PT Business Review+ No. 068 by Poland Today Business Review+

1 year subscription: EUR 690 +VAT (23%) Newsletter Editor: Lech Kaczanowski lech.kaczanowski@poland-today.pl tel. +48 607 079 547 Sales Contact: James Anderson-Hanney james.anderson-hanney@poland-today.pl

No. 068 / 19th January 2015 / www.poland-today.pl / magazine, conferences, portal, newsletter

MANUFACTURING & PROCESSING Automotive sector slowly rebounding page 2 ENERGY & RESOURCES Polish entrepreneur interested in buying three of KW's worst performing coalmines page 4 PROPERTY & CONSTRUCTION Hines buys 2nd office building for Poland-focused fund page 4 Euro-Styl sells flagship Tricity project to Irish property investors page 5

Swiss franc loans represent 37% of Poland's entire home loan portfolio.

Mortgage holders in fear as CHF surges

The unexpected decision by the Swiss central bank to scrap the franc's cap against the euro that sent shockwaves across the markets was received with particular concern in Poland, where an estimated 0.5m families hold mortgages in the Swiss currency. Although the macroeconomic impact of the franc's sharp appreciation against the złoty is said to be limited, the consequences for many household budgets will be dire. page3

E-COMMERCE South African Naspers merges online retailers in CEE page 6 Deal-of-the-day site Gruper joins forces with Romanian ZUMZI page 7 ONLINE MEDIA Sweden's Bonnier Group buys business portal Bankier.pl page 7

tel. +48 881 650 600

TRANSPORT & LOGISTICS Polsteam to build four new cargo ships in China for USD 100m page 8 SEGRO secures site for its 2nd industrial park in Tychy page 8 Goodman to build 40,000 sq.m of logistics space in Gdańsk page 9 POLITICS & ECONOMY Norway's Kongsberg signs 2nd missile contract in Poland page 10 Government and unions agree on rescue plan for coal mines page 11 OPINION Time for Kopacz to become Poland’s ‘Iron Lady’ page 12 KEY FIGURES Up-to-date macroeconomic figures, currency & stock market data and lots of other hard-to-find info pages 13-15

10-13 MARCH 2015 PALAIS DES FESTIVALS

CANNES - FRANCE

DO GREAT MINDS REALLY “THINK ALIKE”? Find out at MIPIM’S masterminds session CHRISTOPHE CUVILLIER CEO and Chairman of the Management Board, Unibail-Rodamco

LUCIANO GABRIEL CEO, PSP Swiss Property AG

mipim.com “MASTERMINDS CEO’S : Growth of the European listed real estate sector” Wednesday 11 March, 15.00

CHRIS GRIGG Chief Executive, British Land

SERGE GRZYBOWSKI Chairman and CEO, Icade

weekly newsletter # 068 / 19th January 2015 / page 2

With 314,000 units delivered last year, the Tychybased Fiat plant boosted its output by 6% y/y. Its key product remains the Fiat 500 model, with close to 200,000 units made in 2014, some 8.5% more than in the prior year. The factory also boosted production of the Ford Ka model, but made fewer Lancia Ypsilons.

MANUFACTURING

Automotive sector slowly rebounding Although Poland's car production saw a merely symbolic growth last year, the country's automotive industry as a whole is beginning to benefit from gradual recovery in Western Europe. The 2015 will be a transition year for the sector, with a number of large new automotive investments currently under development across the country. Polish car factories turned out 578,311 passenger and light commercial vehicles last year, merely 3,200 more than in 2013, reported the automotive market consultancy Samar. Fiat Auto Poland remained the country's number one carmarker, with 54.3% of the total production, ahead of Volkswagen (30.4%) and Opel Polska (15.4%). The total figure included 485,500 passenger cars, down from 487,000 in 2013, 550,000 in 2012 and as many as 722,000 in 2011.

Poland is a major automotive exporter

The Opel plant in Gliwice saw its production drop by 18%, down to 88,900 units, with double-digit declines affecting all of its models. This temporary slowdown is mostly due to the fact that GM is soon to launch production of the next generation Astra compact in Gliwice, making the current models gradually lose their appeal. Volkswagen Poznań turned out almost the same number of passenger units as in 2013 (82,700) but it made also 92,800 light commercial vehicles, marking a 5% improvement y/y.

Car production stagnates plant in Poland that will produce the Crafter van range. Image: VW Fiat

2009

Opel

2010 2011

Au tomotive exports in EURbn, left ax is

2012

Vehicle output in '000 , right axis

600

500

40 0 20 09

20 10

2 011

2 012

20 13

Source: Samar, AutomotiveSuppliers.pl *) projected

*2 014

600

700

500

17 16

2014 400

800

300

2013

200

900

100

1,000

20 08

Volkswagen is currently building a new greenfield

Car production in Poland by maker in '000 units

Passenger & LCV production in Poland and automotive exports

2014, marking a 1% improvement y/y. In September alone the figure came to EUR 1.76bn – the best monthly total ever, including a historic result in the parts and components category: EUR 727m. The total exports of vehicles, parts and components are expected to reach EUR 18.6bn, Rafał Orłowski of AutomotiveSuppliers.pl told Poland Today.

Source: Samar

According to the market research firm AutomotiveSuppliers.pl, Poland's automotive industry exported EUR 13.92bn worth of products in Q1-Q3

The improvement was largely due to higher sales to non-EU markets, which increased by 10%, as exports to the EU (which buys 79% of Poland's automotive exports) dropped by 1.1%. Exports to Germany, Poland's main trading partner, rose by 6% and totaled EUR 4.4bn in January-September. British customers bought EUR 1.24bn worth of Polish automotive production (+0.3% y/y), whereas exports to Italy increased by 1.2% and came to EUR 1.22bn. The most significant improvement (+37% y/y) was in exports to Hungary. In the first three quarters of last year Poland shipped out EUR 5.91bn worth of parts and components (+9.6% y/y), EUR 3.79bn worth of passenger cars and light commercial vehicles (-6% y/y), and EUR 1.58bn worth of diesel engines (-3.1% y/y).

weekly newsletter # 068 / 19th January 2015 / page 3

BANKING & FINANCE

Thousands Thous ands of home loan holders in shock over SwissSwiss -franc rally The estimated 0.5m Polish families with home loans in Swiss-franc will remember last Thursday, January 15, 2015, as a day of nail-biting and hair-pulling. On that day, following an unexpected move by the Swiss central bank, which allowed its currency to appreciate, the Polish zloty tumbled by as much as 28% against the Swiss franc. Although by the end of the day the decline narrowed to 15% (with CHF trading at PLN 4.2 PLN), it nevertheless significantly boosted the monthly payments of Swiss-franc mortgage loan holders, putting the condition of Poland's banking sector as a whole into question. Polish banks had an estimated PLN 131bn (EUR 30.4bn) of Swiss-franc mortgages in their portfolios as of Nov. 30, representing 37% of all home loans, according to data from Poland's financial market watchdog KNF. Banks pushed cheaper foreign currency loans in Poland and other CEE countries before and after the 2004 EU enlargement, luring masses of inexperienced borrowers with lower interest, but also exposing them to currency swings, which became particularly painful after the 2008 global financial meltdown. Their payments have gone up as the franc gained against the złoty and other CEE currencies, and last week's sudden appreciation makes it even more difficult for many families to make ends meet. "Massive Swiss franc appreciation is extremely bad news for foreign-currency borrowers in central Europe," Michał Dybuła, an economist at BNP Paribas SA in Warsaw, said in a commentary. "It will make servic-

ing franc loans more expensive, reducing disposable income and hurting consumption. That’s bad news for growth and the banking sector as the non-performing ratio of Swiss franc mortgages is likely to increase."

