WBJ #19 2011

The central bank caught the market offguard with a 0.25 bps interest rate hike

Could France’s stance on shale gas prove problematic for Poland?

Pedestrians beware – Poland's roads are the bloodiest in the EU

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WWW.WBJ.PL

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VOLUME 17, NUMBER 19 • MAY 16-22, 2011, 2011 . z∏.12.50 (VAT 8% included) . ISSN 1233 7889 INDEX-RUCH-332-127

Since 1994 . Poland’s only business weekly in English

Squeezed by Nord Stream

REAL ESTATE

COURTESY OF OKAM

Lokale Immobilia

• Okam interview • Ursus controversy 15-18

A taste of Polish medicine

A guide to Polish business and industry

Przewodnik po polskim biznesie i gospodarce

Business consulting companies

¸UKASZ MAZUREK/WBJ/SHUTTERSTOCK

Poland’s pharmaceuticals market is large and healthy, but big changes are afoot – WBJ investigates 11-14

Poland wants to keep the Nord Stream pipeline from strangling its hopes for energy independence

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In this issue News . . . . . . . . . . . . . . . . . . . . . . .2-4 Industry News . . . . . . . . . . . . . . . . .5 Business Environment . . . . . . . . . .6 Cover Story . . . . . . . . . . . . . . . . . .8-9 Opinion . . . . . . . . . . . . . . . . . . . . . .10 Pharmaceuticals supplement . .11-14 Lokale Immobilia . . . . . . . . . . .15-18 The List . . . . . . . . . . . . . . . . . . . . . .19 Markets . . . . . . . . . . . . . . . . . . . . . .20 Listed Firms . . . . . . . . . . . . . . . . . .21 Arts & Culture . . . . . . . . . . . . . . . .22 Last Word . . . . . . . . . . . . . . . . . . . .23

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Rebel diplomacy

Shifting allegiances

Rados∏aw Sikorski made a surprise visit to Libya last week, meeting with the rebel council 3

Civic Platform’s seduction of a key Democratic Left Alliance politician could be a game changer 10

A GUIDE TO POLISH EXPORT is AVAILABLE NOW! To order: Please contact us at +48 22 639 85 68 or kwilinski@valkea.com

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NEWS

www.wbj.pl

IMF praises Poland

MAY 16-22, 2011

Google Street View

IN THE SPOTLIGHT

12.6%

The International Monetary Fund (IMF) has praised Poland’s fiscal consolidation plans.

According to a report by the IMF, Poland’s fiscal deficit will fall to 5.6% of GDP in 2011 and 3.6% in 2012, while GDP will grow at 4% in 2011 and 3.8% in 2012.

was the unemployment rate in Poland in April, according to Labor Ministry estimates. This is an improvement over the 13.1% reported in March

3.6% of GDP is the IMF’s latest forecast for Poland’s fiscal deficit in 2012

54%

Solidarity inspires EU logo

Z∏.22 billion from privatization The government has announced that revenues from privatization projects in 2010 came to z∏.22.037 billion. In total, 487 privatization projects were initiated, of which 230 were successfully completed. The total value of contracts signed was the highest in Polish history, as was the volume of transactions.

is the level of software piracy in Poland, much of which takes place in small and medium-sized companies

4.1% of GDP

COURTESY OF GOOGLE

Poland has unveiled the logo for its six-month presidency of the EU Council, which starts on July 1. Comprising six colored arrows and a Polish flag, the logo is reminiscent of the one used by the Solidarity labor union.

Numbers in the News

is the forecast value of Poland’s online economy in 2015, according to Boston Consulting Group

Quote of the Week

Google will soon begin filming in Poland for Google Street View, the service which adds panoramic, ground-level views to the firm’s map programs.

Warsaw, Wroc∏aw, Poznaƒ, Gdaƒsk and Kraków have been selected by the American internet giant for its controversial web-based service.

The images are expected to come online early next year.

In the meantime, Poles will be able to pick specific landmarks and attractions they feel deserve to be included. The most interesting will then be selected following a public vote.

Since its 2007 launch, Google Street View has drawn heavy criticism internationally from those who see it as an

invasion of personal privacy. In Japan, for example, Google was forced to reshoot all its photos following complaints that the cameras on its vehicles had been placed too high, allowing views into private areas. And then came the revelation that the firm’s vehicles had been “accidentally gathering data” from wifi networks around the world for years.

In Poland the service has also aroused controversy. Originally planned for 2009, Google shelved its plans to launch Street View in Poland after Inspector General for Personal Data Protection (GIODO) Wojciech Wiewiórowski raised concerns that the service might infringe on privacy rights.

Following protracted dis-

cussions the watchdog office relented, but Mr Wiewiórowski told Dziennik – Gazeta Prawna that even though he had withdrawn his complaints, he still intended to monitor the implementation of the service.

And even if Google gets the service online for Poland, there’s no guarantee it will remain that way.

Street View has already been discontinued in Australia and Germany, and now Google is threatening to cut it in Switzerland, according to The Wall Street Journal. This follows a recent court decision that requires the firm to guarantee 100 percent anonymity of faces and license plates in its imagery.

David Ingham

“An old political satyr has ravished a politically immature nymph. In other words, Donald Tusk has ravished Ar∏ukowicz with a minister’s seat” Civic Platform exile Janusz Palikot offers some insight into the prime minister’s recruitment of leftist politician Bartosz Ar∏ukowicz

Figures in focus Living epidemic Estimated number of people living with HIV (adults and children) in selected EU countries, 2001 & 2009

2001 140,000 120,000 100,000 80,000 60,000 40,000

On WBJ.pl

20,000 0

Dividends worth z∏.16 billion?

More Polish companies than ever are planning to share profits with their shareholders, Parkiet reports. The combined amount domestic companies listed on the Warsaw Stock Exchange will pay out in dividends this year could exceed z∏.15.7 billion, surpassing the record z∏.13.3 seen in 2007.

Illegal software woes Software piracy remains a significant problem in Poland, as over 50% of computer programs used in the country are illegal copies, according to a report by the Business Software Alliance. The good news is that the figure hasn’t risen since last year. ●

2009

160,000

A setback for Poles in Polish-Lithuanian “spelling row” Having their names spelled on official documents using Polish characters has been a major sticking point for the Polish minority in Lithuania. In a judgment issued last week, the European Court of Justice sided with Lithuania on the issue. Log on to WBJ.pl to delve into this latest episode in this long-standing neighborly dispute.

Italy

France

Germany

Poland

Romania

Source: "UNAIDS Report on the Global AIDS Epidemic 2010"

Company index Adgar Post´pu ..........................15 GlaxoSmithKline ........................12 PGE ........................................5, 20 AGED ..........................................16 HB Reavis Group........................16 PGNiG ................................4, 5, 20 BASF SE/Wintershall Holding

Hochtief Polska..........................15 PKOBP........................................20

GmbH ..........................................8 IKEA ............................................15 Polimex-Mostostal ....................20 Bayer HealthCare ......................12 Ingeborg Investments................16 Polpharma ................................12

DATELINE

Brammo ....................................23 Internet Group............................20 Polskie LNG ................................9 Carpathian PLC..........................17 Investcon Group ........................20 Poros Customs ..........................23

May/June MAY 16-18 EUROPEAN ECONOMIC CONGRESS Event:

Most important economic event in Central Europe. Location: Katowice. www.eec2011.eu

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COIE CONFERENCE

Event:

Inauguration of the Investor and Exporter Service Center of the Âwi´tokrzyskie Voivodship Marshal’s Office. Location: “¸ysogóry” Hotel, Kielce. www.sejmik.kielce.pl

Celtic Property Developments ..16 Irena ..........................................20 ProLogis ....................................17

Location: Vienna. www.realvienna.at

Colliers International ................18 Jastrz´bska Spó∏ka W´glowa......5 Rabobank Group ........................18

25-27 3RD ANNUAL BUILDING MATERIALS CONFERENCE Event:

Aimed at the integration of MBA students and alumni from all over the world. Location: Kraków. ksb.uek.krakow.pl

24-25 REAL VIENNA Event:

The Real Estate and Investment Fair focused on Central & Eastern Europe.

The main theme of this year’s conference will concern honesty in the construction sector. Location: Hotel Qubus, Kraków. www.dlabudownictwa.pl

26-27 EUROPEAN FINANCIAL CONGRESS Event:

20-22 INTERNATIONAL MBA ALUMNI CONGRESS Event:

Chevron ........................................4 IZNS............................................20 PZU ........................................3, 20

A discussion platform for foremost experts and eminent representatives of business, academic and political circles. Location: Sheraton, Sopot. www.efc2011.com

ConocoPhillips ............................4 Kruk............................................21 RED Real Estate Development..15 Cushman & Wakefield ..............18 Kulczyk Oil Ventures ....................8 RKW............................................15 Cyfrowy Polsat ..........................20 Lotos ............................................8 Roche ........................................14 E.ON AG........................................8 LUX MED ......................................7 Rossmann ..................................16 Eli Lilly........................................14 MLP Group ................................16 RWE ..............................................5 Empik ........................................16 New World Resources ..............20 S+B Gruppe ................................16 Epstein architectural studio ......16 NFI Krezus ................................20 Sandoz........................................12 ET Logistik ................................16 NFI Midas ..................................20 Sanofi-Aventis ............................12 ExxonMobil ..................................4 Novartis ......................................12 SPEC ............................................5 Fasing ........................................20 Okam ..........................................17 SwedeCenter..............................15

JUNE 9 DR IRENA ERIS LADIES’ GOLF CUP Event:

The fourth edition of the Dr Irena Eris Ladies’ Golf Cup. Location: Naterki. www.drirenaerisgolf.pl/english

Gazprom ..............................4, 8, 9 Orlen ............................................3 Tauron Polska Energia ..............20 GDP Suez ....................................8 Paged..........................................20 TelForceOne ..............................20 Getin Holding ............................20 PBG ............................................20 TVN ............................................20 Ghelamco ..................................18 Pfizer ..........................................14 ZPC Ursus ..................................16

NEWS

MAY 16-22, 2011

www.wbj.pl

The war in Libya

EU office in Benghazi

He was the first foreign minister from a member of the international Libya Contact Group to personally visit the rebel council since the outbreak of the conflict. The trip was agreed upon with the EU’s foreign policy chief, Catherine Ashton, as well as NATO allies, as a show of support for the uprising.

COURTESY OF THE FOREIGN MINISTRY

Sikorski makes surprise visit to Libya Poland’s foreign minister met with the rebels fighting Gaddafi’s regime

Keeping with the position of most EU members, FM Sikorski did not officially recognize the rebel council, saying instead that it was “the legitimate interlocutor of the international community.”

“We wish the Libyan nation victory in democratization,” Mr Sikorski told Mustafa Abdul Jalil, chief of the rebel

FM Sikorski met with the rebels fighting Gaddafi in the region in the aftermath of the Arab Spring.

Much secrecy surrounded Mr Sikorski’s trip to Benghazi, with media attention alerted by a comment on the FM’s Twitter account saying, “The CASA military plane is circling above Palermo. The sun is warming from the south.

We’re going where it is even hotter. Twitter may not work.”

The minister’s plane landed in Benghazi on its second attempt, after initial information suggesting the town might be under attack proved incorrect.

“Not without adventures, but ‘mission accomplished.’ …

The Hague is waiting for Colonel Gaddafi,” tweeted Mr Sikorski on Wednesday night.

The history won’t forget you either

Interim Transitional National Council. Mr Jalil, in turn, cited Poland’s own fight for democracy under communism.

According to Kacper R´kawek, an expert at the Polish Institute of International Affairs (PISM), the visit was a bold move and should be viewed in the context of the imminent Polish presidency of the EU. Poland has not been very enthusiastic regarding the NATO-led military mission in Libya, he explained, but the country will need to address the issue very seriously from July onwards.

Poland’s expertise with the processes of democratization will be a trademark of the presidency, predicted Mr R´kawek, and last week’s visit may signal a more important involvement

Polish-US relations

Road safety

F-16s to be stationed in Poland?

Poland deadliest for pedestrians

COURTESY OF THE FOREIGN MINISTRY

Polish Foreign Minister Rados∏aw Sikorski last week headed to Benghazi, Libya, a stronghold of the rebels who are fighting to overthrow the regime of Muammar Gaddafi.

COURTESY OF US AIR FORCE

Over a fifth of all EU pedestrian deaths happen in Poland

F-16s in Poland? They may be on the horizon

President Obama will reportedly announce the news later this month During a visit scheduled for this month, US President Barack Obama will commit to stationing American F-16 fighters in Poland, according to diplomatic sources quoted

by Gazeta Wyborcza.

The planes, along with the necessary support personnel, would be stationed on a rotational basis from 2013. Mr Obama is also expected to discuss the stationing of SM-3 interceptor missiles in the country as part of America’s planned missile defense shield.

If accurate, the news would be well received in Poland.

Opinion surveys have long shown a desire for a concrete

American military presence on Polish soil, and many people were openly disappointed when Mr Obama scrapped his predecessor’s missile shield plan.

Russia, which had welcomed plans to abandon the Bush-era missile shield, would no doubt be less pleased.

Mr Obama’s trip to Poland is part of a European tour which will include visits to the UK, Ireland and France, where Mr Obama will attend a G8 Summit.

In Warsaw, the US president is expected to attend a May 27-28 summit of the presidents of Central European states, hosted by Polish President Bronis∏aw Komorowski.

The official schedule for the event, as well as the attendance list, will be made public soon.

Other topics on the agenda

3

for the American president’s visit include economic cooperation (such as in shale gas exploration and mining) and the construction of Poland’s first nuclear power plant.

The delicate matter of lifting tourist visas for Poles is also expected to be discussed, although Gazeta Wyborcza’s sources stressed that it would not be a central topic. Mr Obama has already expressed his support for Poland’s entry into the Visa Waiver Program.

President Obama is also expected to pay his respects to late President Lech Kaczyƒski.

He was prevented from attending last year’s state funeral in Kraków due to volcanic ash from Iceland, a phenomenon which disrupted air traffic across Europe.

Alice Trudelle

More pedestrians are killed every year in Poland than in any other country in the European Union, according to a report just published by the European Road Safety Council.

From 2001 to 2009, over 80,000 pedestrians were killed in the countries which now comprise the EU27 and 20.5 percent of those fatalities occurred in Poland. Look at the period between 2005 – Poland’s first full year as an EU member – and 2009, and the figure rises to 21.59 percent.

In 2009 alone, 1,467 pedestrians died on Poland’s roads, a figure 30 percent higher than the next-worst country, Romania. In the same year, pedestrian deaths as a percentage of all road deaths totaled 34 percent in Poland, the third highest in the EU27.

The annual change in pedestrian death totals over the period 2001-2009 has improved year-by-year, but at a painfully slow rate. Only Denmark and Romania have, on average, showed slower rates of improvement.

These figures are indicative of the attitude of Polish road users, the government and the police towards road safety,

Alice Trudelle

said Anna Zieliƒska, an expert at the Motor Transport Institute.

“The police, government and drivers don’t think speed is a crucial reason for accidents,” she said.

“Just recently the government introduced a new law which increased the speed limit on motorways to 140 km/h. I think this sends a message to the public which tells them: ‘you can go faster’. This is going in the wrong direction,” she continued, adding that the attitude of Polish road users already left much to be desired.

Ms Zieliƒska emphasized that it is people’s awareness of speed-related risk, and not speed limits, which needs to be increased.

“This isn’t just for drivers – it also goes for those who design Poland’s roads. There are too few infrastructural features designed to slow traffic.

