WBJ #42 2013

Nobel Prize summit

Bad sin tax

Former Nobel Peace Prize winners gathered in Warsaw to talk world peace. Sharon Stone was also awarded for her HIV/AIDS prevention efforts

The government could lose out when it hikes taxes on cigarettes and alcohol 6

WWW.WBJ.PL

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VOLUME 19, NUMBER 42 • OCT 28 – NOV 3, 2013 . z∏.12.50 (VAT 8% included) . ISSN 1233 7889 INDEX-RUCH-332-127

Since 1994 . Poland’s only business weekly in English

Next stop: WSE PKP Cargo’s CEO ¸ukasz Boroƒ talks to WBJ about the biggest IPO of this year, and what lies ahead for EU’s secondbiggest freight carrier

Spotlight on innovation Warsaw Business Journal honored the most innovative and promising projects with its Investment of the Year Awards 10-11

12-13

Plus: • Terrorism charges for Brunon K. • Monetary neutrality continues • Wirtualna Polska sold to o2 • Sierakowski interview • A nuclear conundrum

News . . . . . . . . . . . . . . . . . . . . . . .2-4 Business . . . . . . . . . . . . . . . . . . . .5-6 Finance & Economics . . . . . . . . . . .7 Interview . . . . . . . . . . . . . . . . . . .8-9 Investing in Poland . . . . . . . . .10-11 Cover Story . . . . . . . . . . . . . . .12-13 Opinion & Analysis . . . . . . . . . . . .14 Lokale Immobilia . . . . . . . . . .15-18 The List . . . . . . . . . . . . . . . . . . . . . .20 Markets . . . . . . . . . . . . . . . . . . . . .21 Sports . . . . . . . . . . . . . . . . . . . . . . .22 Lifestyle . . . . . . . . . . . . . . . . . . . . .23

SHUTTERSTOCK

In this issue

Ukrainian crunch

Bank run

Time is running out for Ukraine to convince the EU it is ready to embrace the rule of law

Alior Bank’s stock plunged on October 18 after new accounting rules hit results hard 5

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NEWS

www.wbj.pl

NSA spying on EU leaders The news published

by British daily The Guardian that the US National Security Agency (NSA) was monitoring the calls of 35 world leaders dominated last week’s EU summit.

The daily released the information based on a classified document provided by whistleblower Edward Snowden.

Although the leaked document did not contain any names, both French President Francois Hollande and German Chancellor Angela Merkel accused the US of bugging their phones and said that the problem lies much deeper.

“The problem is not which leader has been spied on, but it is the extent of this network,” said Mr Hollande. “It doesn’t just concern heads of state, but also companies and citizens.

So it goes much further than just relations between states and leaders, it is a major problem.”

Both countries issued a call

for a “mutual understanding” between the EU and the United States on cooperation between their intelligence agencies.

“The friendship and partnership between the European member states, including Germany, and the United States is not a one-way street. We depend on it. But there are good reasons that the United States also needs friends in the world,” said Ms Merkel.

The recent scandal could affect the ongoing negotiations between the US and the EU regarding a free trade agreement between the two

economies. President of the European Parliament Martin Schulz has called for talks to be suspended, although Ms Merkel has suggested that this would not be an adequate solution.

The revelations will also probably push EU officials towards stricter data-privacy legislation, which the 28-nation bloc is currently working on.

The current draft, proposed by the European Commission early in 2012, would introduce the right for EU citizens to request that their digital presence be erased, as well as allow for the imposition of specific fines of up to €100 million for those not complying with the legislation. The new rules will increase the operational cost for many US internet giants such as Google, Facebook and Microsoft.

As a result of the recent leaks, the EU now may push for the legislation to be passed – despite protests from companies – before the end of the current European Parliament term Jacek Ciesnowski in 2014.

On WBJ.pl Energa IPO in November

Poczta Polska privatization delayed State-owned postal operator Poczta Polska (Polish Post) will not be privatized in 2014, a Ministry of Administration and Digitization spokesperson has said.

Artur Kozio∏ek told daily Rzeczpospolita that the reason for this was that the company is still going through the restructuring process it started in 2008. ●

3.9% was the rise in retail sales year-on-year in Poland in September. The figure was strong but not as high as economists had predicted.

€700 million

is the value of treasury bonds Poland recently sold which will mature in 2019. The yield on the bonds was 1.759 percent, representing the lowest spread over mid-swaps since 2008.

13% was Poland’s unemployment rate in September, according to Poland’s statistical office.

Quote of the Week “We need to agree on common values for all religions as soon as possible, a kind of secular Ten Commandments.”

Nobel Peace Prize laureate and former President Lech Wa∏´sa in his opening speech inaugurating the three-day Nobel Peace Summit in Warsaw last week.

Figures in focus Drowning in debt Government deficit as a percentage of country’s GDP in selected EU member states (Q2 2013) 180 150 120 90 60 30

an hR d ep ub lic Sw ed en Es ton ia* *

Cz ec

Po l

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Ge rm

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0 nc e

How do you view the world? Is your glass half-empty or half-full? In this analysis, Bjorn Lomborg, an adjunct professor at the Copenhagen Business School, attempts to examine all areas of human existence to see if the world really is doing better or worse by developing a unique scorecard. Read more this week at WBJ.pl.

Hu

In praise of a better world

ly

The Treasury Ministry will go ahead with its plan to list Poland’s fourth-largest utility Energa on the Warsaw Stock Exchange this year.

Treasury Minister W∏odzimierz Karpiƒski told the Polish Press Agency. “We have positive market signals regarding PKP Cargo’s debut, so the sentiment is good,” he said. “Our plan is still for Energa to debut on the WSE in November.” The Treasury, which holds 85 percent in the utility, plans to sell a 35 percent stake during the IPO.

z∏.530 million is how much Poland lost in excise tax revenue after the levy was raised this year. The rise led cigarette sales to plummet, economists say.

Ita

Naftogaz, a Ukrainian oil and gas company, has suspended the import of natural gas via Poland from Germany’s RWE. Naftogaz deputy CEO Vadim Chuprun told journalists that gas transferred through Poland is too expensive.

“Just take a look at the prices,” Mr Chuprun was quoted by news agency Unian as saying.

Numbers in the News

Fra

Ukraine halts Polish gas imports

IN THE SPOTLIGHT

ce *

Polish Foreign Minister Rados∏aw Sikorski has said that Georgia’s transfer from the presidential to the parliamentary system could bring it closer to initialing an association agreement with the European Union. Georgia was due to hold presidential elections on October 27 as WBJ went to press. If observers find no major violations, then it is “more or less certain,” that the agreement will be initialed, Mr Sikorski said.

OCTOBER 28 – NOVEMBER 3, 2013

Gr ee

Georgia closer to EU association agreement

SHUTTERSTOCK

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* Highest in the EU ** Lowest in the EU

Calendar

October/November

Location: Web:

The Belgian Days are organized by the Belgian Business Chamber together with the Embassy of Belgium in Warsaw and the Economic Representations of Brussels, Flanders and Wallonia. They will feature both cultural and business events in two Polish cities.

Warsaw and Poznaƒ belgium.pl

Location: Web:

The 3rd annual Future4Build fair trade and international conference will address global topics related to sustainable building. Over 100 Polish and international experts will participate in conferences covering current and relevant issues in green building developments in Poland. The conference allows direct access to best practice case studies and innovative solutions.

EXPO XXI, Warsaw future4build.com

13-15 MAPIC Event:

MAPIC is the key meeting point for retailers,

Alior Bank ....................................5 Google ..........................................2 PKN Orlen ....................................5

Web:

property developers and owners of retail property looking to enhance their sites. This leading international retail property event delivers three days of meetings, expert-led conferences and an exhibition for industry leaders targeting all types of retail property.

Palais de Festivals, Cannes, France mapic.com

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THE SUSTAINABLE INNOVATION FORUM

Bulanda, Mucha Architekci ......18 Innova Capital ..............................5

Event:

For the fourth year running the Sustainable Innovation Forum brings together leaders from business, government, finance and NGOs to discuss innovation with the aim of accelerating green growth and sustainable development.

InterContinental Hotel Warsaw climateactionprogramme.org

BZ WBK ............................7, 13, 21 Jones Lang LaSalle ..................16

Location:

NOVEMBER 6-7 FUTURE4BUILD Event:

Company index Akron ............................................5 Ghelamco Poland ................10, 15 PGNiG ........................................13

OCTOBER OCT 22 – NOV 15 BELGIAN DAYS Event:

Source: Eurostat

Location: Web:

Banco Santander ......................13 Grupa Azoty..................................5 PKP Cargo..............................2, 12 Bank Millennium ........................7 Grupa o2 ......................................5 Poczta Polska ..............................2 Bank Pekao ................................10 Grupa PSB..................................16 Praktiker ....................................16 BG˚ ............................................13 Helaba ........................................15 PSP Investments........................15 BNP Paribas ..............................13 Home Broker..............................17 Bohemia Motors ........................10 Huawei Poland ..........................10 Bricomarche ..............................16 ING Bank Âlàski ..........................7

Event:

Location: Web:

The conference will address a wide range of administrative issues, including efficient car fleet management, purchases and logistics, property management, document management systems, innovative IT solutions and cost-optimization.

Novotel Airport Warsaw wydarzenia.nf.pl

Rabobank ..................................13 Randstad Professionals ............10 REAS ..........................................17 Ringier Axel Springer ..................5

Carlo Tassaro Group ....................5 JP Morgan ....................................5 RKW Rhode Kellermann CBRE ....................................10, 15 Knight Frank ..............................16 Wawrowsky ................................18 Charter Hall ..............................15 Leroy Merlin ..............................16 RWE ..............................................2 China General

LHI ..............................................18 Segro European Logistics

Nuclear Power Corp. ................14 Maryland RE ..............................15 Partnership ................................15 China National Nuclear Corp. ..14 Microsoft ......................................2 Coyote Polska ............................10 MLP Group ................................16

28-29 ADMINISTRATIVE DIRECTORS FORUM

PwC ............................................10

Curzon Capital Partners III ......15 Moody’s ........................................7 DB Schenker Rail Polska ....10, 13 Mrówka ......................................16 Dentons ......................................10 Naftogaz ......................................2

Senatorska Investment..............18 SENER ........................................10 Telekomunikacja Polska........5, 21 Tristan Capital Partners ............15

EDF Energy ................................14 Noble Securities ........................21 Unibep ........................................15 Energa ..........................................2 Nomi ..........................................16 UniCredit ....................................13 Espirito Santo Investment Bank 5 Obi ..............................................16 Veolia Us∏ugi dla Ârodowiska ....10 EY..................................................6 pbb Deutsche Pfandbriefbank ..15 Warsaw Stock Exchange ....2, 6, 16, 21 Facebook ......................................2 PBI/Gemius ..................................5 Wyborowa ....................................6 GDF Suez Energia Polska ........10 Petrokemija..................................5 X-Trade Brokers ....................5, 21

NEWS

OCTOBER 28 – NOVEMBER 3, 2013

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Region

The deadline for Ukraine to choose between keeping Yulia Tymoshenko imprisoned or signing an association agreement with the EU is fast approaching As Ukraine stalls on the reforms it must implement before it signs an association agreement with the EU, the rhetoric coming from some of the bloc’s foreign ministers is becoming more impassioned.

“The time for bluffing is over on both sides, it is time for action now,” Polish Foreign Minister Rados∏aw Sikorski exhorted after he and his Swedish counterpart Carl Bildt met with Mr Yanukovych in Kiev last week.

His sentiments were echoed by other EU officials.

“We are ready to sign [the association agreement with Ukraine],” said German Foreign Minister Guido Wester-

welle. “But for this [to occur] the last works have to be done, the last reforms need to be done, especially if it’s about democracy and rule of law and the end of selective justice. We have a timetable, and this timetable shows that nobody should take too much time,” he added.

Time running out Indeed, time is running out.

Leaders on both sides hope that Ukraine will sign the association agreement with the EU during the Eastern Partnership summit in Vilnius, set for November 28.

But the crucial issue of former Prime Minister Yulia

leave the country to seek medical treatment for some of her health problems. He has not offered to pardon her though, meaning that if she returned to Ukraine she would be imprisoned again.

That of course would render her return to political life – including a run for president in 2015 elections – impossible.

The proposal was quickly dismissed by the EU as inadequate.

Tymoshenko’s imprisonment remains unresolved.

For years the issue has served as a roadblock in negotiations on agreements that would see landmark deals on free trade and Ukraine’s partnership with the bloc. The EU is demanding that Ms

“The time for bluffing is over on both sides, it is time for action now.”

Looking for green light In the end, whether Ukraine is allowed to sign the treaty may be up to two statesmen, former Polish President Aleksander KwaÊniewski and former European Parliament President Pat Cox. The two ex-presidents have repeatedly visited Kiev in an effort to engage in talks that would lead to a reso-

Tymoshenko be set free immediately. She was jailed in 2011 for abuse of power, in what the EU says was a politically motivated trial.

Ukrainian President Viktor Yanukovych’s latest proposal is to allow Ms Tymoshenko to

SHUTTERSTOCK

EU calls Yanukovych’s bluff

Ukrainian President Viktor Yanukovych’s most recent proposal to allow Ms Tymoshenko to leave the country for medical treatment was rejected by the EU lution acceptable to both sides.

“We will not go into details, but what they report will be decisive. If there is a green light from Pat Cox and Aleksander KwaÊniewski, there will be a green light for Ukraine in Europe,” Mr Bildt said.

Mr Cox and Mr KwaÊniewski are to submit their report in November,

prior to the Vilnius summit, which puts even more pressure on Ukraine to decide about its future in the EU now. “So it all depends on how quickly Ukraine is able to cope with the settlement of this issue,” Mr Bildt stressed and added that, “we are approaching crunch time.”