Swiss franc loans represent more than a third of the entire home loan portfolio Mortgage loans by currency, as of end of November 2014

PLN 54%

Other 1%

CHF 37% EUR 8%

Source: KNF

At the end of 2009, Swiss-franc loans represented 60% of all home loans in Poland, but their share has since been gradually decreasing, after the regulator capped and eventually banned non-zloty mortgages. The non performing loans ratio for the whole loan portfolio of Polish banks was around 8% as of end of November 2014, but when it comes to Swiss-franc loans alone the figure was at a safe 3.1%. According to estimates by Citibank, with EUR/CHF at 1.0 the debt service costs for Polish households would rise by approximately 17%, or less than 0.2% of GDP. Its analysts argued that the negative impact of a stronger franc on Polish consumption should be limited and would be more than offset by the positive impact of lower fuel prices. Although the macroeconomic impact of the strong franc is likely to be limited, it will cause a serious

headache for tens of thousands of Polish families. An average mortgage holder with a PLN 300,000 loan in Swiss franc will see their monthly installments go up by PLN 300-400. Since household budgets are already stretched due to the appreciation of the Swiss currency over the past half a decade, higher monthly payments are bound to affect the spending patterns of many Polish families. According to unofficial estimates, the number of loan holders who experience loan repayment difficulties, currently at some 30,000, is likely to triple if PLN/CHF remains above 4.0, which seems like a realistic scenario for the coming months. "Poland's banking sector can withstand a significant weakening of the złoty against the franc, as well as a sudden and concentrated deterioration of the CHF loan portfolio," KNF said in a statement last week, adding that most borrowers should be able to deal with PLN/CHF rates of 4.0, 4.5 and even 5.0. Shares in Polish banks tumbled after the SNB move, with Getin Noble Bank, BPH, Millennium, mBank, BZ WBK and PKO BP being seen as the most exposed to Swiss franc loans. Getin Noble Bank shares lost 16% in less than half an hour from the SNB announcement. Analysts said the situation was too dynamic to come up with a reliable assessment of the potential impact of the currency crisis on Poland banks, but there is growing concern among bankers that the most affected customers may exert pressure on the government to introduce a relief scheme for borrowers of Swiss franc mortgages. Hungary, which used to be one of the countries most exposed to Swiss franc loans, fixed the exchange rate for the conversion of households' euro and Swiss-franc mortgages late last year at well below current market levels. The banks that issued those loans had to pick up the bill for fixing the rates, but a similar scenario in Poland seems very unlikely.

weekly newsletter # 068 / 19th January 2015 / page 4

"The only thing Swiss-franc loan holders can do at the moment is to remain calm and wait for events to unfold. We have to get used to the fact that the PLN/CHF rate will remain above 4.0. Monthly loan payments will increase by some 25% as some of the growth will be compensated by the negative interest rates introduced by the SBB," commented Łukasz Piechowiak, chief economic at Bankier.pl.

ENERGY & RESOURCES

Polish entrepreneur interested in buying three of KW's worst performing coalmines

of management and employee numbers. Universal Energy is most likely expecting the assets to be cleared of all debt before the investor agrees to buy them. Domarecki is best known as the driving force behind Polish company Selena FM, which evolved from a small local player into one of the world's largest producers of polyurethane foam and other sealants. The group includes some 30 ventures and production sites in Poland, Brazil, South Korea, China, Romania, Turkey and Spain. Listed on the Warsaw Stock Exchange, Selena FM posted net earnings of PLN 31.6m (up from PLN 25.3m in the corresponding period of 2013) on PLN 840m turnover. Domarecki controls a 77% stake in Selena, valued at PLN 272m.

KW lost EUR 260m in the first 11 months of 2014, and has liabilities of almost EUR 1bn, the company said. At the moment, KW loses more than PLN 60 (EUR 14) for every ton of coal it mines. KW executives have recently said that only three or four of the company’s 14 mines are currently profitable. The company had to give up a bond issue in November after investors demanded too-high yields.

PROPERTY & CONSTRUCTION

Polish company Universal Energy has expressed interest in acquiring three of the four coalmines that have been shortlisted for a closure under the government's new restructuring plan for the sector. The company said last week it was interested in taking over the KWK Brzeszcze, KWK Sosnica-Makoszowy and KWK Bobrek-Centrum coal mines with a view to continuing mining operations. Treasury Minister Włodzimierz Karpiński told reporters the government will take the offer into consideration. Universal Energy is a Silesia-based technology and engineering firm, focusing on solutions for the energy and mining sectors, particularly methane removal. It was established last year by Polish entrepreneur Krzysztof Domarecki, who said Universal Energy needs three months to carry out due diligence at the three mines in order to decide whether investing in them makes economic sense. The businessman told the media the mines may perhaps be made profitable again, following their full-scale restructuring in terms

age, which includes generous severance payments for the downsized miners, been estimated at PLN 2.3bn (EUR 530m). The program also called for the introduction of a six-day working week at KW (while maintaining a five day working week for individuals), in a bid to boost the efficiency of its operations, as well as a new remuneration system with fewer bonus payments.

Hines buys 2nd office building for PolandPolandfocused fund

Trade unions have long opposed any real reforms in Image: KW the coal mining sector.

At the beginning of January the government announced it would close four of the 14 mines that currently constitute Europe's largest coal producer Kompania Węglowa (KW), resulting in up to 4,800 redundancies. The remaining pits are to be transferred to a special purpose company owned by Polish coal trader Węglokoks. The cost of the entire rescue pack-

Following the acquisition of the Ambassador office building from Spain's Kronos Real Estate a few months ago, Hines Poland Sustainable Income Fund (HPSIF), a comingled fund sponsored by US property giant Hines, has bought another class-A asset in the Polish capital. Following the transaction HPSIF's Polish portfolio includes two buildings with a combined GLA of nearly 20,000 sq.m The property in question, previously owned by 5th Avenue Holding, is Sky Office Center, located at the intersection of Rzymowskiego and Modzelewskiego streets in Warsaw's key office hub of Mokotów/Służewiec. Completed in September 2013,

weekly newsletter # 068 / 19th January 2015 / page 5

the building is fully leased with a GLA of 4,800 sq.m and 57 underground parking spaces. As explained by Agnieszka Sabaj, Marketing Manager at Hines Polska, HPSIF requires its portfolio properties to obtain sustainable building certificates, which means that they don’t need to hold them prior to acquisition. "The term 'sustainable' therefore refers to environmental improvements that will be implemented at its assets," Ms. Sabaj told Poland Today.

real estate organizations in the world. The Hines regional office in Poland was founded in 1997 in Warsaw and is 100%-owned by the Houston-based Hines International Real Estate Holdings, which belongs to the Hines family. To-date, the company has built and acquired a total of 16 assets in Poland with a combined space of 0.5m sq.m. Last year alone Hines acquired the New City office complex in Warsaw's Mokotów district (42,000 sq.m) as well as two logistics assets (in Gądki near Poznań and Grodzisk Mazowiecki near Warsaw). On the development front, Hines has just recently broken ground on its latest development in Poland, the class-A Proximo office building, the first phase of which is to reach completion in May 2016 offering 28,385 sq.m of GLA, including 2,000 sq.m of retail space. Located directly by the new subway station Rondo Daszyńskiego in Warsaw's booming Wola district, the entire project, will be developed in two stages to reach a total 48,000 sq.m of GLA.