City roads especially should be designed differently, so that roads are safe for society – for unprotected road users,” she said.

Recent police data showed that in the first quarter of this year the number of people killed on Polish roads increased by 20 percent compared to the corresponding period of 2010.

Gareth Price

Following Foreign Minister Rados∏aw Sikorski’s visit to Libya last week, EU foreign relations head Catherine Ashton said the EU would open a diplomatic mission in Benghazi, the stronghold of the rebels fighting to overthrow the Gaddafi regime. “I intend to open an office in Benghazi so that we can move forward on the support we have discussed with the people, to support civil society, to support the interim national council,” Ashton said.

Gay pride confusion Organizers of the gay pride march in Warsaw last week said that citizens of Belarus, Russia and Ukraine would be able to attend without paying the usual visa fees, citing a new directive from the Foreign Affairs Ministry. To avoid paying fees, citizens of these nations would simply have to state that their aim was to attend the parade, they explained. However, the MFA later denied the news, stating that Schengen duties left no doubt as to visa fees.

Orlen ‘best-managed’ Polish oil giant Orlen has been named “Best Managed Company in Poland” in a ranking published by British financial monthly Euromoney. The list was prepared based on the opinions of independent experts in the areas of finance and management.

Orlen was awarded first place for the fourth time in a row. Czech power group CEZ was named best managed in the CEE region.

PZU layoffs Polish insurance giant PZU has announced it will cut 1,212 jobs this year, almost 10% of its workforce. As part of the firm’s restructuring plan, another 2,104 people will be forced to change their place or type of work.

“This is a difficult but necessary decision. The goal of all the company’s restructuring activities is to continue to modernize and improve its competitive position,” said Andrzej Klesyk, CEO of PZU. ●

4

NEWS

www.wbj.pl

MAY 16-22, 2011

Terrorism

Shale gas

Lawsuit filed against Poland over bomb suspect

Could ‘non’ spell trouble for Poland?

The Open Society Justice Initiative, an advocacy group, has filed a case against Poland in the European Court of Human Rights. The organization wants the ECHR to pressure Poland to conduct an effective investigation into the alleged torture and illegal detention of Abd alRahim al-Nashiri.

The group says that Poland is guilty of enabling the detention and torture of al-Nashiri at a secret CIA prison on its soil between 2002 and 2003. They also claim Poland aided in the man’s extradition to the US. Three years have passed since Poland’s Public Prosecutor General initiated its investigation, which is still no closer to reaching an end, said alNashiri’s lawyer in Poland, Miko∏aj Pietrzak. Indeed, the Polish government has never admitted to having hosted any CIA “black sites.”

Abd al-Rahim al-Nashiri is

COURTESY OF TECH.SGT MICHAEL HOLZWORTH/US DOD

The lawyers of alleged al-Qaeda terrorist Abd al-Rahim al-Nashiri claim torture occurred on Polish soil

Abd al-Rahim al-Nashiri was transferred to Guantanamo Bay in 2006 the alleged mastermind of the USS Cole bombing in 2000, a suicide attack for which alQaeda claimed responsibility.

He was transferred to the US military base at Guantanamo in 2006 and is now undergoing trial within what Open Society Justice Initiative calls, “a system of US military commissions that lack independence, impartiality and fair trial guarantees.”

In a press release, the organization claims that al-Nashiri

was subjected to torture – such as mock executions with a power drill as he stood naked and hooded – at a military intelligence base in Stare Kiejkuty, in northeastern Poland. The group has called for swift action from the ECHR and from Poland, as an effective investigation could influence the US military’s proceedings against al-Nashiri.

The Convening Authority for the US Office of Military Commissions will consider writ-

ten submissions against the death penalty until June 30, 2011. After that point, a decision will be made on whether or not to approve capital charges against al-Nashiri.

Mr Pietrzak explained that a ruling from the ECHR that Poland had failed to investigate allegations of torture on its soil would have a great influence on current proceedings against al-Nashiri in the US. Alice Trudelle

France’s ban on hydraulic fracturing has raised worries that the EU could follow suit Poland’s shale gas reserves, recently estimated at 5.3 trillion square meters – the largest in Europe – could make the country independent from gas imports for hundreds of years.

With enthusiastic support from its highest offices, Poland has therefore opened the door to a great exploration push, with over 70 drilling licenses already issued to companies such as ExxonMobil, ConocoPhillips and Chevron. Gas monopolist PGNiG, who owns the majority of the licenses, has said it would spend z∏.100 million on exploration this year.

However, French MPs’ decision last week to ban hydraulic fracturing, a key method used in shale gas extraction, and to annul explorations rights already granted, has raised fears that the European Union may create regulations that will put an end to Poland’s shale gas dreams.

Marek Karabula, PGNiG’s vice-president for Oil Mining, says the decision should be an

individual one. “Let countries decide for themselves. This is an energy security issue,” he was quoted by Reuters as saying.

In a long statement, Henryk Jacek Jezierski, Poland’s chief national geologist and deputy minister of the environment, offered assurances that the Polish government has no plans to impose a moratorium.

“We have effective environmental legislation and efficient control institutions, we are prepared to control this process and it can be safely implemented in Poland,” he stated.

Shale gas extraction has become increasingly controversial following the release of Oscar-nominated American documentary “Gasland” and two separate studies from Duke and Cornell universities.

All warn that hydraulic fracturing may damage health and the environment.

Others have noted that France’s powerful nuclear sector and Russian giant Gazprom both stand to lose out if the shale gas industry grows. They may, it has been suggested, also have a hand in the push against shale gas.

Alice Trudelle

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INDUSTRY NEWS

MAY 16-22, 2011

www.wbj.pl

5

Coal

Wind energy

JSW IPO back on track

Utilities to spend z∏.3 billion on wind power

Coal miner Jastrz´bska Spó∏ka W´glowa’s (JSW) initial public offering, scheduled for June 30, looks to be back on track.

Striking employees had raised concerns about the timetable, but Economy Minister Waldemar Pawlak last week gave the privatization his full support.

The minister had previously stated he wouldn’t back the bourse debut plan before a full agreement had been reached with unions at JSW. Nevertheless, he signed a resolution allowing it to go public last Thursday.

Mr Pawlak’s signature means the company’s issue prospectus can now be submitted to the Financial Supervision Authority for approval.

The decision came as a sur-

prise, given that the long-running dispute between management and trade unions remains largely unresolved.

Union members, fearing the impact of the IPO on job security, have held a series of disruptive strikes in recent weeks aimed at extracting a number of key demands.

“Starting the process of going public was made possible by a collective agreement, which [management and unions] managed to obtain on May 5,” Mr Pawlak explained at a news conference.

Over the course of negotiations held that day, unions and management hammered out a partial deal giving workers job security for the next decade.

Among the unions’ stillunmet demands are a pay hike of 10 percent and an agreement on how shares will be distributed among workers.

Another key demand, namely a promise from the Treasury that it will retain a majority

The money will provide for a record 500 megawatts of extra wind-power capacity this year

COURTESY OF JSW

Minister Pawlak has signed a resolution which should allow the miner to debut on schedule

A partial agreement has been reached with unions stake in the miner following the debut, was still being negotiated as WBJ went to press.

The Treasury will, Parkiet reports, sell some 34 percent of its holding to investors, retaining over 50 percent of its stake in JSW. However, it still hasn’t given a written agreement to this effect.

“This is the stock market, so everything is very transpar-

ent,” Prime Minister Tusk said in response to reporters’ questions regarding Mr Pawlak’s decision.

“It is also for the people,” he said, adding that “JSW employees will also benefit from this privatization.”

Analysts say JSW, Europe’s largest coking coal miner, is worth as much a $3.6 billion.

Gareth Price

Municipal heating

PGNiG and PGE join forces for SPEC bid The firms have reportedly filed a joint initial offer PGE, Poland’s largest utility, has reportedly joined forces with gas monopolist PGNiG in a bid to purchase a controlling stake in Warsaw’s heat distributor, SPEC. Warsaw City Hall has set a June 2 deadline for binding offers for an 85 percent stake in SPEC, which runs the largest municipal heating system in the EU. Both PGE and PGNiG are controlled by the state Trea-

sury and have received the official go-ahead to make a bid from Treasury Minister Aleksander Grad, Parkiet reported, citing unnamed sources. The two have already submitted a joint initial offer and are currently conducting an analysis of the firm, the daily wrote. If successful, the two behemoths would divide the SPEC stake in half.

Both companies’ press offices declined to comment on the news.

Although the amount officially expected from the privati-

zation is seen at z∏.750 million, some analysts say the transaction could fetch Warsaw z∏.1.5 billion.

Market observers say that PGNiG and PGE have a very good chance of winning, as long as they present an attractive offer. Their chances would be further improved if they also bid for assets being sold

by Swedish utility Vattenfall.

This is because the SPEC deal is reportedly tied to the sale of Vattenfall’s Warsaw assets, which are valued at about €1.5 billion. Analysts say

that whoever purchases these would be favored to buy SPEC. PGE has already expressed interest in the Swedish firm’s Polish holdings.

Other companies reportedly targeting SPEC include investment funds Penta and EQT, French utility Dalkia and Finnish energy company Fortum.

SPEC covers 80 percent of Warsaw’s heating requirements. It made a net profit of z∏.36 million in 2009 on sales of close to z∏.1.3 billion.

Gareth Price

Construction of wind farms with a combined capacity of 500 megawatts (MW) will launch in Poland this year, according to forecasts from a local lobby group, the Polish Wind Energy Association (PWEA).

According to PWEA data, it costs approximately €1.5 million to install capacity of one MW of onshore wind power, meaning 500 MW will cost €750 million, or just shy of z∏.3 billion.

Capacity installed this year will amount to “about 50 percent” of all functional capacity installed in Poland at the end of 2010, said Magdalena Klera, an environmental specialist at PWEA. “We expect dynamic growth, based on the investment plans of individual companies,” she added.

Energy companies, the organization says, are keen to launch renewable investments in order to meet European Commission greenhouse gas

emission regulations. Poland, which generates around 90 percent of its energy from coal, has found the EC’s stringent environment criteria tough to meet.

“Poland’s energy sector is highly dependent on coal and the development of the renewable energy sector, especially wind and biomass, could be a reasonable, cost effective and sustainable alternative to other [carbon] reduction options like carbon capture and storage or nuclear power,” said Ms Klera.

The Polish government itself is pushing for 6.1 gigawatts of installed wind capacity by 2020, an initiative supported by a system of ‘green certificates.’

Among companies responding to the pressure of green energy demands is utility RWE, which plans to invest €500 million in developing wind energy in Poland. It is due to open its third wind farm in Tychowo this week. New wind capacity at that site and in Piecki will “more than double the capacity of RWE’s wind farms in Poland,” Filip Thon, president of RWE Poland, said in a GP statement.

Fans of green energy Cumulative installed capacity (in MW) for wind-generated power in Poland, 2005-2010 2,000 1,500 *Estimate 1,000 500 0 2005

2006

2007

2008

2009

2010

2011*

Source: Polish Wind Energy Association

6

BUSINESS ENVIRONMENT

www.wbj.pl

Inflation

Poland raises benchmark interest rate

Gareth Price

Inflated expectations Consumer price index (percentage change y/y), Apr 2010 – Apr 2011 5 4

Value of online economy growing at 14 percent annually Poland’s online economy was worth z∏.35.7 billion in 2009, or 2.7 percent of GDP, and it’s growing. Quickly.

That’s the conclusion reached by “Polska Internetowa,” a new report from Boston Consulting Group, created at the behest of Google.

But just how quickly is the online economy growing? At a pace of 14 percent a year, according to the report. By 2015 it will be worth approximately z∏.92 billion, or 4.1 percent of GDP. The online economy already contributes more to overall GDP than mining or the hotels and restaurant trade. Not far ahead are energy and financial services.

Online purchasing is on the rise. According to the report, the value of online purchases made in 2009 amounted to z∏.1 billion, with multimedia and books the most popular and fastest growing category, followed by electronics. There’s definitely room for more growth though.

they add, with a touch of optimism.

Perhaps the greatest challenge to the online economy is structural. Poland is the worst ranked among 28 countries in terms of internet infrastructure, as well as in terms of the percentage of entrepreneurs with internet connections of at least 256 kb/s.

“E-tailing in Poland still has a long road ahead before it reaches the level of development of an advanced online economy, such as the United Kingdom’s,” the report’s authors point out.

“Yet Polish internet users are already today very actively looking for information online, including information about goods and services,”

E Blake Berry

Logged on and profiting Value of online economy as percentage of 2009 GDP, selected countries 8

7.2 6.6

7

5.8

6 5

3.6

4

2.7

3

2.2

2

1.9

1 0

UK

Sweden

Denmark

Czech Republic

Poland

Spain

Italy

Source: Boston Consulting Group, Google

3

Media patronage

2 1 Ap 1 r2 01 1

11

01

20

r2

Ma

Feb

0

11 20

Jan

0

01

c2

De

0

01 v2

No

10

01

Oc

t2

0

20 pt

Se

0

Au

g2

01

0

01

Jul

y2

01

e2

Jun

01 y2

r2

01

0

0

0 Ma

Prompted by a continuing fear of inflation, Polish policy makers surprised the market last week by hiking the headline interest rate by 0.25 percentage points.

The country’s rate-setting Monetary Policy Council (RPP) increased the benchmark rate to 4.25 percent, defying expectations it would leave things untouched.

The lombard, deposit and rediscount rates were also hiked by a quarter of a percentage point.

Prior to the rate hike, an agreement was reached between the National Bank of Poland and the government to combat inflation by periodically selling euro to strengthen the z∏oty. This, alongside relatively dovish commentary from central bankers, led most observers to conclude that the RPP wouldn’t continue its monetary tightening strategy during this session.

It seems that the RPP, which had already raised the benchmark rate twice this year, is still concerned about the prospect of inflation spiraling beyond

rate,” the RPP wrote.

The body also cited the prospect of growing wage pressures and the threat to macroeconomic stability posed by the state of Poland’s public finances as two other key reasons behind its decision.

“In order to curb the risk of inflation running above the inflation target in the medium term, the Council decided to increase the NBP’s interest rates, continuing the cycle of monetary policy tightening,” it stated.

A number of analysts, however, criticized the RPP’s hawkish stance on monetary policy, saying the threat of inflation in the medium term is overstated.

control. A number of key indicators suggest the economy is continuing to pick up steam, the body wrote in a document explaining its decision.

At the time the RPP made its rate-hike decision, the consumer price index rate for April was being forecast at 4.4 percent y/y. In the end, the inflation figure was 4.5 percent, well above the central bank’s target of 2.5 percent.

“In the opinion of the Council, in subsequent months CPI inflation will run at a heightened level, which is linked primarily with increases in the prices of agricultural commodities and crude oil in the global markets, which so far have not been offset by changes in the z∏oty exchange

Ap

The move caught the market wrong-footed

MAY 16-22, 2011

Source: National Bank of Poland

Legal News Contact: Miros∏aw Stefanik ms@pnplaw.pl

No sickness benefit during child-care leave According to ZUS [Poland’s Social Insurance Institution], a person cannot collect sickness benefit during child-care leave. This means that a person who falls ill during child-care leave receives no additional benefits.

However, if the sickness, and consequently the inability to work, persists after the child-care leave has ended, then benefit or remuneration for the period of sickness is due.