Jacek Ciesnowski

International

Domestic

Nobel Peace Prize winners summit held in Warsaw

Failed bomber hears terrorism charges

Actress Sharon Stone (left) in a conversation with the Speaker of the Sejm Ewa Kopacz during the summit

Previous Nobel Peace Prize winners discussed challenges facing the modern world For the first time, Warsaw held the World Summit of Nobel Peace Laureates last week, an annual gathering of previous winners of the prestigious award. This year marked the 13th edition of the event, which had never been held in the Central and Eastern Europe region before.

Though officially chaired by former Soviet President and Nobel Peace Laureate Mikhail Gorbachev, the man who introduced perestroika and glasnost to the Soviet Union

was forced to miss this year’s summit for health reasons.

This year’s motto, “Stand in solidarity for peace – time to act,” commemorated the 30th anniversary of Lech Wa∏´sa’s Nobel Peace Prize, which he received for leading the Solidarity movement that eventually toppled communism in Poland.

Mr Wa∏´sa was the guest of honor at the summit, during which he called for “10 secular commandments,” a list of guidelines that would help shape the future.

“We need to agree on common values for all religions as soon as possible, a kind of secular Ten Com-

mandments on which we will build the world of tomorrow,” he said, without specifying exactly what rules he had in mind.

Guests of the summit included Nobel Peace Prize winners, such as the Dalai Lama, former Prime Minister of South Africa Frederik Willem de Klerk, economist Mohammad Yunus and Northern Irish peace activists Mairead Maguire and Betty Williams.

A special award for her work in HIV/AIDS prevention and education was given to US actress Sharon Stone.

Kamila Wajszczuk, Jacek Ciesnowski

Prosecutors in Kraków have charged former academic Brunon K. with terrorism after an attempted bomb attack on Poland’s parliament building last year. His last name is being withheld in accordance with Poland’s privacy laws.

Spokesman for the Prosecution Piotr Kosmaty told journalists that the case was handed over to the District Court in Kraków last Thursday.

Brunon K. is charged with terrorism against the constitutional authorities of the Republic of Poland, as well as illegal possession of firearms.

A total of nine charges were brought against the former academic at the Agricultural University in Kraków.

“Just before he was taken into custody, Brunon K. gave instructions to buy up four metric tons of ammonium nitrate, fully conscious of the fact that it should be purchased just before use,” Mr Kosmaty said.

However, “the extent of the planning was negligible.

There was no aggregation of explosive material,” countered Maciej Burda, Brunon K.’s attorney, claiming that “everything took place as part of the Internal Security Agency’s operations.”

The suspect confessed that he had prepared an attack on the Sejm, although refused to plead guilty for his actions. Brunon K. had claimed that he was motivated by someone else, but this line of defense was duly dismissed by prosecutors.

Charges were also brought against two other men – Artur K. and Maciej O. – for illegal possession and trade of weapons.

Brunon K. was taken into

custody on November 9 last year. Investigators believed that the academic – who had been giving extra-curricular tutorials to students on explosives – was intent on detonating a four-ton bomb hidden in a vehicle near the Sejm during a budget debate which would have been attended by the prime minister and the president. He faces 15 years behind bars if found guilty.

John Beauchamp

SHUTTERSTOCK

COURTESY OF SEJM.GOV.PL

Academic Brunon K. faces 15 years in prison for planning to ignite four tons of explosives outside of parliament

Brunon K. planned to bomb Poland’s parliament building while the prime minister and president were inside

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NEWS

www.wbj.pl

OCTOBER 28 – NOVEMBER 3, 2013

Smolensk catastrophe

Antoni Macierewicz is doing all he can to save face, but his experts’ flubs are not making his job any easier Antoni Macierewicz and his team of experts, called up to investigate the April 2010 Smolensk catastrophe which killed President Lech Kaczyƒski and 95 others, has not received particularly good press lately.

His latest setback came recently when the Polish Academy of Sciences (PAN) withdrew its support for a conference which would discuss the issues surrounding the crash. “Under current conditions, we don’t see the possibility to conduct such a discussion,” said PAN president Micha∏ Kleiber.

Mr Kleiber was likely referring to a series of blunders made by the experts in Mr Macierewicz’s parliamentary committee, which is attempting to explain how the catastrophe was not an accident but rather an assassination attempt orchestrated by the Polish – or Russian – government, (or both, depending on

which version Mr Macierewicz currently subscribes to).

The current debacle started after leaked transcripts of the military prosecutors’ questioning of members of the parliamentary committee (which is headed by Mr Macierewicz) were published by the Gazeta Wyborcza daily.

Model airplanes In the disclosed testimonies, one member of the committee told the prosecution that his expertise in investigating plane

“There was nothing in that document – it was a bluff.” crashes comes from constructing model airplanes in his childhood. Another one reportedly said he knew a lot about how aircraft were constructed because he had closely observed the wings of planes while on passenger flights.

A further setback came during a televised conference call two weeks ago. Mr Macierewicz spoke with vari-

ous Polish scientists scattered across the globe via internet communicator Skype. The call was a technical disaster, with connectivity issues arising throughout the entire event.

The biggest embarrassment occurred when the screen lit up with incoming calls from pranksters. One of the callers used the moniker “Vladimir Putin,” when ringing in. The joke instantly became an internet meme.

A few days later, one of the committee’s experts, Jacek Roƒda, admitted that he flatout lied on national TV about being in the possession of a Russian document that claimed the plane never descended below 100 meters, which supported his theory that there was an explosion on board.

“There was nothing in that document – it was a bluff,” Mr Roƒda admitted in an interview with the right-wing Catholic nationalist television station TV Trwam. He explained that he lied because he did not want to weaken his case.

Poker face The “bluff” cost Mr Roƒda a position in the parliamentary committee as well as a panel

COURTESY OF ANTONIMACIEREWICZ.PL

Gaffes and blunders

Seventeen percent of Poles believe Mr Macierewicz’s claims that the Smolensk catastrophe was not an accident discussion over which he was supposed to preside last week.

During the panel, Mr Macierewicz and his experts presented what they claimed to be “undeniable evidence, proving that the crash was not an accident.”

The evidence consisted of various experts comparing crushed aluminum cans to plane wreckage and showing similarities which allegedly proved the theory that there was an explosion on board the aircraft. Others claimed the birch tree that the plane was

supposed to have hit, causing it to lose one of its wings, had actually been cut down days before the crash. They also maintained that the flight recordings were manipulated.

The 17 percent Despite these seemingly nonsensical claims, according to a recent study on Polish society, 17 percent of Poles still believe that the Smolensk catastrophe was not an accident. This proportion of Poles does not subscribe to the official version of the events presented by the

Committee for Investigation of National Aviation Accidents, Poland’s aircraft-accident investigation body.

The committee, having concluded its investigations, announced that “[the] immediate cause of the accident was the descent below the minimum descent altitude at an excessive rate of descent in weather conditions which prevented visual contact with the ground, as well as a delayed execution of the go-around procedure.”

Jacek Ciesnowski

OCTOBER 28 – NOVEMBER 3, 2013

BUSINESS

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Banking

Alior Bank shares plummet In just one day, Alior’s stock dropped by 20 percent, with the bank now looking for cash to meet the financial watchdog’s guidelines

COURTESY OF ALIOR BANK

The bank’s results have tanked after it complied with new accounting regulations PR magic at z∏.70 and recommended that stakeholders sell their shares.

Looking for money The reactions weren’t only the result of the sharp drop in revenue, but also due to the fact that the bank will now have to raise money to maintain its capital adequacy ratios above the levels set by the KNF. According to analysts

from Espirito Santo, after the change in Alior’s accounting, the bank’s Tier I Capital (actual contributed equity plus retained earnings) will drop to 11.5 percent (the KNF recommendation is 12 percent). This means Alior still needs z∏.500 million in capital increase.

“The easiest and most probable way to do this is to issue new shares,” said Bogumi∏ Je˝ewski, Senior Equity

Trader at X-Trade Brokers.

However, such a move would cause a major headache for the bank’s main investor, Carlo Tassaro Group, which, in accordance with Alior’s IPO prospectus, has to offload 34 percent of the bank’s shares by the end of 2013.

“Selling such a stake to investors will be very difficult under current market conditions. The most probable way would be to sell it through the

Chemicals

Grupa Azoty mulls expansion at home and abroad – reports

Poland’s largest chemical holding Grupa Azoty has been reported to be looking at making investments in the fertilizer sector in Poland as well as in Croatia, the EU’s newest member.

Last week it was reported by daily Rzeczpospolita that Azoty, which is currently Europe’s second-largest fertilizer producer, could acquire Croatian sector company Petrokemija. The Croatian government, which owns the company, has started looking for a strategic investor for the company. Grupa Azoty has so far declined to comment on the alleged takeover bid.

Analysts value Petrokemija at about z∏.325 million. Grupa Azoty would have to pay at least half of that amount to gain control over the Croatian firm.

Petrokemija is a producer of fertilizers, carbon black and clay-based products. Its annual

COURTESY OF ZA PU¸AWY

Poland’s largest chemical holding is eying up potential fertilizer sector takeovers in Croatia and domestically

Grupa Azoty is the second-largest fertilizer producer in Europe revenue amounts to about z∏.1.6 billion. It has been recording net losses for the past few years, making it a prime target for foreign investment, made that much easier due to the Balkan country’s accession to the European Union earlier this year.

Keeping it domestic While Azoty’s foreign expansion would help boost its strong market share Europewide, at home the chemical giant is also looking at invest-

ments to protect its holdings from foreign takeover bids.

Grupa Azoty may take over the fertilizer production assets of Anwil, currently a unit of oil group PKN Orlen, business daily Puls Biznesu reported last week. The paper’s sources said that the companies and the State Treasury are in joint talks on the issue, although lips are sealed as to the details of any eventual sale.

This is not the first time Anwil, based in W∏oc∏awek, has been eyed up for purchase.

Chemical firm Pu∏awy, now part of Grupa Azoty, in the past wanted to buy Anwil, then valued at z∏.2 billion. The sale fell through, however.

The possible takeover additionally has a political dimension as part of the company’s strategy to protect Grupa Azoty from a takeover bid by Russia’s Akron. The Russian chemical holding now has a 15.34 percent stake in Grupa Azoty and in 2012 it made a hostile bid, albeit unsuccessfully, to acquire Azoty Tarnów, the company that later became the core of the Azoty group.

Furthermore, the Polish government sees Grupa Azoty as a strategic asset, and as such is committed to a form of defense strategy to stop the holding from being taken over by foreign capital.

Meanwhile, Orlen’s CFO S∏awomir J´drzejczyk said in a conference call on Wednesday that the company is not in the process of being sold.

However, he added, “We treat fertilizers as non-core activity. ... Any form of cooperation with anyone interested is possible.”

John Beauchamp, Kamila Wajszczuk

“Analysts did not take this factor into account, even though they should have. It’s hard to tell why, but we have to remember that the bank had a great reputation,” said Mr Je˝ewski.

“It received numerous awards, won many rankings and its CEO, Wojciech Sobieraj, was very often described as a golden child of the banking sector. Maybe it was the power of PR that no one expected the

darkest scenario. After all, Alior is still in good shape an will generate profits in the future,” Mr Je˝ewski added.

However, the hitherto favorable PR for the company might now be coming to an end. In mid-September, the lock-up period for stock received by the bank’s management during Alior’s IPO passed.

On October 4, the bank sold shares worth z∏.59 million, which raised the KNF’s suspicions. “We’re analyzing the behavior of the company’s management prior to the release of the statement,” said KNF spokesperson ¸ukasz Dajnowicz, adding that the trade volumes of Alior stock were unusually high the week preceding the bank’s decision to incorporate the watchdog’s guidelines.

Despite all the turmoil, Alior stock has managed to regain most of its losses.

Between October 18 and October 24, its stock rose from z∏.72 to z∏.81.50, although the price is still a far cry from z∏.95-100 levels it achieved before the original plunge.

Jacek Ciesnowski

Wirtualna Polska sold to o2 for z∏.375 mln Internet portal firm Grupa o2 will buy a 100 percent stake in Wirtualna Polska from Poland’s largest telecommunications firm Telekomunikacja Polska for z∏.375 million. The deal will be carried out with the help of financing from private equity fund Innova Capital.

The deal will result in a merger of the portals, creating Grupa Wirtualna Polska, Grupa o2 said in its statement.

The details of Innova Capital’s involvement in the merged entity were not revealed.

“We believe that by combining Wirtualna Polska and o2 we will create the number one player in Poland. We are monitoring market trends both on our market and globally, and will be looking for add-on acquisitions, also outside the areas both portals have been operating in so far,” Innova Capital managing partner Krzysztof Krawczyk was quoted as saying.

The takeover will have to be approved by the Office of

Competition and Consumer Protection. It is expected to be finalized by the end of Q1 2014.

Wirtualna Polska had been acquired by Telekomunikacja Polska back in 2001. There has been a significant amount of speculation as to a possible sale of the portal since 2011. In early 2013 Reuters said that TP was looking for a consultancy to aid it with the Wirtualna Polska sale.

Until now Ringier Axel Springer’s Onet.pl portal has been the market leader, with 14.39 million users in July 2013, according to PBI/Gemius data.

However, the merger of Poland’s two major portals may change the status quo.

Wirtualna Polska had 13.09 million users in July 2013, while Grupa o2 portals boasted 9.36 million users. The other top-five Polish internet portals, Gazeta.pl and Interia.pl had 12.18 million and 11.73 million active users that month.

KW, BKS

COURTESY OF WP.PL

On October 18, Alior’s stock dropped by some 20 percent.

The sharp decline occurred after the bank released a statement that it would fully comply with the Polish Financial Supervision Authority (KNF) regarding the accounting of bancassurance revenues.

The move comes as the KNF published a recommendation back in March which requires profits from insurance policies to be booked as periodized interest income rather than upfront fees.

Implementing those accounting rules led the bank’s revenue for Q3 to fall into negative territory, with a loss of z∏.105 million.

As a result most brokers slashed their recommendation for the company’s shares. JP Morgan cut the target price by nearly half (from z∏.121 to z∏.69), while Espirito Santo Investment Bank put the price

stock exchange, although this means a lower-than-expected profit for the seller,” said Mr Je˝ewski.

