poland today business review+ no. 040

No. 040 / 23rd June 2014 / www.poland-today.pl / magazine, conferences, portal, newsletter

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MANUFACTURING & PROCESSING

Nexteer Automotive to invest EUR 80m in new electric pow-er steering systems plant in Tychy page 2

PE fund Abris to float alumi-num recycler Alumetal in War-saw page 2

Azoty not for the Russians, government says page 3

Thai Indorama's Włocławek PET plant to boost sales on the Polish market page 4

ENERGY & RESOURCES State fund PIR teams up with EnerCap to invest in Polish heat & power plants page 4 EDF begins EUR 350m over-haul of Rybnik page 5 Dalkia's heat & power project in Warsaw gaining shape page 6

PROPERTY & CONSTRUCTION

Von der Heyden Group getting ready for next installment of flagship Poznań project page 7

HOSPITALITY

Poland with room for new hotel developments page 8

TRANSPORT & LOGISTICS

PKP sells PLN 580m stake in rail freight giant PKP Cargo page 10 Amazon to hire up to 2,000 staff at Polish centers by year-end page 11

Major rail engineering firm Torpol heading for Warsaw bourse page 12

CONSUMER GOODS & RETAIL

Top retailer Biedronka to start accepting card payments at its 2,400+ stores page 12

POLITICS & ECONOMY

Industrial output data below expectations page 14

KEY FIGURES

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

Prime Minister Tusk may be facing the toughest test of his career. Photo: M. Śmiarowski/ KPRM

Snap election looming as scandal unfoldsSnap election looming as scandal unfoldsSnap election looming as scandal unfoldsSnap election looming as scandal unfolds As the eavesdropping scandal involving the country's top offi-cials continues to take its toll, causing the government more em-barrassment each day, Poland's president and prime minister admitted last week that an early election was a possibility. page 13

US firm to recruit thousands of IT staffUS firm to recruit thousands of IT staffUS firm to recruit thousands of IT staffUS firm to recruit thousands of IT staff US software services company EPAM Systems seeks to employ up to 3,000 IT professionals in several Polish cities over the coming years, EPAM representatives tell Poland Today. page 9

weekly newsletter # 040 / 23rd June 2014 / page 2


Nexteer Automotive to Nexteer Automotive to Nexteer Automotive to Nexteer Automotive to invest EUR 80m in new invest EUR 80m in new invest EUR 80m in new invest EUR 80m in new electric power steering electric power steering electric power steering electric power steering systems plant in Tychysystems plant in Tychysystems plant in Tychysystems plant in Tychy

Nexteer Automotive will invest almost PLN 335m (EUR 81.25m) by the year 2020 in the southern Polish town of Tychy, where it will build a plant producing Electric Power Steering systems (EPS). The construc-tion of the factory, which will be located next to an ex-isting Nexteer plant that has been in operation since 1997, is to start this year and reach completion at the turn of 2015 and 2016. "The decision to locate the new investment in Poland was primarily due to excellent quality of products manufactured in our Polish factories, as well as favor-able economic conditions offered by the Katowice Special Economic Zone," said Rafał Wyszomirski, V-ce President Global Operation and CEO Poland at Nexteer Automotive. "This will be an entirely new plant that will operate alongside the existing units in Tychy and Gliwice," Piotr Dembiński, Communication Manager Europe at Nexteer Automotive tells Poland Today. "We cannot communicate any figures on the expected production volume or employment at the moment as a lot will de-pend on the contracts we get from our clients." The investment is part of Nexteer's global EPS prod-uct offensive that focuses mainly on Single Pinion EPS and Column EPS systems used primarily in compact passenger cars from BMW, Citroen, Fiat, Peugeot or Opel. Once regarded as a niche product for small

cars, EPS has become the technology of choice for fuel-efficient vehicles as manufacturers strive to re-duce their CO2 emissions, due to its lower energy con-sumption than traditional hydraulic systems. Over the past half a decade Nexteer invested approxi-mately PLN 360m in its two Polish plants, which cur-rently turn out nearly 1.5 million EPS units per annum, approximately a half of Nexteer's global output. Its past investments have been related to a number of product launches and a rapid shift from hydraulic to electric power steering systems in the European mar-ketplace.

Rafał Wyszomirski, head of Nexteer's Polish busi-ness, was named V-ce President Global Opera-tions in September 2013. He is responsible for global manufacturing, common processes, op-erational metrics, lean manufacturing, health and safety, facilities en-gineering and manufac-turing planning. Image: Nexteer Automotive

Little more than a decade ago EPS represented 4% of Nexteer's sales, but in 2010 the figure was nearly 30% and by 2015 the company was expecting it to pass the 50% mark. According to Nexteer's estimates by 2020 one in two new vehicles will be equipped in the EPS technology, which continues to win market share from hydraulic systems. Nexteer currently has two manufacturing units in Po-land, in Tychy in Gliwice, employing a combined 1,150 staff. The Polish Nexteer plants used to be part of US

Delphi Automotive, which sold the business to General Motors in 2009. It was GM that created the Nexteer brand before selling the former Delphi power steering operations to China's Pacific Century Mo-tors a few years ago. Poland is the only country where Nexteer makes EPS systems for the first all-electric BMW model i3. The Hong-Kong listed Nexteer Automotive is is a mul-ti-billion dollar global steering and driveline business solely dedicated to electric and hydraulic steering sys-tems, steering columns and driveline products for original equipment manufacturers. The company has 20 manufacturing plants, five regional engineering centers and 10 customer service centers strategically located in North and South America, Europe and Asia, employing a total of more than 10,000 people. Nexteer Automotive’s customers include BMW, Fiat Chrysler, Ford, GM, Toyota, and PSA Peugeot Citroen, as well as automakers in India, China, and South America.


PE fund Abris to float PE fund Abris to float PE fund Abris to float PE fund Abris to float aluminum recycler aluminum recycler aluminum recycler aluminum recycler Alumetal in WarsawAlumetal in WarsawAlumetal in WarsawAlumetal in Warsaw

Poland-based private equity fund Abris has launched an initial public offering (IPO) of the aluminum parts maker Alumetal on the Warsaw bourse, planning to float a 31% stake in the business, the company said. Abris may additionally offer up to 25.01% of the com-pany, thus fully exiting Alumetal, which is to make its stock market debut at the end of Q2 or beginning of Q3 2014. According to sources cited by Reuters, the offer may be worth between PLN 200m and 500m. UniCredit is the offer's lead manager, aided by bro-kerages at PKO BP and Banco Espirito Santo.


With an annual capacity of 165,000 tons, Alumetal, produces components mostly for the automobile in-dustry. The Alumetal group is the largest manufactur-er of secondary aluminum casting alloys and master al-loys in Poland and CEE, and the fourth largest alumi-num recycler in Europe with a 5% market share in 2013. The group has three manufacturing plants, lo-cated in Nowa Sól, Kęty and Gorzyce. The company sells close to a half of its production abroad, with its clients including Germany's Volkswagen. In 2012 Alumetal's production neared 100,000 tons. In 2013 Alumetal's revenue rose by about 20% y/y to PLN 1.02bn, while earnings before interest tax, depre-ciation and amortization (EBITDA) and net profit both rose slightly, to PLN 54m and PLN 36m, respec-tively. In Q1 2014, sales increased by more than a quar-ter to PLN 311.4m, EBITDA more than doubled to PLN 23m and net profit nearly tripled and totaled PLN 17m, reflecting improving sentiment in the European auto-motive market. Alumetal doubled output at its newest refinery, Nowa Sól, last year, after starting a second aluminum alloy production line, which boosted the plant's annual pro-duction capacity to 66,000 metric tons from its previ-ous capacity was 33,000 mt. Nowa Sol started operat-ing in July 2011 and investment in it has totaled about EUR 35m, including EUR 8m for the second line.


Azoty not for tAzoty not for tAzoty not for tAzoty not for the he he he Russians, gov't saysRussians, gov't saysRussians, gov't saysRussians, gov't says

The Polish government has reaffirmed the "strategic asset" status of the chemicals conglomerate Grupa Azoty, after the latter announced that its minority

shareholder, Russian fertilizer firm Acron, had in-creased its holdings in the group above the 20% mark. The Treasury Ministry published a statement saying it has no intention of reducing its stake in Azoty, which it considers a strategic asset. "Grupa Azoty is well protected against a potential hos-tile takeover, as guaranteed by the current shareholder structure as well as defense mechanisms included in the articles of association," CEO Paweł Jarczewski added. Acron, indirectly held by Russian oligarch Vyatcheslav Kantor, began to increase its ownership in Grupa Azoty's legal predecessor ZA Tarnow following a 2012 PLN 1.87bn tender offer for a 66% stake. Following the bid, in which Acron bought just over 12%, Acron has been gradually increasing the stake in the firm.