Reduced fines for entrepreneurs generating waste A 2010 amendment to the Act on Waste introduced exorbitant fines for minor infringements committed by entrepreneurs. The most severe was a fine for the delayed submission of the list detailing the waste generated. Even the shortest of delays carried a possible penalty of z∏.10,000.

Here the story gets interesting, as even the Ministry of Environment has failed to submit its detailed list on time, and it was the authority where the draft act originated after all.

The Sejm has hastily started work on a new act which decreases the penalty to

z∏.500 and introduces other minor changes to the penalty system. The draft, adopted by the Sejm on April 28, is now set to be examined by the Senate.

Nevertheless, it is a pity the legislator has not gone to the trouble of analyzing whether it is worth imposing the requirement of such detailed reporting on companies, and on small firms in particular.

New law on international relations On May 16, the Private International Law Act came into force. The act plays a key role in deciding which law should be applicable in transborder cases where parties have not chosen the applicable law.

The act is of less importance for civil and business relations between EU citizens and companies since in this respect EU law applies. However, the law is of utmost importance for relations with entities from outside the EU. While numerous changes are introduced by the new act, some are particularly worth mentioning. These include the possibility to choose the law of inheritance in a last will and testament, or the ability to choose the law applicable for property relations of a husband and wife. ●

BROUGHT TO YOU BY PETER NIELSEN & PARTNERS LAW OFFICE

Third European Economic Congress looks in depth at competition The third edition of the European Economic Congress was due to kick off on Monday.

The three-day event brings luminaries from the realms of European politics, finance and business together to debate the most significant social and economic issues of the day.

The main focus of this year’s Congress is the competitiveness of the European economy in the face of the strength of Asia and the Americas. Other major issues include new policy direction in post-crisis Europe, EU funds for the 2014-2020 budget period, energy and emissions strategies, and innovation.

Matters concerning Central Europe will also be given a platform. The timing of the European Economic Congress is rather symbolic, as it falls at the end of Hungary’s presidency of the EU Council, shortly before Poland takes over.

Notable politicians scheduled to attend include European Parliament President Jerzy Buzek, former President of Poland Lech Wa∏´sa, and the prime ministers of Poland, Hungary, Croatia, the Czech Republic and Slovakia. The list of businesspeople, meanwhile, is long and distinguished.

Below is an abridged schedule of some of the most interesting sessions taking place over the three days of the European Economic Congress 2011: Monday, May 16 Academy of Music Concert Hall Opening ceremony and inauguration 10 am-12 pm “The competitive economy of Europe” and “The new order of the European Union” 12:30-2:30 pm “Central and Eastern Europe – a communi ty of interests, challenges and problems” 3:00-4:30 pm

“EU energy policy” 5-7 pm Qubus Hotel “Clusters – one solution for an economy’s innovative growth” 2-6:30 pm “China vs. Poland: opportunities vs. threats” 4:30-6:30 pm Tuesday, May 17 Monopol Hotel “Public finances” 9-11 am Qubus Hotel “Knowledge and Innovation Community – a merger between science and business” 11:30 am-1:30 pm Wednesday, May 18 Monopol Hotel “Privatisation” 9:00-11:00 am “Capital market / Financial markets” 11:30 am-1:30 pm Qubus Hotel “Innovative economy of Europe” 9:00-11:00 am Silesian Voivodship Office “Public-private partnership” 9:00-11:00 am Novotel Katowice “Health care systems in Central and Eastern Europe – challenges and priorities” 9:00-11:00 am

MAY 16-22, 2011

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7

Advertorial feature

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The operating suite comprises two impressively equipped operating rooms and a double recovery room, while the modern monitoring system, including the on-site analytical laboratory, enables precise control of the patient health condition. After the procedures, the patients are ensured excellent care and recovery in comfortable conditions at the stay ward consisting of six spacious and functional rooms. The LUX MED Group Hospital offers surgical procedures in general, urological, vascular, oncological, plastic and paediatric surgery, as well as in orthopaedics, gynaecology and laryngology.

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their health problems. Currently, the following units are operating within the hospital: • Hernia Treatment Centre, • Vein Disease Treatment Centre, • Proctology Centre, • Plastic Surgery Centre, • Orthopaedic Surgery Centre, • and in future, there will be opened further specialist centres.

In emergency cases: injury, sprain, dislocation or skin cut, care will be provided by specialists from the Emergency Department. The diagnostic part of the hospital is equipped with modern ultrasound, X-ray and computed tomography units of top class, enabling the performance biopsy and ablation procedures, as well as lung, abdominal cavity, orthopaedic, vascular and urologic examinations.

The facility also operates the Gastrointestinal Endoscopy Centre, fitted with comfortable preparation rooms and a cosy space for patient recovery after the undergone endoscopy procedure.

Hospital’s medical personnel comprises specialists with many-year experience

BROUGHT TO YOU BY LUX MED GROUP

in their fields: surgeons, orthopaedists, gynaecologists, laryngologists, endocrinologists – most of them associated with the LUX MED Group for years. The patients are taken care of by experienced anaesthesiologists and nurses. In addition, the LUX MED Group hospital collaborates with outstanding specialists from Warsaw medical centres and hospitals.

The substantive support is provided by the LUX MED Group Scientific Board.

With the modern equipment of operating rooms and the professional care offered, we provide maximum medical safety of the performed procedures, subject to the same monitoring and medical supervision procedures as all the healthcare activities undertaken at the LUX MED Group facilities. www.luxmed.pl

COVER STORY

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Nuclear project gets z∏.20 million Poland’s draft budget for 2012 has allocated z∏.20 million for the country’s nuclear energy program, Dziennik – Gazeta Prawna reports. That’s slightly up on the amount allocated in 2011. The government intends to approve plans for the program by the end of June this year, at which point it will publish a detailed schedule along with a list of costs. A number of multinationals are bidding to supply the nuclear technology.

Nuclear stress tests delayed As Poland continues preparations for its own nuclear program, other EU members are having trouble agreeing on safety criteria for their existing plants. An EU-wide stress test for Europe’s 143 nuclear plants might be delayed because some EU members, including Germany, Italy and Sweden, want to include terrorist attacks and other man-made disasters in the stress tests. Others, including France and UK, argue this is unnecessary.

Lotos posts Q1 profit rise Poland’s second-largest oil refiner, Lotos, posted a z∏.635.2 million net profit for the first quarter of 2011. The result was significantly higher than the z∏.512.1 million averaged from a poll of analysts by Bloomberg.

Operating profit, meanwhile, stood at z∏.412.6 million, over 200% higher than the same period of last year.

The most significant factor behind the increase was a continued rise in crude oil prices, which were up 38% y/y.

KOV in London debut?

Kulczyk Oil Ventures (KOV), a company belonging to Polish entrepreneur Jan Kulczyk, is looking to debut on the London Stock Exchange, Rzeczpospolita reports.

The firm is looking for some z∏.400 million from the share issue, which it will use to fund ongoing exploratory projects in Syria and Brunei, according to the daily. ●

MAY 16-22, 2011

Nord Stream

Stormy waters ahead Brendan Melck

Construction of the controversial Nord Stream pipeline continues, but Poland isn’t giving up on its objections Nord Stream, the undersea pipeline project linking Russia and Germany via the Baltic Sea, is nearing the half-way mark. The first of its two parallel pipelines was laid in early May, with joining work scheduled for this summer. Gas is set to start flowing in Q4.

The news hasn’t elicited cheers in Poland, where Nord Stream has been a source of concern since it was first mooted in the 1990s. The pipeline looks to cut Poland out of the gas-transmission system between Russia and Germany, leaving Warsaw with no bargaining chips if Russia were to turn off its gas supply. For this reason the pipeline has been likened to the MolotovRibbentrop Pact – which secretly split Poland between Nazi Germany and the Soviet Union in 1939 – by several notables, most famously former Defense Minister and current Foreign Minister Rados∏aw Sikorski.

Despite progress on the pipeline, Poland is still crying foul. Authorities in the country have submitted an appeal against construction plans for Nord Stream, claiming that it could impede access to the Port of ÂwinoujÊcie, located near to the Polish-German border. This is the basis of a challenge which the Szczecin and ÂwinoujÊcie Seaports Authority (ZMPSiÂ) has sent to an administrative court in Hamburg, following the rejection of a 2010 lawsuit against the German Federal Maritime and Hydrographic Agency’s decision to allow the construction of Nord Stream.

This appeal, the latest step in an ongoing legal challenge, has returned the pipeline project to the center of public and political debate in Poland at a time when the country is preparing to take over the presidency of the EU Council.

Establishing the status of Nord Stream in relation to the EU’s third energy package – which seeks to rein in state monopolies through the separation of ownership of gas infrastructure from gas production

ports are getting ready to accommodate such ships.

Therefore with a view to the development of our port in ÂwinoujÊcie, we must make it possible for ships with such drafts to sail to it,” he underlined.

The German port of Rostock is making such preparations, meaning that a rival Baltic port in Germany could potentially benefit from the stunting of ÂwinoujÊcie’s development plans. This is not only an economic issue, but also a political one for Poland. The country’s politicians run the risk of looking weak in the face of pressure from big powerful neighbors unless they resolve the problem quickly.

A history of controversy

COURTESY OF NORD STREAM

8

Gerhard Schröder’s jump from German chancellor to chairman of Nord Stream’s shareholders’ committee raised ethical questions or trade – has been identified as a key priority for Poland’s presidency. At the same time, Russian authorities are attempting to ensure this package will not apply to its infrastructure assets in the EU, including Nord Stream.

Trouble with the neighbors Polish opposition to Nord Stream centers on the fact that, because it is not buried in the seabed, it could prevent the entry of large ships to ÂwinoujÊcie Port, thus interfering with trade.

Opposition to the pipeline may not have prevented its realization, but the Polish government is hoping to salvage at least a small concession from the consortium behind the project, and indeed from the German authorities, in the form of a binding commitment to ensure that access to the port is not impeded.

ZMPSi had previously requested that the section in question be buried under the sea floor in order to eradicate the problem once and for all.

After this proposal was rejected, the German authorities proposed a new shipping route for

“It’s going to be necessary to establish the new shipping route officially – this route is through German territorial waters – and I don’t yet know who will take the initiative in establishing the route and putting it in the international shipping documents. This will take a long time, and will also be expensive,” Mr Siergiej explained.

From the point of view of ÂwinoujÊcie’s development as a port, Mr Siergiej suggests that resolving the difficulty posed by Nord Stream is essential. As widely reported, the pipeline will effectively make the current shipping lane impassable to ships whose drafts (the vertical distance between the waterline and the vessel’s keel) of more than 13.5 meters.

“The Baltic is limited to ships with a draft of approximately 15 meters and from what we observe, other Baltic

“The pipeline has been likened to the MolotovRibbentrop Pact by several Polish notables” boats coming into the port which would extend their journey time by 30 minutes, but would mean no issues with draft clearance.

This longer journey time is not a problem, the CEO of ZMPSi has said, but the bureaucratic business of creating a new official shipping route is troubling.

Nord Stream began in 1997 with a Russian-Finnish feasibility study. The project got underway in earnest in 2005, when Russia’s OAO Gazprom established the North European Gas Pipeline together with BASF SE/Wintershall Holding GmbH and E.ON AG. In the intervening years, investors from the Netherlands (Gasunie) and France (GDP Suez) joined the consortium.

Russian gas is already pumped to Germany through the Yamal pipeline, which runs overland through Poland and Belarus, and Russia had previously made a commitment to upgrade and significantly increase the capacity of the pipeline. However, Russian state gas concern Gazprom later threw its weight behind Nord Stream, abandoning the Yamal upgrade plan.

The cost of building an undersea pipeline, rather than bending it over-land around the Baltic coast, is enormous. But Nord Stream will allow Russia to avoid certain transit countries with which it has had difficulties in the past – namely Poland, Belarus and Ukraine.

At the same time, it will gain the ability to shut off supplies to truculent neighbors without hurting partners in Western Europe.

The involvement of Russian and German politicians has also been a source of concern. Gerhard Schröder, for one, raised eyebrows in 2005 when he accepted the chairmanship of Nord Stream’s shareholders’

COVER STORY

MAY 16-22, 2011

www.wbj.pl

9

Legal Eye “The triumph of particular interests ... over communityoriented thinking on energy security is a serious impediment to the continuing process of political and economic integration”

Growing concerns It has been widely reported that Nord Stream will obstruct the passage of liquid natural gas (LNG) tankers to an LNG terminal which is currently under construction in ÂwinoujÊcie. The terminal, which is managed by Polskie LNG, is a flagship project in Poland’s strategy to diversify its gas supply sources and achieve greater energy security.

But concerns regarding LNG transport are somewhat overblown, at least in the short term.

“Both the LNG terminal (in ÂwinoujÊcie) and the port facility connected with it are designed to accommodate one of the largest LNG tankers ever built, Q-Flex tankers, with a maximum draft of 12.5 meters,” explained Zbigniew Rapciak, president of the management board of Polskie LNG. “These vessels will be able to deliver LNG to ÂwinoujÊcie from almost anywhere in the world, regardless of the Nord

Judith Gliniecki is a Partner with Wierzbowski Eversheds judith.gliniecki@eversheds.pl

COURTESY OF NORD STREAM

committee less than a month after stepping down as chancellor of Germany. While in office he had been instrumental in negotiations concerning the pipeline project.

Vladimir Putin, former president and current prime minister of Russia, has also been a tireless campaigner for Nord Stream. And when the ZMPSi filed its lawsuit last year, Mr. Putin told Russian daily Kommersant of his “surprise” at the objection, even though Polish authorities’ concerns about the port being blocked have been on record since at least 2007.

Under the sea

Stream pipeline,” he said.

Looking to the future, however, it’s harder to say what the drafts of future tankers will be.

The same is true of overall maritime transport, as cargo ships continue to grow in size.

And the stakes are high in European shipping. The sector holds much promise and has moved up the strategic priority list for both Polish and European Union authorities. Having witnessed a considerable dip in 2009, shipping bounced back impressively in 2010. The sector saw a 30 percent increase in the transhipment of goods, yearon-year, and all Polish ports, including ÂwinoujÊcie, recorded improvements in their operating results.

Maritime transport is an essential part of the EU’s strategy for a more sustainable transport mix, and considerable amounts of EU funds are being spent to boost the infrastructure of Poland’s ports. It is clear that the development of ÂwinoujÊcie Port is not a subject of indifference for the EU, but Mr Siergiej said that attempts to communicate with the European Commission on this subject have failed.

“Last year, we sent a letter to the European Commission highlighting the fact that Nord Stream may break two of the

four basic EU treaty freedoms – freedom of the movement of goods and freedom of the movement of services,” Mr Siergiej said.

He added, “We still have not received any response from the Commission to our letter, which has been sent to various committees, none of which has responded and this is despite the fact that we sent another letter, urging the Commission to look at our case.”

EU Council presidency Poland’s six-month presidency of the EU Council, starting in July, will give the Polish government an opportunity to highlight its opposition Nord Stream’s possible exemption from the EU’s third energy package. The package requires operators to observe a high degree of transparency in terms of information regarding their activities.

Russia is keen to secure an exemption for the pipeline, allowing Gazprom to maintain control over both the transmission infrastructure (Nord Stream) and the production and trade of gas which goes through the pipeline. However, a recent article in daily Gazeta Prawna suggested that José Manuel Barroso, the president of the European Commission,

Port report Volume of maritime cargo traffic at Poland's four largest ports (in million metric tons), 2010

Dry bulk

Liquid bulk

Large container

Less-than-container

Wheeled

Gdańsk

Gdynia

Świnoujście

Szczecin 0

5,000

10,000

15,000

20,000

25,000

30,000

Source: Central Statistical Office

is in favor of subjecting Nord Stream to the third energy package’s directives.