Sky Office Center was completed in 2013.

Image: Hines

In line with the objectives of the HPSIF, best sustainability practices will be implemented in the building, especially with regard to its management and cooperation with tenants. In accordance with Hines’ standard practice, Sky Office Center’s BMS system will also undergo improvements, Hines representatives said. Hines Poland represents HISF as asset and property manager in its investments in Poland. Hines is a privately owned real estate firm involved in real estate investment, development and property management worldwide. Currently, Hines manages 391 properties totaling 15m sq.m. With offices in 115 cities in 18 countries, and controlled assets valued at approximately USD 28.2bn, Hines is one of the largest

Hines is probably best known in Poland for its 34,000 sq.m Metropolitan project near the Warsaw Old Town, which remains among the city's most prestigious office locations. The company's latest office development is Centrum Biurowe Neptun, the first high rise office building in Gdańsk, which was completed in Q1 2014 offering close to 16,000 sq.m of GLA. Their development portfolio includes three completed office projects and one under construction (Proximo) with a combined GLA of approximately 150,000 sq.m, as well as three residential projects (including one under construction in Kraków) with a total usable floor space of 100,000 sq.m.

PROPERTY & CONSTRUCTION

EuroEuro-Styl sells flagship Tricity project to Irish property investors Polish developer Euro Styl, which has built a number of residential and office buildings in the Tricity area in recent years, has sold one of its flagship developments, the BPH Office Park in Gdańsk to an Irish-backed investor GNT Gdańsk. The parties chose to keep the value of the transaction confidential. BPH Office Park is situated in the Jasień district of Gdańsk, 10 kilometers west of the city centre. This modern office complex consists of three buildings with a total leasable space of almost 20,000 sq.m. Buildings A & B were completed in July 2013, while building C was brought to the market in January 2014. The A-class complex is 100% leased to Bank BPH (GE Capital Group) under a long - term lease agreement. "After numerous successful residential projects, we are delighted to have completed our first sales transaction in the commercial real estate sector. The office market is a segment where Euro Styl continues to expand its presence; with the Tensor building in Gdynia and the C200 Office project in Gdańsk under construction and more schemes planned. This sale confirms that the company's strategy is proving to be most effective," commented Mikołaj Konopka, Vice President, Euro Styl. According to Rafał Kosoń, Associate Director Capital Markets at JLL, which advised Euro Styl on the deal, the sale of BPH Office Park demonstrates growing investor interest and increasing liquidity of modern office assets in major markets outside Warsaw.

weekly newsletter # 068 / 19th January 2015 / page 6

"After significant investment transactions in Kraków and Wrocław, it is now prime products in Tri-City Poland's fourth largest office market - that have come onto the investors' radar," Kosoń commented.

than 180,000 sq.m, with a further 38,500 sq.m under construction and 52,800 sq.m in pipeline projects.

Modern office stock in key cities* No. of assets

Total area in sq.m

Warsaw

430

4,200,000

Kraków

102

628,000

Wrocław

100

551,000

455,000

Tri-City Katowice

317,000

Poznań

303,000

Łódź

297,000

Source: CBRE *) as of June 2014

BPH Office park is fully occupied by the BPH Bank, Image: JLL the Polish unit of GE Money.

Euro Styl's latest project -"C200 Office" - is to reach completion in March 2016. The company is redeveloping the former Gdańsk shipyard offices into 17,500 sq.m of class A and B+ office space. Earlier last year, the developer broke ground on its first office project in Gdynia. Located at 8 Łużycka St. the Tensor office park will include up to 20,000 sq.m of office space in three buildings, the first of which (4,960 sq.m) is to reach completion in 2H 2015. The three buildings will be accompanied by 446 parking spaces. Both projects are being developed on a speculative basis, with Danish shipping giant Maersk being having signed the first lease at Tensor. To-date, the company has delivered two office projects: Opera Office and BPH Office Park, completed during the 2011-2013 period with a combined GLA of 28,000 sq.m. In the residential sector, it has so far completed apartments with a total floor area of more

nearly EUR 260 million, 40% higher than in 2013. eMAG has more than 1,000 employees. Naspers acquired a 75% stake in the business in 2012. The remaining 25% belong to eMAG's founder and CEO Julian Stanciu.

The Tricity area has emerged in recent years as one of Poland's hottest offshoring destinations and many developers design their projects to match the expectations of BPO/SSC tenants. As of end of Q3 2014, the office space vacancy rate in Tricity stood at 13.1%.

E-COMMERCE

Naspers merges its CEE online retailers South Africa's Naspers Group, owner of Poland's top e-commerce platform Allegro, is merging parts of its CEE business with the acquisition of Polish Agito by Romania's eMAG. The latter is currently awaiting a green light from Poland's competition watchdog UOKiK for the transaction, which gives the Romanian firm access to Poland's EUR 4bn e-commerce market. Established 13 years ago, eMag is the largest e-tailer in Bulgaria, Romania and Hungary with an inventory of 250,000 products and a potential customer base of 36m people. In 2014, eMAG’s sales were estimated at

Agito was founded in 2002 as one of Poland's first online stores and initially focused on electronics and home appliances. Its current inventory includes 150,000 products across 12 categories. Naspers took over the business in mid-2012. "Our close cooperation with eMAG will lead to transfers of their unique know-how, which is vital to speeding up Agito's development," commented Szymon Bujalski, managing director at Agito. "Moreover, by joining forces with a regional leader we will be able to improve our offer both in terms of prices, as well as products availability." Naspers's key asset in Poland is the online marketplace Allegro, which according to estimates may be responsible for some 50% of the e-commerce traffic in the country. The sector's turnover is estimated to have totaled PLN 30bn last year, with Allegro clearly dominating certain categories, for instance electronics. Although the company does not publish data regarding its turnover and commissions, it has approximately 12.5m users, including 2.9m active customers every month. In 1H 2014 alone its users posted 290m items on Allegro, 21% more than in the corresponding period of 2013. Allegro (which owns and operates 100 ecommerce related websites across the CEE region with more than 40m users), has been Naspers’s largest ecommerce investment to date. Naspers acquired the business (then called Tradus plc and listed on the LSE) for GBP 946m in March 2008. Last week Reuters published a story suggesting that Naspers may be seeking buyers for Allegro, but according to most market insiders the com-

weekly newsletter # 068 / 19th January 2015 / page 7

pany has few reasons to exit its extremely successful Polish project. Naspers owns also Poland's leading epayments business PayU, product comparison website Opineo and classified platform OLX.