Grupa Azoty key figures

0 .0

2.0

4.0

6.0

8.0

10 .0

201 0 201 1 2012 20 13

200

300

4 00

500

6 00

700

Turno ver, in PLNb n, lef t axis

Net result in PLNm, right axis

Source: Grupa Azoty

Facing an increasingly realistic prospect of some of Poland's key industrial assets falling into Russian hands, the government used its decisive say in Azoty Tarnów and another major nitrate producer ZA Puławy to merge the two businesses, creating the

number two fertilizer producer in Europe. Following the merger, in March 2013, Poland capped voting rights at what is now Grupa Azoty to 20% for all shareholders other than the State Treasury as well as gave the firm's CEO a tie-breaking vote on the man-agement board. Now that the Russians have accumulated more than 20% of shares in the Polish group, both Azoty and the State Treasury suspect that Acron may try to install their representative on the supervisory board of Grupa Azoty. According to observers, the Polish government may find ways to keep them out, however. Grupa Azoty has an estimated 80% share in Poland's fertilizer market and being well aware of the way Kremlin likes to blend politics and economy, Polish decision makers have been against Acron's takeover plans from the start. The group's product range en-compasses inorganic fertilizers (nitrogenous & multi-component), caprolactam, structural materials and other highly processed chemicals, such as OXO, plasti-cizers, titanium white, melamine & AdBlue. The group is also the largest supplier of ammonia and phosphoric acid in Poland. Grupa Azoty is ranked fifth among Eu-ropean producers of polyamides and is the only pro-ducer of polyacetal (POM), OXO and titanium white in the country. The group has its own research facilities. Last year Grupa Azoty turned over PLN 9.8bn (up from PLN 7.1m in 2012) and more than doubled its net earnings that reached PLN 714n against PLN 315m in the prior year. Although so far the government has managed to keep Acron at bay, Azoty remains depend-ent on the Russians to a significant degree due to gas, which, which prior to their merger represented some 30% of raw material costs for Tarnów and as much and 60% for Puławy – the group's two key industrial assets. The company has been actively seeking alterna-tive sources of this key raw material in recent months, resulting in a number of deals with other suppliers.



Thai Indorama's Thai Indorama's Thai Indorama's Thai Indorama's Włocławek PET plant Włocławek PET plant Włocławek PET plant Włocławek PET plant to boost to boost to boost to boost sales on the sales on the sales on the sales on the Polish marketPolish marketPolish marketPolish market

Following a PLN 100m upgrade of its Polish factory in Włocławek, 140km northwest of Warsaw, Thailand-based polyethylene terephthalate (PET) producer In-dorama Ventures is counting on a substantial sales growth in Poland. PET is a form of polyester that is ex-truded or molded into plastic bottles and containers for packaging foods and beverages, and many other consumer products. "In 2013 we managed to sell around 70,000 tons of our product in Poland. In 2014 domestic sales will increase to around 85,000 tons and in 2015 to almost 100,000 tons," says Om Prakash Mishra, who heads the Polish unit Indorama Ventures Poland. "Typically half of the sales volume is sold directly to the Polish market, be-ing the only indigenous producer. We expect to achieve this sales growth with the increased produc-tion from historically approximately 70,000 tons to 100,000 tons domestic sales." "Business in Poland has been very healthy and has en-couraged our expansion. There is a 6% p.a. growth in consumption resulting from applications like PET trays and bottles for fruit juices. At the same time, prices do not differ much from those in other Europe-an countries. We have been able to build long term business relations with customers in Poland giving us good visibility and assurance for excellent future busi-ness," Mr. Mishra tells Poland Today.

Indorama employs more than 9,000 people at 42 loca-tions throughout the world. In 2013 its turnover to-taled USD 7.5bn. The company acquired the IVL Wloclawek PET facility from South Korean SK Chem-icals in March 2011. Following a recent upgrade, it has an installed capacity of 157,000 tons per annum. The main raw material for the facility, purified terephthalic acid (PTA), is being sourced from PKN Orlen's new Włocławek PTA plant, which was official-ly opened in 2011. Currently Indorama has 83 employ-ees on payroll in Poland. Thanks to a PLN 100m in-vestment program Indorama implemented over the past few years, the company has recently obtained permission to operate under the Pomeranian special economic zone. The program is to reach completion in December 2014 creating a total of 30 new jobs and in-troducing a number of innovative technologies.

Indorama's Włocławek plant can produce up to 157,000 tons of PET per annum. Image: Indorama As part of its investments in Włocławek, Indorama has debottlenecked continuous polymerization, which makes the basic chip, as well as solid state polymeriza-tion, which refines it to transparent bottle grade. Oth-er improvements included installation of an absorp-tion chiller to utilize excess steam and change of elec-tricity vendor to reduce costs. The company also add-

ed a reheat product to their portfolio in addition to the normal grade produced before acquisition, thus ex-panding their customer access, and obtained ISO-9001, ISO_14001, and OHSAS 18001 & 22000 quality certification. A few years ago the company was reportedly mulling a 220,000 ton/year expansion project in Włoclawek. The investment, the cost of which remains undis-closed, would raise the site's PET production capacity in excess of 360,000 tons/year. Asked about further investments in Poland, Mr. Mishra replies: "Poland is our prime market in Europe and upon com-pletion of the current project we would think of future investments aligning our European and global market need and position."

ENERGY & RESOURCES

State fund PIR teams State fund PIR teams State fund PIR teams State fund PIR teams up with EnerCap to up with EnerCap to up with EnerCap to up with EnerCap to invest in Polish heat & invest in Polish heat & invest in Polish heat & invest in Polish heat & power plantspower plantspower plantspower plants

Czech-based private equity company EnerCap Capi-tal Partners has gained a powerful ally in the shape of the state-controlled Polish investment vehicle Polskie Inwestycje Rozwojowe (PIR). Together, the two partners are to finance development of high efficiency cogeneration projects in Poland and the CEE region. "We are opening Poland's infrastructure market to foreign investors. It's a true milestone, as in practical terms it means that international pension funds, insur-ers and sovereign wealth funds will be able to get in-


volved in the process of creating a modern energy sec-tor in Poland," said PIR's CEO Mariusz Grendowicz. PIR has agreed to inject some EUR 30-40m into EnerCap's latest fund E3F that will focus on develop-ment of heat & power sources in Central and Eastern Europe. EnerCap intends to raise approximately EUR 100m from global investors for the fund in Q3 2014 and boost the figure to EUR 350m by the end of 2015. According to the two partners, more than a half of the fund's total resources are to be invested in Poland. "Our typical equity investments will be EUR 20-50m, with limited debt, typically less than 50%," Jim Cam-pion, partner at EnerCap tells Poland Today. "Our fo-cus is on gas or biomass-fired projects. We can be the sole investor or co-invest with others in majority or minority position, on a deal by deal basis. We will also invest in aggregators of smaller distributed generation projects providing we can meet our ticket size and the business is predominantly generation asset based. The power generation capacity range is therefore large, from 15MWe+ for biomass up to multi 100 MWe for co-investment deals." Established in 2007, EnerCap manages an extensive portfolio of investments in Poland, Romania, Slovakia, Croatia and the Czech Republic. Its first fund EnerCap Power Fund I, focusing on new renewable energy pro-jects in Central and Southern Europe, has EUR 425m (367 MW) of project assets under management, both completed and under construction. E3F was set up last year as EnerCap's second fund. "We have been engaged in a series of projects and de-veloper relationships in Poland over the last few years, related to the activities of our first fund EPF1. These projects are consistent with our fund invest-ment objectives. Based on a first close in Q3/Q4 this year we would anticipate the first investment in Q1/Q2 next year," says Jim Campion. "There are a few active

independent developers in Poland, with good capabil-ity. However a number of developments have been slowed related to the changes and uncertainty in long term support mechanisms for efficient CHP." Since approximately two thirds of Poland's power sta-tions were commissioned more than three decades ago, and 90% rely on coal, the sector is facing a mas-sive overhaul in order to avoid blackouts and meet Eu-ropean emissions quotas. According to PIR, high effi-ciency cogeneration will play an important role in the modernization of Poland's power sector, particularly in the context of the expected diversification of gas suppliers and increased domestic production.

Energy generation in Poland in 2012 By source, actual data

Other

2%

Gas

4%

Coal

84%

RES*

11%

Source: Economy Ministry *) renewable sources

"EnerCap currently has a small team of energy special-ist based in Poland, working closely with GEO, our EPF1 fund investee company. Some of these people are now also engaging in evaluating CHP projects in the region. We will also be recruiting two or more suitably qualified sector/investment professionals. It is expected the dedicated EnerCap office will be estab-lished in Q1 next year, or sooner," Mr. Campion tells Poland Today.

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 750m into a PLN 1.5bn cogenera-tion project in Silesia, developed by Tauron (see BR+ No. 027) as well as PLN 150m into a public-private heat & power plant project in Olsztyn (see BR+ No. 022 page 4). The fund's other projects included a PLN 120m investment into a PLN 560m fiber optic joint venture with backbone network operator HAWE (see BR+ No. 018 page 12, PLN 563m investment in Lotos Petrobaltic's B8 exploration project in the Baltic Sea (see BR+ No. 007 page 5) and possible participation in a PLN 12bn petrochemical project by Polish refiner Grupa Lotos and chemical company Azoty (see BR+ No. 014 page 2). Led by Mariusz Grendowicz, the for-mer CEO of mBank, PIR mediates in the allocation of low-cost capital for strategic projects that have a hard time raising commercial financing.