Several questions remain, however. For example, why did it take so long for the bank’s management to implement the changes? And why did most brokers not take the expected changes into account when they were issuing their recommendations in previous months? After all, the information that KNF guidelines could affect Alior’s financial results was published in the bank’s IPO prospectus, as well as later on in the bank’s Q1 results.

The Wirtualna Polska portal will now be merged with o2

6

BUSINESS

www.wbj.pl

OCTOBER 28 – NOVEMBER 3, 2013

Alcohol and tobacco

The 15 percent increase in excise duty that Poland’s government plans to implement next year will likely decrease budget inflows by z∏.150 million, according to estimates by the Sobieski Institute advisory.

The Treasury has said it hopes the increase could bring in an extra z∏.780 million in revenue to state coffers next year.

“It is difficult to say for sure what consumers will do, but outside assessments say that the 15 percent increase in levies will likely result in a 10 percent or even bigger drop in sales volumes,” said Leszek Wiwa∏a, the president of the Employers and Entrepreneurs Association (ZPP).

In two out of three scenarios presented by the Sobieski Institute, the revenue from the excise tax on spirits will decrease. The most pessimistic forecast sees as much as a z∏.1 billion drop in revenue caused by a 25 percent decrease in sales. Only the most optimistic scenario sees increased budget inflows of some z∏.550 million, with only a 7 percent fall in sales volumes.

“The drop in sales volumes will be greater than the Finance Ministry has forecast.

This is a conclusion based on historical data, market projections and examples from other countries,” said Maciej Rapkiewicz, an expert from the Sobieski Institute.

Too greedy Mr Rapkiewicz added that the optimal solution for the state budget would be to raise excise tax by 5 percent not only on spirits, but on all types of alcohol. “In this case, budget revenue from alcohol products

would amount to nearly z∏.11.03 billion and would be higher by over z∏.529.6 million from what the Finance Ministry’s tax hike will bring,” Mr Rapkiewicz explained.

Naturally, alcohol producers protest against any tax increase.

According to Andrzej Szumowski, vice president of alcohol producer Wyborowa, Polish consumers are very sensitive to price changes in the spirits segment.

“Our experience shows that even a 5-7 percent increase in prices leads to a drop in sales,” Mr Szumowski said, adding, “Consumers will simply go elsewhere and unfortunately many of them will buy illegal alcohol products.”

In 2012, the average Pole drank eight liters of spirits, seven liters of wine and 99 liters of beer.

Black smoke

The government plans to pour on a 15 percent increase in the excise tax on alcohol in 2014. Estimates by ZPP show that 13 percent of all cigarettes consumed in Poland are purchased illegally. That market share is set to increase further next year, as the government has decided to hike excise duty on tobacco products by 5 percent.

Black market cigarettes, usually imported from Poland’s eastern neighbors, are already up to 50 percent cheaper than legal ones. In 2012 a pack of low-end cigarettes cost only €0.59 in Russia and €0.92 in Belarus, according to data collected by con-

sulting firm EY. Meanwhile in Poland the least expensive cigarette brand cost €3.15 a pack.

Ten years ago excise duties made up 70 percent of the price for a packet of cigarettes.

Today that share stands at 80 percent.

Beata Socha

Stock Exchange

WSE considers extending trading session again

The black market on alcohol products is not the only one likely to see increased activity

COURTESY OF THE WARSAW STOCK EXCHANGE

Experts argue that the government’s plan to raise more money on alcohol and tobacco excise duties is bound to backfire and decrease budget inflows

SHUTTERSTOCK

Tax hike may cut revenue to budget by z∏.150 million

Adam Maciejewski, CEO of the Warsaw Stock Exchange, wants the bourse to go back to the longer trading day it had until April this year

The bourse’s management wants to make the trading session longer, while brokers would like to see it shortened even further The chief executive of the Warsaw Stock Exchange, Adam Maciejewski, would like the daily session on the bourse to be extended by half an hour to last between 9 am and 5:30 pm, business daily Parkiet reported, quoting a letter he sent to brokers.

The move would be a return to the schedule abandoned in April this year. Since then, the bourse’s trading day has lasted from 9 am to 5 pm. But many other exchanges in Europe trade until 5:30 pm, when it is 11:30 am in the eastern United States, including New York.

The current schedule was supposed to apply until the end of 2013, and then management

was due to revisit the decision.

But Mr Maciejewski has apparently already made up his mind that the bourse should return to the old timetable.

“I’ve been observing trade on the WSE as well as on other European and US exchanges.

I’m particularly interested in the closing moments of the session and I feel bad that we’re ending our trade earlier than others,” the newspaper quoted Mr Maciejewski as saying in the letter.

“I feel like we’re losing business,” he added, saying he feels “authentic grief” that the WSE is ending its daily business a half hour earlier than other bourses.

WSE management claims that lengthening the trading day again would attract more foreign investors who continue to trade on exchanges in Europe and the US after the WSE shuts down for the day.

But Mr Maciejewski will have hard time convincing Polish brokers, many of whom

have even suggested shortening the session further, so that trade would end by 4:30 pm. WSE management has said it opposes that move, fearing it would reducing trade volume excessively and make the Warsaw market less attractive for foreign investors.

“The present hours are optimal. I see no reason why we should trade until 5:30 pm again,” one broker told the daily.

Brokerage houses oppose the proposed change, claiming the move would generate greater costs for them while bringing insufficient profits in return, arguing that if someone wants to trade shares, it can easily be done before 5 pm.

The WSE is to prepare a report of its own and then start talks with brokerage houses. A decision on the schedule is expected no later than four weeks before the close of 2013.

Kamila Wajszczuk, Jacek Ciesnowski

FINANCE & ECONOMICS

OCTOBER 28 – NOVEMBER 3, 2013

Monetary policy

Retail sales rise, but less than economists expected

Central bankers say neutral policy could continue to mid-2014 domestic economic activity proved worse than anticipated,” the document read. “In particular, the growth of industrial output and of construction output in August 2013 showed some deceleration of positive tendencies observed in the previous period.”

However, Mr Belka seemed to indicate he holds a different view. In his statements, he pointed out that a good central bank knows “when to take away the punch bowl,” implying that he thinks the council should be considering raising rates rather than lowering them.

KW, AK

Set to stay flat The National Bank of Poland’s benchmark interest rate, September 2012-October 2013 5.00 3.75 2.50 1.25 0.00 p. ’ Oc 12 t. ’1 No 2 v. ’ De 12 c. ’ Ja 12 n. ’13 Fe b. ’ Ma 13 r. ’ 1 Ap 3 r. ’ 13 Ma y’ 1 Ju 3 n. ’13 Ju l. ’ 1 Au 3 g. ’ Se 13 p. ’ Oc 13 t. ’13

National Bank of Poland President Marek Belka said last week that recent macroeconomic data could convince the Monetary Policy Council (RPP) to maintain its neutral stance for a longer period than initially envisioned.

“This data gets us closer to a decision on extending the period of neutrality in monetary policy,” Mr Belka said at a press conference.

Previously, the RPP had sent strong signals that it would keep interest rates unchanged until the end of this year. According to the minutes of its October sitting, the RPP was unanimous in that view. The NBP’s main rate stands at a record low of 2.50 percent.

RPP member El˝bieta Chojna-Duch agreed with Mr Belka, but also indicated that actions taken by central banks around the world could convince the RPP to lower rates further. Ms Chojna-Duch is widely considered one of the council’s doves.

“Extending the period of

the neutral bias in monetary policy to mid-2014 seems, in my opinion, reasonable, assuming a lack of shocks and an unchanged economic environment,” she said, adding however that, the council “may even mull a return to an easing bias in monetary policy, based on the decisions we observe are made by other central banks.”

The minutes of the October RPP meeting also emphasized concern about the strength of Poland’s economic recovery.

“While discussing the current business conditions, it was noted that some data on

Se

Previously the consensus was it would last until the end of this year

Source: National Bank of Poland

Unemployment holds steady at 13% in Sept In September Poland’s unemployment rate remained at 13 percent, the same rate recorded in August, statistics office GUS announced last week. The figure was in line with an estimate published by the Ministry of Labor and Social Policy earlier this month.

GUS said that the number

of unemployed persons registered in labor offices had declined by 100 since August and amounted to 2.83 million.

It was 104,100 higher than in September 2012.

Economists at Bank Zachodni WBK pointed out that the annual growth rate of those seeking jobs fell to 5.3

7

www.wbj.pl

percent from 6.0 percent in August, and was the lowest reading since June 2012.

Unemployment remained the highest in the WarmiƒskoMazurskie (20.4 percent), Kujawsko-Pomorskie (17.5 percent) and Zachodniopomorskie (16.9 percent) voivodships.

KW, AK

Stuck at 13% Poland’s unemployment rate, September 2011-September 2013

14.50 13.75 13.00 12.25

Se

p.

Oc ’11 t.

No ’11 v. ’ De 11 c.

Jan ’11 .

Feb ’12 .

Ma ’12 r. ’ Ap 12 r.

Ma ’12 y Jun ’12 .’

Jul 12 . ’1 Au 2 g.

Se ’12 p.

Oc ’12 t.

No ’12 v. ’ De 12 c.

Jan ’12 .

Feb ’13 .

Ma ’13 r. ’ Ap 13 r.

Ma ’13 y Jun ’13 .’

Jul 13 . ’1 Au 3 g.

Se ’13 p. ’13

11.50

Source: Central Statistical Office

Poland’s retail sales increased by 3.9 percent year-on-year and fell by 0.9 percent month-onmonth in September, statistics office GUS announced last week. Seasonally adjusted retail sales grew by 4.1 percent y/y.

Economists surveyed by the Polish Press Agency had expected retail sales to grow by 4.6 percent y/y and fall by 0.23 percent m/m in September.

GUS vice president Halina Dmochowska said that the data

will have a positive influence on economic sentiment among businesses, which is gradually improving.

Bank Millennium chief economist Grzegorz Maliszewski told Polish Radio that recent economic data can be seen as positive, because they show that export growth is accompanied by increasing domestic demand.

However economists at ING Bank Âlàski pointed out

that the growth of retail sales remains slower than the growth of incomes, indicating that Poles are still inclined to save after a difficult second half of 2012.

They also pointed out that for the whole of the third quarter of 2013, retail sales rose by 4 percent year on year, indicating a stronger consumption growth than was recorded in previous months.

KW, AK

Moody’s: Pension reform positive for public finances Ratings agency Moody’s issued a comment saying that the planned pension system overhaul should have an overall positive effect on Poland’s public finances.

“We estimate that the changes, including the asset transfers of workers within 10 years of retirement, will push debt levels down by at least 8.4% of GDP and perhaps as much as 9.2% of GDP, in addition to decreasing annual government financing needs by

approximately PLN 20 billion in 2014-17,” Moody’s analyst Jaime Reusche wrote.

“Overall, the fiscal framework will derive significant benefit from the changes even as longer-term concerns (including increased contingent liabilities and unfavorable perceptions about respect for longterm investments) remain,” he also wrote.

“If the reform is passed, the government’s debt metrics will become more comparable to

those of other sovereigns that have not borne the fiscal costs associated with the pension reform originally undertaken by Poland in 1999. Although investor sentiment may have recently been somewhat negatively affected by the proposed pension changes, a prudent mix of consolidation measures and support for the economy since 2010 have preserved fiscal-policy credibility,” the Moody’s statement read.

KW

8

INTERVIEW

www.wbj.pl

OCTOBER 28 – NOVEMBER 3, 2013

The left in Poland

Krytyka Polityczna looks to change the rules of the politics game

Ewa Boniecka: Eleven years ago you established Krytyka Polityczna, which now holds around 1,500 events and campaigns a year. What changes do you want make in Poland?

S∏awomir Sierakowski: First of all, choosing a path of activity on the left was the worst possible move on the Polish political map. After 60 years of communism, everything connected with the left had terrible connotations in Poland, as in all of Eastern Europe.

Furthermore, the emergent post-communist party, SLD, which evolved from the former communist party, PZPR, was devoid of any ideas and totally opportunistic. So we had to start from scratch, or even from a negative level. But it was overcoming all that adversity that has made people in Krytyka Polityczna so tough.

“Reinventing the left” had

to be initiated by introducing a new political vocabulary about the left into the public debate, because such phrases as “social class,” “social justice,” “redistribution” and “trade unions” were widely considered inappropriate. Even today they are still unwelcome in most mainstream political discussions.

Nevertheless, we succeeded in building a strong left-oriented network, and now that network of institutions and people is bigger than all similar right-wing institutions taken together.

If Krytyka Polityczna is such a dominant force on the left then why didn’t you decide to go into party politics?

We decided that we do not want to build a party or join party politics. We do not accept the rules of contempo-

rary party politics, where you face a tragic choice: to be extremely cynical, or to lose to a cynical majority.

We would like to change the political rules of contemporary liberal democracies, which are in deep crisis almost everywhere. Our mission is focused on encouraging people’s involvement in the public sphere.

We are interested in what is going on in the society more than on the political stage. As the right-wing politician Jaros∏aw Gowin remarked, “if Krytyka Polityczna is not yet educating the masses, it is definitely already educating future ‘teachers’ who will soon educate Poles.”

What he meant by that, of course, is that we are a threat

“We do not accept the rules of contemporary party politics, where you face a tragic choice: to be extremely cynical, or to lose to a cynical majority.”

We do a lot of work in all fields of culture, at universities, in mass media, in towns, in high schools, by publishing books, running an online opinion daily and issuing a print magazine. We even publish free children’s books and run a kindergarten in one of our centers based in Cieszyn. This is the type of social and intellectual work that is neglected by political parties and which is too taxing for them.

to his conservative views. We chose a long and difficult road.

While we think that political parties lack substantial ideas, they are almost identical to one another and if they differ, it is not in substantial matters but on increasingly strange surrogate topics such as the supposed “Smolensk conspiracy.”