E-COMMERCE

DealDeal-ofof-thethe-day site Gruper joins forces with Romanian ZUMZI One of Poland's leading deal-of-the-day websites Gruper.pl became part of the international ecommerce group ZUMZI.com. The transaction made Gruper.pl's previous owner, the German-owned publisher Polskapresse a minority shareholder in ZUMZI, which is controlled by the Berlin-based venture investor Rebate Networks as well as Neogen, a Romanian fund linked to Tiger Global Management. "We see a lot of synergies between our businesses. We put a lot of emphasis on technology and development of new services. I am certain that joining forces with the Polish team will enable us to combine our competences also in this area, apart from expanding the overall scale of the business," said ZUMZI's CEO Calin Fusu. According to the companies the transaction gives Gruper.pl's Polish customers access to a wider range of travel deals in countries where ZUMZI operates at the moment, i.e. Romania, Bulgaria, Serbia, Croatia, Slovenia, Moldova and Hungary. Polskapresse acquired Gruper.pl for an undisclosed amount in mid-2012 at the peak of the deal-of-the-day bubble fuelled by US company Groupon. This type of

e-commerce serves as a way for linking primarily local service providers (for instance beauty salons, dentists, hairdressers, restaurants and the like) with online clients. Groupon-type websites offer discount coupons which become available only if a certain number of users sign up for a given deal. This reduces risk for retailers, who can treat the coupons as quantity discounts as well as sales promotion tools. The websites make money by keeping a substantial portion of the money the customer pays for the coupon. Following the initial enthusiasm, deal-of-the day websites lost a lot of their appeal, due to concerns about the quality of services offered to large numbers of customers at very low prices. In December 2014 Polskapresse merged Gruper.pl with another deal-of-the-day website from its portfolio, SweetDeal.pl. The German venture investor Rebate Networks was founded 2010 by Managing Director Michael Brehm. The company’s strategic focus has been on building and expanding local e-commerce platforms in emerging markets. Today, Rebate Networks operates in 15 countries, focusing mainly on Asia and Eastern Europe. "We have been looking at Poland for a couple of years now. I am glad that with the Gruper deal we get to establish presence here. We believe that consolidation of businesses and markets is the right way forward in the e-commerce area," commented Michael Brehm. Polskapresse is one of Poland’s top newspaper publishers with 10 regional dailies (including eight under the umbrella logo Polska) with average Friday copy sales of some 577,000, 90 local weeklies, a handful of classified weeklies and TV supplements, and a free daily paper Echo Miasta, distributed in eight of Poland's largest regions. The company has six printing shops working for the group as well as external clients. With close to 8.5m users as of mid-2014, Polskapresse Group ranked as number 10 in the Polish internet. In

the autumn of 2013 Polskapresse acquired its key competitor in the regional papers business, Media Regionalne, from UK's Mecom. Polskapresse belongs to Verlagsgruppe Passau, one of Europe's largest publishers of regional daily newspapers with investments in Germany, Poland and the Czech Republic.

ONLINE MEDIA

Sweden's Bonnier Group buys business portal Bankier.pl Bonnier Business Polska, a part of the Swedish media group Bonnier AB and publisher of the business daily Pus Biznesu, has acquired a 100% stake in the Bankier.pl Group, which operates some of Poland's leading business websites. The seller was Poland's leading online marketplace Allegro.pl, which acquired Bankier.pl back in 2009 for PLN 63m. Allegro.pl, a unit of South Africa's Naspers, is divesting its non-core businesses in order to focus on e-commerce. "The acquisition of Bankier presents the opportunity to achieve within a short time-frame an objective which Bonnier has for its products internationally – a leading position in the most profitable and prestigious segments," says Patricia Deyna, CEO for Bonnier Business Polska. "Through Bankier, we gain a team of experienced managers, journalists, and salespeople, as well as a leading brand." The acquisition significantly strengthens Bonnier Business Polska’s digital market position, making it a leader in business media both in print and online. The Bankier portals include flagship Bankier.pl, as well as tax, small business and PR niche sites pit.pl, vat.pl, twoja-firma.pl and prnews.pl, among others, plus

weekly newsletter # 068 / 19th January 2015 / page 8

SystemPartnerski.pl, the largest financial affiliate network in Poland. Before becoming part of the Allegro Group, Bankier.pl had been listed on the Warsaw Stock Exchange since 2006. "The strategy of Bonnier Business Press includes a significant increase of investments in technology and digital media," says Anders Eriksson, head of Bonnier AB's B2B business area. “We consider the acquisition of Bankier as an important step for our strong development in Poland, where we have experienced success for the past 18 years, and which we continue to consider as one of the key markets in the coming years.” With a staff of more than 200 people, Bonnier Business Polska publishes the Puls Biznesu daily, with average sales of approximately 15,000 copies last year, medical magazine Puls Medycyny, runs the economic portal pb.pl as well as organizes conferences and events.

der the Polsteam logo) has ordered four lake freighters with a tonnage of 36,500 sq.m from China's Jiangsu Yangzijiang Shipbuilding. The value of the contract (which can be extended by a further two vessels) tops approximately USD 100m. According to PŻM, Polish shipyards showed no interest in the contract, which the Chinese are to fulfill by the end of 2017. The new ships are to replace PŻM's existing lakers, built in 1999-2000 by Japan's Mitsui. Although in terms of tonnage they will be very similar to the Polsteam vessels that currently operate on the Great Lakes (their size and design being determined by the locks of the Great Lakes Waterway), they will be equipped in much more economical engines, which makes a considerable difference amid very low shipping rates.

The Bankier.pl transaction comes little more than a month after another top Polish business news portal Money.pl, changed owners. Money.pl, along with a number of related websites, was acquired by Poland's number two internet portal wp.pl (a.k.a. Wirtualna Polska) from its founder Arkadiusz Owsiak and German fund Holtzbrinck Digital (see BR+ no 067).

As part of its ongoing tonnage renewal program, Poland's leading shipowner, the state controlled Polska Żegluga Morska (better known internationally un-

PŻM has earlier ordered 12 bulk carriers (39,000 DWT each), designed by Finland's Deltamarin, from China's Yangfan Group, the first of which is to be delivered in November this year. Together with the newly contracted lakers, the Polish company is to receive 16 vessels with a combined tonnage of 614,000 DWT over the 2015-2017 period. Between 2005 and 2013 PŻM acquired 42 bulk carriers (which replaced 51 older vessels) and two ferries at the total cost of PLN 1.5bn. PŻM operates 65 ships of total capacity 2.7m DWT, including 59 bulk carriers, 2 sulfur carriers and 4 ferries. It specializes primarily in worldwide shipping of bulk cargo, such as coal, grain, etc and it is the world leader in the niche market for transporting liquid sulfur. PŻM's subsidiary Unity Line offers ferry services in the Baltic Sea. The company is also the owner of Szczecin's class-A office & hotel complex Pazim.