ENERGY & RESOURCES

EDF begins EUR 350m EDF begins EUR 350m EDF begins EUR 350m EDF begins EUR 350m overhaul of Rybnikoverhaul of Rybnikoverhaul of Rybnikoverhaul of Rybnik

French utility giant EDF, one of the largest foreign in-vestors in Poland's energy sector, is launching a large-scale investment program at its key asset, the Rybnik power plant in Silesia. Estimated at more than EUR 350m (PLN 1.5bn), the "Nowy Rybnik" initiative is aimed at maintaining the power station's current ca-pacity of approximately 1,800 MW for at least another 15 years through modernization and replacement of existing installations and various environmental im-provements.


Under the "Nowy Rybnik" investment program, EDF will retrofit eight existing power units at Rybnik, ex-tending their life cycles until 2030, improving their operational efficiency and making them compliant with new European requirements on emissions of sul-fur oxides and nitrogen oxides (Industrial Emission Directive which enters into force on January 1, 2016). The investments will be implemented over the 2014-2018 period, providing employment for approximately 600 people, mainly with local subcontractors. Thanks to new desulphurization and denitrification systems, the Rybnik plant will cut emissions of sulfur oxides four times, whereas the amount of nitrogen ox-ides and dust emitted to the atmosphere will be cut by a half. In March 2014 EDF Polska awarded a contract for implementation of desulphurization systems at four of Rybnik's eight power units to Alstom.

Rybnik is one of the largest baseload power plants in Poland, generating approximately 7% of energy gen-erated in the country. Image: EDF Polska Overall, EDF seeks to spend some EUR 800m (PLN 3.3bn) on adapting its Polish power generation assets,

(which besides Rybnik include also plants in Kraków, Wrocław, Gdańsk, and Gdynia) to new environmental standards and modernizing production to ensure long-term energy security in the regions where the group operates. The EDF Group in Poland holds a 10% share in the electricity market, and a 15% share in the district heat-ing market. With 3,300 employees it is the largest for-eign investor in the energy sector in Poland. EDF is the country's largest combined heat and power producer, supplying heat to Kraków, Gdańsk, Gdynia, Wrocław, Zielona Gora and Toruń. EDF operates a coal – fired power plant in Rybnik of a capacity of 1,775 MW. Over the last year EDF has been consolidating its Polish business, which used to be divided into many local subsidiaries, into a single entity. The main source of electricity in Poland is coal (over 90%). For its genera-tion purposes, EDF consumes almost 7m tons per year, which makes it one of the three largest recipient of hard coal in Poland. Europe's leading electricity producer, EDF is involved in supplying energy and services to approximately 28.5m customers in France, where 95% of its electrici-ty production is CO2-free thanks to nuclear and hy-dropower generation facilities.. The group generated consolidated sales of EUR 75.6bn in 2013, of which 46.8% outside of France.

ENERGY & RESOURCES

Dalkia's heat & power Dalkia's heat & power Dalkia's heat & power Dalkia's heat & power project in Warsaw project in Warsaw project in Warsaw project in Warsaw gaining shapegaining shapegaining shapegaining shape

French utility Dalkia seeks to build a brand new gas-fired heat & power station in Warsaw's Ursus district at the cost of PLN 270m. The investor has already ob-tained positive environmental assessment for the pro-ject and hopes to get the construction permit by early 2015. According to Dalkia, the construction will take 15 months. "'We want to build a cogeneration plant in order to se-cure heat supplies to Ursus. The latter currently has some 55,000 inhabitants but according to projections their number will reach 90,000 by 2025," said Jacky Lacombe, who will soon take the CEO post at Dalkia Warszawa, the capital city's district heating company. "Our decision about investing in Ursus has to do with the actual needs of the Warsaw metropolitan area, its businesses and inhabitants. A new source of heat and power in western Warsaw will support growth in this part of the city, which currently remains outside the district heating network. Moreover, after 2016 some of the existing energy generation facilities may have to be decommissioned due to environmental regulations. We may be interested in building further small CHPs throughout Warsaw, but there are no detailed plans as of now," Dalkia Warszawa spokesperson Magdalena Kempiński told Poland Today's Lech Kaczanowski last year. Before becoming part of Warsaw, Ursus used to be a separate town with its own heat producer, Energetyka Ursus, located approx. 1km from the Dalkia site in a


former industrial cluster that the local councilors seek to transform into residential areas. Energetyka Ursus went bankrupt a few weeks ago but the court-appointed receiver has to keep the plant running until the municipality finds an alternative heat supplier.

Keeping thKeeping thKeeping thKeeping the capital warme capital warme capital warme capital warm PGNiG Termika's Warsaw heat & power units: capacity

Facility MWt (heat) MWe (power)

Siekierki 2,081 622

Żerań 1,560 364

Pruszków 186 9

Kawęczyn (seasonal) 512 -

Wola (seasonal) 465 -

Source: PGNiG Termika

Dalkia operates Warsaw's district heating network, distributing energy provided by the state-controlled PGNiG Termika, which acquired the Warsaw cogen-eration business a few years ago from Sweden's Vattenfall. Termika is not particularly happy about Dalkia's attempts to build an independent power source in Ursus, and it has even expressed interest in acquiring the bankrupt Energetyka Ursus, despite the latter's PLN 20m debt, in order to throw a wrench into Dalkia's plans. The French are hoping to reach some kind of an agreement with their supplier shortly. The existing Ursus cogeneration unit has a thermal capacity of 143MW but it can generate a mere 6MW of electricity, whereas the one to be developed by Dalkia will be able to produce 80MW of heat and 107MW of electric power. According to Dalkia, besides obvious environmental advantages of the new plant (it will generate half as much emissions as a coal-fired unit of similar capacity), it will be economically much more feasible. Besides the new heat & power plant, Dalkia will spend some PLN 30m over the coming two years on connecting the Ursus heat distribution network

with that of Warsaw, putting an end to the area's ener-gy isolation.

Dalkia hopes to make money from producing elec-tricity at the new CHP. Image: Dalkia Once a major manufacturing cluster, Ursus is rapidly transforming into a primarily residential area. Many industrial tenants, including the now bankrupt coal-fired heat producer have been unhappy about this trend, which is gradually forcing them out of Ursus, but there seems to be no turning back. The Ursus au-thorities support Dalkia's investment, which would enable the district to part with its industrial past and become a much more attractive destination for resi-dents and services. As for PGNiG Termika, it is also gearing up for a mas-sive overhaul of its cogeneration assets in Warsaw, in-cluding a brand new 450MWe gas-fired unit at the Żerań plant in the north of the city, which is to go online in 2018. Besides the new unit in Żerań, PGNiG Termika seeks to convert one of the existing coal-fired boilers at its Siekierki plant in south of Warsaw into a biomass unit, with commissioning expected in Q4 2014.

PROPERTY & CONSTRUCTION

Von der Heyden Group Von der Heyden Group Von der Heyden Group Von der Heyden Group getting ready for next getting ready for next getting ready for next getting ready for next installment of flagship installment of flagship installment of flagship installment of flagship Poznań projectPoznań projectPoznań projectPoznań project

With its flagship Poznań office development Andersia Business Centre set to be fully leased by the end of June, German-owned developer Von der Heyden Group (VDHG) is shifting focus to its remaining pipe-line projects in Poland: a boutique hotel in Gdańsk and a large-mixed use complex in Poznań. The latest- and largest – tenant at Andersia Business Centre is Poland's leading convenience retailer Żabka Polska, operator of Żabka and Freshmarket chains, which will move into the building in December. Żabka's headquarters will take up 4,500 sq.m of Andersia Business Center's total GLA of 11,000 sq.m. Other major tenants in the complex include Mars Polska, Newell Poland Services, and Probuild. Opened in 2012, Andersia Business Centre is a modern A-class office building located in the very centre of the city, along the main thoroughfare Królowej Jadwigi, and near the city's most famous high street, Półwiejska. The building is an integral part of the emerging complex on Plac Andersa (Anders Square) offering office, retail, hotel services and entertain-ment, which was developed by VDHG in joint venture with the City of Poznań. Besides Andersia Business Centre, it includes Andersia Tower and Poznań Finan-cial Centre, which house a number of renowned ten-ants such as Bank Zachodni WBK, Polkomtel, Franklin Templeton, Ernst & Young, and IKB Leasing.


VDHG is slowly gearing up to break ground on the fi-nal installment of the Plac Andersa complex: Andersia Silver. The developer's special purpose company, Andersia Retail, together with the hospitality firm Orbis, which owns the adjacent plot, are currently building a connection road between Tadeusz Kościuszko Street and Królowa Jadwigi Street. The project, which is to reach completion in three months, precedes the next stage of development of Plac Andersa. At the end of 2013, VDHG received the zon-ing permit for two buildings with office, retail and res-idential function with a total usable area of app. 67,000 sq.m. Design works for the first of the two buildings have just begun. According to earlier esti-mates by VDHG, the capex on this 30,000 sq.m edifice were to reach EUR 65m. After Andersia Tower (105,2m), Andersia Silver will be the tallest building in Poznań. VDHG has in place all necessary planning permits to construct up to 116m.