The reason is that this is the only way to audibly signal the difference between politi-

COURTESY OF KRYTYKA POLITYCZNA

WBJ sits down to talk with S∏awomir Sierakowski, a sociologist and creator of the leftist movement called Krytyka Polityczna (Political Critique) to talk about politics, the state, economy, ideology, and the position of the left in Poland and in Europe

S∏awomir Sierakowski cal adversaries. Polish parties are operating only through vulgar marketing methods and getting rid of any serious arguments. As a result, Polish party politics are devoid of any substance.

Sociologists’ findings show that Polish society is mostly

conservative. Do you agree with that analysis?

Certainly the legal structure and the shape of the public domain in Poland rests on a conservative base. There are two reasons for that: the power of the Catholic Church in Poland, remarkably strengthened by its victory in the con-

INTERVIEW

OCTOBER 28 – NOVEMBER 3, 2013

frontation with communists, and the opportunism of the post-communist left party SLD, which held power in the 1990s, and of the currently ruling Civic Platform (PO).

When SLD came to power in 1993, they avoided any confrontation with the increasingly strong and aggressive Roman Catholic Church. At the same time, the SLD government eagerly ran a neo-liberal economic policy following the shock therapy of Leszek Balcerowicz, claiming that “we will do the same, only better.”

That trend was expected and supported by the postSolidarity elites. That was how post-communists wanted to be redeemed and gain respect after 1989. The result of it all was firstly the quickly growing number of “losers” in the new Poland, and secondly the lack of a social democratic alternative for these people. So the only way to express their frustration was right-wing populism, which explains the strength of Jaros∏aw Kaczyƒski in Polish politics today.

In terms of private behavior we are increasingly similar to Western societies. There are already Poles whose relationships can be described as civil unions, and this is the case for sexual minorities as well.

Some of them are adopting children. People have a liberal approach to ethical matters like in vitro; women have abortions. It is obvious that in their private lives Poles want to decide how to live for themselves.

Why are these liberal attitudes not reflected in electoral results?

Nearly half of Poles do not take part in elections, while the other half vote not “for” but “against” a given party. It is very difficult to find someone who actively supports a specific party, and if you do, it is mostly because that person is afraid that another party will win.

This is reflected in the situation created by Jaros∏aw Kaczyƒski, which I describe as an “arrest” of Polish politics.

Mr Kaczyƒski created such a strong threat with his nationalistic and right-wing message that the remaining political players are defining themselves through opposition to him.

The main legitimization of Civic Platform from the beginning of its rule is the prevention of Jaros∏aw Kaczyƒski’s rise to power. People voted for PO the first and second time around for that reason. This is

why Civic Platform cared only about how to stop Mr Kaczyƒski, and has made few if any changes in Poland. In Polish politics we only have Mr Kaczyƒski and those against him. It is not real pluralism, and certainly not a democratic choice.

There are other parties aside from PO and PiS. Why don’t people mobilize themselves and support alternative political groups?

Politicians in any given country have their hands tied when it comes to economic policy, so they are faced with a tough choice: either disappoint their voters or organize cultural wars against their adversaries.

when you make a fortune, but when you make a fortune and spend a significant part of it on a public good.

This is not the case in Poland or in other countries in the region. At the time when the Eastern European phenomenon of an “engaged intelligentsia” began to be regarded as outdated, emerging businesses and the middle classes were encouraged to move forward without any social principles.

Such people like the late Jacek Kuroƒ, an intellectual and prominent opposition activist of the communist period who later became labor minister in Tadeusz Mazowiecki’s government, held the view

“After the transformation in 1989, we understood capitalism in a one-sided way as a total freedom of gaining individual profits without any social responsibility.”

The corrosion of the party systems almost everywhere is the most visible symptom of this. People are voting for a certain party and then see that all parties apply the same policy. People get angry and often turn their backs on all politicians.

And as I mentioned, this is because no modern country is so economically sovereign that it can decide the shape of its economic policy independently. The rating agencies and international corporations can exert enough pressure to make ministers of finance and economy abandon their own ideas.

So when an elected politician faces the decision of whether to keep his promises and ideas which are in opposition to the financial markets and will lead to either higher debt-servicing costs or raising the budget deficit, he can resign. As such, left-wing parties in all countries face a dilemma when they come to power, as did Hollande or Obama, or Zapatero some time ago, in implementing their domestic agendas.

In the West, elites from academia and business promote a philosophy of social responsibility. Do you believe Poland is different in this respect?

Yes. After the transformation in 1989, we understood capitalism in a one-sided way as a total freedom of gaining individual profits without any social responsibility. In America, you gain respect and social status as a businessperson not

that modernization means more than just the development of a free market, but it should also promote social values and altruistic ideas: these were seen as naive and anachronistic, however.

As a result we have built an egocentric social organism, a self-absorbed middle class and conceited business class. All this makes it difficult to create an altruistic political culture or an ethos geared towards the public good, and hampers the support – including financial support – of cultural and educational institutions. In other words, the humanization of the modernization process in Poland is practically non-existent.

How do you see the chances of SLD, Janusz Palikot’s Your Move party and the newly created center-left political forum Europe Plus for building an alternative on the politcal left in Poland?

At the beginning, when SLD and Palikot’s Movement – however questionable their left identities can be – were competing with each other to show which one is more profound, I believed that such pluralism could have a positive influence on both parties and on our political scene, and it did.

But soon a nasty personal conflict developed between the parties’ leaders, resulting in stagnation. Meanwhile Europe Plus, with its very clumsy start, did not help improve the situation. ●

S∏awomir Sierakowski S∏awomir Sierakowski, born in 1979, is a sociologist and political commentator. He is a founder and leader of Krytyka Polityczna (Political Critique), a Central European movement of liberal intellectuals, artists and activists, with branches in Ukraine and Russia. He has been awarded fellowships from Yale, Princeton

and Harvard, and from the Institute for Human Sciences in Vienna. He contributes a monthly column to the leading Polish daily Gazeta Wyborcza and to the international edition of The New York Times. He has been ranked as one of the most influential Poles by the weeklies Polityka, Wprost and Newsweek. ●

www.wbj.pl

9

10

INVESTING IN POLAND

www.wbj.pl

OCTOBER 28 – NOVEMBER 3, 2013

Investment of the Year As part of its mission to support foreign investment in Poland, Warsaw Business Journal aims to recognize companies that have made a large, positive contribution with their investments in Poland. To accomplish this goal, WBJ organized a competition for “Investment of the Year” awards, presented at the Investing in Poland Celebration Evening on October 23, 2013.

Awards

WBJ spotlights innovative projects with Investment of the Year Awards

Warsaw Business Journal honored some of Poland’s most innovative investments with its Investment of the Year Awards at a celebration evening on October 23 at the Amber Room restaurant in Warsaw.

The investments nominated for the award were divided into three categories based on the number of jobs they created, and were judged by the amount of money invested, their level of innovativeness and the impact the investment has on the local community.

“This competition gives us the opportunity to shine a spotlight on investments that are making a real difference, but might not always get the big press headlines,” said Andrew Kureth, editor-in-chief of Warsaw Business Journal. “These investments are making a significant positive local impact, and that’s why we’re proud to recognize them with these awards.”

Small, yet cutting-edge The award for Small Investment of the Year went to Spanish-based SENER for the opening of an aerospace unit in its Warsaw office. The company wants to capitalize on Poland’s new membership in the European Space Agency. “Poland’s membership in the European Space Agency means new funds for developing new aerospace technologies, resulting new jobs

being created and new innovative projects, which can help Poland realize its potential,” Joanna Lachowska-Keane, general director at SENER Sp. z o.o said.

By investing €500,000 so far in Poland the company plans to become a sustainable, highly innovative space company which will compete in the European market. “Our main goal is to participate in a Polish satellite project, currently we focus on innovations in mechanics and optics,” Ms LachowskaKeane added.

Reaping benefits from recycling The award for Medium-Sized Investment of the Year went to Veolia Us∏ugi dla Ârodowiska, a company specializing in waste management, which opened a new sorting plant for municipal waste as well as a production line for refuse-derived fuel, and a composting plant.

“We are using technologies which are not yet standard practice in Poland, like ballistic separators and sorting systems,” Yves Basset, president of the board at Veolia Us∏ugi dla Ârodowiska, said. The company invested €28 million in the modernization project, which also resulted in the creation of 15 new jobs.

With the new amendment to the law on municipal waste going into force on January 1, 2012, Veolia was one of the companies that quickly adapted and started reaping benefits from the new regulations. “The amount of waste recycled doubled over only one month after the implementation of the new law. People are starting to really recycle,” Mr Basset added.

Clean energy The winner of the Large Investment of the Year Award was GDF Suez Energia Polska, for the construction of a green unit at its Po∏aniec power plant, an undertaking which created 100 jobs at the facility after the modernization was completed.

The green unit, which is the world’s largest power unit entirely fueled by biomass, has also become one of Poland’s largest renewable-energy producers. The biomass-powered bloc has a capacity of 205 MW and can power up to 600,000 households. “Poland is moving towards more renewable energy and that is why we have decided to build the biggest biomass fueled energy block in the world. We managed to achieve that goal,” said Bogumi∏ Jab∏oƒski, director at GDF Suez Energia Polska. The investment cost €250 million.

GDF Suez operates seven energy blocks which use both coal as well as biomass to produce energy and heat. “We are now in the process of carrying out a major modernization project we dubbed ‘Feniks’ to make all the blocks compatible with EU regulations and to increase their generation capacities,” Mr Jab∏oƒski said.

Knowledge transfer The winners received statuettes, certificates, as well as vouchers for a weekend at the St. Bruno hotel in northeastern Poland. The competition and gala represent the final phase of this year’s Investing in Poland project, which also comprises the publication of Investing in Poland 2014, a guide for investors looking for investment opportunities in Poland.

ROXANA DAWID/WBJ

This year’s winners were those whose investments made a significant positive impact with high-tech solutions and knowledge transfer

WBJ editor-in-chief Andrew Kureth praised the winners’ innovativeness It was launched at a conference in September.

“All those who received these awards this evening represent companies which introduce to Poland something extremely important: knowledge, because even 20 years after the transition, Poland still needs knowledge and technology transfer, as well as effectiveness, both in the energy sector and in waste management,” said Jacek Socha, a former treasury minister and currently deputy chairman of PwC in Poland.

All the nominees in the competition were selected by their respective chambers of commerce based on their innovativeness and creativity.

“Investments in Poland are increasingly turning towards being capital intensive rather than labor intensive,” said Adam Ma∏ecki, deputy director of the department of Foreign

Investment at the Polish Information and Foreign Investment Agency (PAIiIZ).

The other companies nominated in the Small Investment category were Coyote Polska for its innovative road information service and DB Schenker Rail Polska for its investment in high-tech locomotives. Medium-Sized Investment category nominees also included Bohemia Motors for its hightech car showroom and Ghelamco Poland for its T-Mobile Office Park, both in Warsaw.

The other nominee shortlisted in the Large Investments category was Huawei Poland for its CEE operational center.

The jury, which selected the Investments of the Year, included Mr Kureth, Mr Ma∏ecki, as well as Katarzyna Kacperczyk, director of department of economic cooperation at Poland’s Ministry of Foreign Affairs, Leszek Kurycyn, Rand-

stad Professionals operations director, and the representatives of chamber of commerce partners. The French Chamber of Commerce and Industry was represented by its vice president Bertrand Jannet, the Polish-Spanish Chamber of Commerce by vice president Marcin Grodzki, the Netherlands-Polish Chamber of Commerce by member of the board Remco van der Kroft, the Polish Indian Chamber of Commerce was represented by chairman of the board Ryszard Sznajder, and vice president of the board Mik Kuczkiewicz represented the Belgian Business Chamber.

Nearly 200 business leaders, executives and diplomats attended the award ceremony.

Partners of the project include PAIiIZ, PwC, Bank Pekao, Randstad, Dentons and CBRE. Beata Socha

Investing in Poland Project Partners Organizers:

Strategic Partners:

Industry Partners:

Media Partners:

Event Partners:

Chambers of Commerce Publication Partners:

OCTOBER 28 – NOVEMBER 3, 2013

Bogumi∏ Jab∏oƒski of GDF Suez and Andrew Kureth of WBJ

Former Treasury Minister Jacek Socha, now with PwC

INVESTING IN POLAND

Joanna Lachowska-Keane and Aleksandra Buka∏a of SENER

www.wbj.pl

11

Yves Basset of Veolia Us∏ugi dla Ârodowiska

Adam Ma∏ecki of PAIiIZ

Guests enjoyed networking, music, as well as delicious food and drinks provided by Amber Room

ALL PHOTOS: ROXANA DAWID/WBJ

12

COVER STORY

www.wbj.pl

OCTOBER 28 – NOVEMBER 3, 2013

Privatization

All aboard the IPO train Ahead of the biggest IPO of the year, which PKP Cargo set for October 30, WBJ sits down with the company’s CEO ¸ukasz Boroƒ to discuss why it took the company so long to debut on the Warsaw bourse, its plans to become a regional player and its long-term goals

“We have an opportunity to cash in our profits and use it to pay off the debt of our parent company.”

We had to act fast, and we did. The previous management started a restructuring process. The average employment was reduced from 43,772 employees in 2008 to 26,493 in the first half of 2013.

We made changes in the company’s structure, hired fresh blood and it worked, resulting in the company gaining ground and earning money. That’s why in 20092010 PKP could start thinking about privatizing the company again.

So why is the company being privatized three years later?

At first, the company was supposed to be sold to a strategic investor, which because of the nature of our industry, could only be a national carrier from another country, such as Ger-

COURTESY OF PKP CARGO

Jacek Ciesnowski: The initial plans to privatize PKP Cargo date back to 2000. Why did it take you 13 years to finally make it happen? ¸ukasz Boroƒ: The first idea was to split PKP into several smaller companies, divide all the assets between them and sell them later to investors, which would result in dissolving PKP altogether. We all know that did not happen.

PKP is still here, and PKP Cargo will be its first subsidiary to be privatized through a public offering.

On top of that, after the Polish freight sector opened up to competitors, we have had problems keeping up with them. We lost our strong position in the sector, and as a result PKP Cargo got into financial trouble.