TRANSPORT & LOGISTICS

Polsteam to build four new cargo ships in China for USD 100m

ators of ocean-going vessels that traverse the Great Lakes, also known as "salties." The Polish company transports steel from the Dutch port of IJmuiden to North America, bringing back grain.

One of the PŻM vessels that currently traverse the Image: PŻM Great Lakes.

The investment in new lake freighters is part of PŻM's efforts to maintain its strong position in the Great Lakes region, which plays a key role in trade exchange between the USA and Canada. The Polish company alongside a Canadian shipowner, are the leading oper-

SEGRO acquires site for its 2nd industrial park in Tychy British industrial property developer SEGRO has acquired a 10ha investment site in Tychy, where the company plans to develop more than 40,000 sq.m of production and warehouse space over the coming years. According to SEGRO, whose previous project in Tychy has been a huge success, first units at the new

weekly newsletter # 068 / 19th January 2015 / page 9

park may be available for lease by Q4 2015, as preparatory building work at the site is already underway. SEGRO's new project in Tychy will be situated close to the National Road no. 1 and the S1 expressway, by a newly developed road that links the Fiat Auto Poland car manufacturing plant with the remainder of the Tychy Special Economic Zone. SEGRO Industrial Park Tychy, the company's first project in the area, was developed and fully leased in less than 2½ years, encouraging the developer to embark on another investment there. Located on a 13ha site within close proximity to the National Road no. 1, just 22 km from Katowice, the park offers 56,000 sq m of flexible warehouse and production space.

wice, Lodz, Poznan, Prague, Strykow, Tychy, Warsaw and Wroclaw. Its Polish portfolio includes more than 800,000 sq.m of built-up warehouse and industrial space that can be quickly expanded by a further 600,000 sq.m, Segro's Paweł Sapek told Poland Today last year. SEGRO is an owner, asset manager and developer of modern warehousing and light industrial properties, with GBP 4.5bn of assets principally concentrated in the UK and in key conurbations in France, Germany and Poland. It has 5.8m square metres of built space under management and a gross passing rent roll of GBP 266m.

terminal, attracts more tenants. To date, Goodman has built a 14,000 sq.m warehouse at the Pomeranian Logistics Centre, which is fully leased to Kuehne + Nagel, Terramar, NRF Poland and NTA. Once the two new projects have been finalized, the combined area of the center will reach nearly 53,000 sq.m, although Goodman can develop up to 500,000 sq.m of flexible logistics warehousing and production facilities with integrated office space at the site. On completion the total value of the project is estimated to exceed EUR 300m.

TRANSPORT & LOGISTICS

Goodman to build 40,000 sq.m of logistics space in Gdańsk Gdańsk

SEGRO's first project in Tychy has been a huge success for the British developer. Image: SEGRO

"The region is popular especially among logistics and production companies seeking convenient conditions for domestic and pan-European distribution. The new investment will provide the tenants with modern, flexible warehouse and production space for different industry sectors,” Magdalena Szulc, SEGRO Business Unit Director Central Europe. SEGRO started its operation in Central Europe at the beginning of 2006. Currently the company runs investments in such strategic locations as: Gdansk, Gli-

Australian-owned industrial property developer Goodman will develop close to 40,000 sq.m at its Pomeranian Logistics Centre (PLC) in Gdańsk, thanks to a huge contract with a Polish FMCG distributor as well as a new speculative project.

DCT Gdańsk with Pomorskie Centrum Logistyczne in Image: Goodman the background.

The company has not disclosed any further details about the client, for whom it's building 23,105 sq.m of warehouse space and 1,825 sq.m of offices in Gdańsk. The warehouse section will be made up of 2,741 sq.m cold storage space and a 382 sq.m freezer. The facility, which is to reach completion in Q4 2015, will serve as a storage and distribution hub for a major FMCG player. The lease period is 10 years. Additionally, Goodman has decided to build 14,000 sq.m speculatively, hoping PLC's unique location directly by DCT Gdańsk, Poland's leading container

DCT Gdańsk, to which Goodman owes much of its success, has emerged as one of the key Baltic Sea terminals in merely few years thanks to its ability to receive the world's largest ships. It is a regular port of call for ships operating on Maersk Line's ChinaEurope route. The terminal is currently building a second quay, which is expected to reach completion in 2016, doubling DCT Gdańsk's capacity to reach 3m TEU. Moreover, the area is directly connected via the Gdańsk ring road to the A1 motorway, S7 expressway to Warsaw and S6 road to Szczecin.

weekly newsletter # 068 / 19th January 2015 / page 10

"Goodman’s Pomeranian Logistics Centre is one of the most ambitious speculative developments in Poland and is part of our strategy to be present in key logistics regions of Poland,” says Błażej Ciesielczak, Goodman Regional Director for Central and Eastern Europe. Goodman is an integrated property group that owns, develops and manages logistics and business space across Continental Europe, the United Kingdom, the Asia-Pacific region, North America and Brazil. The Group invests in industrial estates and warehouse and distribution centers. With total assets under management of EUR 19.2bn and 432 properties under management, Goodman is the largest industrial listed property group on the Australian Securities Exchange. As of end of 2014, Goodman had 187,000 sq.m of warehouse space under construction in Gdańsk, Poznań, Wrocław, Kraków, Lublin and a land bank that enables the company to develop a further 825,000 sq.m.

POLITICS & ECONOMY

Norway's Kongsberg signs 2nd missile contract in Poland Poland's defense ministry has signed a second massive contract with Norway's Kongsberg Defence & Aerospace for the delivery of its trademark NSM (Naval Strike Missile) coastal artillery system to the Polish military. The deal, worth NOK 1.3bn (approx. PLN 600m) follows a NOK 1.5bn (PLN 700m) contract Poland signed with the Norwegians back in 2008. Both contracts are similar in size and concern squadronsize units.

"After a successful delivery and acceptance of the first Squadron, this second Squadron will increase the cooperation with the Polish Government and industry and further enhance security of supply by establishing the capability to maintain the system in Poland in an alliance with WZE (Wojskowe Zakłady Elektroniczne S.A)," Kongsberg said.

"This agreement proves the leading position of NSM and our position as a reliable partner and supplier to Poland. Polish industry and Kongsberg successfully delivered the first NSM Coastal Defense Squadron through a close cooperation with the Polish government. With this contract we continue our ambition of involving even more Polish companies and expand our cooperation into a broader technological arena", says Harald Ånnestad, President of Kongsberg. The NSM is a fifth generation strike missile, developed by Kongsberg for the Norwegian Navy. The seaskimming weapon can handle littoral and open-sea anti-ship roles and can be used as a land-attack cruise missile. NSM reached initial operational capability in 2012 and it been recently tested by the US Navy.

Kongsberg missile systems will defend Poland's BalImage: Kongsberg tic coast.

The JV with WZE and the related technology transfers are part of an offset package, the value of which roughly matches the size of the deal. The previous compensation package, related to the first NSM contract, was approved in November 2011 with the estimated value of PLN 345m. The first batch of NSM missiles along with the weapons systems were implemented at the Polish army unit in Lębork. The coastal defense system bought by Poland uses NSM in conjunction with a command and weapon control system similar to the NASAMS air defense system in use by four NATO countries, including the US. The radar system, communications system and trucks carrying launch ramps are provided by Polish subcontractors: Bumar Elektronika (radar), Transbit (communications), and Jelcz (trucks). Kongsberg currently has offices in Szczecin and Warsaw, where a total of 70 employees work in the civilian maritime industry and with defense technology.