Andersia Business Centre: the latest of the three ex-isting segments of Von der Heyden Group's Plac Andersa complex in Poznań. Image: VDHG Outside of Poznań, the developer is hoping to secure debt financing for its EUR 11m Długi Targ Hotel pro-ject in Gdańsk in order to launch construction by the end of this year. VDHG's new boutique hotel project is based on a refurbishment and conversion of a histori-cal building into a three-star property with a total area of approximately 4,600 sq.m and 84 spacious rooms.

The hotel will be managed by DHG's Spanish subsidi-ary IBB Hotel Collection, which runs the company's other Polish hospitality projects: IBB Grand Hotel Lublinianka in Lublin (since 2003) and IBB Andersia Hotel in Poznań (since 2007). Founded in 1989 by Sven von der Heyden, VDHG is a niche player on the European and Polish real estate market, focusing on class A office buildings and hotels in central locations of Warsaw, Poznań and Lublin. With a staff of 250 people across 26 subsidiaries the company has completed EUR 300 m worth of invest-ments in Poland, Germany ,and Spain over the past 25 years and plans to invest a further EUR 175m (includ-ing equity and debt) during the next four years.

POZNAŃ OFFICE MARKET AT A GLANCE At the end of 2013 Poznań’s total stock amounted to

303,200 sq.m, a rise by a modest 24,100 sq.m com-

pared with 2012, following mainly the delivery of

Skanska’s Malta House (15,600 sq m). Smaller schemes

included Wechta’s Temida and Piątkowska Office in

the city’s Old Town area, which contributed 2,500

sq.m and 2,000 sq.m, respectively. The first phase of

SwedeCenter’s Business Garden office complex (four

buildings totaling 42,000 sq.m) is still under construc-

tion but the complex will not be delivered until 2015.

Low new supply in Poznań is due to weak occupier in-

terest and relatively high availability of lower grade

space. Transaction volume in 2013 came to just 39,100

sq.m, marking a fall of 7.5% on 2012. At year end the

vacancy rate edged down by a little more than 0.1

percentage point to 14.2% compared with the end of

2012. Headline rents stood at EUR 14–16/sq.m/month,

with effective rents lower on average by 15–20%.

Source: Cushman & Wakefield Marketbeat Spring 2013

HOSPITALITY

Poland with room foPoland with room foPoland with room foPoland with room for r r r new hotel developmentsnew hotel developmentsnew hotel developmentsnew hotel developments

With the tourism industry picking up in Poland, inves-tors see room for new hotel developments in the coun-try, said participants in the Spotlight Hotel Investment Poland conference which Poland Today organized in Warsaw at the beginning of June. More and more people are coming to Poland from abroad and the do-mestic market has also been robust of late. A number of international hotel chains not yet present in Poland are going to enter the country in the upcoming years, the participants in the conference said. The last few years were a good period for the Polish tourism industry. Approximately 15.8 million foreign visitors came to Poland last year, said Katarzyna Sobierajska, undersecretary of state at the Ministry of Sport and Tourism of the Republic of Poland. Mean-while, the demand generated by the domestic market has also been rising in recent years, pointed out Sebastien Denier, vice president, Central and Eastern Europe, at Louvre Hotels. What would help the country boost the demand for hotel space even further is the organization of a bigger number of large-scale cultural and sports events, said Ireneusz Węgłowski, vice president of the manage-ment board at Orbis. Significantly, the gap between the weekday hotel occupancy and the weekend hotel oc-cupancy in Poland has been closing, said Katy Miller, business development manager at STR Global. Poland remains a country with a relatively low hotel space saturation level, according to Sobierajska. There are just approximately 30 hotel rooms per 1,000 in-


habitants in Poland, she said. Hotel investors recog-nize the growth potential of the Polish market, with around 170-200 building permit applications having been filed in Poland last year. “Investors perceive Po-land as a promising market,” Sobierajska said. Astrid Schafleitner from Motel One said that Poland now offers a lot of opportunities for the conversion of old office buildings, dating to the 1960s or 1970s, into modern hotel facilities. According to Andrzej Chełchowski, partner at Miller Canfield, there is also room in Poland for hotels located near hospitals which could be used by both patients and their families. Such facilities already exist in the German market, he said.

Poland continues to offer good investment opportu-nities, said participants of the investment panel. Photo: Poland Today

Admittedly, like in the other property market sectors, a number of planning- and property claims-related is-sues are, sometimes, a problem for hotel investors in Poland, Chełchowski said. The uncertainty as to what exactly a hotel investor will be able to build in a given location remains a major challenge, said Przemysław Wieczorek, member of the management board at Puro Hotels.

Adam Konieczny, country head Poland at Christie + Co, said that a number of international hotel chains in-cluding InterCityHotel, Motel One and Leonardo Ho-tels would like to and are expected to enter Poland in the near future. At the moment, Accor/Orbis, Best Western, Louvre Hotels and Hilton, which respective-ly have 64, 20, 16 and 10 hotels in Poland, are the four largest chains in the country, Konieczny said. The representatives of the particular chains claimed that there is still room for new hotels in Poland. Ralph Steinert, development director, Germany and CEE at LHG, said that there are eight to ten cities in Poland with potential for new Louvre Hotels facilities. There is room for growth through both development and takeovers, he said. Mikhail Kolesnik, senior director of development for the Russia, CIS and Eastern Europe area, at Marriott International, said that the company is actively looking at new sites in Poland. Investors argued that Poland continues to offer good investment opportunities. Warsaw and Kraków are now the most attractive cities, with Wrocław being a difficult market, said Rudolf Grossmayer, an asset manager at UBM. Both he and Stephane Obadia, de-velopment director at Algonquin, stressed the attrac-tiveness of branded hotels. It is international brands that bring recognition and value to hotel facilities, they said. Grossmayer pointed out that investment in the Polish hotel market requires patience and long-term com-mitment. While in Western Europe the company had previously been able to sell hotels right after their completion, this had never happened in Eastern Eu-rope, he stressed. It is now mostly international inves-tors that are investing in business hotels in Poland. Small Polish investors are rather interested in leisure locations, said Wojciech Szybkowski, a partner at CMS Cameron McKenna.

To some extent, securing bank financing remains a challenge for hotel developers and investors, with not many banks granting loans for new developments. Some investors are now thus resorting to alternative sources of financing. Bankers participating in the con-ference admitted that hotels are seen by their institu-tions as risky investments whose long-term perfor-mance is difficult to evaluate. However, they added that their banks are always ready to finance good hotel projects.

by Adam Zdrodowski

SERVICES & BPO

EPAM Systems EPAM Systems EPAM Systems EPAM Systems to hire to hire to hire to hire up to 3,000 IT staff in up to 3,000 IT staff in up to 3,000 IT staff in up to 3,000 IT staff in Poland in 3Poland in 3Poland in 3Poland in 3----4 years4 years4 years4 years

US software services firm EPAM Systems, which opened its first Polish delivery center in 2011 in Kraków, is expanding into other regional cities in search of top IT talent. The company has just launched a unit in the northern Polish city of Gdańsk, and it is seeking locations for subsequent centers. "Our goal is to have 3,000 engineers in Poland in 3-4 years' time and we have no choice but to tap into sev-eral talent pools to achieve this," Shemek Fedyczkowski, Country Manager of EPAM Systems Poland, tells Poland Today. "In Kraków we currently have an estimated 220 employees between two offices, and our plan for Gdańsk envisages two offices with 500 and 300 employees respectively. We are gearing up to launch operations in another major Polish city but I cannot provide more details on this yet, because we want to surprise our competition." Recruitment for the first office in Gdańsk is currently already underway with EPAM seeking developers pro-


ficient in Java, Java Script, .Net, Data Base specialists, as well as business analysts and testers. The company is hoping to onboard some 100 staff by the end of the year. "At the moment our growth is restricted only by the supply of suitable candidates. The Polish market has an enormous potential, but we are also bringing in for-eign talent to our Polish centers. Due to the recent un-rest in Ukraine, where we have some 3,700 employees, some projects are being moved to Poland, which is considered much safer, yet still very competitive by our international clients."

Epam Systems key figures in USDm

0

100

200

300

400

500

600

700

2009 2010 2011 2012 2013

0

10

20

30

40

50

60

70

Total revenue, left axis

Net income*, right axis

Source: Epam Systems *) GAAP

Foreign employees currently represent only a fraction of Epam's workforce in Poland (approximately 5%), and problems with the imports of talents from abroad is one of the reasons why the company decided to ex-pand beyond Kraków. "The Małopolskie region authorities have been very uncooperative when it comes to work permits for for-eign employees, which I consider as a rather short-sighted approach. We are bringing in top engineering

talents, who will pay their taxes in Poland and help the economy grow. Many may choose to settle here. Natu-rally, due to our strong presence in Ukraine and Bela-rus, we get a lot of applications from those countries, but in Kraków this has proven very difficult. The atti-tude in Gdańsk is totally different. We are getting plenty of support from all parties, and Invest in Pom-erania is doing a fantastic job coordinating everything. Of course the majority of our employees in Poland will be Poles, but in order to keep projects going we need some flexibility in terms of recruitment. We are seeing this in Gdańsk, but not in Kraków, which is a shame."