¸ukasz Boroƒ, CEO of PKP Cargo

OCTOBER 28 – NOVEMBER 3, 2013

many, Russia etc. We all know that such an idea would never get any political support in the current climate, so the process was postponed again.

About a year ago we decided to sell a minority stake on the stock exchange. It took us nine months to prepare the offer.

When it comes to privatizing companies, especially profitable ones, there are often politicians who argue it’s in the state’s best interest to keep profit-making assets.

Why privatize at all?

There are many state-controlled companies that have other investors, and they are doing just fine. They continue to be profitable. And I think that being publicly floated and having other investors involved will only stimulate the company to perform better.

And the Treasury will still be getting profits, for example, from dividends which the company may pay out in the future.

Recently, Law and Justice leader Jaros∏aw Kaczyƒski said that in his opinion, the value of the IPO is too small compared to the value of the company and the profit it brings. What do you think?

It’s a political opinion and I don’t deal with politics.

All the revenue from the flota-

tion will be used to pay off PKP’s debt, currently estimated at over z∏.4 billion. If you’re not going to spend it on the company’s growth, where will you get the money for that?

When PKP as a whole was divided into smaller companies, like ours, the whole debt stayed with the main company.

We all got a clean slate, and because we’ve managed to be profitable, we have an opportunity to cash in our profits and use it to pay off the debt of our parent company. It makes sense. PKP Cargo’s financial needs aren’t that big, so the question is what to do with our profits? Keep them in the bank?

The maintenance costs of our rolling stock are not very high. Our locomotives should be operational for another 2432 years and our cars for another 36 years. If we need new locomotives, we don’t buy them, but rather lease them, which also helps to keep our costs at a minimum. If we need more locomotives, especially for our international routes which require modern machines, we can either lease them or buy them using loans.

With our financial structure, getting credit should be easy.

Our current needs can be financed with what we have. If we end up needing significant funds for some kind of investment we could always finance

COVER STORY it by issuing more shares or by selling bonds.

Judging from media reports, the bulk of the time during which the company was preparing its prospectus was spent on negotiations with the workers’ unions, which were opposed to the idea of floating the company on the WSE. Is that true?

To be fair, I don’t think that the process could have been much shorter. It took us nine months, but please remember that we are talking about a huge state-owned company, so the offer had to be prepared very carefully, and that takes time.

But speaking of unions: Yes, it was complicated, but we finally reached a compromise and this dispute is settled.

Recently some workers in one of your facilities even threatened to go on a hunger strike, claiming that they are afraid of losing their jobs. Aren’t you afraid that the unions’ actions can affect the company’s share prices?

I think that we, as the company’s management, are doing what we can to make our workers happy. Irresponsible actions by union representatives can happen and it can affect our stock price. But so far everyone is working together for the company’s future and I hope it will stay

that way.

The company is present in other European markets. Are there any plans for further expansion?

When it comes to international expansion we’re concentrating on organic growth. Our plan is to become a significant regional player within the next few years.

We’re already the secondbiggest freight operator in the EU (behind DB Schenker) in terms of freight turnover in 2012, but most of our operations are in Poland. We want to change that.

By expanding our presence in other countries we can diversify our sources of income. Currently most of our revenue comes from operations within Poland, and since the situation in our sector is heavily connected to the economy of the country we’re operating in, it’s in our best interest not to concentrate on just one market. We believe we have everything we need to become a strong player in the CEE region.

Are you planning any acquisitions?

Not currently, but that would be logical in the future to take over some smaller, local companies. That way we could acquire their know-how, their experience, contacts and assets which would help us

www.wbj.pl

gain a foothold on other markets. Still, it’s not in our current, short-term plan. Such an aggressive expansion would be too risky right now, so we are concentrating on organic growth.

Recently you inaugurated a cargo connection with China.

Yes, that is a very interesting project for us, although I don’t expect the transport to that country to be a major part of our operations – at least not in the near future.

There is still lots to be done in Europe.

I think that rail freight transport is the future. It’s eco-friendly, cheaper and more reliable than other ways of freight transport. You can’t transport products by trucks every day. In the EU, international road transport is very often banned on the weekends, while trains don’t have such limitations, that’s why I think the sector has clear advantages.

Are you happy with the stock price being set at z∏.68 per share?

From our point of view, we did what we could. The whole IPO process was transparent and conducted by many international banks. We attended meetings with investors, that in my opinion went very well.

I’m happy with how the process has gone so far. ●

13

PGNiG faces huge fine Poland’s natural gas giant PGNiG is required to sell 1.6 billion cubic meters of gas through the Polish Power Exchange before the end of 2014. If it fails to do so, Poland’s energy regulator URE is likely to fine it up to z∏.4.3 billion. From December 2012 up until midSeptember, PGNiG attempted to sell 2.5 billion cubic meters of gas on the exchange, but only managed to push through 50 million cubic meters.

Santander eying BG˚ Spanish lender Banco Santander may be interested in buying Polish Bank BG˚ from the Netherlands-based Rabobank, Santander’s CEO Javier Marin suggested. Santander already operates in Poland through its unit BZ WBK, the country’s third-largest lender.

Several lenders have been reported as possible buyers for BG˚, including UniCredit and BNP Paribas. ●

14

OPINION & ANALYSIS

www.wbj.pl

OCTOBER 28 – NOVEMBER 3, 2013

Europe remains divided over nuclear energy

Stratfor

“European countries are struggling to define their energy policies because the economic crisis has them strapped for cash.” countries hoping to transition toward green energy, the economic crisis in Europe and infrastructural issues will probably complicate their efforts.

Mounting questions France’s EDF Energy will lead a consortium in charge of building two new reactors at the Hinkley Point C plant in Somerset, southwest England, according to the British government.

The consortium will include Chinese investors (China National Nuclear Corp. and China General Nuclear Power Corp.), which London invited to participate in the British nuclear power sector in mid-October. EDF has long been looking for partners to share the cost of the new reactors, which the British government estimates to be around $23 billion.

However, EDF has yet to make a final investment decision on the project, and the new reactors will require the authorization of the European Commission. The existing plant at Hinkley currently produces about 1 percent of Britain’s total energy, but its share is expected to rise to 7 percent once the expansion is complete in a decade.

The announcement comes at a time when questions are mounting about the future availability of energy in the United Kingdom. According to the Royal Academy of Engineering,

the closure of older power plants and the slow progress in building new ones will probably stretch the British electricity system, and supply will come under strain in late 2014 and early 2015. The report also mentions that some of the country’s existing coal-fired plants should be closed by 2015 to meet EU pollution directives, further straining availability.

In addition, the United Kingdom has some serious concerns about natural gas, which accounts for about 30 percent of the country’s electricity generation, according to the Department of Energy and Climate Change. Production at the natural gas fields in the North Sea is declining, and large-scale liquefied natural gas exporters are focusing on Asian markets, thus making imports more expensive for Britain.

Recently London has stepped up its efforts to become a larger player in shale gas, but it will take time for these efforts to bear fruit.

Energy prices are also a controversial issue in Britain. In recent months, most energy companies in Britain have announced price hikes of between 6 and 10.8 percent. The government has argued that the new nuclear reactors would reduce the average household’s energy bill by $125 in 2030 compared to what it would be without the new projects. The opposition Labour Party has expressed doubts about these claims and has criticized the government for giving EDF state guarantees for the development of the plant.

A different direction At the same time as Britain’s announcement, France and Germany, the countries with the largest economies in Europe, are seeking to move away from nuclear energy.

During his campaign, French President Francois Hollande said his government would reduce France’s dependence on nuclear power from 75 percent to 50 percent by 2025 by closing the country’s oldest reactors.

Public support for nuclear power in France has somewhat declined since

the Fukushima incident.

To fulfill Hollande’s promise, France will need to significantly expand its renewables, which will be expensive. Paris recently admitted that the energy transition would cost

ma in 2011 reignited the debate, and in May of that year, German Chancellor Angela Merkel announced that the country would close all of its nuclear power plants by 2022.

Germany’s transition to renew-

an estimated $27.3 billion a year. The government is expected to pass a new energy law by the end of 2014 that would cap nuclear power capacity and give Paris more authority to shut down reactors.

In late September, Paris announced a levy on nuclear energy and a tax on carbon emissions from fossil fuels. According to the government, these taxes should contribute to investments in green energy from 2016 onwards. But Eurostat estimates that only 12.8 percent of France’s electricity is generated from renewable sources (the EU average is 20.4 percent), which suggests that the transition will probably be slow.

In Germany, nuclear energy has been a contested issue for decades. In 2010, Berlin outlined an ambitious long-term energy strategy designed to lower carbon dioxide emissions, increase energy efficiency and put a heavier emphasis on renewable energy. However, the events in Fukushi-

ables is well underway. According to the European Commission, the percentage of gross domestic consumption of electricity generated from renewable sources doubled between 2005 and 2011, from 10 percent to 20 percent. However, the transition to renewables has become controversial because of the substantial increases in electricity costs for households and fears among businesses about lost competitiveness.

the plans could see delays since a site for the plant still needs to be picked – it should be done by 2016 – and permits and construction companies still have to be approved.

Finland is another country that continues to pursue nuclear power. Finland started work on a nuclear plant in 2005, but the project has been repeatedly delayed. Another plant is supposed to be completed by 2024, but it is still unclear who will construct it.

Other European countries are struggling to define their long-term energy policies because the current economic crisis has them strapped for cash. For example, the Czech Republic has delayed a decision on whether to expand its nuclear sector with a new plant at Temelin until early 2015. In Lithuania, plans to build a nuclear power plant to reduce energy dependence on Russia have been delayed because of unpredictable political support at home and because the three Baltic states, all of which would profit from the electricity supply, have struggled to agree on the ownership of the project.

Europe will remain divided on the future of energy, as countries such as the United Kingdom and Poland focus on shale gas development, expand nuclear power plants or continue to rely on coal, while others attempt to transition to renewables.

Additionally, across the continent many power plants are aging and have been in service for half a century. This will fuel further debates regarding the commissioning of new plants.

The high levels of unemployment and low rates of economic growth in the European Union suggest the costly transition to green energy will likely remain slow and controversial in the coming years. ● COURTESY OF STRATFOR

A

t a time when other European countries are trying to move away from nuclear energy and increase their use of renewables, the British government announced plans to build its first new nuclear reactors in nearly two decades.

The October 21 announcement was the first of its kind in Europe since the Fukushima disaster of 2011 reignited the controversy over nuclear energy. However, for the

Uncertainty and delays Despite France’s and Germany’s efforts to move away from nuclear energy, several European countries are trying to expand their nuclear energy sectors over the coming decades, though the process will be slow and expensive. Poland plans to build two nuclear power plants, each with a capacity of 3,000 megawatts, to reduce its dependence on coal.

Warsaw hopes the first unit will be operational around 2025. However,

This edited version of “Europe remains divided over nuclear energy” is reprinted with permission of Stratfor.

Stratfor.com

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The record amount of new office stock coming online in Warsaw puts landlords in a tough spot

Residential developers finally see some hope returning to the housing market

16

New office/retail scheme in Warsaw’s Old Town 18

17

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

Developer Maryland RE has officially delivered the Riviera shopping center in Gdynia, the biggest retail center in northern Poland. It houses 240 stores on over 70,000 sqm of retail space, 96% of which has already been leased. The center is anchored by hypermarket Real. Its tenant list includes electronics store Saturn, bookstore Empik, children’s clothing and toys retailer SMYK, as well as a number of clothing and footwear retailers. It will also house a 2,800-sqm Helios multiplex cinema.

Unidevelopment to build a housing estate in Warsaw’s Goc∏aw Unibep’s subsidiary Unidevelopment will construct a residential estate in Goc∏aw, one of Warsaw’s eastern districts. The developer has signed a purchase contract for the land on ul. Kapelanów Armii Krajowej, where the investment will be situated. The estate will be developed in two phases and will deliver 230 apartments and 620 sqm of retail area in total. ●

In this issue Tristan’s retail purchase . . . . . .15 Segro financing . . . . . . . . . . . . .15 Office tenants in Q3 . . . . . . . . .16 Praktiker’s possible sale . . . . .16 MLP’s IPO . . . . . . . . . . . . . . . . . . .16 Housing market rebound . . . . .17 New Senatorska project . . . . .18 Chmielna 25 complete . . . . . . .18

Transaction

Tristan buys five retail units from Charter Hall for €174.5 million The deal included a total of 66,300 sqm of commercial space in regional cities throughout Poland

Tristan Capital Partners has purchased five retail units from Charter Hall, which sold its Polish assets for €174.5 million.

The deal included 66,300 sqm of commercial space, including the Borek shopping center in Wroc∏aw (opened in 1999), the Turzyn mall in Szczecin (2001), the Dàbrówka mall in Katowice (1999), the Zakopianka retail park in Kraków (1998), as well as the Arena retail park in Gliwice (2006).

“The sale of the Charter Hall portfolio to the Tristan Capital Partners fund is proof

that Poland is still an attractive market which is of large interest to international investors,” said Mike Atwell, head of capital markets CEE at property consultancy CBRE, which advised on the sales process.

“The geographical location of each of these five properties in major Polish cities shows the large demand for these kind of locations from institutional investors,” Mr Atwell added, saying that each unit is “an example of huge development potential.”

Proceeds from the sale by Charter Hall Group will go towards the purchase of the Southgate Plaza Shopping Centre in Morphett Vale near Adelaide, Australia, reportedly worth some $60 million.

John Beauchamp

COURTESY OF ADVANCED PUBLIC RELATIONS

Riviera mall in Gdynia opens

OCT 28 – NOV 3, 2013, LI 18/42

Zakopianka in Kraków was one of the five retail centers transacted

Investment

German banks lend money for Polish logistics portfolio The loan will be used to finance SELP’s acquisition of nine Polish warehouse assets and one in the Czech Republic Two German banks, pbb Deutsche Pfandbriefbank and Helaba, have granted a €188 million five-year secured loan to Segro European Logistics Partnership (SELP) for an acquisition of Polish and Czech seed assets.