Considering the history of attempts to prevent or limit the pipeline’s progress up to now, Nord Stream’s opponents have few reasons for optimism. Marcin Libicki, a member of the European Parliament from 2004-2009, authored a 2008 report on the project which highlighted the environmental and political dangers involved. The report was adopted by the European Parliament almost unanimously; nevertheless, its warnings and cautions went unheeded.

“The investment [in the Nord Stream pipeline] went ahead, and so far, the business-political machinery behind it is managing to cope with the political will of the democratically chosen representatives of EU citizens,” Mr Libicki told WBJ.

The future Looking to the second half of 2011, a major task facing the Polish government is to reemphasize the importance of energy solidarity in the EU, a concept which Polish politicians from all ideological walks of life have called into question concerning the Nord Stream pipeline. So far, said Mr Libicki, this solidarity has been visibly lacking.

“The failure to act [in response to the report on Nord Stream] on the part of the executive bodies of the EU showed the weakness of European solidarity in the field of energy,” he commented.

“The triumph of particular interests in a particular group of countries over communityoriented thinking on energy security is a serious impediment to the continuing process of political and economic integration, particularly when it comes to common security,” Mr Libicki concluded. ●

The 1980s witnessed two important events in sea lore.

More widely celebrated was Disney’s release of “The Little Mermaid” in 1989. Less known, but of greater geopolitical significance, was the United Nations’ adoption of the Convention on the Law of the Sea in 1982.

When it comes to pipelines in the Baltic and access to Poland’s ports, we must look to the Convention. It doesn’t have any catchy songs, but it does have a history filled with enough nautical archaisms to make a salty dog’s day.

Freedom of the seas The Nord Stream pipeline feud may leave you with the impression that anything goes in the Baltic. Well, actually, your impression is not far from the mark. Freedom of the seas was pretty much the state of the law up until mid-20th century.

While the general principle was each country for itself on the high seas, certain accepted customary rules developed over the centuries. With the rise of naval power, for example, came the “cannon-shot rule” from the 18th century.

In other words, coastal countries claimed rights over that strip of the sea that was within a cannon shot to their coast. Apparently, this was one league (about three nautical miles).

On the basis of the rule, they could regulate the passage of foreign ships through this strip of land.

Since then, numerous other contentious issues have arisen, including fishing rights and the mining of minerals on the ocean floor.

The Law of the Sea These earlier rules were based on tradition. The United Nations Convention on the Law of Sea (1982), meanwhile, attempted to create rules for contemporary issues, such as pollution, oil drilling, and (of particular importance) the laying of submarine pipelines.

Both Poland and Germany have ratified this Convention.

Pipeline rules When it comes to pipelines, the Convention primarily affirms the rights of coun-

tries to put them on the sea floor. Specifically, everyone is allowed to put pipelines on the floor of the high sea, subject to certain considerations, such as not endangering existing pipelines or cables.

In the shallower areas of continental shelves (where coastal states claim territory), other countries may also lay down pipelines.

There are a few more exceptions to this rule. Most importantly, a coastal state may set conditions for the pipelines on its continental shelf, but it may not impede the placement of another’s pipeline except for concerns about pollution or obstacles to its own exploitation of the natural resources in the area.

Based on my admittedly sketchy understanding of marine geography, it appears that the Nord Stream pipeline is lying on Germany’s continental shelf, and not Poland’s.

Thus, Poland cannot directly place conditions on the pipeline placement; it can only ask that Germany take into consideration its reservations. For this reason, it appears that Poland is appealing to another basic tenet of the Convention.

Neighborly passage All coastal states, such as Poland and Germany, must allow foreign ships to pass through their territorial waters for innocent purposes, such as commercial shipping traffic. This passage, however, may be restricted to specified sea lanes. Furthermore, coastal countries are supposed to be good neighbors. One coastal country may not exercise its rights in a manner that infringes or “unjustifiably interferes” with another country’s rights.

Poland is arguing that the Nord Stream pipeline will prevent larger ships from reaching the ÂwinoujÊcie port through the current sea lanes. Unfortunately for Poland, it appears that the German authorities are taking the view that no unjustified interference has occurred because regular ships will be able to get to the port and Germany could create a new sea lane for the larger ones. ●

10

OPINION

www.wbj.pl

MAY 16-22, 2011

Defection: one of the left’s many woes

P

rime Minister Donald Tusk and his ruling Civic Platform (PO) party landed a heavy blow on the Democratic Left Alliance (SLD) last week with the announcement that Bartosz Ar∏ukowicz, one of SLD’s brightest stars, was taking a job in the government.

Mr Ar∏ukowicz will now be the PM’s plenipotentiary for contact

“PO is desperate to show that it cares about the ‘little guy’” with the “marginalized,” a position created specially for him. This means he is leaving SLD and will most likely run as a PO candidate in the parliamentary elections this October.

It is a huge loss for SLD as Mr Ar∏ukowicz has something which very few of the leftist party’s politicians possess – charisma. He comes across well on camera, is reasonably attractive, intelligent, eloquent and articulate. Mr Ar∏ukowicz first gained nationwide recognition thanks to his participation in the parliamentary committee set up to investigate corruption allegations in the 2009 “Gambling Affair.”

The phantom alliance Mr Tusk’s move is logical and in line with his party’s recent strategy of weakening SLD as much as possible before this fall’s parliamentary elections. One method has been to repeatedly suggest that SLD is planning a coalition with the conservative Law and Justice (PiS) party after the elections, despite both parties’ consistent disavowal of the idea.

Surveys show that some PO voters (who are generally disinclined to vote PiS) have drifted towards SLD in the last few months. By suggesting that SLD is “in cahoots” with PiS, PO hopes to convince wayward voters to the fold. And the party isn’t being particularly coy about its new strategy.

“We are showing that in SLD there is no place for people who want to focus on social issues because [SLD leader] Grzegorz Napieralski is thinking only of grabbing power together with [PiS leader] Jaros∏aw Kaczyƒski,” Rafa∏ Grupiƒski, deputy leader of PO’s parliamentary club, said recently.

In his first statement following his defection, Mr Ar∏ukowicz also toed the party line. “For the past few weeks, it has been demanded of me to vote arm-in-arm with Jaros∏aw Kaczyƒski. I can no longer lend credibility to a project whose consequences I might not be able to explain,” he stated.

A caring government Another reason behind Mr Ar∏ukowicz’s appointment as the PM’s

plenipotentiary for contact with the marginalized is to show PO’s sensitive side before the elections. Inflation has proven a major bugbear in recent months and voters have complained bitterly about rocketing prices.

This gives opposition parties plenty of ammunition with which to attack PO. Preparing for the inevitable criticism from its rivals, PO is desperate to show that it cares about the “little guy.” Mr Ar∏ukowicz’s leftist credentials will serve PO well, despite the party’s clearly liberal economic bent.

Potential for humiliation The left is currently in poor shape, having been in the political wilderness for over six years. Thus it is not difficult for PO to co-opt some of its leading politicians and authority figures, such as Tomasz Na∏´cz, an advisor to President Bronis∏aw Komorowski, and Marek Belka, who now heads the National Bank of Poland. There are now suggestions that Ryszard Kalisz, another popular SLD politician, could be seduced by PO in the near future.

SLD is on the defensive and its leader, Grzegorz Napieralski, is scrambling to convince potential defectors that they are better off staying with him. This is naturally an unwelcome distraction at a time when the party should be focusing on building its poll numbers.

Adding insult to injury, PM Tusk has let it be known that Mr Ar∏ukow-

icz will probably top Civic Platform’s candidate list in Szczecin this autumn. Szczecin is where Mr Napieralski hails from and the seat of his power.

Given that PO candidates took around 49 percent of the vote in the northern city during the 2007 elections, compared to SLD’s 17 percent, running Mr Ar∏ukowicz on the Civic Platform ticket is almost guaranteed to humiliate Mr Napieralski. SLD’s leader could decide to run in Warsaw, but this would be seen as an act of surrender. Mr Napieralski is in an extremely difficult position.

Time to rally the troops At the same time, current opinion

polls show that even if PO wins the autumn vote, they will be unable to form a government without the help of, that’s right, SLD. Mr Tusk naturally wants his coalition partner to be as pliant as possible, so he is doing everything in his power to weaken the leftist party.

How much weaker SLD becomes depends in large part on Mr Napieralski. The 37-year-old politician showed surprising strength during the 2010 presidential campaign, but remains untested as a leader during the broader battleground of a parliamentary campaign. And, with the loss of Mr Ar∏ukowicz, he is in need of fresh troops. ●

A tectonic shift in Central Europe At a meeting last Thursday, the defense ministers of the Visegrad Four (V4) – a loose regional grouping of the Czech Republic, Hungary, Poland and Slovakia – decided to create a battle group. The decision is significant but not unexpected.

It’s significant because it shows that the V4 states are willing to upgrade their loose alliance to the security and military level. It’s expected because Stratfor has long forecast that they would be forced to take security matters into their own hands

by NATO’s lack of focus on the singular issue that concerns them: Russian resurgence in the post-Soviet sphere.

Europe’s two major political and security institutions are the European Union and NATO, both born in the aftermath of World War II, which devastated Europe. They then evolved in the shadow of a looming confrontation with the Soviet Union, which threatened to revisit such devastation. Approximating national

interests to form a common security strategy was not perfect during the Cold War, but it was simple, especially with Soviet armored divisions poised for a strike at Western Europe via the North European Plain and the Fulda Gap. The Cold War and the memory of World War II acted as bookends holding European states on the metaphorical bookshelf. Once the two eroded in the 1990s, the books did not immediately come tumbling down. Instead, the drive to expand NATO and the European Union became an end to itself, giving both ^ organizations a raison d’etre in the 1990s. Inertia drove the entities.

The post-Cold War order But a number of factors since the mid-2000s have shaken this unity, primarily the emergence of an independent-minded Germany and the resurgence of Russia as a regional power.

While Russia does not pose the same threat it did during the Cold War, Central Europeans continue to see Moscow as a security threat and would prefer for NATO to treat Russia accordingly. Germany sees Russia as a business opportunity and an exporter of cheap and clean energy.

The two views collided most recently during discussions for NATO’s New Strategic Concept, producing a largely incomprehensible mission statement for the alliance.

There are other tremors. The United States, the guarantor of European security structures, has spent the last 10 years obsessed with the Middle East and has been unable to prevent the divergence of interests on the European continent.

NATO has unsurprisingly become incapable of approximating national security interests toward a common mean, while the European Union has failed – spectacularly so in Libya – to create a coherent foreign policy.

Instead, European countries are diverging into regionally focused groupings.

Poland is key The two most prominent of these are the Nordic states, which are cooperating closely with the Baltic states, and the V4. The blocs’ security concerns regarding Russian intentions are rooted in separate geographies. The Nordic and Baltic states’ focus is in the Baltic Sea region, while the V4 is concerned with Moscow’s strength in the traditional border states of Belarus, Ukraine and Moldova. The two regional blocs remind us of primordial continental plates splitting off from Pangea. Europe’s tectonic plates, held together for 60 years by geopolitical conditions, have begun to diverge.

Poland is key. It shares a Baltic Sea coast with Nordic neighbors to the north, of which it perceives

Sweden as a strategic partner. But its history is heavily rooted in the northern slopes of the Carpathians, a geographical feature it shares with the other V4 members. It also happens to be the United States’ most committed Central European

“Central Europeans continue to see Moscow as a security threat” ally, as well as the region’s most populous country and most dynamic economy.

Poland could therefore be pivotal in any divergence of the blocs from the European core and could hamper Moscow’s national security designs. ● A tectonic shift in Central Europe is reprinted with permission of Stratfor

Unless otherwise noted, the opinions here are those of Warsaw Business Journal. Readers’ comments, opinions and letters should be sent to editor@wbj.pl. Please include a name and contact information and clearly indicate if they are to be considered for publication.

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WBJ examines the trends shaping Poland’s pharmaceutical market and looks at how Polish companies fare both at home and abroad 11

POLAND’S PHARMACEUTICAL MARKET W a r s a w B u s i n e s s J o u r n a l ’s s p e c i a l s u p p l e m e n t o n t re n d s i n t h e P o l i s h p h a r m a c e u t i c a l m a r k e t

•

MAY 16-22, 2011, 2011

Health-care reform

Shock therapy?

A controversial new bill governing the reimbursement of pharmaceuticals could prove a bitter pill to swallow

In search of a cure The intention behind the Reimbursement Act – whose

main provisions are expected to come into force at the start of 2012 – is to shift some of the expenditure growth away from reimbursement costs and towards other needy areas of the public health-care sector.

Many measures in the act have been on the Tusk government’s health-care reform agenda for several years – for example, fixed retail prices and wholesale margins are being (and have been) trumpeted as the solution to the “mess” of the drug reimbursement system. However, older proposals have been combined with a new set of plans, drawn up in response to the NFZ’s increasing expenditure on drug reimbursement.

First among the contentious measures is the introduction of a 17 percent ceiling on drug-reimbursement expenditure as a total proportion of public health-care expenditure, and a payback system whereby drug producers are required to cover

A salve from the Senate The industry’s warnings have not gone entirely unheeded.

The Polish Senate has passed an amended version of the Reimbursement Act, changing this measure to make pharmaceuticals companies responsible for only 50 percent of the overspend.

“In this form, this measure now becomes a real risksharing mechanism – and we hope the Sejm approves this

SHUTTERSTOCK

There’s a good reason why health-care reform is so often referred to as a “third-rail” issue – no matter how brave or noble, the politicians who touch it are usually in for a shock. With its new “healthcare package,” the Civic Platform government could be the next in line to learn this lesson.

Among the bills comprising Health Minister Ewa Kopacz’s proposed reforms, one in particular is causing controversy – the Act for the Reimbursement of Medicines, Foodstuffs Intended for Particular Nutritional Purposes and Medical Devices, often referred to simply as the “Reimbursement Act” (Ustawa Refundacyjna).

Among other things, the act proposes the introduction of fixed official sales prices for medicines, which has led to protests by members of the pharmaceutical industry.

spending above this 17 percent threshold.

Industry insiders and commentators agree that this will lead to a significant reduction in the level of reimbursement expenditure. As a comparison, in 2009, reimbursement expenditure reached 18.9 percent of health-care spending.

In addition, the plan to make pharmaceuticals firms responsible for expenses above the 17 percent threshold has been greeted with outrage by the industry, which has warned of cuts to R&D spending, as well as possible bankruptcies.

Fixed prices may adversely affect the elderly and poor amendment,” said Pawe∏ Sztwiertnia, the director general of the Employers’ Union of Innovative Pharmaceutical Companies (Infarma).

The Senate has also with-

drawn a proposed three percent levy on the revenues of pharmaceutical companies from the sales of reimbursed drugs, another measure which had enraged the industry.

Putting a (fixed) price on medicine On the other hand, the Senate left other contentious measures untouched. For example, Continued on p. 12 ➡

Polish pharmaceuticals producers

Treating the East

SHUTTERSTOCK

As competition grows on the generics market, Polish pharmaceuticals producers are redoubling their efforts to expand eastward

Destined for foreign patients?

Poland’s domestic pharmaceutical industry is dominated by producers of generics – unbranded versions of medicines developed by innovative pharmaceutical companies, which are generally cheaper than their originator equivalents.