EPAM Systems' Kraków office is located in the Quattro Business Park developed by Buma Group. Image: Buma

Over the past four years the NYSE-listed EPAM Sys-tems has more than doubled its turnover, largely thanks to its unique software delivery platform in Cen-tral and Eastern Europe. Epam's customers represent mainly independent software vendors, banks and fi-nancial services firms, as well as travel and consumer sector companies, for instance UBS, Microsoft, Ora-cle, Expedia, Coca-Cola, SAP, Barclays Capital, and Thomson Reuters. "Our Polish teams are developing solutions for a Sili-con Valley-based global leader in the 'Big Data' sector, and soon EPAM in Poland will commence cooperation

with a New York-based major US financial institution. Services for the banking & finance sector have been the key growth driver for Epam," says Fedyczkowski. Established in 1993 and headquartered in the United States EPAM Systems, Inc. employs over 9,800 IT pro-fessionals at its locations in 17 countries across four continents. In 2013, EPAM was ranked by Forbes as #6 among America's 25 Fastest-Growing Tech Companies and #2 on the list of America's Best Small Companies: 20 Fast-Growing Tech Stars. Epam turned over USD 555.1m (+28% y/y) and posted a net income of USD 62m last year.


PKP sells PLN 580m PKP sells PLN 580m PKP sells PLN 580m PKP sells PLN 580m stake in PKP Cargostake in PKP Cargostake in PKP Cargostake in PKP Cargo

Poland's state-owned railway operator PKP last week sold 7.63m shares (a 17% stake) in the Warsaw-listed rail freight company PKP Cargo via an accelerated book building addressed to institutional investors. PKP Cargo's share price dropped by over 6% early on news - the largest decline since the company's IPO in October 2013 - before recouping some losses. Prior to the sale, PKP had held 50.4% of shares in the freight business. 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 PLN 1.42bn IPO on the Warsaw Stock Exchange, which saw the state-owned Polish railway operator PKP sell 20.9m shares in the business. The latter has now decided to further reduce its stake in order to cut its own debt. The 17% stake in PKP Cargo was sold for PLN 580m, making it the country's second-biggest


share offering this year after the PLN 1.03bn sale of Vattenfall AB’s stake in power utility Enea SA in January. 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 econom-ic slowdown. Last year the company carried around 114m tons of freight, mainly hard coal and building materials. 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.

PKP Cargo 's CEO Adam Purwin was one of the

panelists at Poland Today's recent conference "Po-land Transformed." Photo: Poland Today

The company has emerged from the brink of bank-ruptcy 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 in-depth 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 inde-

pendently operate in Germany, Czech Republic, Slo-vakia, Hungary, Austria, and Belgium and it is current-ly seeking a Dutch permit.

PKP Cargo key figures

0.0

1.0

2.0

3.0

4 .0

5.0

6.0

2010 2011 2012 201 3

0

100

200

300

400

500

600

T urnover, in PLNbn, lef t axis

N et result in P LNm, r ight axis

Source: PKP Cargo


Amazon to hire up to Amazon to hire up to Amazon to hire up to Amazon to hire up to 2,000 staff 2,000 staff 2,000 staff 2,000 staff atatatat Polish Polish Polish Polish centers by yearcenters by yearcenters by yearcenters by year----endendendend

The world's top e-commerce provider Amazon has launched a massive recruitment campaign for its Polish logistics centers, two of which are to launch in the second half of 2014. Over the coming months the company will create some 1,600 positions in the Poznań and Wrocław regions. Amazon has been onboarding executives and special-ists since the beginning of the year and to-date it has recruited some 40 staff. By the end of July it aims to hire 100 team leaders for each of the two centers that

are to open later this year. Between July and Decem-ber the company will be hiring regular personnel for its fulfillment centers, who will take care of sorting, packing, and dispatching customer orders. Overall, by the end of this year, Amazon intends to find some 700 employees for each of the two facilities. A third one will be launched next year. In the long-term, the Seat-tle-based e-commerce giant is to create 2,000 perma-nent jobs at each of the three logistics centers in Po-land, going up to 3,000 in the run-up to the holiday season – between 6,000 and 9,000 jobs in total.

In Wrocław, where Amazon is developing two dis-

tribution centers, the one built by Panattoni will be delivered in 2015. Photo: Panattoni

Amazon's Polish distribution centers are being devel-oped by Goodman and Panattoni. The Australian-owned Goodman is working on a 95,000 sq.m facility in Wrocław's Bielany Wrocławskie suburb, some 5km from the city centre. Construction of the center com-menced in October 2013 and it is planned that the ful-fillment centre will be fully operational in the second half of 2014. US-owned industrial space developer Panattoni Europe is to deliver 201,000 sq.m of modern warehouse space for e-commerce mogul Amazon in what is regarded as the largest ever deal in Central and


Eastern Europe's real estate market. The two centers, each with more than 100,000 sq.m of logistics space, will be located near Wrocław and Poznań. The first of the warehouses, with some 92,000 sq.m of warehouse space, is under development in Sady near Poznań and it is to be commissioned in mid-August 2014. Poland's central location in Europe, proximity to Am-azon’s European clients and access to a skilled work-force were among the reasons for Amazon's invest-ment decision, Tim Collins, director of retailer's Euro-pean operations, told reporters at news conference in Warsaw in October last year, adding that. Amazon does not intend to close any of its existing European logistic infrastructure. The three Polish sites will be integrated into the network of 25 centers in Europe as part of an expansion strategy to serve customers in every European country, including Russia and Ukraine, Collins added. Amazon will be the owner of its Polish distribution centers, which are being devel-oped under the built-to-suit formula..


Major rail engineering Major rail engineering Major rail engineering Major rail engineering firm Torpol heading firm Torpol heading firm Torpol heading firm Torpol heading for Warsaw boursefor Warsaw boursefor Warsaw boursefor Warsaw bourse

Torpol, the railway infrastructure subsidiary of the ailing Polish construction group Polimex-Mostostal, launched its initial public offering on the Warsaw Stock Exchange last week, hoping to sell 7.4m shares and raise PLN 52m. Torpol's IPO prospectus has al-ready been approved by the financial regulator with book-building set to reach completion on June 24 and the bourse debut expected to take place on July 8. Be-sides new shares, the IPO may include an entire stake currently owned by Polimex-Mostostal, worth roughly

PLN 110m. The latter transaction will have to be ap-proved by Polimex-Mostostal's creditors, and their verdict will likely depend on the outcome of the book-building. Torpol is a major player in Poland's railway and tram-way infrastructure segment, in which it has a 10% share, and recently it has made successful inroads into the Norwegian market, where its ambition for the coming years is a 5-6% share. The company has a di-versified portfolio of contracts for the years 2014-2015, with a total value of over PLN 2.2bn net (excluding consortium partners). Last year Torpol turned over PLN 416m with a gross margin at 5.8%. Its EBITDA came to PLN 21m and net earnings totaled PLN 5m. According to Torpol's projections, its 2014 revenues and profits will nearly double against the prior year. The company employs 400 staff. "The IPO is a milestone step for Torpol. It will boost our credibility vis-à-vis our customers, provide re-sources for organic growth and make it easier for Torpol to obtain financing for ongoing projects," CEO Tomasz Sweklej said in a statement. Torpol's flagship projects in Poland include the de-velopment of a brand new railway station in Łódź as well as modernization of the E75 Rail Baltica line. In Łódź, Torpol is leading a consortium responsible for the design and delivery of a new multimodal Łódź Fabryczna station, together with modernization of the Łódź Widzew-Łódź Fabryczna railway line. The en-tire projects is worth PLN 1.43bn, of which 40% will go to Torpol. The Rail Baltica project concerns an up-grade of the Warszawa Rembertów-Zielonka-Tłuszcz railway line. In this case, Torpol will cash in PLN 1.1bn of the project's total value of PLN 1.3bn. The company is hoping investors will be attracted by the considerable growth prospects in Poland's rail in-frastructure. According to the latest reports, under the

new EU budget some EUR 10.5bn (PLN 44bn) will be spent on railway-related projects. The Polish railway infrastructure operator PKP PLK, Torpol's key domes-tic client, said its investments over the 2014-2020 pe-riod will amount to PLN 58.6bn. A government master plan for the sector envisages PLN 115bn worth of in-vestments between 2007 and 2030. In 2010 Torpol establish a subsidiary in Norway, which has since obtained contracts worth more than PLN 100m worth on this demanding market, with PLN 61m in competed works. According to Torpol, the Norwegian government seeks to invest NOK 168bn (approx. PLN 80bn) in development of railway infra-structure in the country over the 2014-2023 period.