Kongsberg supplies high-technology systems and solutions to customers engaged in the oil and gas industry, the merchant marine industry, and the defense and aerospace industries. In 2013, Kongsberg had a turnover of NOK 16.3bn (of which 76% outside Norway) and net earnings of NOK 1.2bn. The military technology unit Kongberg Defence Systems contributed NOK 4.5bn to the total sales figure. The group employs approximately 7,500 worldwide. Poland's centre-right government, has put modernizing the armed forces high on its agenda. The Defense Ministry seeks to spend USD 43bn over the coming decade to replace outdated weaponry, much of which dates back to the Communist times. Investments will include a missile-defence system, new ships for the navy, upgraded tanks, military training aircraft, 70 helicopters, unmanned aerial vehicles and better equipment for ground troops. Overall, the share of the defence budget going on equipment will rise from 15% to 33%. Poland's ongoing large-scale army modernization program has been a magnet for Nordic weapons makers.

weekly newsletter # 068 / 19th January 2015 / page 11

Last year the country's state-owned defense group Polski Holding Obronny (PHO) signed cooperation agreements with Saab and BAE Systems Hägglunds, the Swedish unit of European defense giant BAE Systems. Saab is already involved in the Polish naval sector having signed a contract in 2006 for 36 Saab Bofors Dynamics RBS 15 Mk 3 anti-ship and antisurface missiles for Poland's Orkan-class fast attack craft. The Swedes are hoping to sell more of their naval program, including submarines, to Poland but they are interested also in land-based systems. As for the PHO-BAE partnership, it focuses on new tracked armored combat vehicles for a top-priority Polish military program under an exclusive teaming agreement. Poland seeks to buy some 600 vehicles of that kind by 2022.

pits, with the remaining nine mines to be transferred to a special purpose company owned by Polish coal trader Węglokoks. The ministers had expected the entire rescue package, including generous severance payments for up to 4,800 redundant workers, to total some PLN 2.3bn (EUR 530m). KW lost EUR 260m in the first 11 months of 2014, and has liabilities of almost EUR 1bn. At the moment, KW loses approximately PLN 60 (EUR 14) for every ton of coal it mines and according to the ministers, without urgent action it would go bankrupt by the end of January. As of end of November Polish mines had stockpiles of unsold coal totaling 8.2m tons.

POLITICS & ECONOMY

According to the original plan, Europe's largest coal miner, the ailing state-owned giant Kompania Węglowa (KW), was to be taken apart. The company, which produces about a third of Poland's coal output, was expected to close down its four worst-performing

Poland's energy sector, which remains largely stateowned, has an even bigger part to play, as according to the government it is expected to invest in Nowa KW, the newly-created vehicle that will incorporate the remaining nine KW mines. Although details of these potential capital ties are yet to be hammered out, there is also talk about long-term coal supply contracts. It will take a lot of creativity on the part of cabinet ministers to put the plan in motion, as forcing stock exchange listed firms to throw money at unprofitable ventures or buy coal well above market prices seems problematic, albeit not unheard of. As far as KW's surplus workers are concerned, it has been agreed that any potential employment cuts would not affect miners themselves, focusing only on administration and coal processing staff. However, the reductions are to be carried out by means of early retirement, the terms of which are very generous, pushing the cost of the entire program way beyond the initial estimates.

Government and trade unions agree on rescue plan for coal mines It took merely 10 days of largely peaceful protests on the part of trade unions for the government to backtrack on its restructuring plan for the country's coalmining sector. The two sides reached an agreement last Saturday that envisages no pit closures, even though only a few days earlier the government had seemed determined to shut down at least four lossmaking mines.

Domarecki (see full story on page 4) as well as statecontrolled power utility Tauron and coal trader Węglokoks. Tauron, which has two coalmines that employ approximately 6,000 people and that posted a symbolic operating profit of PLN 5m in Q1-Q3 2014, is interested in one of KW's four troubled mines.

PM Ewa Kopacz promised no miners would lose jobs Image: KW as a result of the planned restructuring.

Although details of Saturday's settlement are yet to emerge, what we do know is that the four ailing mines are to be restructured and then sold. However, should no investor express interest in the restructured pits, they are to be reunited with the remaining KW mines under a new entity "Nowa KW." The list of potential investors includes Polish entrepreneur Krzysztof

All in all, it seems that Ewa Kopacz has just missed her chance to go down in history as the first Polish prime minister to challenge the almighty unions and introduce true market rules in the country's coalmining sector. Even if some of KW's mines do find new owners, the history is likely to repeat itself a few years down the road elsewhere. Below please find Poland Today Editor Andy Kureth's opinion piece on the issue, which he had written shortly before the government and the miners came to a settlement.

weekly newsletter # 068 / 19th January 2015 / page 12

OPINION

Time for Kopacz to become Poland’s ‘Iron Lady’ by Poland Today Editor Andrew Kureth

Since coming to power just a few months ago, media have frequently compared Prime Minister Ewa Kopacz to Margaret Thatcher – most recently The Economist last week. But so far, Kopacz has been less of an ‘Iron Lady’ and more of an ‘Aluminium Lady’, bending as much as possible to the will of those who oppose government plans (or finding flexible solutions, depending on your point of view). But now Kopacz has a chance to show she has some backbone by following through with the government’s restructuring programme for the mining industry, which aims to save the sector from bankruptcy. It calls for drastic changes at Poland’s largest coal miner, Kompania Węglowa, which would close down four of its most unprofitable mines. While some miners would be transferred to work in other mines, at least 4,000 would lose their jobs. Poland’s miners are outraged, and are holding strikes throughout the country. Poland’s mining unions have long been powerful politically, and have carved out juicy perks for their members, such as early retirement and hefty bonuses.

But those perks are becoming unsustainable: Polish mines are woefully inefficient. As we reported last week, Kompania Węglowa produces a mere 620 tonnes of coal per employee – far below some of the world’s other most inefficient mines. It has gotten so bad that Polish electricity producers have turned to buying imported coal. At Polish coal mines, often located right next to those power plants, the mountains of unsold, high-priced coal grow higher by the day. Kompania Węglowa loses 60 złoty (€14) for every tonne of coal it produces. It lost €260m in the first 11 months of this year and owes debts of nearly €1bn. Miners reply that their product is needed and that mining has a long tradition in Poland. They point out that for those who are laid off the prospects for finding other work are marginal, especially since local economies will almost certainly collapse once the mines are shuttered. They are right on all points, but the argument for restructuring is stronger. Yes, coal is key for Poland’s energy suppliers and will be for the foreseeable future – but not at the prices that Poland’s mines offer. Yes, mining does have a long tradition in Poland, especially in Silesia – but sentimentality is no reason to prop up a failing business. Yes, local economies will almost certainly collapse without the mines – but they may have anyway, as the mines continued to lose money and locals move either to one of Poland’s large cities or to the West in search of work. These towns should have diversified their economic bases and should have put programmes in place to help people like miners transition from one career to another. To be fair, the central government should have supported such efforts. Indeed, the government should have pushed restructuring long ago when coal prices were higher. There is plenty of blame to go around – but none of it changes the necessity of restructuring Poland’s coal mining sector.