Poland is a leader in terms of the extent of generics’ dominance in its domes-

tic market, compared with other Central European countries. Generics account for around 60 percent of Poland’s pharmaceutical market, in value terms, according to IMS Health data from 2010, compared with 49 percent in the Czech Republic, and 44 percent in Slovakia. This is thanks to pharmaceutical regulators

favoring generics, seeing them as a means of reducing reimbursement bills, in the context of a tight health-care budget.

Competitive medicine This environment has benefited Polish pharmaceutical producers. The largest Polandbased producer, Polpharma, announced revenues of z∏.13 billion in 2008 (the company has published no results since). The second-largest domestic producer, Adamed,

has also flourished in recent years, as evidenced by its increasing investment in research and development, and foreign expansion.

However, consumption of locally produced medicine Continued on p. 12 ➡

In this supplement Pharmaceuticals legislation . . . .11-12 Polish pharma . . . . . . . . . . . . . . . .11-12 Paying for modern treatments . . . .14

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POLAND’S PHARMACEUTICAL MARKET

MAY 16-22, 2011

Shock therapy? ➡ Continued from p. 11 the Reimbursement Act would require fixed, official retail prices to be applied to reimbursed medicines following negotiations with pharmaceutical companies. The problem, according to the industry, is that this process is to be completed within a relatively short time frame, leaving many to question its feasibility.

“It’s worth emphasizing that the negotiations will involve more than 4,500 reimbursed medicines, and there’s a risk that the Ministry of Health will have to complete the entire process in only a couple of months,” Mr Sztwiertnia warned.

“How the Ministry of Health intends to manage this process is unclear, because the regulations concerning negotiations with pharmaceutical companies will come into effect [later] this year,” he said.

He added, “The NFZ’s

criticism of the implementation of the Reimbursement Act is already known, and now questions are arising concerning the Ministry of Health’s ability to implement the new regulations, and whether it has sufficient staff resources.”

Drugs makers wouldn’t be the only ones affected by the price negotiations – pharmacies which sell reimbursed medicines would also be obliged to sign contracts with the NFZ, agreeing to sell medicines at the official, fixed price. Violations would be subject to fines. Incensed by the restrictions, pharmacists’ groups have engaged in protests.

Wholesalers would also have to accept fixed margins.

However, amendments made by the Senate would mean that wholesalers’ margins would be reduced gradually, starting at a fixed rate of seven percent from the beginning of 2012, rather than

falling immediately to the final fixed rate of five percent.

reimbursed drug sales.

However, the new system could mean that the elderly and those on low incomes have their access to treatment restricted, due to an inability to pay the new official prices.

A study quoted by daily Gazeta Prawna suggested that prices would rise by between nine and 11 percent as a result of the introduction of fixed prices.

“For many patients – mainly those who have until now benefited from promotions in pharmacies – the cost of reimbursed medicines will go up,” commented Adam Kozierkiewicz, an independent health market expert.

“Whether they will be more expensive on average for the whole population is unclear,” he added.

For its part, the Office of Competition and Consumer Protection, Poland’s competition watchdog, has said that fixed prices and margins on reimbursed drugs violate free

Savings and costs By doing this, the government aims to rationalize expenditure on reimbursed medicines.

Savings are expected to be made in part through reducing waste – there are reports of people stockpiling medicines when pharmacies offer large discounts – and by avoiding reimbursed drugs being sold to patients at prices below the reimbursement paid by the NFZ. Competition between pharmacies is fierce, with infamous “Leki za Grosz” (Drugs for a Penny) signs having appeared outside pharmacies across Poland in recent years. Small, independent pharmacies, have put pressure on policy makers, who have in turn placed considerable emphasis on “cleaning up the mess” of

market principles.

Possible side effects Taken together, the effect of the Reinbusement Act’s measures on the market are hard to foresee.

“Even the most knowledgeable experts and market observers are not able to completely assess the likely effects of the Reimbursement Act, because of the large number of new elements it will bring in at the same

time,” Mr Kozierkiewicz said.

A poll taken in the first half of April by pharmaceutical market research company IMS Health found that its main beneficiaries were expected to be the Ministry of Health and the NFZ. But if prices rise beyond the reach of the poor and elderly, these institutions – and the government itself – could find themselves regretting they touched the third rail in the first place.

Brian Davies

Selected measures of the draft Pharmaceutical Reimbursement Act, as of May 2011 •Introduction of fixed retail prices of reimbursed medicines, and fixed margins on wholesale of these medicines •Price negotiations with pharmaceutical companies due to take place to establish fixed prices •Introduction of a 17 percent fixed limit for expenditure on the reimbursement of medicines as a total of public health expenditure •Introduction of a payback system, which, following an amendment by the Senate, envisages that 50 percent of expenditure on drug reimbursement exceeding the 17 percent limit will be met by pharmaceutical companies •Extension of a system of reference-pricing for high-cost medicines used in hospitals, likely to compel producers to lower prices in order to ensure reimbursement

A tough market for medicine Public expenditure on health care in Poland is relatively low, at around 5.1 percent of GDP, compared with the OECD average of 6.5 percent. As a result Poland has traditionally relied on its domestic generic pharmaceuticals medicines industry to supply the majority of medicines, and has invested little in the reimbursement of more modern, expensive and targeted treatments. In comparison, Poland’s southern neighbors, the Czech Republic, Slovakia, and Hungary, invest proportionately much greater amounts in these types of treatments.

According to information from the Polish Association of Pharmaceutical Industry Employers (PZPPF), annual state pharmaceutical reimbursement per capita in Poland stands at

only $95, in comparison with $230 in the Czech Republic, $245 in Hungary, and as much as $300 in Slovakia. Furthermore, the PZPPF reports that the proportion of overall medicine bills paid

by Poles out of their own pockets, 62.5 percent, is considerably higher than the amount paid in Hungary (41.5 percent), in the Czech Republic (34 percent) and in Slovakia (30.8 percent).

Nevertheless, the last few years have seen a considerable increase in Polish state expenditure on the reimbursement of medicines. Nowhere has this been more evident than in the case of high-cost, innovative medicines used in hospitals, particularly in the treatment of cancer.

The amount the National Health Fund (NFZ) dedicates to

the reimbursement of chemotherapy drugs – including modern, innovative, targeted treatments – has risen dramatically in recent years, culminating in a y/y increase in spending of 96.3 percent in 2009, to z∏.1.36 billion.

That’s not the only area to see growth, either. In 2009 the NFZ’s expenditure on the reimbursement of outpatient medicines rose by 11.9 percent y/y to z∏.8.24 billion.

Good times for the pharmaceutical industry are expected to be short-lived, however. Growth in the NFZ’s spending on the reimbursement of outpatient medicines – based on initial calculations – increased only slightly in 2010, edging up by 3.2 percent y/y to z∏.8.5 billion. ●

Treating the East companies to adapt to growing competition from cheaper generics producers from China and India,” said Micha∏ Pilkiewicz, country manager of IMS Health Poland.

“New regulations coming into effect will certainly favor cheaper suppliers,” he added.

New frontiers While this new trend presents Polish drugs producers with a challenge in their home market, it also means that they are focusing more on Eastern markets, where many are already present.

Another factor behind this trend is the fact that the markets of Russia and many countries of the Commonwealth of Independent States are seeing dynamic growth, while in Poland growth is steady at best.

“Regarding the eastward expansion, in some cases we can say that there are solid foundations to establish Polish corporate brands, and some Polish medicine brands,” Mr Pilkiewicz said.

“Polish companies have a

natural ability to develop and expand their businesses in eastern markets,” he added.

Polpharma earns around 20 percent of its revenue from exports, according to a report in daily Gazeta Prawna, with over half of this coming from the Russian market. The company is also rumored to be weighing a bid for the Russian drug maker Valenta Pharmaceuticals in order to further strengthen its position on this market.

State-owned Polfa Warszawa, which is currently undergoing privatization, has a strong, established presence in Russia and certain Central Asian countries; it is also expected to launch its first product in China this year. For its part, Warsaw Stock Exchange-listed Bioton has based its current international expansion on partnership agreements with major multinationals – like GlaxoSmithKline in Russia and Bayer HealthCare in China.

A wider perspective This does not mean that Polish companies are dropping their focus on the domestic market, however.

“The increasing emphasis that Polish pharmaceutical

companies are placing on export is definitely not a sign of the saturation of the Polish generics market,” Monika Stefaƒczyk, chief pharmaceutical market analyst at market research group PMR said.

“It’s more a sign that Polish companies have started to have a wider perspective and to analyze other markets in terms of growth potential,” she added.

SHUTTERSTOCK

➡ Continued from p. 13 (as a percentage of total consumption) is falling in Poland, according to experts, and the trend can be seen in the reimbursed drugs market. Pharmaceutical market research organization IMS Health estimates that the proportion of such medicines which were produced by Polish firms has declined, in value terms, from 30 percent in 2005, to 26 percent in 2010, while the proportion of imports has risen from 70 percent to 74 percent.

Polish companies are facing increased competition from multinationals which have generics subsidiaries in both the prescription and over-the-counter drug segments. France’s Sanofi-Aventis – Poland’s number-one drugs maker in terms of sales value – has its own generics unit, Zentiva, while Swiss pharma major Novartis has a generic arm, Sandoz, which has made large inroads into the Polish market. The competition is set to get fiercer, too.

“The challenge for the next few years will be for Polish

More foreign pharmacies may soon be stocking Polish-made medicines

Brian Davies

14

POLAND’S PHARMACEUTICAL MARKET

www.wbj.pl

MAY 16-22, 2011

Innovative pharmaceuticals

Can modern, innovative drugs compete in the Polish market?

For multinational pharmaceutical companies, doing business in Poland can be challenging due to the country’s low public expenditure on health care and limited funds dedicated to drug reimbursement (see article, p. 11).

As a generics-dominated market, with domestic companies traditionally serving the majority of demand, foreign innovators have come up against many barriers. However, as the sixth-largest pharmaceutical market in Europe, it is one which no multinational pharmaceutical company can afford to avoid.

Generic concerns The challenges facing innovative pharmaceutical companies in Poland are easily illustrated with one example.

Around the time of Poland’s EU accession, Polish authorities allowed domestic companies to produce generic versions of blockbuster drugs such as erectile dysfunction pill Viagra and schizophrenia drug Zyprexa – developed by US pharma giants Pfizer and Eli Lilly respectively.

A guide to Polish business and industry

During this period, such medicines were still subject to patent protection and data exclusivity regulations, but legal cases against the generics producers were thrown out by Polish judges. In the case of Poland’s generic Viagra, this was because it was registered just before accession, when different rules applied; the case against the generic Zyprexa was thrown out on a technicality.

The generics were then put on Poland’s drug reimbursement list, helping to save the National Health Fund (NFZ) considerable sums of money.

Meanwhile, Polish authorities have a reputation for being very conservative when it comes to putting new drugs on the reimbursement list – in both outpatient and inpatient settings.

Catching up with Europe Since 2007, however, investment in the reimbursement of new, innovative drugs in Poland has been rising, particularly in the case of cancer drugs used in hospitals. This reflects a new attitude among

Przewodnik po polskim biznesie i gospodarce

Polish health authorities to cancer as a disease area. As a result, modern drugs produced by multinational pharmaceutical companies such as Switzerland’s Roche have become more readily available in Poland’s oncology centers.

These modern medicines can offer an enhanced level of treatment to customers as they often have considerably fewer unpleasant and harmful side effects. In some cases they represent the only available treatment option.

“Particularly in terms of hospital and specialist treatment, there has been a real increase in the number of patients covered by these programs, and in access to modern therapies,” Micha∏ Pilkiewicz, country manager of pharmaceutical market research organisation IMS Health Poland, said.

“You could say that in this sector at least, we’re slowly catching up with Europe, and I hope this trend is maintained by the NFZ,” he added.

With the number of cancer patients growing alongside expectations regarding the standard of treatment, this positive investment trend seems likely to continue.

Cost concerns could drive hospitals away from innovative, effective medicines Doctors’ bills?

New legislation, meanwhile, is a cause for concern as well as optimism.

First of all, there’s the “Reimbursement Act” (see article, p. 11) which is expected to come into effect this year. A cap on reimbursement expenditure and the inclusion of innovative hospital drugs to a price-referencing system are just two of the measures which could hit the industry.

“Hospitals will be guided by concerns on price when they come to buy new medicines, and not by their effectiveness,” said Pawe∏ Sztwiert-

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The cost of modern medicine

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nia, the director general of the Employers’ Union of Innovative Pharmaceutical Companies (Infarma). “As a consequence, patients will have restricted access to innovative therapies,” he predicted.

However, other measures in the act could improve access.

“The act introduces assessment of the effectiveness of medicines, and also brings in clearer criteria for putting new medicines on the lists of reimbursed medicines,” Mr Pilkiewicz explained. “This means there is a chance of introducing a more effective

system of spending NFZ funds, and also might increase access to innovative medicines,” he added.

Additionally, a change in Polish pharmaceutical law approved in March means that Poland’s data exclusivity laws (which protect data on clinical trials, preventing the development of generic equivalents of innovative drugs) have been brought into line with those of the EU, which has more innovationfriendly data exclusivity regulations than Poland previously had.

Brian Davies

Deputy Prime Minister Waldemar Pawlak has weighed in on the zoning controversy in Ursus

Arie Koren, general director of developer Okam, talks land prices and new projects 17

16

LOKALE IMMOBILIA

W a r s a w B u s i n e s s J o u r n a l ’s w e e k ly s u p p l e m e n t o n re a l e s t a t e , c o n s t r u c t i o n a n d d e v e l o p m e n t

Adgar’s new facade Adgar Post´pu has begun updating its Adgar Business Center office building at ul. Post´pu 15 in Warsaw’s Mokotów district. The project consists of a change in the color of the building’s exteriors and the creation of a more modern shape, which will be achieved by rearranging the structure of the facade. The project has been designed by Katarzyna Uszok’s architectural studio, with work set to be completed this summer. ●

In this issue Brama Portowa cornerstone . .15 The Old Town’s new building . .15 S+B Gruppe’s commercial project . . . . . . . . . . . . . . . . . . . . . .16 Ursus controversy . . . . . . . . . . . .16 Konstruktorska commercialization . . . . . . . . . . . .16 Property-related stocks . . . . . . .16 Okam interview . . . . . . . . . . . . . .17 Subway financing . . . . . . . . . . . .18 Senator cornerstone . . . . . . . . .18

Brama Portowa cornerstone laid The office-retail development will be delivered in late 2012 A cornerstone-laying ceremony was held last week at the construction site of the Brama Portowa office project in Szczecin. The investment, which is located at the intersection of the city’s ul. Stefana Wyszyƒskiego and Al. Niepodleg∏oÊci, is being developed by SwedeCenter, a company from the Inter IKEA group.

“We are very glad that the realization of Brama Portowa – an investment being developed in the very heart of Szczecin – is proceeding smoothly and we hope that we will secure permanent tenants for the project in the near future,” Roger Andersson, country manager SwedeCenter, said in a statement.

Brama Portowa will comprise two buildings, one with over 4,500 sqm of space and the other with more than 8,000 sqm. Each will house office and retail space. The structures, which are to feature ecologically friendly solutions that will allow the project to obtain a LEED certification, are being built by Hochtief Polska.

Completion is scheduled for Q4 2012.

Active in the commercial property sector, SwedeCenter has been present in the Polish market since the early 1990s.

Completed projects in the country including N21 and Cracovia Business Center in Warsaw and Kraków, respectively.

