rep. 19,660 3.7% 23,327 3.7%

8 Ukraine 15,017 2.8% 17,213 2.9% 8 USA 14,579 2.7% 16,436 2.6%

9 Sweden 14,666 2.7% 15,811 2.6% 9 UK 14,208 2.6% 15,509 2.4%

10 Slovakia 13,939 2.6% 15,288 2.6% 10 South Korea n/a n/a 14,619 2.3%

Source: Central Statistical Office (GUS) *) preliminary estimates, full year

CurrencyCurrencyCurrencyCurrency

Central Bank average rates

as of 3 January 2014

100 USD 305.17 ↓

100 EUR 416.45 ↓

100 GBP 502.14 ↑

100 CHF 338.84 ↓

100 DKK 55.84 →

100 SEK 46.86 ↑

100 NOK 49.62 ↑

10,000 JPY 292.53 ↑

100 CZK 15.14 ↑

10,000 HUF 139.51 ↓

100 USD/EUR against PLN

300

350

400

450

18 Jan 13

27 M

ar 13

7 Jun 13

14 A

ug 13

22 O

ct 13

3 Jan 14

USD EUR

MMMMoney Supplyoney Supplyoney Supplyoney Supply

in PLN m Aug '13 Sep '13 Oct '13 Nov '13

Monetary base 153,867 166,620 154,967 153,672

M1 531,124 540,873 536,237 538,837

- Currency outside banks 114,083 113,223 113,174 113,718

M2 928,359 931,042 935,095 934,713

- Time deposits 412,407 405,703 414,941 412,469

M3 949,988 947,228 955,419 953,446

- Net foreign assets 154,035 147,978 150,517 148,702 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

CCCCreditreditreditredit

The financial sector's net lending in PLN bn,

loan stock at the end of period

Type of loan Jul '13 Aug '13 Sep '13 Nov '13

Loans to customers 901,863 908,106 901,288 906,298

- to private companies 263,491 262,963 559,965 262,396

- to households 556,027 560,608 260,585 563,157

Total assets of banks 1,627,182 1,626,489 1,612,836 1,627,119

Source: Central Bank NBP

IIIInterest ratesnterest ratesnterest ratesnterest rates

Average weighted annual interest rates

on loans to non-financial corporations

Term / currency Jun '13 Jul '13 Aug '13 Sep '13 Oct '13 Nov '13

PLN (up to 1 year) 5.0% 4.7% 4.6% 4.5% 4.5% 4.5%

PLN (up to 5 y ) 5.4% 5.1% 5.1% 4.9% 4.9% 4.9%

PLN (over 5 y) 5.3% 4.9% 4.9% 4.8% 4.8% 4.8%

PLN (total) 5.3% 5.0% 4.9% 4.8% 4.8% 4.8%

EUR (up to 1m EUR) 1.9% 2.3% 1.9% 1.8% 2.0% 1.9%

EUR (over 1m EUR) 2.9% 3.5% 3.5% 3.2% 2.5% 3.0%

Warsaw Inter Bank Offered Rate (WIBOR) as of 3 Jan 2014

Overnight 1 week 1 month 3 months 6 months

2.58%% 2.58% 2.61% 2.70% 2.72%

Central Bank (NBP) Base Rates

Reference Lombard NBP deposit Rediscount

2.50% 4.00% 1.00% 2.75%

Stock ExchangeStock ExchangeStock ExchangeStock Exchange

Warsaw Stock Exchange, rates in PLN

WIG-20 stocks in alphabetical

order

Price 3 Jan '14

Change 20 Dec

'13

Change end of '12

↑ Asseco Pol. 47.95 +6 +6

↑ Bogdanka 128.35 +1 -6

↑ BZ WBK 382.1 +1 +58

↑ Eurocash 49 +6 +12

↑ Grupa Lotos 36.1 +2 -12

↓ GTC 7.4 -2 -25

↑ Handlowy 103 +1 +5

→ JSW 54.05 0 -42

↑ Kernel 41.2 +8 -38

↑ KGHM 118.2 +4 -38

↓ mBank 490 -1 +50

→ Pekao 178.25 0 +6

↓ PGE 16.16 -6 -11

↓ PGNiG 5.17 -2 -1

↑ PKN Orlen 42.52 +5 -14

↓ PKO BP 38.94 -3 +6

→ PZU 449.5 -1 +3

↑ Synthos 5.69 +4 +5

↓ Tauron 4.36 -5 -8

↑ TP SA 9.83 +1 -20

Source: Warsaw Stock Exchange

Key indices

as of 3 January 2014

WIG Total index

55551111,,,,444497979797....81818181 Change 1 week +1% ↑

Change end of '12 +9% ↑

WIG-20 blue chip index

2,2,2,2,444400005555....22222222 Change 1 week 0% →

Change end of '12 -7% ↓

WIG Total closing index

last three months

50000

51000

52000

53000

54000

55000

56000

26 Sep 13

18 O

ct 13

13 N

ov 13

5 D

ec 13

3 Jan 14


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New Business Consultant

Tomasz Andryszczyk

RRRRegional Dataegional Dataegional Dataegional Data

Poland's regions

(main cities indicated

in brackets)

Industrial output

Jan-Nov 2013 *

Monthly wages (PLN)