So far, Kopacz has proved to be her usual pliable self. She met the striking miners and negotiated with them personally. She has promised to ensure that no jobs are lost – at least in the short term – and has continually cast the programme as “restructuring” mines rather than “liquidating” them. To no avail: the miners want it all. But that is simply impossible. Poland’s taxpayers cannot be asked to continue to spend billions of złoty on hugely inefficient businesses to prop up a couple of local economies and keep 4,000 people in work. That money can be better spent promoting innovation and services, and making Poland’s economy more flexible. While Poland certainly needs coal, it is far less clear how much it actually needs mining. So instead of trying to placate Poland’s miners’ unions, Prime Minister Kopacz should stand up to them. Poland’s lower house of parliament, the Sejm, passed the restructuring programme last week. Kopacz must see it through without any reservations. As it is an election year, she is no doubt afraid of losing votes. She might. But it is also equally possible that by standing firm in the face of such fierce opposition , she will gain the respect of many Poles who still feel lukewarm about her government, but who also believe the miners have been coddled for too long. Her predecessor Donald Tusk was known for avoiding rocking the boat at all costs. By showing strength here she will actually do something Tusk never did: implement meaningful, positive reform of Poland's mining sector.

weekly newsletter # 068 / 19th January 2015 / page 13

KEY STATISTICS Consumer Prices

Inflation

Clothing, shoes

-4.7

+1.1

Housing

+0.5

Transport

-3.2

0.0 +3.6

-4.6 +3.4

-4.6

-3.2

0.0

+0.1 +3.5

-0.1

-0.2

-5.0

-1.1

+0.1 +0.5

+0.1 +0.4

0.0 +0.4

0.0

-1.0

-3.0

-0.8

-2.0

-2.4

-3.7

Communications +4.0

0.0

-0.4

-0.3 +3.0

Gross CPI

0.0

-0.6

0.0

-0.3

-0.1

-6.5

-0.7 +3.0

-0.6 -0.2

-1.0

Aug '14 Sep '14

Oct '14 Nov '14

+4.7

-1.1

-0.9

+4.2

-9.1

+2.1

+1.7

+1.6

+2.3

-0.2

y/y (%)

Year

2009

2010

2011

2012

2013

-1%

Turnover in PLNbn

582.8

593.0

646.1

676.0

685.7

-2%

y/y (%)

+4.3

+5.5

+11.6

+5.6

+2.3

0.0

Dec 14

0.0 +3.6

-2.5

Oct 14

Alcohol, tobacco +3.6

-0.2

Jun 14

-2.2

Jul '14

m/m (%)

m/m

Aug 14

+0.1

Apr 14

-2,0

Dec 13

Food & bev

Month y/y

Feb 14

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

Oct 13

Sector

Retail Turnover

Jun 13

Dec '14

Aug 13

Nov '14

Apr 13

Oct '14

Feb 13

Sep '14

Dec 12

Data in (%)

-0.3

Residential Construction Dwellings

2009 2010

2011

2012

2013 Jan-Nov y/y

178.8

174.9

184.1

165.1

138.7

158.1

162.2

141.8

(in '000 units)

Producer Prices Month

Industrial Output Out put

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

Commenced

142.9

127.4

139.5

+15.3

+2.0

-8.5

+16.5

+3.5

+0.3

U. construction

670.3 692.7 723.0

713.1 694.0

706.9

+0.3

y/y (%)

+4.4

+1.7

+2.3

-1.9

+4.2

+1.6

-7.5

Completed

160.0 135.7

152.5

127.6

-1.2

Year

2007

2008

2009

2010

2011

2012

2013

Source: Central Statistical Office (GUS)

y/y (%)

+10.7

+3.6

-3.5

+9.8

+7.7

+1.0

+2.2

Gross Domestic Product (ESA2010)

-0.1

+0.3

0.0

-0.4

-0.5

m/m (%)

y/y (%)

-1.0

-1.8

-2.1

-1.5

-1.6

-1.3

-1.6

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 Output

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

Month

Period

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

m/m (%)

-0.1

0.0

-0.1

m/m (%)

+14.0

+16.9

+0.9

-5.4

+19.8

+7.2

-9.4

y/y (%)

-1.5

-1.4

-1.2

-0.9

-0.8

-0.7

y/y (%)

+10.0

+8.0

+1.1

-3.6

+5.6

-1.0

-1.6

2007

2008

2009

2010

2011

2012

2013

Year

2007

2008

2009

2010

2011

2012

2013

Year y/y (%)

+7.4

+4.8

+0.2

-0.1

+1.0

+0.2

-1.8

y/y (%)

+15.5

+12.1

+5.1

+4.6

+11.8

-0.6

-12.0

Source: The Central Statistical Office of Poland, GUS

Gross Wages

(%) +14.3

-0.1

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

-0.2

Construction Prices

2014 144.4

-1.7

Month

m/m (%)

Month

Permits

131.7

146.1

GDP in PLN bn current prices

Growth y/y unadjusted

Current account def. in % of GDP

Q3 2014

+3.3%

426.836

n/a

Q2 2014

+3.5%

418,317

-1.2%

Q1 2014

+3.4%

403,121

-1.2%

Q4 2013

+3.0%

463,855

-1.3%

2013

+1.7%

1,662,052

-1.3%

2012

+1.8%

1,615,894

-3.6%

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

Sentiment Indicators

2011

+4.8%

1,553,582

-5.0%

Sector

Economic sentiment and consumer confidence indicators

2010

+3.7%

1,437,357

-5.1%

6,736 205 6,358

193 6,020

183 6,392 194

Construction

3,895 166 3,706

158 3,884

166 3,872 165

Retail & repairs

3,456

151 3,577

153 3,532

3,913

147 3,544

163 3,747 164

151

138 3,666 130 3,650

129 3,710

6,695

174 6,987

181 6,835

177 6,835 177

Financial sector 6,602

148 6,747

152 6,738

151 6,360 143

National average 3,823

152 3,895

155 3,740

Transportation IT, telecoms

Source: Central Statistical Office (GUS)