SELP, a joint venture between Segro PLC and Canadian state-controlled pension fund PSP Investments, has purchased a portfolio of 10 grade-A logistics

assets, nine of which are located in Poland and one in the Czech Republic. The investment also includes a land bank of 520,000 sqm, providing potential for further development.

Most of the loan, specifically €166 million, has been earmarked for the acquisition of the portfolio and land, while the remaining €22 million will be set aside to refinance future properties. The transaction closed on October 11.

“This financing highlights [pbb’s] continued presence in the logistics sector across European markets,” said Charles Balch, Head of Real Estate Finance International

Clients, UK and CEE, at pbb Deutsche Pfandbriefbank.

SELP’s overall portfolio consists of 34 logistics properties totaling 1.6 million sqm of space. Its assets are located in Poland (38 percent of the aggregated floorspace), France (36 percent), Germany (13 percent), Belgium/Netherlands (9 percent) and the Czech Republic (4 percent).

The joint venture was formed in late June this year, when the Canadian PSP purchased a 50 percent stake in Segro’s European logistics portfolio. David Sleath, chief executive of Segro, said, “The creation of SELP is an important step for Segro in

strengthening our position as one of the leading providers of logistics space in Continental Europe. We are excited about the prospects for the venture and the opportunity it provides to leverage and grow our platform in this attractive and growing sector.”

The entire portfolio held

by SELP is valued at €1 billion. The company stated it wants to expand its holdings to a value of at least €2 billion through developments and acquisitions.

“Our participation in this joint venture advances our strategy of investing in highquality logistics properties in Europe. We see this core investment as a unique

opportunity for PSP Investments to build a scalable Continental European logistics portfolio,” said Neil Cunningham, senior vice president of Real Estate Investments at PSP Investments.

Helaba, hedquartered in Frakfurt and Erfurt, has financed many office, retail and logistics properties in Poland, the Czech Republic and Slovakia. In September of this year the bank provided Curzon Capital Partners III with a five-year loan in the amount of €75 million for the purchase of the Mokotów Nova office scheme in Warsaw from Belgian developer Ghelamco.

Beata Socha

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

16

LOKALE IMMOBILIA – REAL ESTATE

www.wbj.pl

OCTOBER 28 – NOVEMBER 3, 2013

Office

Tenant activity picks up in Q3 in Warsaw

Vacancy continues to climb However, even with the higher take-up figures, the record high amount of space delivered in 2013 (246,00 sqm in the first three quarters, plus another 74,000 sqm scheduled for the fourth quarter), is bound to push up vacancy rates.

“Despite the strong demand, we expect an increase in vacancy rate due to the large amount of new office

Regional leases

Altogether, 65,000 sqm was leased in regional cities in Q3 2013.

Rents hold steady Despite increasing vacancy, rent levels have remained mostly unchanged. Prime headline rents in the city cen-

ter range between €22 and €24 per sqm per month and between €14.50 and €14.75 per sqm per month in noncentral areas, according to the JLL report.

Knight Frank’s analysts say that non-central locations are quoting monthly rents even as low as €11 and as high as €18 per sqm. But given stiff competition from

other developers, tenants are offered generous incentives, which bring the asking rents down by approximately 25-30 percent.

Beata Socha

Warsaw market summary statistics Q3 2013 (Q1-3 2013)

Change q/q

Change y/y

12-month outlook

Gross take-up (sqm)

184,600 (518,600)

+6,000

+27,000/63,000

➔

Net take-up (sqm)

136,000 (365,000)

+6,000

+13,000/42,000

➔

Vacancy rate (%)

10.9

+0.4 pp

+2.8 pp

94,000 (246,600)

+18,000

+38,000/99,000

➔

Under construction (sqm)

573,000

-8,000

-16,000

Prime rent (€/sqm/month)

22-24

0%

-4%

➔

The other biggest leases in the third quarter of the year included Eurobank’s renewal of 6,100 sqm in Wratislavia Center in Wroc∏aw, BPH’s pre-lease in Avia in Kraków for 3,100 sqm and a new deal by Arvato Polska in Szczecin’s Piastów Office Center for 2,000 sqm.

stock that has been completed or is due to be completed in the coming months. This may further enhance the negotiating position of tenants,” Anna Kot, head of office agency at Jones Lang LaSalle said.

According to Jones Lang LaSalle, vacancies at the end of Q3 stood at 10.9 percent in Warsaw, which corresponds to 442,000 sqm of vacant space in the whole of Warsaw.

Naturally, non-central districts had a slightly higher vacancy rate (11.1 percent) than the city center (10.4 percent).

➔

The southern city of Katowice has overtaken Wroc∏aw in Q3 in terms of leasing activity, with two of the biggest pre-leases in regional markets taking place in Katowice: IBM’s lease of 8,700 sqm in A4 Business Park I and ING Services Polska taking up 5,600 sqm in GPP Business Park II.

BZ WBK leased 11,800 sqm in Atrium 1, Skanska’s office scheme still under construction in Warsaw’s CBD

➔

Tenant activity in Poland’s capital increased in the third quarter of 2013, with approximately 184,600 sqm leased, some 17 percent more than in the corresponding period of 2012.

Interestingly, over 80 percent of the leased space was in schemes outside Warsaw’s central business district (CBD), mainly in the western Wola district and in the southern S∏u˝ewiec Przemys∏owy part of the capital. New contracts, including pre-leases, made up nearly 70 percent of all deals, according to data compiled by advisory Knight Frank.

Most of the pre-leases occur in non-central locations, mainly due to high construction activity, for example in S∏u˝ewiec, experts at

another advisory, Jones Lang LaSalle, said.

The largest pre-lease contracts closed in the third quarter of 2013 included Polkomtel’s lease of 22,680 sqm in Konstruktorska 4 – even before the construction on the project launched – as well as BZ WBK’s lease of 11,800 sqm in Atrium 1, currently under construction in Warsaw’s CBD. As much as 30 percent of the 290,000 sqm of office stock scheduled to be delivered in 2014 to the Polish capital has already been pre-leased.

COURTESY OF SKANSKA PROPERTY POLAND

Nearly 190,000 sqm was leased in the third quarter of 2013. Still, the vast swathes of space being delivered make Warsaw an increasingly tenantdominated market

Prime yield (%)

6.25

0 bp

0 bp

➔

Completions (sqm)

Source: Jones Lang LaSalle

Market

With one of its shareholders going bust, media reports say the DIY chain could be looking for a buyer for its assets

DIY chain Praktiker may sell its Polish stores, according to reports by daily Rzeczpospolita.

The paper reported that Baumarkt Praktiker International, a shareholder of the Polish firm, has filed for bankruptcy and may soon be looking for a buyer for its assets.

Praktiker Polska’s management board has assured that Baumarkt Praktiker International’s decision to file for bankruptcy “has no bearing on the activity of Praktiker Polska, which will continue its opera-

tions in an unchanged form, and its financial liquidity is not in danger,” the company wrote in a statement.

Still, media reports have caused quite a stir, particularly because the German firm in the group, Praktiker AG, which filed for bankruptcy in July following a failed restructuring attempt, has been selling off its German stores since September.

The Polish DIY market has been growing increasingly competitive for years. In 2009 the number of large DIY stores stood at 272 and has nearly doubled since then. French chain Castorama is the largest player in the Polish market, with 72 stores. Castorama has also been named as the most likely potential buyer of Praktiker stores.

COURTESY OF WIKIMEDIA COMMONS

MLP Group raises Praktiker may look to offload stores over z∏.90 million in WSE debut

There are 24 Praktiker stores in 20 cities in Poland Praktiker Polska has 24 DIY stores in 20 cities in Poland.

Other major players in the DIY segment include Bricomarche, Nomi, Obi, Leroy Merlin, and wholesale chain Grupa PSB. In smaller cities, Mrówka

is also an important player in the market.

Last year Praktiker Polska recorded z∏.759.2 million in revenue, a drop of 6.4 percent on 2011 results.

BKS

Developer MLP Group SA has managed to sell all of the 3,773,595 shares it was offering at z∏.24 apiece. Total gross sales amounted to z∏.90.57 million. As WBJ went to press, the Warsaw Stock Exchange was set to start quoting MLP shares on October 28.

“We are happy with the extremely large interest shown by investors in our IPO,” said Rados∏aw Krochta, vice president of MLP’s management board, in a statement. “The company has solid foundations and excellent prospects for development,” he added, underlining that MLP will be “the first

developer of warehouse space on the WSE.” During the book-building process individual investors submitted 352 applications for a combined total of 470,282 shares, around 80.2 percent of which were allocated.

Meanwhile, institutional subscribers were allocated a total of 3,396,235 shares, with demand reaching five times that amount.

MLP Group plans to use the raised funds to finance the expansion of existing industrial parks and the development of land the company has in its portfolio.

John Beauchamp

OCTOBER 28 – NOVEMBER 3, 2013

LOKALE IMMOBILIA – REAL ESTATE

www.wbj.pl

17

Residential

Housing rebound begins to materialize As many as 9,600 apartments were sold in the third quarter of 2013 in the six largest Polish cities, the highest number since 2007, according to data compiled by real estate consultancy REAS. Increased demand, combined with dwindling supply on the residential market have pushed prices up slightly, particularly in Warsaw. Prices now stand at levels similar to those from late 2011.

At the end of September 2013 the average price of an apartment in Warsaw’s primary market stood at z∏.8,138 per sqm, 4.1 percent higher than at the end of Q2 2013.

Kraków, Wroc∏aw and Poznaƒ also saw rising apartment prices, albeit very slightly – by no more than 1.2 percent. TriCity and ¸ódê were the only two cities out of the group which recorded a price drop, by 0.8 percent and 0.1 percent.

Countrywide, apartment prices inched up by 1.6 percent.

REAS analysts stress in their report that “at the initial

stages of market recovery, price appreciation is achieved not through rising list prices, but through a limitation of special offers and discounts.”

However, according to calculations made by realtors from the Home Broker agency, transaction prices in Polish major cities increased by 8 percent over the past year.

upmarket dwellings – as well as buyers looking to invest in apartments as major components of the current demand.

Since the market has apparently already hit the bottom and prices are beginning to pick up, private investors might look at this as the final call to jump on the “buyer’s market” train.

Uneven odds Jump on the train Between Q4 2012 and Q3 2013 nearly 33,500 units were purchased. The third quarter of 2013 saw particularly strong apartment sales on the primary market, even though the government subsidy program “Apartments for the Youth” has not taken effect yet.

Some of the increased demand came from buyers looking to take out mortgages for 100 percent of the apartment’s value, ahead of regulations set to enter into force in 2014 which will incrementally lower the maximum loan-tovalue ratio down to 80 percent in 2017. Continually low interest rates are also driving demand for residences.

REAS experts, however, also point to so-called “cash buyers” – those usually interested in larger and more

Finally, some of the increased demand can be credited to the fact that the government subsidy program, due to its low price ceilings, will likely be limited in scope. REAS experts estimate that out of the six markets they analyzed the two weakest markets, TriCity and ¸ódê, are the most likely to benefit from the Apartments for the Youth program, because about 54-60 percent of all residences on the primary market will fall below the price ceilings.

Meanwhile, out of all the apartments offered in Warsaw and Kraków, only a small fraction will qualify for the program (10 percent and 6 percent respectively).

Pipeline dries out Growing demand has coupled with the decreasing stock of

Q3 saw the highest number of apartments sold since 2007

available units on offer in Poland’s major cities, particularly in the capital. In the third quarter developers delivered 2,200 new units to the Warsaw market, while some 4,000 apartments from the primary market were sold.

The residential pipeline has been drying out since early 2012, when the last surge in the number of new projects launched was observed. The increased activity in the early months of last year was caused by the introduction of the Developer’s Act, forcing developers to maintain escrow accounts for all their property launched to the market after April 2012.

According to data provided

by Poland’s Central Statistical Office, in Q3 2013 developers began construction on 36,400 units, which is 21.2 percent lower than in the same quarter

SHUTTERSTOCK

With decreasing stock and demand picking up speed, apartment prices are beginning to rise in major cities

last year. The number of building permits obtained by developers was also down, by 24.6 percent year-on-year to 41,000.

REAS experts say that the figures from the developers’ market for the entire 2013 may look very much like those from 2009.

2014 forecasts Experts believe the market will see even stronger sales next year, particularly in the low-

end segment, driven by the Apartments for the Youth program and by the creation of a state-controlled rental housing fund. With z∏.5 billion earmarked for purchasing housing units in Poland’s major cities, the fund will easily be the biggest buyer in the market, largely shaping the demand and market conditions in the coming years.

Beata Socha

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www.wbj.pl

LOKALE IMMOBILIA – REAL ESTATE

Business with Heritage investment underway in Warsaw’s Old Town

Chmielna 25 officially opened in Warsaw COURTESY OF GLAUBICZ GARWOLIƒSKA CONSULTANTS

The development (far right) will be in view of the landmark Zygmunt Column Construction has just begun on an investment planned to provide some 9,500 sqm of retail and office space in the heart of Warsaw’s Old Town, a stone’s throw from one of the oldest symbols of Warsaw, the Zygmunt Column.

The new building, named Plac Zamkowy – Business with Heritage, is being constructed

by Senatorska Investment on the site of an old parking lot, with construction expected to be complete by Q1 2015. The retail area will comprise some 1,640 sqm, while the office space will measure 4,071 sqm.

An underground parking lot

will also serve the site.

Due to the historic nature of the building’s surroundings, which comprise part of a UNESCO World Heritage Site, consultations lasted for more than 30 months prior to the inaugural work on the site.

“During the planning stage of the building, our chief priority was to respect the surrounding urban fabric while incorporating functionality and modern solutions,” Maksymilian Marcinkowski, president of Senatorska Investment said in a statement.

“Our [investment] is the only building in the direct

vicinity of the Old Town which is purely designed for commercial purposes,” Mr Marcinkowski underlined, adding that “thanks to this, lessees … will have a prestigious address as well as a broad outreach to potential clients.”