CONSUMER GOODS & RETAIL

Top retailer Top retailer Top retailer Top retailer Biedronka Biedronka Biedronka Biedronka to start accepting card to start accepting card to start accepting card to start accepting card payments at its 2,400+ payments at its 2,400+ payments at its 2,400+ payments at its 2,400+ stores nationwistores nationwistores nationwistores nationwidededede

In a much awaited move Poland's top grocery retailer Biedronka has finally decided to start accepting card payments at its 2,400+ stores across the country. Point-of-sale terminals have already been installed at 330 Biedronka outlets and by the end of July the entire chain will welcome plastic. Considering the size of Biedronka's turnover (PLN 32bn in 2013, making it one of Poland's top five companies), the decision is big news for the customers, but also for the country's card payment industry. Biedronka had long refused to accept credit cards at its Polish outlets because of the hefty interchange fees Polish banks had been charging retailers. Before a law


was passed that cut interchange fees on card transac-tions, the latter had stood at as much as 1.7%-3% de-pending on the size of a retailer – the highest level in Europe. Card transactions at Biedronka stores will be handled by Bank Pekao SA, the Polish arm of Italy's Unicredit.

Jeronimo Martins, hopes to have 3,000 Biedronka

stores in Poland next year. Image: JMP

Jeronimo Martins Polska is Poland's 4th largest com-pany by revenues. It operates more than 2,400 Biedronka groceries and 100 Hebe drugstores in 900 towns and cities and employs in excess of 45,000 peo-ple. According to preliminary estimates by its Portu-guese owner Jeronimo Martins, Biedronka's sales rose by approximately 15% y/y in 2013 and came to EUR 7.7bn (PLN 32bn), representing two thirds of the com-pany's global business, which turned over EUR 11.8bn (+11%). The like-on-like sales growth in Poland came to 4.2%. Biedronka opened 290 new locations last year and plans to maintain a similar pace of growth in 2014. "We stick to our plan of reaching 3,000 Biedronka lo-cations in 2015. As for the Hebe chain, we are expect-ing its dynamic expansion to continue this year," Anna Papka, external relations manager at Jeronimo Mar-tins Polska, told Poland Today earlier this year.

POLITICS & ECONOMY

Early elections Early elections Early elections Early elections increasingly probable increasingly probable increasingly probable increasingly probable as as as as eeeeavesdropping avesdropping avesdropping avesdropping scandal scandal scandal scandal unfoldsunfoldsunfoldsunfolds

A week after the Wprost magazine released a secretly taped conversation between a government minister and the head of Poland's central bank the prospect of early elections in the country is becoming increasingly realistic. The journalists, who claim to have received from an anonymous source more than 900 hours of re-cordings featuring some of Poland's top officials, con-tinue to release bits and pieces of conversations that in addition to causing a major domestic crisis are also likely to undermine Poland's international position. The first tape that Wprost made public involved a res-taurant conversation last July between central bank governor Marek Belka and Interior Minister Bartłomiej Sienkiewicz, in which they discussed how the central bank might use its power to help the ruling party win re-election in 2015. In the obscenity-laced tête-à-tête Belka, whose institution is required by law to remain independent, implied that he might be of some use provided that Finance Minister Jacek Rostowski leaves the government. Although Rostowski did get replaced a few months later, the cabinet does not seem to have received any form of backing from the NBP so far. Crawling coup d'état In a news conference, Prime Minister Donald Tusk tried to divert attention from the content of the re-cordings to their authors, calling the tape scandal "an attempt to bring down the government by illegal

means." He hinted, however, that early elections with-in weeks may be necessary to calm the situation, but he vowed not to step down now. Polish President Bronisław Komorowski said the government was fac-ing a crisis and urged its leaders to consider in their consciences whether to resign over the scandal. The opposition called for Mr. Tusk and his government to step down, but the prime minister defended Belka and Sienkiewicz, saying their conversation was in state in-terest and showed no indication of any criminal activi-ty. Deputy Prime Minister Janusz Piechociński, repre-senting the junior coalition member Polish People's Party (PSL) confirmed on Wednesday that he had dis-cussed with Tusk the possibility of holding an early election to help calm the political turmoil.

Donald Tusk is facing one of the biggest challenges of his political career. Photo: KPRM

However, it looks like the Belka-Sienkiewicz talk may be just the tip of an iceberg as other recordings con-tinue to emerge. Considering the amount of material that Wprost claims to have received, Poland is facing weeks of revelations, or "a crawling coup d'état" as one commentator put it. As this issue of BR+ was going to the press, another conversation was made public, this one involving former Finance Minister Jacek Rostowski and Foreign Minister Radosław Sikorski, in which the latter calls the Polish-US alliance "useless" and "harmful" because it gives Poland "a false sense of


security." In order to illustrate Warsaw's position vis-à-vis Washington, Mr. Sikorski uses a number of vul-gar metaphors, even though for many years he himself used to be one of the staunchest supporters of a strong Poland-US bond. Attack on free press? On Wednesday state prosecutors and the Internal Se-curity Agency raided the premises of the Wprost mag-azine in a failed attempt to seize the "proof" of the re-cordings, causing an outcry among journalists from other media organizations, who condemned it as an at-tack on free speech. A spokeswoman for the state prosecutors said the search was ordered after Wprost editor-in-chief Sylwester Latkowski refused to hand over the recordings. She said the aim was to obtain ev-idence, not violate journalist secrecy. In Poland, bug-ging or wiretapping to get unauthorized access to in-formation is punishable by up to two years in prison, but at the same time journalists are obliged to protect their sources if they request anonymity. Latkowski was asked to surrender his laptop, which he refused to do. The raid was unsuccessful, but it put Prime Minis-ter on the spot, even though in Poland state prosecu-tors are independent from the government. Following the embarrassing (and failed) attempt by the authorities to seize evidence from the Wprost headquarters, Donald Tusk called for Wprost and oth-er media to release all of the secret recordings of poli-ticians' private conversations that might be in their possession. He said Poland was facing a "serious crisis" and that until all the materials are out in the open the country will be far from stable and officials may be vulnerable to blackmail. Regardless of the content of the tapes, the fact that someone was able to obtain secret recordings of the country's top officials is a major embarrassment for Polish security and intelligence agencies. The Wprost magazine suggested that past or current secret agents,

businessmen or Tusk's political opponents could be behind the recordings. A number of defense analysts have hinted that foreign powers may have played a role in the scandal, pointing mainly to the Kremlin, de-spite lack of any evidence. Polish-Russian relations have been tense for many years and they worsened even further due to the two countries' roles in the Ukraine crisis. So far only one suspect has emerged in the criminal investigation of the case: the manager of the restaurant where the talks took place, identified only as Łukasz N. According to a June 17 survey by Millward Brown for TVN, nearly one in two adult Poles (48%) want the government to resign immediately due to the eaves-dropping scandal, with 30% expecting Tusk to remain in power. A CBOS poll conducted shortly before Wprost first revealed the transcripts, saw Poland's rul-ing party Civic Platform (PO) record a 5 pps increase in voter support to 32% in June, while the main oppo-sition party, conservative Law and Justice (PiS), gained 1 point to 24%, the latest survey from the CBOS institute shows. . The next general election in Poland isn't scheduled until late 2015.


Industrial output data Industrial output data Industrial output data Industrial output data below expectationsbelow expectationsbelow expectationsbelow expectations

Poland's industrial output increased by 4.4% y/y in May vs. 6.3% y/y growth expected in the PAP (Polish news agency) consensus survey, as output fell by 1.7% from the prior month, the Central Statistical Office (GUS) said last week. "Weaker growth of output may be a signal of deceler-ating pace of economic recovery in the second quarter,

possibly due to the negative impulse from situation in Russia and in Ukraine. In our opinion, pace of the GDP growth in the second quarter of the year should be close to the one recorded in first quarter and even if it slides marginally, it should remain above 3% y/y. We expect the second half of the year to bring an im-provement of results in industry due to further recov-ery of foreign trade with other euro zone countries," Bank Zachodni WBK analysts commented on the fig-ures.

Industrial output & producer prices

-12%

-8%

-4%

0%

4%

8%

Sep

12

Nov

12

Jan

13

M ar

13

M ay

13

Jul

13

Sep

13

Nov

13

Jan

14

M ar

14

M ay

14

Industry output, y/y change

Producer Price Index, y/y change

Source: GUS, the central statistical office

According to the Economy Ministry projections, the industrial production figure is likely to reach approx-imately 4% in June.

"Industrial output grew by 4.7% in the first five months of 2014, in line with earlier expectations, while construction also recorded an 11.3% growth in the period," the ministry analysts said in wrote in a comment to May output data."We expect these favor-able tendencies to continue also in the coming months."