149

131

3,781 154

100

-20

-40

60 De c 14

Energy

161 3,663 160 3,743

120

Sep 14

3,690

Jun 14

145 6,044 137

Manufacturing

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

Mar 14

8,615 196 6,333 144 6,382

Dec 13

Se p 13

Jun 13

M ar 13

De c 12

Q3 2014

Sep 12

Q2 2014

Jun 12

Q1 2014

Ma r 12

Coal mining

Q4 2013

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

Key Economic Data & Projections Indicator

2011

2012

*2014

*2015

GDP change

+4.5%

+1.8%

+1.7%

+3.3%

+3.2%

Consumer inflation

+4.3%

+3.7%

+0.9%

+0.0%

-0.4%

Producer inflation

+7.6% +3.4%

-1.3%

-1.5%

-1.1%

CA balance, % of GDP

-5.0%

-3.7%

-1.4%

-1.5%

-2.2%

Nominal gross wage

+5.2%

+3.7%

+3.4%

+3.5%

+3.8%

Unemployment**

12.5%

13.4%

11.5%

10.9%

4.12

4.19

4.20

4.18

4.15

EUR/PLN

2013

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

weekly newsletter # 068 / 19th January 2015 / page 14

58.14 ↑

100 SEK

45.71 ↑

100 NOK

48.26 ↑

10,000 JPY

319.31 ↑

10,000 HUF

400

USD EUR

350

300

15.56 ↑

100 CZK

134.53 ↓

Money Supply Aug '14

Sep '14

WIG Total index

PLN (up to 1 year)

4.5%

PLN (up to 5 y ) PLN (over 5 y) PLN (total)

4.4%

4.1%

4.8%

4.7%

3.6%

4.8%

4.7%

4.5%

3.9%

↓ Alior Bank

4.7%

4.5%

4.0%

4.7%

4.4%

4.0%

EUR (up to 1m EUR) 1.9%

1.7%

1.6%

EUR (over 1m EUR) 3.4%

3.1%

2.5%

-2%

-4%

↑ Asseco Pol.

53.4

+1%

+16%

Change 1 week

-3% ↓

→ Bogdanka

97.5

-22%

Change end of '13

-2% ↓

1.7%

↓ BZ WBK

347

-7%

-10%

2.4%

↓ Eurocash

35.03

-6%

-27%

WIG-20 blue chip index

24.6

-8%

-31%

↑ JSW

21.34

+2%

-60%

2,252 2,252. 252.33

↑ Kernel

30.23

+3%

-21%

Change 1 week

-4% ↓

↓ KGHM

103.2

-7%

-13%

Change end of '

-6% ↓

-3%

-21%

450.95

-11%

-10%

WIG Total closing index

8.02

-1%

-18%

last three months

172

-3%

-4%

54,000

19.54

+20%

53,000

4.3

-5%

-17%

50.46

-2%

23%

-6%

-16%

↓ Grupa Lotos

Warsaw Inter Bank Offered Rate (WIBOR) as of 16 Jan 2015 Overnight

1 week

1 month

3 months

6 months

2.05%

2.03%

2.02%

Nov '14

Reference

Lombard

NBP deposit

Rediscount

2.00%

3.00%

1.00%

2.25%

Monetary base

167,008

166,104

171,649

169,090

574,529

578,485

574,606

583,682

- Currency outside banks

124,986

124,389

125,902

127,107

1,003,128 1,003,354 1,011,930 1,017,659

- Time deposits

448,037

444,514

457,106

453,769

1,020,561 1,021,824 1028,665 1,033,418

- Net foreign assets 162,129 159,513 157,084 160,634 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

7,120

↓ LPP ↓ mBank ↓ Orange Pol.

Credit

↓ Pekao

The financial sector's net lending in PLN bn,

↑ PGE

loan stock at the end of period

↓ PGNiG

Type of loan

Aug' 14

50,300. 300 .33

78.04

Oct '14

WIG-20 stocks Price Change Change in alphabetical 16 Jan 9 Jan end of order '15 '14 '13

Jun '14 Jul '14 Aug '14 Sep '14 Oct '14 Nov '14

Central Bank (NBP) Base Rates

in PLN m

as of 16 January 2015

Sep' 14

Oct' 14

Nov' 14

↓ PKN Orlen

Loans to customers

950,774

954,978

958,641

966,268

↓ PKO BP

- to private companies

277,482

280,248

279,124

282,031

↓ PZU

478.05

-1%

+6%

- to households

587,136

590,208

592,068

593,456

↓ Synthos

3.99

-4%

-27%

Total assets of banks

1,718,251 1,737,728 1,742,288 1,755,746

→ Tauron

5.04

15%

Source: Central Bank NBP

52,000 51,000 50,000 16 Jan 15

100 DKK

Warsaw Stock Exchange, rates in PLN

on loans to non-financial corporations

17 Dec 14

425.50 ↑

16 Jan 15

565.85↑

100 CHF

4 Nov 14

100 GBP

20 Jun 14

432.20 ↑

28 Aug 14

100 EUR

Key indices

Term / currency

450

10 Apr 14

371.74 ↑

3 Feb 14

100 USD

Stock Exchange

Average weighted annual interest rates

25 Nov 14

as of 16 January 2015

I nterest rates

9 Oct 14

100 USD/EUR against PLN

Central Bank average rates

31 Oct 14

Currency

Source: Warsaw Stock Exchange

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

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

y/y (%)

share (%)

2013

EXPORTS in PLNbn

IMPORTS in PLN bn share (%)

Jan-Sep 2014

y/y (%)

share (%)

2013

share (%)

No Country

Jan-Nov share 2014

IMPORTS in PLN bn 2013

share No

Country

Jan-Nov share 2014

2013

54,009

+4.3

10.7

69,304

10.9

36,296

+3.9

7.2

47,906

7.4

1 Germany

164,416 26.1% 162,548 25.1%

1 Germany

138,921 21.8% 142,161 21.7%

7,729

+19.9

1.5

8,624

1.4

3,158

+5.8

0.6

4,150

0.6

2 UK

39,890

6.3%

42,138

6.5%

2 Russia

68,146 10.7% 79,578 12.1%

Crude materials except fuels

12,459

+2.1

2.5

15,744

2.5

16,368

+07

3.2

21,585

3.3

3 Czech Rep.

39,520

6.3%

40,110

6.2%

3 China

Fuels etc

21,003

-6.1

4.2

30,013

4.7

55,523

-0.5

11.0

75,539

11.7

4 France

35,354

5.6%

36,367

5.6%

4 Italy

34,920 5.5% 34,940 5.3%

Food and live animals Beverages and tobacco

66,219 10.4%

61,127 9.3%

1,471

+4.7

0.3

1,864

0.2

1,985

-0.6

0.4

2,646

0.4

5 Russia

27,329

4.3% 34,069

5.3%

5 Netherlands

23,878 3.8% 25,409 3.9%

Chemical products

46,392

+4.3

9.2

59,103

9.3

75,454

+6.7

14.9

92,917

14.3

6 Italy

28,514

4.5%

27,958

4.3%

6 France

23,782 3.7%

Manufactured goods by material

101,308

+2.8

20.1

129,915

20.3

90,508

+6.9

17.8

112,392

17.3

7 Netherlands

26,026

4.1%

25,707 4.0%

7 Czech Rep.

22,712 3.6% 24,054 3.7%

167,104

+4.0

32.9

216,608

33.4

8 Ukraine

n/a

18,020

2.8%

8 USA

15,542 2.4%

17,431

51,133 +16.6

10.1

58,210

9.0

9 Sweden

17,917

2.8%

17,581

2.7%

9 UK

16,296 2.6%

17,184 2.6%

10 Slovakia

15,965

2.5%

17,099

15,559 2.4%

15,137 2.3%

Animal and vegetable oils

Machinery, transport equip.

190,119

+5.1

37.8

239,434

37.5