The building’s design was drafted by German architects RKW Rhode Kellermann Wawrowsky, which specializes in the revitalization of buildings in historic urban surroundings, and has buildings in Berlin, Leipzig, and Frankfurt.

John Beauchamp

OCTOBER 28 – NOVEMBER 3, 2013

Investor and leasing company LHI has officially opened its Chmielna 25 office/retail scheme in Warsaw’s downtown. The seven-storey class-A building offers 3,800 sqm of office space on five floors as well as 1,700 sqm of retail space on the two bottom levels.

The retail area has been pre-leased to children’s toys and clothes retailer Smyk, which is to make Chmielna 25 its flagship store. The investor will occupy a part of the office area in the building. The new project is located on a 1,242sqm plot on Warsaw’s ul.

Chmielna high street.

“Small office projects in the very center of the city are extremely popular with companies looking for a prestigious and convenient location. Office towers don’t offer such exclusivity,” Robert Mand˝unowski, LHI’s CEO said.

Construction launched in late 2011 and took 18 months to complete. Budner was the general contractor for the project. The building was designed by the Bulanda, Mucha Architekci studio.

The building has been awarded a LEED GOLD cer-

tificate. It features an underground parking lot, with bicycle parking and an electriccar charging station.

Chmielna 25 is LHI’s second investment on ul.

Chmielna. In 2011 it deliv-

ered the Nowy Dom Jab∏kowskich office project.

Before that, the company, part of LHI Group, had for years focused mainly on property leasing activity.

Beata Socha

COURTESY OF MSL GROUP

18

Chmielna 25 offers 3,800 sqm of office space and 1,700 sqm of retail area

20

THE LIST

www.wbj.pl

OCTOBER 28 – NOVEMBER 3, 2013

Corporate Services

Security Companies Ranked by revenue from security services in 2012 A guide to Polish business and industry

www.bookoflists.pl

Przewodnik po polskim biznesie i gospodarce

Services Access control system installation / Remote monitoring / CCTV monitoring / Convoys

On-site protection / Cleaning / Intervention units / Training

Other

1,046.8 991.4 882.3 876.6

1,237.6 1,141.3 1,001.0 941.1

35,875 31,525 26,545 22,350

✓ ✓ ✓ -

✓ ✓ ✓ ✓

✓ ✓ ✓ ✓

WND

✓ ✓ ✓

✓ ✓ ✓

Konsalnet Holding SA ul. Przasnyska 6A, 01-756 Warsaw 2 22 560-5000/22 560-5004 centrala@konsalnet.pl www.konsalnet.pl

608.6 525.9 484.9 483.0

651.1 562.2 516.8 506.0

WND WND WND WND

✓ ✓ ✓ -

✓ ✓ ✓ ✓

✓ ✓ ✓ -

Cash processing; security audits; armed escorts; VIP protection; events security; convoying dangerous objects, works of art., valuables, precious metals; loss verification in economic relations; GPS monitoring

✓ ✓ ✓

✓ ✓ ✓

WND

Jeronimo Martins Distribution; Tesco; T-Mobile; PZU; Bank Pekao; ArcelorMittal Poland

22,603 20,254 1994

Adam Paw∏owicz

Impel Security Polska Sp. z o.o. ul. Âl´˝na 118, 53-111 Wroc∏aw 3 71 711-0300/71 711-0313 cc.ochrona@impel.pl www.impel.pl

443.5 405.3 416.1 406.4

1,416.6 1,240.4 1,110.7 1,033.3

WND WND WND WND

✓ ✓ ✓ ✓

✓ ✓ ✓ ✓

✓ ✓ -

Mass-event security; VIP security; safety audits; reception service; GPS monitoring; video surveillance; cash processing; ATM service; storage, archiving, digitization and destruction of documents

✓ ✓ ✓

✓ ✓ ✓

Ergo Hestia; PZU

Bank Pekao; Katowice International Airport; Tele-Fonika Kable; Gdynia Naval Base Military Command; Telekomunikacja Polska

WND WND 1990

Miros∏aw Greber

Securitas Group ul. Cybernetyki 21, 02-677 Warsaw 4 22 457-0700/22 457-0701 securitas@securitas.pl www.securitas.pl

238.0 215.0 202.0 190.0

238.0 215.0 202.0 190.0

5,400 5,300 4,900 4,550

✓ ✓ ✓ -

✓ ✓ ✓ ✓

✓ ✓ ✓ ✓

Video monitoring; video verification; integrated security systems; security audits; security management; aircraft security; reception

✓ ✓ ✓

✓ ✓ ✓

XL Insurance (member of XL Capital)

Grupa Lotos; Avon; P&G; Citibank; Ernst & Young; British American Tabacco; Raiffeisen Polbank; Jeronimo Martins; Metro AG; PepsiCo; RWE; Danone

5,296 6,175 1996

Krzysztof Toczyski

Grupa EKOTRADE ul. Melomanów 4, 00-712 Warsaw 5 22 548-9052/22 548-9050 biuro@ekotrade.com.pl www.ekotrade.com.pl

167.2 150.4 144.3 142.0

178.2 162.1 150.7 144.6

9,400 7,500 6,375 5,200

✓ ✓ ✓

✓ ✓ ✓ ✓

✓ ✓ ✓ -

Fire monitoring; mass events security; reception services

✓ ✓ ✓

✓ ✓ ✓

Noble Bank; Eurobank; Multikino; XL Insurance Company Getin Bank BPS; Kuehne + Nagel

9,500 8,700 1991

Jacek Jerschina

City Security SA ul. Âwi´tojerska 5/7, 00-236 Warsaw 6 22 628-6070/22 635-5116 biuro@citysecurity.pl www.citysecurity.pl

94.0 82.0 79.5 67.0

98.7 87.2 84.0 68.0

4,910 4,450 4,250 3,500

✓ ✓ ✓ ✓

✓ ✓ ✓ -

✓ ✓ ✓ ✓

Facility services; anti-terrorist training; debt collection

✓ ✓ ✓

✓ ✓ ✓

Concordia

Praktiker; Z∏ote Tarasy; NATO Military Airport in Malbork; UEFA EURO 2012; MAN Starachowice

4,910 4,650 2001

Beniamin Krasicki

Grupa HUNTERS Sp. z o.o. ul. Bukowska 114, 62-065 Grodzisk Wielkopolski 7 61 442-1600/61 442-1613 biuro@hunters.pl www.hunters.pl

26.5 25.4 32.8 32.9

35.7 34.8 44.8 43.8

682 942 1,155 1,514

✓ ✓ ✓ ✓

✓ ✓ ✓ ✓

✓ ✓ ✓ ✓

Debt collection; event security; GPS car monitoring; DNA system marking

✓ ✓ ✓

✓ ✓ ✓

Allianz; PZU; Hestia; Benefia

Nivea; Volkswagen Antoninek; H&M Gàdki; MAN; Imperial Tobacco; Piotr i Pawe∏

3,000 3,000 1990

Piotr ˚y∏kowski

Gustaw Gemini Security Sp. z o.o. ul. ¸yskowskiego 18, 8 71-641 Szczecin 91 812-1478/91 434-7527 biuro@gustaw-securitas.pl www.gustaw-securitas.pl

20.5 16.9 17.4 16.4

20.6 17.0 17.5 17.2

866 604 567 580

✓ ✓ ✓ -

✓ ✓ ✓ ✓

✓ ✓ -

WND

✓ ✓ ✓

✓ ✓ ✓

TUiR Partner

Supreme Court in Warsaw; Voivodship Administrative Court; National Museum in Warsaw; District Prosecutor's Office; Netto; Piotr i Pawe∏; Enea Operator; military units; Orange; Saint Gobain Polska; Unizeto Technologies

833 833 1988

Gustaw Wiliƒski

Agencja Ochrony Osób i Mienia Guard-Service Sp. z o.o. ul. Tatrzaƒska 6A, 60-413 Poznaƒ 9 61 847-7196/61 847-7196 guardservice@guardservice.pl www.guardservice.pl

19.0 19.0 19.0 19.0

20.0 20.0 20.0 20.0

500 520 500 500

✓ ✓ ✓ ✓

✓ ✓ ✓ ✓

✓ ✓ ✓ ✓

WND

✓ ✓ ✓

✓ ✓ ✓

PZU; InterRisk

Raben Polska; Aluplast; Kuehne + Nagel; PKP; Sita Zachód

400 400 2000

Konrad Sz∏apka

P. Dussmann Sp. z o.o. ul. Kurpiƒskiego 55, 02-733 Warsaw 10 22 827-2290/22 827-2298 dussmann@dussmann.pl www.dussmann.pl

1.6 WND WND 1.2

WND WND WND 43.2

120 WND WND 402

✓ ✓ ✓ ✓

✓ ✓ ✓ ✓

✓ ✓ ✓ ✓

Mass-event security

✓ ✓ ✓

✓ ✓ ✓

Axa TUiR

WND

WND WND 1993

Pawe∏ Skwarczowski

Rank

Property security / Bodyguards / Alarm system installation / Detective services

Type of property protected

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

Revenue from Average security Total revenue employment services (z∏. mln) per year (z∏. mln) 2012 / 2011 / 2010 / 2009

Grupa Solid ul. Post´pu 17, 02-676 Warsaw 22 668-6006/22 668-6006 1 ext. 1507 solid@solidsecurity.pl www.solidsecurity.pl

Notes: WND = Would Not Disclose. Research for The List was conducted in April 2013. Number of employees is as of April 2013. All information pertains to the companies’ activities in Poland. Companies not responding to our survey are not listed.

Private houses / Offices / Industrial buildings

Shopping malls / Banks / Public buildings

Number of security employees / Total number of employees / Year founded in Poland

Top local executive / Title

PKO BP; Raiffeisen Bank Polska; BZ WBK; Coca Cola HBC Polska; PZU; InterRisk; Castorama Carrefour Polska; Vienna Insurance Group KGHM PolskaPolska; Miedê; Military Technical Academy

38,125 41,035 1994

Arkadiusz Reszke

Cooperation with insurance companies

Selected clients

President

President

President

President

President

Board Member

President

President

President

President

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. Monika Brysiak, ul. Elblàska 15/17, 01-747 Warsaw, via fax to +48 22 257-7599, or via e-mail to online@bookoflists.pl. Copyright 2013, 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.

MARKETS

OCTOBER 28 – NOVEMBER 3, 2013

www.wbj.pl

Stocks report

world stock indices DJIA

NASDAQ

15,509.21 (Oct 24 close)

S&P500

3,928.96 (Oct 24 close)

0.89% (for the week)

FTSE100

1,752.07 (Oct 24 close)

1.70% (for the week)

DAX

6,721.34 (Oct 25 close)

1.09% (for the week)

1.49% (for the week)

Euro zone lagging behind

NIKKEI 8,985.74 (Oct 25 close)

14,088.19 (Oct 25 close)

1.36% (for the week)

-3.25% (for the week)

CHANGE: 15.63% (year to Oct 24)

CHANGE: 26.24% (year to Oct 24)

CHANGE: 19.81% (year to Oct 24)

CHANGE: 11.51% (year to Oct 25)

CHANGE: 15.52% (year to Oct 25)

CHANGE: 31.81% (year to Oct 25)

52-week high: 15,709.58

52-week high: 3,947.61

52-week high: 1,759.30

52-week high: 6,875.60

52-week high: 9,010.65

52-week high: 15,942.60

52-week low: 12,471.49

52-week low: 2,810.80

52-week low: 1,343.35

52-week low: 5,605.60

52-week low: 6,950.53

52-week low: 8,619.45

¸ukasz Wróbel Noble Securities SA As fears related to the US budget and debt-ceiling impasses faded away, investors in the international markets focused on macroeconomic data and corporate earnings. The most notable report last week was on employment in the US for September, which was quite disappointing.

Employers added fewer workers to the payrolls than projected – the increase of 148,000 followed a revised 193,000 gain back in August, which resulted in the US unemployment rate falling to 7.2 percent. However, that didn’t interrupt a relief rally on Wall Street, with the S&P500 index finishing last week near its all-time high, above 1,750 points.