Apart from Brama Portowa, the developer is now involved in projects such as the Business Garden office parks in Warsaw, Poznaƒ and Wroc∏aw.

Brama Portowa has been designed with a LEED certification in mind

Adam Zdrodowski

Mixed-use development

Old Town, new building Warsaw’s historical district is getting a new structure The first investment in decades is set to be carried out in the vicinity of Warsaw’s historic Pl. Zamkowy, Gazeta Wyborcza has reported. The development, which is expected to comprise retail, office and hotel space, will be located at the intersection of ul.

Miodowa and ul. Senatorska on a plot which until recently hosted a parking lot.

The land in question has just been handed over by City Hall to Maciej Marcinkowski, a businessman who specializes in purchasing claims to nationalized properties from the legal heirs of their former owners. The plot on ul. Senatorska previously belonged

to a Jewish family; resolving ownership matters concerning the property took Mr Marcinkowski several years.

The design for the building is being provided by RKW Rhode Kellermann Wawrowsky, which secured a planning decision for the plot on ul. Senatorska back in August 2009. The final design of the five-storey building should be ready by the end of the year; construction on the scheme could then launch in 2012.

The investment’s facades will be designed to complement those of neighboring, historical buildings and Warsaw’s historical architecture preservation authorities have been consulted on the matter.

A representative for the investor stressed that the RKW studio has previously designed modern buildings

SHUTTERSTOCK

RED Real Estate Development has launched pre-sales of units in its RED Park residential project in Poznaƒ. The development, which will be located in the city’s Diec neighborhood, will comprise four 13-storey buildings, underground parking lots and retail space. The first phase of the project, construction of which is expected to launch in August, will comprise 130 apartments. Prices start at z∏.5,100 per sqm, meaning all units qualify for the government’s “Family on its Own” subsidized mortgage program for first-time homebuyers.

MAY 16-22, 2011, LI 16/19

Commercial space

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RED Park pre-sales launched

•

The building’s facades won’t look out of place in their Old Town setting located in the historical areas of many European cities,

including Dresden, Dortmund, Frankfurt and Munich

in Germany.

Adam Zdrodowski

Warsaw Business Journal presents Real Estate weekly newsletter • Know about the newest projects before they’re on the market • Keep up to date on the latest tenders and auctions • Learn the latest trends in Poland’s dynamic office, residential and retail sectors • Find out who’s who in Polish real estate To subscribe: e-mail subscribe@wbj.pl or call +48 22 639 85 68, ext. 201 and sign up for free two-week no-obligation trial subscription

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Development in Warsaw

Dekada commercialization Ingeborg Investments has already leased over 70% of space in its new shopping and recreational center, Dekada in Sieradz. The list of its future tenants has recently been expanded to include multimedia retailer Empik and a Rossmann beauty supply store. The Dekada shopping and recreational center is being built on ul.

Saraƒska, in downtown Sieradz. The opening of the facility is planned for Q4 2011. It will offer some 10,000 sqm of leasable space.

MLP tenants extend leases Developer MLP Group has extended lease agreements with two of its tenants at Pruszków I logistics park: logistics operator ET Logistik and importer of household articles AGED. The companies leased a total of 7,793 sqm of warehouse space in the facility. It occupies a total area of 43 ha. ●

S+B Gruppe announces new Warsaw project

Zoning controversy grows The argument over zoning in the capital’s Ursus district is attracting national attention Economy Minister and Deputy PM Waldemar Pawlak has criticized Warsaw City Hall over its proposed zoning plan for the capital’s Ursus district. According to Mr Pawlak, the plan discriminates against the development of industrial activity in the area.

In a letter to Warsaw City Hall, Mr Pawlak offered his support to industrialists from Ursus who oppose City Hall’s approval of a plan to build a housing estate on a site previously occupied by tractormaker ZPC Ursus. He claims the plan stands in violation of the law, as the changes have not been presented for public approval and because City Hall disregarded the fact that factory owners possess perpetual usufruct rights to premises located at the site.

Mr Pawlak’s entry into the fray was solicited by the Asso-

MAY 16-22, 2011

Austrian developer S+B Gruppe has announced the acquisition of a mothballed project in central Warsaw. The unfinished 55 meter building, which stands in shell and core condition, has been on hold since spring 2009 due to financing problems.

Having satisfied more than 90 creditors, S+B took over the plot and partially built edifice, and is now in talks with local authorities concerning a new blueprint for the investment. It wants to develop hotel or office space in the building, which is located on ul. Wspólna near the capital’s Central Station.

“City center locations can retain their value, or even appreciate in times of economic uncertainty. This is particularly true of Warsaw,” S+B Gruppe CEOs Franz Paul Bauer and Reinhard Schertler said in a statement.

S+B has earmarked €40 million for the completion of the Wspólna 72 project. The announcement of the scheme comes just months after the company successfully completed its 18,280 sqm Zebra Tower office project in the capital.

The property was sold earlier

ciation for the Development of Ursus, which opposes the plans.

“I would like to suggest taking action to re-define the area of the former Ursus plant premises back to an industrialservice development,” reads the letter sent to the Warsaw Mayor Hanna GronkiewiczWaltz.

Mr Pawlak also noted that the current zoning plan discriminates against 100 entrepreneurs who employ over 2,000 people.

The deputy PM’s intervention is not good news for investor and developer Celtic Property Developments, which owns part of the land in question. The firm wants to build its Miasteczko Ursus housing estate at the location, bringing around 10,000 apartments to the local housing market.

“We are forced to passively wait and see how both parties resolve the argument,” a spokesperson for Celtic Property Developments told Lokale Immobilia.

Katarzyna Piasecka

% change (week)

52-week low

52-week high

% change (year)

Total shares

Market value (z∏.mln)

BUDIMEX

103,00

-3.56

84.55

109.20

6.19

25,530,098

2†629,60

CELTIC

18,70

1.08

17.43

60.55

NA

34,068,252

637,08

DOMDEV

47,00

3.30

38.52

52.00

-22.89

24,560,222

1†154,33

ECHO

5,07

-1.74

4.10

5.40

18.74

420,000,000

2†129,40

ELBUDOWA

164,50

-2.08

150.00

188.40

-5.46

4,747,608

780,98

ENERGOPLD

3,98

0.76

3.57

4.31

-5.24

70,972,001

282,47

ERBUD

32,96

-11.40

32.96

61.00

-35.12

12,602,711

415,39

GANT

13,70

-0.72

12.98

23.60

-43.74

20,499,953

280,85

GTC

20,10

-2.90

19.58

24.98

-9.46

219,372,990

4†409,40

HBPOLSKA

2,08

-7.56

2.08

3.90

-41.41

210,558,445

437,96

JWCONSTR

15,30

-0.97

13.50

18.69

-5.44

54,073,280

827,32

LCCORP

1,52

-2.56

1.41

1.72

0.66

447,558,311

680,29

MARVIPOL

8,12

-4.13

8.12

17.26

-52.79

36,923,400

302,77

MIRBUD

4,07

0.49

2.79

4.75

37.97

75,000,000

305,25

MOSTALWAR

37,70

-8.05

37.70

72.55

-44.80

20,000,000

754,00

MOSTALZAB

2,58

-3.01

2.55

4.15

-44.03

149,130,538

384,76

ORCOGROUP

38,20

6.26

19.00

40.00

38.41

14,053,866

536,86

PBG

146,00

-8.92

146.00

252.00

-37.07

14,295,000

2†087,07

PLAZACNTR

4,98

0.61

3.70

5.59

-15.74

292,647,720

1†457,39

POLAQUA

18,25

-2.61

16.00

21.19

-13.10

27,500,100

501,88

POLIMEXMS

3,09

-7.21

3.09

4.84

-33.55

521,154,076

1†610,37

POLNORD

30,67

-3.22

30.50

40.50

-21.96

22,389,268

686,68

RANKPROGR

13,07

4.14

9.59

13.60

NA

37,145,050

485,49

ROBYG

2,05

-0.97

1.70

2.13

NA

257,390,000

517,35

RONSON

1,51

-4.43

1.36

1.82

-13.71

272,360,000

411,26

TRAKCJA

3,34

-4.02

3.32

4.97

-19.32

232,105,480

775,23

ULMA

87,00

0.00

70.00

88.00

8.75

5,255,632

451,98

UNIBEP

6,85

-2.84

6.85

10.30

-10.69

33,927,184

227,31

WARIMPEX

10,18

-1.83

7.64

10.89

20.19

54,000,000

549,72

ZUE

12,50

-1.88

12.15

15.14

NA

22,000,000

275,00

this year to German investment fund Union Investment for about €76 million.

S+B Gruppe has a property portfolio comprising assets in Vienna, Prague, Bucharest and

Warsaw. The developer has to date developed some 850,000 sqm of usable space in projects worth a total of more than €2.5 billion.

Adam Zdrodowski

COURTESY OF CB RICHARD ELLIS

Closing price on May 12

S+B will spend €40 million to complete Wspólna 72

Konstruktorska Business Center commercialization underway

Property-related stocks Security

COURTESY OF S+B GRUPPE

16

The building will bring 48,000 sqm of office and retail space to the Warsaw market Developer HB Reavis Group has appointed CB Richard Ellis the exclusive leasing agent for its Konstruktorska Business Center project in Warsaw. Construction on the development, the company’s first venture in the Polish capital, has already started and is scheduled to be completed in Q1 2013.

Designed by the Epstein architectural studio and located on ul. Konstruktorska in Warsaw’s Mokotów district, Konstruktorska Business Center will offer 48,000 sqm

of office and retail space on seven floors as well as an underground parking lot for more than 1,000 cars. The building is currently undergoing a BREEAM environmental certification process.

“We believe that our project offers spectacular space ideal for a wide array of quality users and it will be a great addition to the existing business infrastructure [of Mokotów]. We are excited about our expansion into the Polish market and are currently looking into acquiring addi-

tional office and retail projects across Poland,” stated HB Reavis Group spokesperson, Roman Karabelli.

Luxembourg-headquartered HB Reavis Group is an international commercial property development company with regional offices in Bratislava, Budapest, Prague, Warsaw and Zagreb. Founded in 1993, the firm has to date developed almost 500,000 sqm of commercial space; it focuses on office, retail and logistics projects.

Adam Zdrodowski

LOKALE IMMOBILIA – REAL ESTATE

MAY 16-22, 2011

Belief in the market Adam Zdrodowski: You recently bought a sizable piece of land in Warsaw’s Wola district in order to develop a large residential project. From your perspective as a developer, is now a good time to buy land for investments in Poland? Are the prices attractive at the moment?

Arie Koren: We believe in the Polish real estate market. We think that in 2012 it will start growing again at a pre-crisis pace. Plenty of businesses are moving to Warsaw. We also see a tendency and philosophy of young Poles to own, not to rent, the flat they live in.

Therefore we believe that it is a very good time to buy plots, as prices are still lower than [elsewhere] in Europe.

Prices are attractive now because of many factors, but particularly [because of] the lack of bank credit, which has been depressing the market.

But Polish banks are also recovering from the crisis and show more willingness to provide financing, which should relieve the real estate market.

That should help push market prices higher again.

The InCity project will be located in an area of Warsaw in which a number of develop-

access to a vivid lifestyle, swimming pool, gym and restaurants.

I would be afraid of Okam if it was my competitor.

The InCity project arguably belongs to the upper segment of the market – what are the prospects for this sector?

Many developers in Poland seem to have focused exclusively on small, cheap units which are in demand now...

By “upper standard” I understand good quality and an attractive location. Nowadays the difference between standard and upper standard [apartments] isn’t significant.

We don’t finish the flats, the owners do that. All we can give

COURTESY OF OKAM

Your company has acquired the plot with a ready design and a building permit.

Because of the problems which some developers had during the crisis, are there many offers of this kind in the market now?

Buying plots without any documents is risky and we don’t want to put our own capital at risk. We look for plots with

building permits and viable projects. We only take them over if they have a good value proposition and we simply improve the quality of the building materials. That such offers are in the market is the result of an unprofessional approach by some developers.

If you want to be professional you have to be prepared to take losses.

ers have recently announced new residential and office schemes. Why has this area been so popular with developers of late? Are you not afraid of the competition?

We like competition. Competition makes the market. It also forces developers to improve the quality [of their projects]. We are very happy that Wola has become popular – that only proves we were right to invest there.

First of all it is very close to the city center, but still away from the crowds and heavy traffic. Secondly, the new subway line will stop just next to the plot. InCity offers a great location, easy transportation and

The InCity project will be built in Warsaw’s popular Wola district

17

Promenada sale completed

Residential development

Arie Koren, co-founder and general director of developer Okam, talks to Lokale Immobilia about the land market in Poland and the company’s latest projects

www.wbj.pl

is a very good standard of common areas and we do our best to deliver.

I believe that people who bought their first flat in the lower standard will sooner or later move to the upper standard. Therefore we are investing in two factors that promise success: quality and a good location.

What are your predictions concerning apartment prices in Poland in the near future?

Prices will grow unless there is an external shock again. I have observed that real estate markets have three-year cycles.

Therefore I believe that in 2012 the market will start growing again. One of the factors will be the Euro 2012 championship. Another factor is the lack of good quality apartments in Warsaw.

What are your plans for the future? Will there be more residential projects in Warsaw and across Poland?

We are now in three cities: Warsaw, ¸ódê and Katowice.

In June we will start the construction of InCity at Siedmiogrodzka [in Warsaw] with about 500 flats. In Katowice this summer we will launch construction of luxurious apartments in 3 Ponds Valley, one of the most beautiful plots in Silesia, with about 254 apartments. And in ¸ódê we are building a mixed-use office and residential project which will change the image of this city.

In our plans we have a smaller construction in Konstancin and also 34 flats and luxurious apartments in Kazimierz in Kraków. We will welcome every opportunity for further investments in Warsaw. ●

Carpathian PLC has announced the completion of its sale of the Promenada shopping center in Warsaw to MD Poland I, a subsidiary of Atrium European Real Estate Limited. The value of the transaction, in which the seller was advised

by Jones Lang LaSalle, Salans and BNWW, amounted to €169.5 million. Carpathian acquired the property in two parts in 2006 and 2009 from Savana Torrido Investments and Poldrim Torrido Investments, respectively, for a total of €144.5 million.

Solid in ProLogis Park Industrial space developer ProLogis has leased a total of 35,500 sqm of space in two buildings in its ProLogis Park Teresin property in central Poland, to logistics services provider Solid Logistics.

The tenant now occupies a total of 63,000 sqm of warehouse space at four ProLogis distribution parks in Poland. “A lease expansion with a customer within a single park is already an achievement, but when a customer decides to base the majority of its operations in facilities offered by a single warehouse provider, it is a great success.”

Dariusz Proniewicz, leasing manager for ProLogis Poland, said in a statement. ●

LOKALE IMMOBILIA – REAL ESTATE

www.wbj.pl

The first quarter of 2011 saw an increase in leasing activity in the warehouse market in Poland – over 376,000 sqm was taken up in the period, 14.7% more than in Q4 2010, according to a recent report by Colliers International. “The downward trend which began in 2009 and continued in 2010 has visibly slowed. At the end of Q1 2010, rents stabilized in some locations. In Q1 2011, that trend continued in the whole warehouse market, with a slight growth trend having taken place in areas with a shortage of space,” stated Tomasz Kasperowicz, a partner in the warehouse and industrial department at Colliers International.