KEY STATISTICS

Consumer PriceConsumer PriceConsumer PriceConsumer Pricessss

Data in (%) Feb '14 Mar '14 Apr '14 May '14

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

Food & bev +1.6 -0.2 +1.2 -0.3 +0.3 -0.5 -0.8 -0.4

Alcohol, tobacco +2.2 +1.4 +3.7 +0.7 +3.9 +0.3 +3.9 +0.2

Clothing, shoes -4.7 -1.7 -4.3 +0.8 -4.4 +2.8 -4.6 -0.1

Housing +1.9 +0.1 +1.8 -0.1 +1.7 0.0 +1.6 0.0

Transport -1.1 +0.4 -2.7 +0.1 -2.1 -0.1 -0.1 -0.4

Communications -3.2 +0.4 -0.3 +0.6 -1.7 -1.5 -1.1 -0.1

Gross CPI +0.7 +0.1 +0.7 +0.1 +0.3 0.0 +0.2 -0.1

IIIInflationnflationnflationnflation

-1%

0%

1%

2%

3%

4%

5%

May 12

Jul 12

Sep 12

Nov 12

Jan 13

Mar 13

May 13

Jul 13

Sep 13

Nov 13

Jan 14

Mar 14

May 14

y/y m/m

Retail Retail Retail Retail TurnoverTurnoverTurnoverTurnover

Month Dec '13 Jan '14 Feb '14 Mar '14 Apr '14

m/m (%) +17.3 -21.3 -0.6 +12.5 +2.3

y/y (%) +5.8 +4.8 +7.0 +3.1 +8.4

Year 2009 2010 2011 2012 2013

Turnover in PLNbn 582.8 593.0 646.1 676.0 n/a

y/y (%) +4.3 +5.5 +11.6 +5.6 +2.3

Residential ConstructionResidential ConstructionResidential ConstructionResidential Construction

Dwellings

(in '000 units)

2009 2010 2011 2012 2013 Jan-May

2014

y/y

(%)

Permits 178.8 174.9 184.1 165.1 138.7 61.9 +14.9

Commenced 142.9 158.1 162.2 141.8 127.4 58.7 +23.8

U. construction 670.3 692.7 723.0 713.1 694.0 693.2 -1.0

Completed 160.0 135.7 131.7 152.5 146.1 55.8 -3.0

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

Q1 2014 +3.4% 397,429 n/a

Q4 2013 +2.7% 455,528 -1.5%

Q3 2013 +2.0% 405,554 -1.9%

Q2 2013 +0.8% 296,314 -2.3%

2013 +1.6% 1,635,746 -1.5%

2012 +1.9% 1,596,379 -3.7%

2011 +4.5% 1,528,127 -5.0%

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

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% +1.6% +3.5%

Consumer inflation +2.6% +4.3% +3.7% +0.9% +0.5%

Producer inflation +2.1% +7.6% +3.4% -1.3% -1.3%

CA balance, % of GDP -5.1% -5.0% -3.7% -1.3% -0.8%

Nominal gross wage +3.9% +5.2% +3.7% +3.4% +4.5%

Unemployment** 12.4% 12.5% 13.4% 13.4% 12.2%

EUR/PLN 3.99 4.12 4.19 4.20 4.11

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

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

Sector Q1 2013 Q2 2013 Q3 2013 Q4 2013

A B A B A B A B

Coal mining 6,060 138 6,290 143 6,061 138 8,615 196

Manufacturing 3,491 152 3,560 155 3,625 158 3,690 161

Energy 6,196 188 5,828 177 6,021 183 6,736 205

Construction 3,556 152 3,693 157 3,766 160 3,895 166

Retail & repairs 3,432 146 3,421 146 3,408 145 3,456 147

Transportation 3,439 122 3,547 125 3,589 127 3,913 138

IT, telecoms 6,685 174 6,707 174 6,654 173 6,695 174

Financial sector 6,356 143 6,702 151 6,109 137 6,602 148

National average 3,741 149 3,613 144 3,652 145 3,823 152

Source: Central Statistical Office (GUS)

Construction OutputConstruction OutputConstruction OutputConstruction Output

Month Nov '13 Dec '13 Jan '14 Feb '14 Mar '14 Apr '14 May '14

m/m (%) -2.9 +21.5 -64.0 +18.7 +24.2 +3.2 +14.0

y/y (%) -8.9 +5.8 -3.9 +14.4 +17.4 +12.2 +10.0

Year 2007 2008 2009 2010 2011 2012 2013

y/y (%) +15.5 +12.1 +5.1 +4.6 +11.8 -0.6 -12.0

Source: The Central Statistical Office of Poland, GUS

Sentiment IndicatorsSentiment IndicatorsSentiment IndicatorsSentiment Indicators

Economic sentiment and consumer confidence indicators

-40

-20

0

20

Aug 11

Nov 11

Feb 12

May 12

Aug 12

Nov 12

Feb 13

May 13

Aug 13

Nov 13

Feb 14

May 14

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 Nov'13 Dec'13 Jan'14 Feb'14 Mar'14 Apr'14 May'14

m/m (%) -0.3 -0.1 0.0 -0.1 -0.2 -0.2 -0.2

y/y (%) -1.5 -1.0 -1.0 -1.4 -1.3 -0.7 -1.0

Year 2007 2008 2009 2010 2011 2012 2013

y/y (%) +2.0 +2.2 +3.4 +2.1 +7.6 +3.3 -1.3

Construction PriceConstruction PriceConstruction PriceConstruction Pricessss

Month Nov'13 Dec'13 Jan'14 Feb'14 Mar'14 Apr'14 May'14

m/m (%) -0.1 -0.1 -0.2 -0.2 -0.1 -0.1 0.0

y/y (%) -1.7 -1.7 -1.7 -1.6 -1.5 -1.5 -1.4

Year 2007 2008 2009 2010 2011 2012 2013

y/y (%) +7.4 +4.8 +0.2 -0.1 +1.0 +0.2 -1.8

Industrial OutputIndustrial OutputIndustrial OutputIndustrial Output

Month Nov '13 Dec '13 Jan '14 Feb '14 Mar '14 Apr '14 May '14

m/m (%) -6.2 -9.7 +2.9 -1.8 +9.4 -2.3 -1.7

y/y (%) +2.9 +6.6 +4.1 +5.3 +5.4 +5.4 +4.4

Year 2007 2008 2009 2010 2011 2012 2013

y/y (%) +10.7 +3.6 -3.5 +9.8 +7.7 +1.0 +2.2


TTTTraderaderaderade

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

EXPORTS in PLN bn IMPORTS in PLN bn

Jan-Mar 2014

y/y (%)

share (%)

2013 share (%)

Jan-Mar 2014

y/y (%)

share (%)

2013 share (%)

Food and live animals 17,740 +8.5 10.8 69,304 10.9 12,271 +3.2 7.5 47,906 7.4

Beverages and tobacco 2,065 +4.8 1.3 8,624 1.4 899 -6.1 0.6 4,150 0.6

Crude materials except fuels 4,180 -0.9 2.5 15,744 2.5 5,430 -1.4 3.3 21,585 3.3

Fuels etc 7,503 -7.1 4.5 30,013 4.7 19,069 +1.2 11.6 75,539 11.7

Animal and vegetable oils 490 +43.6 0.3 1,864 0.2 628 -0.3 0.4 2,646 0.4

Chemical products 15,190 +7.1 9.2 59,103 9.3 24,737 +6.8 15.1 92,917 14.3

Manufactured goods by material 32,339 +3.1 19.6 129,915 20.3 28,881 +5.9 17.6 112,392 17.3

Machinery, transport equip. 62,802 +11.1 38.0 239,434 37.5 52,769 +3.8 32.2 216,608 33.4

Other manufactured articles 22,557 +14.6 13.7 82,816 13.0 15,598 +11.8 9.5 58,210 9.0

Not classified 217 n/a 0.1 1,782 0.2 3,592 n/a 2.2 16,242 2.6

TOTAL 165,083 +7.8 100 638,599 100 163,874 +3.6 100 648,195 100

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

EXPORTS in PLNbn IMPORTS in PLN bn

No Country Jan-Apr 2014

share *2013 share No Country Jan-Apr 2014

share *2013 share

1 Germany 58,734 26.3% 159,622 25.0% 1 Germany 47,765 21.7% 139,334 21.5%

2 UK 14,109 6.3% 41,503 6.5% 2 Russia 26,387 12.0% 79,601 12.3%

3 Czech Rep. 13,475 6.0% 39,421 6.2% 3 China 21,405 9.7% 60,914 9.4%

4 France 13,093 5.9% 35,745 5.6% 4 Italy 11,303 5.1% 33,703 5.2%

5 Russia 9,809 4.4% 34,058 5.3% 5 Netherlands 8,172 3.7% 25,005 3.9%

6 Italy 10,033 4.5% 27,450 4.3% 6 France 8,705 4.0% 24,533 3.8%

7 Netherlands 9,048 4.1% 25,292 4.0% 7 Czech Rep. 7,648 3.5% 23,778 3.7%

8 Ukraine n/a n/a 18,037 2.8% 8 USA 5,028 2.3% 17,350 2.7%

9 Sweden 6,395 2.9% 17,498 2.7% 9 UK 5,830 2.6% 16,861 2.6%

10 Slovakia 5,526 2.5% 16,795 2.6% 10 Belgium 5,526 2.5% 14,913 2.3%

Source: Central Statistical Office (GUS) *) preliminary estimates

CurrencyCurrencyCurrencyCurrency

Central Bank average rates

as of 20 June 2014

100 USD 304.95 ↑

100 EUR 415.06↑

100 GBP 520.22 ↑

100 CHF 341.09 ↑

100 DKK 55.67 ↑

100 SEK 45.39 ↓

100 NOK 49.60 ↓

10,000 JPY 298.99 ↑

100 CZK 15.11 ↑

10,000 HUF 135.64 ↑

100 USD/EUR against PLN

300

350

400

450

5 Jul 13

12 Sep 13

21 Nov 13

3 Feb 14

10 A

pr 14

20 Jun 14

USD EUR

MMMMoney Supplyoney Supplyoney Supplyoney Supply

in PLN m Jan '14 Feb '14 Mar '14 Apr '14

Monetary base 161,544 158,330 173,213 168,511

M1 546,487 548,033 558,954 548,394

- Currency outside banks 113,455 114,680 116,657 119,261

M2 947,443 954,284 964,624 969,754

- Time deposits 418,259 423,296 422,990 439,137

M3 962,416 968,442 980,377 986,142

- Net foreign assets 140,617 135,759 132,849 126,943 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 Jan '14 Feb '14 Mar' 14 Apr' 14