Jan-Nov 2013 **

Unemploy-ment

Nov 2013

New dwellings Jan-Nov 2013

Indus-

try

Constru-

ction

Indus-

try

Constru-

ction

in '000 % Num-

ber

Index *

Dolnośląskie (Wrocław) 99.9 94.7 4,237 4,031 150.9 13.0 15,174 113.2

Kujawsko-Pomorskie (Bydgoszcz) 102.4 105.9 3,337 3,297 146.7 17.8 5,808 105.1

Lubelskie (Lublin) 102.6 96.3 3,673 3,031 129.9 14.0 5,636 89.7

Lubuskie (Zielona Góra) 96.6 91.0 3,373 2,983 58.2 15.3 3,026 104.7

Łódzkie (Łódź) 104.1 90.8 3,667 3,061 149.8 13.9 5,644 79.0

Małopolskie (Kraków) 97.2 90.8 3,749 3,361 161.5 11.4 13,544 101.9

Mazowieckie (Warszawa) 106.8 78.6 4,466 4,785 280.9 11.0 25,962 93.1

Opolskie (Opole) 97.9 94.9 3,487 3,199 50.5 14.0 1,558 101.2

Podkarpackie (Rzeszów) 108.7 97.4 3,257 3,088 149.7 16.0 5,329 95.8

Podlaskie (Białystok) 105.8 97.0 3,179 3,767 69.5 14.9 3,592 87.8

Pomorskie (Gdańsk-Gdynia) 102.8 94.7 3,875 3,494 112.0 13.1 11,037 90.0

Śląskie (Katowice) 97.7 90.7 4,516 3,552 206.7 11.1 9,540 108.2

Świętokrzyskie (Kielce) 101.5 88.5 3,378 3,191 87.9 16.1 2,385 87.1

Warmińsko-Mazurskie (Olsztyn) 98.8 84.0 3,171 3,074 112.2 21.1 4,020 86.3

Wielkopolskie (Poznań) 104.8 91.1 3,669 3,624 142.5 9.5 12,345 93.7

Zachodniopomorskie (Szczecin) 112.1 86.7 3,417 3,274 107.1 17.4 4,988 76.4

National average 101.8 88.0 3,906 3,707 2,116.0 13.2 129,588 113.2

Index 100 = same period of the previous year. ** without social taxes

Sources: Central Statistical Office GUS, NBP, C&W

Foreign Direct Investment (EUR m)Foreign Direct Investment (EUR m)Foreign Direct Investment (EUR m)Foreign Direct Investment (EUR m)

Quarter Q2 '12 Q3 '12 Q4 '12 Q1 '13 Q2 '13 Q3 '13

in Poland 1,861 1,381 2,886 175 -3,020 -1,794

Polish DI 310 -550 -1,203 957 2,588 -1,529

Year 2007 2008 2009 2010 2011 2012

in Poland 17,242 10,128 9,343 10,507 14,832 4,716

Polish DI -4,020 -3,072 -3,335 5,484 -5,276 375

Current Account (EUR m)Current Account (EUR m)Current Account (EUR m)Current Account (EUR m)

Period 2010 2011 2012 Q1 '13 Q2 '13 Q3 '13

Trade balance -8,893 -10,059 -5,313 -139 1,203 1,017

Services, net 2,334 4,048 4,816 1,274 1,686 1,047

CA balance -18,129 -17,977 -13,332 -2,313 486 -2,027

CA balance vs GDP -5.1% -5.0% -3.7% -3.1% -2.3% -2.0%

Source: NBP, BZ WBK

UUUUnemploymentnemploymentnemploymentnemployment

Registered unemployed, in ‘000 and

% of population in working age

1800

2000

2200

2400

2600

Q3 10

Q1 11

Q3 11

Q1 12

Q3 12

Q1 13

Q3 13

6

9

12

15 number (left axis) % (right axis)

Source: Central Statistical Office GUS

IndustrIndustrIndustrIndustrial ial ial ial PropertiesPropertiesPropertiesProperties

by region, 1H 2013

Existing stock, sq.m

Under const ruction, sq.m

Va-cancy ratio

Effective rents EUR/ sq.m/mth

Warsaw central 2,728,000 41,000 15.9%

3.5–5.0

Warsaw suburbs 1.9–3.2

Central Poland 1,021,000 8,000 16.5% 1.9–3.1

Poznań 1,041,000 50,000 3.6% 2.3–2.9

Upper Silesia 1,478,000 33,000 5.8% 2.5–3.1

Wrocław 795,000 84,000 5.5% 2.4–3.0

Gdańsk 192,000 n/a 9.6% 3.2–4.0

Kraków 149,000 n/a 7.6% 4.0-4.1

CommercialCommercialCommercialCommercial PropertiesPropertiesPropertiesProperties

City

New apartments* Offices 1H'13 Retail rents**1H'13

Q2 '13

PLN/sq.m

Change

y/y

Rents** Vacancy Retail

centres

High

streets

Warsaw 8,081 -0.5% 11.5-25.5 10.5% 85 85

Kraków 6,026 -15.0% 13-15 2.71% 41 78

Katowice 5,817 +8.7% 13-14 8.29% 48 56

Poznań 6,341 -8.0% 14-16 14.66% 44 55

Łódź 4,811 -2.8% 12-14 14.97% 31 26

Wrocław 5,970 -7.7% 13-16 12.37% 38 41

Gdańsk 6,403 +0.7% 13-15 11.24% 39 31

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

Country Credit RatingsCountry Credit RatingsCountry Credit RatingsCountry Credit Ratings

Agency rating outlook

Fitch Ratings A- stable

Standard & Poor's A- stable

Moody's A2 stable

Source: Rating agencies

Real EarningsReal EarningsReal EarningsReal Earnings

Average gross wage vs inflation.

100

120

140

160

180

Nov09

Jul10

Mar11

Nov11

Jul12

Mar13

Nov13

Wage CPI

Index 100 = Jan 2005. Source: GUS

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