Lots of CE property on offer Real estate worth a total of approximately €3.5 billion is currently for sale in the core Central European markets of Poland, the Czech Republic, Slovakia and Hungary, a figure that marks a small increase upon the previous quarter, according to Cushman & Wakefield data. When it comes to the geographical distribution of the investment offers, Poland continues to dominate with its 58% (€2.05 billion) share of the total. ●

MAY 16-22, 2011

Transport infrastructure

Warsaw City Hall reallocating subway funds The move “won’t delay” construction Plans to reallocate funds designated for the construction of the capital’s second subway line have been revealed by Warsaw City Hall in an amendment to the city’s 2011 budgetary bill.

Funding worth some z∏.300 million is to be moved from the 2011 budget to the budgets of the 2012-2014 period.

This does not mean that the completion of the central section of the second line will be delayed, City Hall emphasized in an official statement, following allegations from both the opposition and the media that the project could face major delays.

Construction on the central stretch of the second metro line started on August 16, 2010. Initially, it was planned to be com-

Work on the C13 PowiÊle subway station is under way

pleted in H1 2012 but, according to the most recent schedule, work is planned to be finished in autumn 2013 and the line is expected to welcome its first passengers in spring 2014.

“It looks like we will meet the deadline,” City Hall spokesperson Bartek Milczarczyk told Lokale Immobilia. “We are changing the stages of financing, not the realization of the investment,” he said.

Mr Milczarczyk confirmed that the amendment was partly due to the fact that City Hall still hasn’t obtained all the permits necessary for the construction of the subway stations.

“We expect to get [the permits] before this year’s summer holidays,” he said. “As soon as we get them, we will know which stages to accelerate to meet the deadline.”

In addition, Mr Mil-

czarczyk cited the need for access to the National Stadium during Euro 2012 as a further reason for the changes.

“During the tournament, work on the subway may be slowed down to provide access to the stadium,” he said.

In contrast, Czes∏aw Bielecki, an architect, politician and publicist, feels modifications to the construction schedule are, to a great extent, caused by Warsaw City Hall’s inability to plan properly.

“The city’s authorities failed to prepare professional infrastructure development plans.

Additionally, the bureaucracy which accompanies them in almost every investment triggers delays. Public investments clerks are now falling into the same traps they used to prepare for private enterprises,” Mr KP Bielecki stated.

Senator cornerstone laid in Warsaw Belgian developer Ghelamco last week laid the cornerstone on its Senator office project on Warsaw’s ul. Bielaƒska. Among the guests joining Ghelamco Group president Paul Gheysens at the event were Belgian Minister Vincent Van Quickenborne, Warsaw Mayor Hanna Gronkiewicz-Waltz and Belgian Ambassador to Poland Raoul Delcorde.

Senator is being constructed in a historical area of the Polish capital. With this in mind, Jeroen van der Toolen, Ghelamco’s managing director for CEE, said, “We meet today in a special place, which has for ages been tied to the largest financial institutions in Poland.”

The six-storey Senator

building will comprise 25,000 sqm of class-A office space as well as underground parking for 300 vehicles. Its facade draws inspiration from the original Polish Bank building.

Construction began last October, with completion scheduled for 2012. The first tenant in the building, Rabobank Group, signed on at the start of April.

Since entering the Polish market 20 years ago, Ghelamco has delivered over 350,000 sqm of office and warehouse space, with more in the pipeline. Under its Ghelamco Residential brand, the firm is also working on a pair of housing projects in Warsaw.

EBB

ACOURTESY OF GHELAMCO

Warehouse sector improves

COURTESY OF AGP METRO POLSKA

18

From left: Ghelamco Group president Paul Gheysens, Warsaw Mayor Hanna Gronkiewicz-Waltz and Belgian Minister Vincent Van Quickenborne placed a time capsule in the cornerstone containing documents and newspapers

THE LIST

MAY 16-22, 2011

www.wbj.pl

19

Corporate services

Business Consulting Companies

Rank

Ranked by total number of consultants

Company name Address Tel./Fax E-mail Web page

Number of consultants: Total / Polish / Foreign

Revenue from management consulting (z∏. mln)

revenue Total revenue Total in Poland from consulting (z∏. mln)

www.bookoflists.pl

Main activities

Selected clients

Total employees / Year founded

Top local executive / Title

Dariusz Kraszewski; Marek Metrycki

1st half of 2010 / 2009 / 2008 / 2007

1

Deloitte Al. Jana Paw∏a II 19, 00-854 Warsaw 22 511-0811/22 511-0813 dpoland@deloittece.com www.deloitte.com/pl

298 298 -

58.5 120.2 180.5 170.9

157.1 335.6 363.7 314.4

160.6 340.3 371.8 319.6

Audit; consulting; tax and financial advisory

PZU; BRE Bank; PGNiG; CSIOZ; Ministry of Economy

1,100 1990

2

Ernst & Young Business Advisory Sp. z o.o. i Wspólnicy Sp. k.

Rondo ONZ 1, 00-124 Warsaw 22 557-7000/22 557-7001 ernst.young@pl.ey.com www.ey.com/pl

295 294 1

WND 110.7 98.8 96.3

WND 133.7 120.8 121.6

WND 406.1 444.0 389.5

Business consulting; IT advisory

Energa; Agora; Pekao; Ministry of Interior and Administration; BOÂ

1,309 1990

Ernst & Young Managing Partner for Poland; Ernst & Young Advisory Managing Partner

3

PricewaterhouseCoopers(1) Al. Armii Ludowej 14, 00-638 Warsaw 22 523-4000/22 523-4040 pwcpoland@pl.pwc.com www.pwc.com/pl

272 262 10

WND WND WND WND

WND 146.9 146.7 118.2

WND 389.1 399.7 388.8

Industry-focused assurance; tax and advisory services to build public trust and enhance value for clients and their shareholders

PGNiG; TP; GDDKiA; PKN Orlen; PKO BP

1,496 1990

Advisory Managing Partner

4

Capgemini Polska Sp. z o.o. ul. Pi´kna 18, 00-541 Warsaw 22 464-7000/22 464-7100 office.pl@capgemini.com www.pl.capgemini.com

250 WND WND

WND WND WND WND

WND WND WND WND

WND 392.3 333.2 258.6

WND

WND

3,785 1996

Frank Wagenbauer

5

KPMG ul. Ch∏odna 51, 00-867 Warsaw 22 528-1100/22 528-1009 kpmg@kpmg.pl www.kpmg.pl

173 169 4

24.3 57.1 55.8(2) WND

30.1 70.7 72.3(2) WND

200.3 455.0 440.3(2) WND

WND

WND

1,290 1990

Andrzej Âcis∏owski

6

WYG International Sp. z o.o. ul. Marynarska 15, 02-674 Warsaw 22 492-7100/22 492-7113 warszawa@wyginternational.pl www.wyginternational.pl

152 152 -

WND 71.2 WND WND

WND 72.4 62.1 WND

WND 100.5 68.6 WND

WND

Polish Agency for Entrepreneurship Development; Centrum Rozwoju Zasobów Ludzkich; Carrefour Polska; Bumar; Philips Polska

247 1999

Andrzej Dziurdzik

7

CGI Information Systems and Management Consultants (Polska) Sp. z o.o. ul. Sienna 39, 00-121 Warsaw 22 526-5700/22 526-5701 info.poland@cgi.com www.cgi.com

150 150 -

WND WND WND WND

WND WND WND WND

WND WND WND WND

Development and maintenance of applications; IT consulting

TP; Polkomtel; Netia; Allianz; Bank BPH; BRE Bank; BZWBK

31,000 1997

Dariusz Gorzeƒ

8

Accenture Sp. z o.o. ul. Sienna 39, 00-121 Warsaw 22 464-0000/22 464-0001 pl.office@accenture.com www.accenture.pl/com

145 WND WND

WND WND WND WND

WND WND WND WND

WND 308.9 367.0 386.4

WND

WND

WND 1993

Jaros∏ow Kroc

9

F5 Konsulting Sp. z o.o. ul. Sk∏adowa 5, 61-897 Poznaƒ 61 856-6960/61 853-0295 konsulting@f5.pl www.f5.pl

120 120 -

8.6 19.6 18.9 29.9

8.6 19.6 18.9 29.9

8.6 19.6 18.9 29.9

Business consulting; EU projects; human resources development

Ministry of Treasury; Polish Pharmaceutical Holding; Oil and Gas exploration “Diament”; KGHM Ecoren; PKN Orlen

272 1991

Marek Pankowski

10

DGA SA ul. Towarowa 35, 61-896 Poznaƒ 61 859-5900/61 859-5901 dgasa@dga.com.pl www.dga.pl

38 38 -

3.4 10.1 7.2 9.3

22.9 49.6 25.2 41.9

23.7 52.3 27.4 42.6

Strategies for business development; business plans and financial models; business valuation; privatization; M&A; preparation and implementation of comprehensive training and consulting projects; outplacement projects; research projects; comprehensive support for human resources

WND

52 1990

Andrzej G∏owacki

11

Aon Hewitt ul. Marsza∏kowska 76, 00-517 Warsaw 22 696-5220/22 696-5221 dominika.korzeniowska@hewitt.com www.hewitt.pl

32 32 -

WND WND WND WND

WND WND WND WND

WND WND WND WND

Engagement management; leadership and talent management; high performance workforce; HR benchmarks; HR excellence

BRE Bank; JSW; Provimi; RWE; SPEC

43 1995

11

Doradca Consultants Ltd. Sp. z o.o. ul. WolnoÊci 18A, 81-327 Gdynia 58 621-0331/58 621-9927 office@doradca.com.pl www.doradca.com.pl

32 32 -

3.6 5.1 5.6 11.3

3.6 5.1 5.6 11.3

3.7 5.6 6.0 11.7

Management consultancy

Polish Agency for Enterprise Development; Energa; TP; Sopra Consulting; Ministry of Treasury

45 1985

Jaros∏aw Zysnarski

13

Hay Group Sp. z o.o. ul. Flisa 4, 02-247 Warsaw 22 577-4444/22 577-4445 polandoffice@haygroup.pl www.haygroup.pl

30 29 1

WND WND WND WND

13.0 11.9 15.5 13.9

13.0 11.9 15.5 13.9

Transforming business strategies into organizational solutions; strategy decoding and development; board support post-M&A; operational reorganization and improvment; climate change; leadership transformation; talent managment; reward strategies and reward information services

Skandia; AkzoNobel; KBC Group; HDI; Lukas; BG˚

41 1998

Mik Kuczkiewicz

14

Konsorcjum doradczo-szkoleniowe SA ul. Flisa 4, 02-247 Warsaw 22 577-4040/22 577-4047 office@weknowhow.pl www.weknowhow.pl

22 21 1

1.8 3.3 3.6 3.3

1.8 3.3 3.6 3.3

15.7 24.6 24.5 28.4

Leadership and management; efficiency: individual, team, organization, strategies; talent management; executive development

ArcelorMittal Poland; Bank Handlowy; Polska Telefonia Cyfrowa; BG˚; Merck

80 2004

Aleksander Drzewiecki

15

Mercer (Polska) Sp. z o.o.

Al. Jerozolimskie 94, 00-807 Warsaw 22 456-4020/22 456-4021 ewa.pieniazek@mercer.com www.mercer.com.pl

20 20 -

WND WND WND WND

4.6 6.5 2.2 4.3

10.8 20.7 18.0 10.1

WND

WND

220 1999

Notes: Notes: NR = Not Ranked, WND = Would Not Disclose. Research for the List was done in December 2010. Number of employees and ownership structure are as of November 2010. All information pertains to the companies’ activities in Poland. Companies not responding to our survey are not listed.

Footnotes: (1) Financial year July 1 – June 30; (2) Financial year July 1 2008 – June 30 2009

Consulting Department Managing Partner; Managing Partner for Deloitte Poland

Duleep Aluwihare; ¸ukasz Zalicki

Andrew Friars

Director, Board Member

Senior Partner

President

General Manager

President

President

President

Edward Robert Stanoch Managing Director, Board Member

President

President

President

Krzysztof Nowak Market Leader, Board Member

To the best of WBJ ’s knowledge, the information is accurate as of press time. While every effort is made to ensure accuracy and thoroughness, omissions and typographical errors may occur. Corrections or additions to the List should be sent, on official letterhead, to Warsaw Business Journal, attn.

Joanna Raszka, ul. Elblàska 15/17, 01-747 Warsaw, via fax to (48-22) 639-8569, or via e-mail to wbjbol@wbj.pl. Copyright 2011, Valkea Media SA. The List may not be reprinted or reproduced in whole or in part without prior written permission of the publisher. Reprints are available.

20

MARKETS

www.wbj.pl

MAY 16-22, 2011

Stocks report

world stock indices DJIA

NASDAQ

12,701.48 (May 12 close)

S&P500

2,857.88 (May 12 close)

0.93% (for the week)

FTSE100

1,348.65 (May 12 close)

1.53% (for the week)

DAX

5,939.87 (May 12 close)

1.01% (for the week)

0.34% (for the week)

Mixed data leads to volatility

NIKKEI225 7,440.31 (May 12 close)

9,729.28 (May 12 close)

0.86% (for the week)

-1.32% (for the week)

CHANGE: 9.71%

CHANGE: 6.77%

CHANGE: 7.24%

CHANGE: 0.68%

CHANGE: 6.70%

CHANGE: -6.02%

(year to May 12)

(year to May 12)

(year to May 12)

(year to May 12)

(year to May 12)

(year to May 12)

52-week high: 12,928.50

52-week high: 2,887.75

52-week high: 1,370.58

52-week high: 6,105.80

52-week high: 7,600.41

52-week high: 10,891.60

52-week low: 9,596.04

52-week low: 2,061.14

52-week low: 1,010.91

52-week low: 4,790.00

52-week low: 5,607.68

52-week low: 8,227.63

Andrew Nawrocki Market analyst/Trader, gowebtrade.com Investors last week responded to mixed financial data, with the WIG index as well as foreign indices seeing erratic fluctuations. Better than expected non-farm payroll data released in the US a week prior did little to ease investors’ worries last week, as many turned their attention towards problems in Greece and the continued volatility within the commodity sector.