Loans to customers 914,189 914,068 923,709 928,450

- to private companies 263,063 263,941 267,553 270,886

- to households 567,984 567,257 569,334 573,332

Total assets of banks 1,628,197 1,616,891 1,628,519 1,639,359

Source: Central Bank NBP

IIIInterest ratesnterest ratesnterest ratesnterest rates

Average weighted annual interest rates

on loans to non-financial corporations

Term / currency Nov '13 Dec '13 Jan '14 Feb '14 Mar '14 Apr '14

PLN (up to 1 year) 4.5% 4.3% 4.2% 4.5% 4.5% 4.4%

PLN (up to 5 y ) 4.9% 4.9% 4.9% 4.8% 4.9% 4.8%

PLN (over 5 y) 4.8% 4.7% 4.8% 4.7% 4.7% 4.7%

PLN (total) 4.8% 4.7% 4.8% 4.7% 4.7% 4.7%

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

EUR (over 1m EUR) 3.0% 2.9% 3.6% 3.4% 3.3% 3.0%

Warsaw Inter Bank Offered Rate (WIBOR) as of 20 June 2014

Overnight 1 week 1 month 3 months 6 months

2.62%% 2.60% 2.60% 2.68% 2.70%

Central Bank (NBP) Base Rates

Reference Lombard NBP deposit Rediscount

2.59% 4.00% 1.00% 2.75%

Stock ExchangeStock ExchangeStock ExchangeStock Exchange

Warsaw Stock Exchange, rates in PLN

WIG-20 stocks in alphabetical

order

Price 20 June '14

Change 13 June

'14

Change end of '13

↑ Alior Bank 84 +1% +3%

↑ Asseco Pol. 42 +1% -9%

↑ Bogdanka 123 +2% -2%

→ BZ WBK 376.35 0% -3%

→ Eurocash 42.8 0% -10%

→ Grupa Lotos 38.45 0% +8%

↑ JSW 47 +2% -12%

→ Kernel 33.68 0% -12%

↑ KGHM 125.9 +5% +7%

↑ LPP 8502.5 +2% -6%

↑ mBank 519.55 +4% +4%

→ Orange Pol. 10.35 0% +6%

↓ Pekao 179 -7% 0%

↑ PGE 21.87 +1% +34%

↑ PGNiG 5.17 +1% 0%

↑ PKN Orlen 41.15 +1% 0%

↓ PKO BP 39.08 -3% -1%

↓ PZU 449.65 -2% 0%

→ Synthos 4.56 0% -17%

↑ Tauron 5.55 +3% +27%

Source: Warsaw Stock Exchange

Key indices

as of 20 June 2014

WIG Total index

55552222,,,,923923923923....26262626 Change 1 week 0% →

Change end of '13 +3% ↑

WIG-20 blue chip index

2,2,2,2,638638638638....01010101 Change 1 week +7% ↑

Change end of '13 +10% ↑

WIG Total closing index

last three months

49,000

50,000

51,000

52,000

53,000

54,000

5 M

ar 14

27 M

ar 14

22 A

pr 14

28 M

ay 14

20 Jun 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-Apr 2014 *

Monthly wages (PLN)

Jan-Apr 2014**

Unemploy-ment

Apr 2014

New dwellings Jan-Apr 2014

Indus-

try

Constru-

ction

Indus-

try

Constru-

ction

in '000 % Num-

ber

Index *

Dolnośląskie (Wrocław) 100.3 112.4 4,191 4,016 148.1 12.7 4,872 91.7

Kujawsko-Pomorskie (Bydgoszcz) 109.8 118.4 3,433 3,188 143.5 17.4 2,082 89.8

Lubelskie (Lublin) 105.5 82.6 3,762 3,012 130.1 14.0 1,654 78.9

Lubuskie (Zielona Góra) 115.9 123.8 3,449 3,067 56.3 14.9 1,127 102.7

Łódzkie (Łódź) 101.2 118.4 3,725 3,258 147.6 13.7 2,228 118.1

Małopolskie (Kraków) 98.0 110.9 3,834 3,314 159.0 11.2 5,499 92.1

Mazowieckie (Warszawa) 105.4 110.5 4,604 4,998 276.8 10.8 9,794 100.9

Opolskie (Opole) 108.0 144.5 3,656 3,461 49.6 13.7 680 125.5

Podkarpackie (Rzeszów) 107.0 116.1 3,424 3,085 148.2 15.8 2,112 102.9

Podlaskie (Białystok) 106.3 119.7 3,303 3,710 67.6 14.5 1,254 113.3

Pomorskie (Gdańsk-Gdynia) 109.3 118.8 4,045 3,438 110.5 12.9 3,089 86.9

Śląskie (Katowice) 100.6 112.2 4,658 3,532 203.7 10.9 3,624 101.4

Świętokrzyskie (Kielce) 117.2 84.7 3,416 3,213 86.1 15.8 970 124.8

Warmińsko-Mazurskie (Olsztyn) 105.1 113.1 3,285 3,061 108.9 20.5 1,533 103.6

Wielkopolskie (Poznań) 108.0 104.6 3,759 3,617 137.8 9.1 4,721 106.7

Zachodniopomorskie (Szczecin) 108.2 96.1 3,548 3,379 105.3 17.1 1,650 88.6

National average 104.7 110.3 4,007 3,751 2,079.0 13.0 46,889 98.2

*) 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 Q3 Q4 '12 Q1 '13 Q2 '13 Q3 '13 Q4 '13

in Poland 1,381 2,886 175 -3,020 1,885 -3,614

Polish DI -550 -1,203 957 2,588 -1,449 1,588

Year 2008 2009 2010 2011 2012 2013

in Poland 10,128 9,343 10,507 14,896 4,763 -4,574

Polish DI -3,072 -3,335 5,484 -5,935 -607 3,684

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

Period 2011 2012 2013 Q2 '13 Q3 '13 Q4 '13

Trade balance -10,059 -5,175 2,309 1,203 1,094 151

Services, net 4,048 4,642 5,249 1,686 1,032 1,257

CA balance -18,519 -14,191 -4,984 486 -2,086 -1,071

CA balance vs GDP -5.0% -3.7% -1.5% -2.3% -1.9% -1.5%

Source: NBP, BZ WBK

UUUUnemploymentnemploymentnemploymentnemployment

Registered unemployed, in ‘000 and

% of population in working age

1,800

2,000

2,200

2,400

2,600

Q1 11

Q3 11

Q1 12

Q3 12

Q1 13

Q3 13

Q1 14

6

9

12

15 number (left axis) % (right axis)

Source: Central Statistical Office GUS

IndustrIndustrIndustrIndustrial ial ial ial PropertiesPropertiesPropertiesProperties

by region, Q4 2013

Existing stock, sq.m

Under const ruction, sq.m

Va-cancy ratio

Effective rents EUR/ sq.m/mth

Warsaw central 563,000 17,000

22.3% 3.6–5.1

Warsaw suburbs 2,063,000 12.5% 2.1–2.8

Central Poland 1,021,000 80,000 15.2% 2.1–3.3

Poznań 1,023,000 215,000 4.4% 2.5–3.15

Upper Silesia 1,431,000 37,000 9.3% 2.4–3.3

Wrocław 780,000 259,000 11.7% 2.6–3.1

Tri-city 184,000 46,000 9.2% 2.8–3.3

Kraków 141,000 0 4.0% 3.3-4.0

CommercialCommercialCommercialCommercial PropertiesPropertiesPropertiesProperties

City

New apartments* Offices 2H'13 Retail rents**2H'13

Q1 '14

PLN/sq.m

Change

y/y

Headline

rents**

Vacancy

ratio

Retail

centres

High

streets

Warsaw 8,005 -0.1% 11.5-25.5 11.75% 80-90 85

Kraków 6,419 +1.8% 13-15 4.90% 35-45 78

Katowice 5,531 0.0% 13-14 7.30% 35-45 56

Poznań 6,666 +4.0% 14-16 14.20% 35-45 55

Łódź 4,808 -1.8% 12-14 14.40% 35-45 25

Wrocław 5,928 -0.2% 13-15.5 11.75% 35-45 40

Gdańsk 6,031 -5.7% 13-15 11.20% 35-45 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

Apr10

Dec10

Aug11

Apr12

Dec12

Aug13

Apr14

Wage CPI

Index 100 = Jan 2005. Source: GUS

poland today business review+ no. 040

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