The beginning of the week saw the WIG and WIG20 decline sharply, both falling by around one percent on Monday. Setting the overall tone for the week was S&P’s decision to downgrade Greece’s debt from BB- to B. In Poland, big losses reported by Bank Handlowy on Monday and worse than expected results from PKO BP on Tuesday soured the

Major indices WIG

48,795.21 (May 12 closure)

WIG20

2,829.83 (May 12 closure)

12.05

11.05

10.05

09.05

06.05

05.05

04.05

02.05

29.04

28.04

27.04

26.04

21.04

12.05

11.05

10.05

09.05

06.05

05.05

04.05

02.05

29.04

2,800

28.04

48,000

27.04

2,840 26.04

48,600

21.04

2,880

20.04

49,200

19.04

2,920

18.04

49,800

15.04

2,960

14.04

50,400

13.04

3,000

12.04

51,000

20.04

52-week low: 2,270.13

19.04

Change year to May 12: 2.73 %

18.04

52-week low: 39,109.37

15.04

52-week high: 2,932.62

Change year to May 12: 2.41%

14.04

Change for the week: -1.02%

13.04

52-week high: 50,371.74

12.04

Change for the week: -0.96%

Top 5 KREZUS INVESTCON PAGED FASING NEWWORLDR

Closing 3.70 3.70 14.75 19.29 46.00

% change (week) 52-week high 21.71 3.70 19.35 3.70 17.06 24.00 15.10 30.85 13.52 48.99

52-week low 1.31 1.69 12.60 15.00 33.21

Top 5 PGNIG TAURONPE CYFRPOLSAT PZU PGE

Closing 4.10 6.28 16.70 385.00 24.11

% change (week) 7.33 4.49 4.11 3.72 1.99

52-week high 4.10 6.89 17.30 411.00 24.11

52-week low 3.16 5.04 13.36 330.00 19.70

Bottom 5 IRENA MIDAS TFONE IGROUP IZNS

Closing 0.53 1.39 5.48 0.21 2.07

% change (week) -55.46 -18.24 -16.21 -16.00 -14.46

52-week low 0.53 1.39 0.63 0.21 2.07

Bottom 5 PBG POLIMEXMS PKOBP GETIN TVN

Closing 146.00 3.09 43.35 13.51 16.75

% change (week) -8.92 -7.21 -4.83 -4.39 -3.18

52-week high 252.00 4.84 46.81 15.29 18.90

52-week low 146.00 3.09 36.15 9.35 15.95

52-week high 4.35 6.22 12.48 0.95 3.64

Currency report

A surprising decision

Other indices mWIG40

2,903.17 (May 12 closure)

sWIG80

12,587.42 (May 12 closure)

NewConnect

57.59 (May 12 closure)

WIG-Banki

SOURCE: WSE

12.05

11.05

10.05

09.05

06.05

05.05

04.05

02.05

29.04

28.04

27.04

26.04

21.04

20.04

12.05

11.05

10.05

09.05

06.05

05.05

04.05

02.05

29.04

28.04

27.04

6,900

26.04

57.0

21.04

7,000

20.04

57.6

19.04

7,100

18.04

58.2

15.04

7,200

14.04

58.8

13.04

7,300

12.04

59.4

19.04

52-week low: 5,751.39

18.04

Change year to May 12: 0.48%

15.04

52-week low: 54.52

14.04

52-week high: 7,387.49

Change year to May 12: -9.18%

13.04

Change for the week: -3.37%

12.04

52-week high: 64.39

7,400

The rate-setting Monetary Policy Council (RPP) last week hiked the benchmark interest rate by 0.25 percentage points to 4.25 percent.

The markets was not expecting the decision, as the RPP’s statements since March inflation came in at 4.3 percent had been rather dovish. Marek Belka, the president of the central bank, argued the hike was necessary because other commodities, in addition to food and energy, have risen in value.

Investors now expect quicker monetary policy tightening than before. The rate hike, along with the Finance Ministry’s decision to buy z∏oty on the open market with euro given to it by the EU, has created additional demand for Poland’s currency. This is not good

6,995.37 (May 12 closure)

Change for the week: -1.91%

60.0

Adam Narczewski, X-Trade Brokers Dom Maklerski SA

12.05

11.05

10.05

09.05

06.05

05.05

04.05

02.05

29.04

28.04

27.04

26.04

21.04

12.05

11.05

10.05

09.05

06.05

05.05

04.05

02.05

29.04

12,500

28.04

2,900

27.04

12,600

26.04

2,920

21.04

12,700

20.04

2,940

19.04

12,800

18.04

2,960

15.04

12,900

14.04

2,980

13.04

13,000

12.04

3,000

20.04

52-week low: 10,980.45

19.04

Change year to May 12: 2.76%

18.04

52-week low: 2,361.69

15.04

52-week high: 12,932.00

Change year to May 12: 3.40%

14.04

Change for the week: -1.95%

13.04

52-week high: 2,987.72

12.04

Change for the week: -1.23%

mood, and sent most financial stocks falling.

News on Tuesday of a solution to Greece’s woes reassured investors and pushed markets higher throughout Europe, but for the most part declines characterized the week. Wednesday’s big news came with the central bank’s surprise 0.25 bps rate hike.

Friday saw a rally, however, as better than expected Q1 GDP increases for the leading euro zone countries sent markets climbing. As of midday Friday, most European bourses were more than half a percentage point higher.

Next week’s most important data will come when the European Monetary Union releases CPI figures for April, with expectations at 2.8 percent. ●

news for exporters, as a stronger z∏oty will eat into their profits.

The EUR/USD continued its corrective movement last week. The US Consumer Price Index increased on a yearly basis, preventing the dollar from depreciating.

The EUR/USD reached a monthly low at $1.4122 and finished the week at $1.4230.

If it breaks the support level at $1.4085, the downward move could become pronounced.

The usually volatile USD/PLN was fairly steady throughout the week, finishing Friday’s session at z∏.2.75, the level it opened at on Monday. After the RPP’s decision, the EUR/PLN reached a two-month low of z∏.3.89, but by Friday the euro had recovered to finish at z∏.3.91 against the z∏oty. ●

currency rates 3.3936

3.3725 11.05

13.05

3.3906 10.05

SOURCE: NBP

3.3703 09.05

12.05

3.3943 06.05

0.0985

0.0982 13.05

3.0

3.4031

PLN-100JPY

3.5

12.05

0.0986

0.0985 11.05

10.05

09.05

0.0982 06.05

3.1102

3.0965 13.05

0.095

0.0980

PLN-RUB

0.100

12.05

3.0948 11.05

3.1194 10.05

09.05

3.1236 06.05

4.4932

4.4472 13.05

3.0

3.1092

PLN-CHF

3.5

12.05

4.4611 11.05

4.4783 10.05

09.05

4.4652 06.05

2.7573

2.7321 13.05

4

4.4466

PLN-GBP

5

12.05

2.7201 11.05

2.7361 10.05

09.05

2.7270 06.05

3.9147

3.9135 13.05

2.5

2.7190

PLN-USD

3.0

12.05

3.9193 11.05

3.9284 10.05

09.05

3.9600 06.05

3.5

3.9215

PLN-EUR

4.0

LISTED FIRMS

MAY 16-22, 2011

Warsaw Stock Exchange

WSE’s net profit up 45 percent Lots of IPOs and high trading revenue gave the bourse a boost

optimistic.

“I foresee the rest of the year as being steady, with a regular inflow of public offerings to our markets,” he told WBJ, stating that this would be equally true for equities and corporate bonds.

But the head of the WSE isn’t expecting an explosion of growth either. “I consider the first quarter to have been marked by an impressive outcome in this regard, and hence I would not expect it to be considerably heightened in the upcoming months,” he said.

alternative market, NewConnect. In terms of main floor debuts, the WSE was second in Europe with seven, compared to the London Stock Exchange’s 13.

In terms of volume, the Polish exchange accounted for 47 percent of all European listings in Q1, according to research by PricewaterhouseCoopers. But if you look at value, it accounted for just four percent of the total, while the LSE’s debuts were responsible for 61 percent.

Looking to the future, Mr Sobolewski was cautiously

The first quarter of 2011 proved successful for the Warsaw Stock Exchange (WSE), with net profit amounting to z∏.38.6 million on revenues of z∏.69.2 million. Those figures mark y/y increases of 45 and 30 percent, respectively.

The results represent the first full quarter of the WSE’s operations as a publicly traded company.

In a statement concerning the results, CEO Ludwik Sobolewski was straight to the point. “The WSE’s quarterly results reflect the very good condition of the Polish capital market,” he said.

Trading accounted for the majority (79.2 percent) of total revenues and amounted to z∏.54.78 million, up 33.5 percent y/y. According to the bourse’s authorities, the high trading revenue in the first quarter was driven by tenders for significant blocks of shares as well as by investors trading more actively.

During the first quarter the WSE hosted 45 initial public offerings, the highest of any European bourse. The majority of those listings were on its

David Ingham

Welcome to the bourse Number of IPOs held on the WSE's main market*, June 2010 to May 2011 7

*not including firms transferring from NewConnect **to May 12

6

6 5 5 4 4

4

4

3 3 2

2

2

2

1

1 1

0 01

20 pt

Se

0

Au

g2

0

01

01

y2

e2

Jul

Jun

10 Oc t2 01 0 No v2 01 0 De c2 01 0 Jan 20 11 Feb 20 11 Ma r2 01 1 Ap r2 01 Ma 1 y2 01 1**

0

0

2

Source: Warsaw Stock Exchange

IPOs

Kruk collects z∏.43.7 million from initial public offering Kruk, a leading debt collection firm in Poland, held its IPO on the Warsaw Stock Exchange last week.

At the launch of trade, the firm’s share price rose by a slight 0.18 percent to z∏.39.77 from its issue price of z∏.39.70.

But by the close of the day’s trading, the share price stood at z∏.41.71, a five percent increase.

As WBJ went to press, Kruk’s shares were trading at z∏.40.53, up 1.91 percent on the week.

While its opening could have been stronger, the firm’s IPO was successful by most measures. It sold all 9.3 million shares it put up for sale, having set the maximum issue price.

“We are very glad about the large interest Kruk is enjoying among investors,” Dariusz Proƒczuk, chairman of the firm’s supervisory board, said prior to the debut.

“We believe that both the growth potential of Polish and other Central European debt collection markets, as well as the growth potential of Kruk,

COURTESY OF THE WARSAW STOCK EXCHANGE

The debt collector was the WSE’s 19th debutant this year

Kruk CEO Piotr Krupa celebrates his firm’s IPO are very promising for investors,” he added.

Kruk specializes in the management of large-scale debt portfolios of banks, financial intermediaries, insurance firms, leasing companies, telecoms as well as energy firms and firms from the fast moving consumer goods sector.

The firm has announced that it plans to use the funds it raised from the offer, z∏.43.7 million, for investments in the

development of its debt portfolio as well as for expansion into the Czech and Hungarian markets. Kruk is already present in Romania.

In 2010, the firm recorded a net profit of z∏.36 million and z∏.164 million in revenues.

Kruk was the 19th firm to debut on the main floor of the bourse this year and the 411th firm to list on the WSE since it opened in 1991.

Remi Adekoya

www.wbj.pl

21

22

ARTS & CULTURE

www.wbj.pl

MAY 16-22, 2011

Concert

Concert

A Shadow cast over Warsaw The sounds of India

DJ Shadow Palladium, ul. Z∏ota 9 May 16, 7 pm

For more information, log on to www.palladium.art.pl

Bargains and beauty Arkady Kubickiego Royal Castle, Pl. Zamkowy 4 May 22, 11 am – 4 pm

A peek at Belarus’ artistic side

Belarus is not known as a center for artistic talent, but a new exhibition at Zach´ta Gallery hopes to change this percep-

The group’s 10 musicians perform an eclectic brand of music, encompassing both Bollywood film music and jazz

Art market

Exhibition “Opening the Door” Zach´ta Gallery Pl. Ma∏achowskiego 3 May 23 – Aug 20

COURTESY OF ERA JAZZU

With a combination of brass instruments, traditional Hindi music, drums, and dancing, the London-based “Bollywood Brass Band” will bring its unique sound to Poland this month. Formed in 1992, the band has previously performed at both the Royal Albert Hall and England’s legendary Glastonbury Festival.

COURTESY OF DJ SHADOW

Since DJ Shadow (Joshua Davis) came onto the scene in the mid-1990s he has been a luminary of the electronic triphop movement. His debut album “Entroducing” was described a few years ago as one of the “Top 100 Albums of All Time” by Time; he also produced the critically acclaimed 1998 release “Psyence Fiction”

by British outfit Unkle. Fans can expect a combination of greatest hits and new material, as the California-born DJ comes to Warsaw on his current world tour. ●

Bollywood Brass Band Palladium, ul. Z∏ota 9 May 19, 8 pm

tion. The exhibition, which features “new art” from Belarusian artists based in Minsk and Western Europe, attempts to open new channels of communication for the country’s comparatively isolated and internationally unknown art. A diverse artistic

Collectors and first-time buyers alike will be interested in

scene is united within the framework of this project, bringing the viewer into direct contact with the major questions currently facing this evolving nation. ●

Monthly event

For more information, log on to www.zacheta.art.pl

Aimed at increasing awareness about cyclists in Warsaw,

this event, organized by the Warsaw Academy of Fine Arts, Poland’s most prestigious art school. The market, currently in its 10th year will

improvisation. ● For more information, log on to www.erajazzu.eu

include work from approximately 150 artists who are either past or present students of the academy. A wide variety of work will be on sale, from paintings and graphic art to ceramics and jewelery. ● For more information, log on to www.targowiskosztuki.com

Freedom ride Critical Mass Pl. Zamkowy May 20, 6 pm

Critical Mass is the biggest regular bike event of its kind in Europe. Held on the last Friday of every month, over 2,000 people leave Pl.

Zamkowy at 6 pm to ride through the city. ● For more information, log on to www.masa.waw.pl

LAST WORD

MAY 16-22, 2011

www.wbj.pl

23

Tech Eye

The fast and the furious eaters ed with the morbidly obese – motorcycles and go karts.

First up is Brammo’s Empulse (not pictured), an electric motorbike which looks pretty svelte.

The bike was originally supposed to come out this year, but has just been delayed until 2012, apparently so its maker can squish some new tech into it.

Nevertheless, you can pre-order now and prices range from roughly $10k to $14k depending on the model of Empulse.

The low-end model has a range of 60 miles, while the highend can go up to 100 miles. All have a top speed of 100+ mph.

OF

S RO PO

S OM ST CU

with this week’s tech? Not much, except that Techeye was inspired to choose products which are rarely associat-

Mr Poros says the price of the Musashi Miaymoto is as yet undecided, he’s currently preparing it for a custom bike championship in the Czech Republic. But one of his previous bikes, the Alien, cost around €12,000.

Last but not least, there’s the Linde E1 electric go kart. This little critter recently set a world record (for electric vehicles) by going from 0 to 100 km/h in 3.45 seconds. By comparison, the average American can go from 0 to 1 km/h in about 10 seconds, possibly faster if twinkies are involved.

Can you buy a Linde E1? Not at the moment, but interest appears to be high so Linde may decide to market it.

In any case, Techeye would offer a word to the wise (and the tubby) – all three of these vehicles are nacho-free zones. Spill cheese on them, and you’ve ruined your ride. ● COURTESY OF LINDE

Such experiences were emotionally scarring.

Is Techeye being unduly harsh to America’s weight afflicted? Perhaps.

To those who suffer from true ailments, we apologize. To the rest – stop eating from the trough and we’ll stop ridiculing you. Failing that, invest in technology to capture and store the energy generated when giant thighs rub together. You’ll still be the butt of jokes (literally, in many cases), but at least you’ll also be a source of green power.

What does all that have to do

SY TE UR CO

Having just returned from a long holiday in the United States, Techeye is exhausted. Not because of the marathon of terrible movies we watched on the plane, nor the jetlag.

No, the source of our fatigue can be summed up thusly: fat people.

You simply can’t escape them in the US, where (over)eating has become the national pastime. These days the morbidly obese r o a m together in herds of motorized carts, gnawing through anything in their path and riding roughshod over the unwary.

Much of our holiday time was lost to circumnavigating the fleshy, ravenous behemoths who lurch up and down the aisles of every grocery store. And there were dangerous encounters, like having to hold our breath and scooch past the corpulent couple whose sweaty attempts at romance would block the hallway in our friend’s apartment building.

Perchance you yearn for something a little more gas-guzzly?

Something with a samurai on it? If so, look no further than Poland.

Yes, you read that right – upand-coming designer S∏awomir Poros jr, of Poros Customs, recently debuted his Samurai-flavored Musashi Miaymoto custom motorcycle to much acclaim. The bike has a 750cc BMW motor with a custom exhaust and valve cover as well as a suicide clutch. If you know what that last thing is, you’re at least a little awesome.

Ever been forced to circumnavigate a fleshy land mass? Let us know: techeye@wbj.pl