The global business surveys for October may be counted as a further evidence that the world is experiencing

Major indices WIG

53,887.13 (October 25 close)

WIG30

2,701.30 (October 25 close)

25.10

24.10

23.10

22.10

21.10

18.10

17.10

16.10

15.10

14.10

11.10

10.10

09.10

25.10

24.10

23.10

22.10

21.10

18.10

17.10

16.10

15.10

2,400

14.10

50,000

11.10

2,480

10.10

50,800

09.10

2,560

08.10

51,600

07.10

2,640

04.10

52,400

03.10

2,720

02.10

53,200

01.10

2,800

30.09

54,000

08.10

52-week low: 2,286.99

07.10

Change year to October 25: 2.93%

04.10

52-week low: 43,145.55

03.10

52-week high: 2,718.20

Change year to October 25: 12.01%

02.10

Change for the week: 2.12%

01.10

52-week high: 53,994.46

30.09

Change for the week: 2.47%

Top 5 WIKANA CALATRAVA YAWAL PRIMAMODA MEWA

Closing 0.59 0.03 8.58 2.80 0.23

% change (week) 52-week high 59.46 0.65 50.00 0.43 34.06 8.60 33.97 4.59 27.78 0.42

52-week low 0.26 0.02 4.38 1.42 0.13

Top 5 TPSA ALIOR GRUPAAZOTY PGE PZU

Closing 9.88 81.50 84.30 18.80 468.00

% change (week) 14.35 11.19 7.57 6.46 5.64

52-week high 12.16 100.50 88.50 19.05 470.95

52-week low 5.83 59.50 46.51 13.35 343.30

Bottom 5 TATRY BIOTON NOVAKBM RUBICON NOKAUT

Closing 92.00 0.02 1.51 0.10 2.29

% change (week) -45.88 -33.33 -31.36 -16.67 -15.19

52-week low 91.05 0.02 1.51 0.07 2.12

Bottom 5 KERNEL BORYSZEW SYNTHOS JSW TAURONPE

Closing 45.49 0.52 5.15 66.50 4.86

% change (week) -10.28 -3.70 -3.20 -2.99 -2.21

52-week high 72.35 0.64 6.00 94.15 5.10

52-week low 45.03 0.38 4.12 57.70 3.67

52-week high 205.00 0.10 6.50 0.43 7.99

2,537.62 (October 25 close)

mWIG40

Change for the week: 2.11%

52-week high: 2,628.36

Change for the week: 3.35%

52-week high: 3,567.78

52-week low: 2,177.02

Change year to October 25: 38.90%

52-week low: 2,383.61

25.10

24.10

23.10

22.10

21.10

18.10

17.10

16.10

15.10

14.10

11.10

10.10

09.10

08.10

07.10

04.10

03.10

SOURCE: WSE

25.10

24.10

23.10

22.10

21.10

18.10

17.10

16.10

15.10

14.10

11.10

10.10

09.10

08.10

07.10

04.10

25.10

24.10

23.10

22.10

21.10

18.10

17.10

16.10

315.0

15.10

13,300

14.10

320.2

11.10

13,600

10.10

325.4

09.10

13,900

08.10

330.6

07.10

14,200

04.10

335.8

03.10

14,500

02.10

341.0

01.10

02.10

52-week low: 296.29

14,800

30.09

01.10

52-week high: 353.00

Change year to October 25: 2.34%

03.10

52-week low: 9,660.90

339.97 (October 25 close)

02.10

Change year to October 25: 40.09%

NewConnect Change for the week: 3.41%

01.10

52-week high: 14,753.57

30.09

25.10

24.10

23.10

22.10

21.10

18.10

17.10

14,753.57 (October 25 close)

Change for the week: 3.51%

Adam Narczewski X-Trade Brokers DM SA

30.09

sWIG80

16.10

15.10

3,200

14.10

2,300

11.10

3,280 10.10

2,360 09.10

3,360

08.10

2,420

07.10

3,440

04.10

2,480

03.10

3,520

02.10

2,540

01.10

3,600

30.09

2,600

US labor report moves markets

3,567.78 (October 25 close)

Change year to October 25: -3.37%

a steady recovery led by developed economies. The euro zone is still lagging behind the UK and US. Both the fall in German Ifo Business Climate Index and the drop in various EU countries, PMIs provided another timely reminder that the euro zone recovery remains fragile.

Investors on the Warsaw Stock Exchange welcomed some positive factors from the Polish economy (retail sales increased by almost 4 percent y/y and the unemployment rate remained at 13 percent). The WIG20 traded around the level of 2,550 points, while mid- and small-caps once again outperformed the blue chip index. Telecoms and banks showed relative strength thanks to surprisingly positive quarterly reports from Telekomunikacja Polska and BZ WBK. ●

Currency report

Other indices WIG20

21

The release of the September US labor market report had a significant impact on markets. The much worsethan-expected data caused a massive sell-off of the US dollar.

Traders are relatively confident the Fed will not reduce its QE3 asset repurchase program this year, meaning money will keep flowing into the market. The EUR/USD, which had been oscillating around the $1.37 resistance level, increased sharply to reach $1.3830, its highest level since November of 2011. The path towards $1.40 is now open.

Since we know that the National Bank of Poland’s Monetary Policy Council will not touch interest rates at least till the end of the

year, the z∏oty is much more sensitive to external factors.

Those caused the local currency to depreciate against the euro (which was gaining globally) but to appreciate against the weakening dollar.

The EUR/PLN, after reaching its weekly low of z∏.4.16, rebounded to finish the week in the z∏.4.19 area.

On the other hand, the USD/PLN declined from its weekly high of z∏.3.06 down to z∏.3.03, its lowest quote in two years.

The ongoing discussion in Poland about the possible conversion of Swiss francdenominated mortgage loans is not affecting the CHF/PLN much. The pair slightly increased from z∏.3.37 to z∏.3.39 throughout the course of the week. ●

currency rates 3.1228 25.10

SOURCE: NBP

3.1168

3.1246 23.10

24.10

3.1077 22.10

21.10

3.1172 18.10

0.0957

0.0956 25.10

3.10

3.1206

100JPY/PLN

3.13

24.10

0.0955 23.10

0.0957 22.10

21.10

0.0957 18.10

3.4016

3.4005 25.10

0.095

0.0959

RUB/PLN

0.097

24.10

3.3944 23.10

3.3827 22.10

21.10

3.3824 18.10

4.9090

4.9164 25.10

3.37

3.3874

CHF/PLN

3.41

24.10

23.10

22.10

21.10

4.9

18.10

4.9055

4.9290

4.9375

3.0326 25.10

3.0323

4.9503

GBP/PLN

5.0

24.10

3.0385 23.10

3.0564 22.10

21.10

3.0506 18.10

4.1812

4.1910 25.10

3.02

3.0620

USD/PLN

3.07

24.10

4.1800 23.10

4.1786 22.10

21.10

4.1769 18.10

4.16

4.1850

EUR/PLN

4.20

22

SPORTS

www.wbj.pl

Tennis

OCTOBER 28 – NOVEMBER 3, 2013

Basketball

A bad end to a good season Gortat’s decisive year

SHUTTERSTOCK

Agnieszka Radwaƒska’s chances in the WTA Championship tournament in Istanbul were slim at best before the tournament even got under way. Ms Radwaƒska did not have much luck in the draw, as she was put in a group along with US star Serena Williams, the Czech Republic’s Petra Kvitova and Angelique Kerber from Germany.

Prior to the tournament Ms Radwaƒska, currently the number-four ranked player in the WTA, had lost all seven matches she had previously played against her arch-nemesis, Ms Williams. Moreover, she had only won one out of the five games she had played against Ms Kvitova. Her record against Ms Kerber was better: prior to the tournament the 24-year-old from Kraków had managed to win five out of the eight matches in which she faced the German.

Unfortunately for Ms Radwaƒska, she was unable to

This is the last year of Marcin Gortat’s current deal. Will he fulfill it in Phoenix?

Agnieszka Radwaƒska improve any of those records during the WTA Championship last week. She lost all three of her matches and was sent home packing after the group stage. Embarrassingly, she didn’t manage to win a single set.

Despite the losses, the Polish tennis star can be happy with her overall performance in 2013. She won three tournaments and won 56 matches, solidifying her position in the top 10 of the WTA rankings.

However, some experts argue Ms Radwaƒska has peaked and will never achieve a number-one ranking. Some

even say she will never win another major or Grand Slam tournament. They argue that her tactical awareness is enough to beat most of her opponents, but players ranked above her continue to easily overpower Ms Radwaƒska.

Now Ms Radwaƒska can enjoy a well-deserved rest, as the Istanbul tournament was her last stop on the WTA tour this year. The next major tournament will be the mixedteams Hopman Cup, held at the turn of the year in Australia, where she, along with Jerzy Janowicz, will make up the top-seeded team.

Jacek Ciesnowski

Marcin Gortat started his stint with the Phoenix Suns three years ago after a complicated trade with the Orlando Magic. With the last season of his current deal starting on October 29, fans are asking whether he will be traded to another club, and whether he will use his time to improve his stock and convince NBA managers that he’s still a valuable asset.

“It’s not only about the contract. ... It’s about what kind of player I am in this league. This is the year and time where I can really prove what I can do,” the Polish center said after a recent pre-season game.

Mr Gortat’s tenure in Phoenix has been a rollercoaster ride. On the one hand he became a starter – something he could have only dreamed of in Orlando while serving as a backup for Dwight Howard. His first season in Arizona was the best of all three so far. Last season was unremarkable, the result of being sidelined with an injury.

At 29 years-old, it’s Mr Gortat’s last chance to nab a big contract before he is considered too old to get paid the big bucks. The fact that it’s the last year of his deal, and that the Suns have three young

centers on their roster – Alex Len, Miles Plumlee and Slava Kravtsov – has fueled speculation that he could be sent to another team before the February trade deadline.

Until recently, the most prevalent rumors had linked Mr Gortat with a move to San Antonio, but after their cen-

ter, Tiago Splitter, signed a new contract, that deal is off the table. But plenty of other teams are either looking for a new starting center or a player with an expiring deal in order to gain some wiggle room on their roster after the season is over.

Jacek Ciesnowski

COURTESY OF FACEBOOK/MARCIN GORTAT

Polish tennis star Agnieszka Radwaƒska lost all three of her matches at the WTA Championship tournament in Istanbul

Marcin Gortat

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Centre for Contemporary Art at Ujazdowski Castle ul. Jazdów 2 www.csw.art.pl Czarna Gallery ul. Marsza∏kowska 4 www.czarnagaleria.art.pl Galeria 022, DAP, Lufcik ul. Mazowiecka 11a www.owzpap.pl Galeria 65 ul. Bema 65 www.galeria65.com Galeria Appendix 2 ul. Bia∏ostocka 9 www.appendix2.com Galeria Asymetria ul. Nowogrodzka 18a www.asymetria.eu Galeria Foksal ul. Foksal 1-4 www.galeriafoksal.pl Galeria Milano Rondo Waszyngtona 2A www.milano.arts.pl Galeria Schody ul. Nowy Âwiat 39 www.galeriaschody.pl

S i g n u p f o r a 2 - w e e k f r e e - t r i a l ! w w w. p o l a n d a m . p l G e r m a n v e r s i o n : w w w. p o l e n a m m o r g e n . p l

Green Gallery ul. Krzywe Ko∏o 2/4 www.greengallery.pl

Simonis Gallery ul. Burakowska 9 www.simonisgallery.com

Katarzyna Napiórkowska Art Gallery ul. Âwi´tokrzyska 32, ul.

Krakowskie PrzedmieÊcie 42/44 and Old Town Square 19/21 www.napiorkowska.pl

State Archaeological Museum in Warsaw ul. D∏uga 52 www.pma.pl

Królikarnia National Gallery ul. Pu∏awska 113a www.krolikarnia.mnw.art.pl Le Guern Gallery ul. Widok 8, www.leguern.pl Museum of Independence Aleja SolidarnoÊci 62 www.muzeumniepodleglosci.art.pl National Museum in Warsaw Al. Jerozolimskie 3 www.mnw.art.pl Polish National Opera at Teatr Wielki Pl. Teatralny 1 www.teatrwielki.pl Pracownia Galeria ul. Emilii Plater 14 www.pracowniagaleria.pl

State Ethnographic Museum ul. Kredytowa 1 www.ethnomuseum.pl Historical Museum of Warsaw Old Town Square 28-42 www.mhw.pl History Meeting House of Warsaw ul. Karowa 20 www.dsh.waw.pl Warsaw Philharmonic ul. Jasna 5 www.filharmonia.pl Warsaw Rising Museum ul. Grzybowska 79 www.1944.pl

Galeria XX1 Al. Jana Paw∏a II 36 www.galeriaxx1.pl

Rempex Art and Auction House ul. Karowa 31 www.rempex.com.pl

Wilanów Palace Museum and Wilanów Poster Museum ul. St Kostki Potockiego 10/16 www.wilanow-palac.pl www.postermuseum.pl

Galeria Zoya ul. Kopernika 32 m.8 www.zoya.art.pl

Royal Castle Pl. Zamkowy 4 www.zamek-krolewski.com.pl

Zachęta National Art Gallery Pl. Ma∏achowskiego 3 www.zacheta.art.pl

OCTOBER 28 – NOVEMBER 3, 2013

LIFESTYLE

www.wbj.pl

23

Concert

Film

Hurts revisited

The best of Asian cinema

COURTESY OF FIVE FLAVOURS FESTIVAL

The story of Hurts’ origin provides an example that drinking can sometimes actually lead to positive things. Theo Hutchcraft and Adam Anderson, the duo behind the band, met outside a pub while their friends were engaged in a brawl with each other. Too inebriated to fight themselves, they decided instead to talk about music.

After discovering that their musical tastes were similar, they decided to form a group.

Hurts became known among music buffs thanks to an original viral video campaign before they even released their first album (“Happiness” in 2010). Their first homemade music video, for “Wonderful Life,” arguably their biggest hit so far, has been viewed over 20 million times on YouTube.

In its short history the synthpop duo, whom many have called the Pet Shop Boys of the 21st century, have already collaborated with such stars as Kylie Minogue and Elton John.

The UK group has gained popularity worldwide, selling over 3 million records and

CHRISTIAN BERTRAND/SHUTTERSTOCK

Hurts November 7 Torwar Warsaw

Theo Hutchcraft of Hurts boasting a huge fan base in the Central Europe region, where they regularly tour.

In 2010 alone, they played three times in Poland, and since then they’ve made the country a regular stop on their tour schedule, visiting at least once a year. The November 7 show in Torwar will be their second concert in Poland this year. Back in March, they played in much more intimate setting at Warsaw’s Palladium.

During their current tour, the band is promoting their second album, “Exile.” Released in March, it burst into the top 10 in 23 countries’ music charts, including Poland’s.

“We had to push ourselves and express the more intense, darker side which lies at the heart of our music,” the band’s lead singer Theo Hutchcraft said in an interview with NME after the release of the album.

“The first record was mainly about love and loss. This is a record about sex and death.

The whole process was one of the heaviest and most extreme experiences we’ve had, but now we’re on the outside looking in, it feels like we’ve made something truly unique and special,” he added.

Jacek Ciesnowski

Tickets start at z∏.105

Wong Kar-Wai’s “The Grandmaster” Five Flavours Festival November 4-11 Muranów Cinema Luna Cinema Warsaw Each year the Five Flavours Festival grows in both size and scope. While the first edition started out as a low-key Vietnamese movie festival, it has now grown into a more international event, with films from across the entire continent. This year’s seventh edition of the festival will present 35 Asian movies, both new and old.

For the first time this year, the festival extends its range to encompass South Asia, with the screening of Sri Lankan

movie “With You, Without You,” directed by Prasanna Vithanage. A drama set in post-war Ceylon, the film is inspired by Fyodor Dostoyevsky’s “A Gentle Creature” and tells a story of an uneasy relationship between a Tamil woman and her Sinhalese husband.

Besides that, the New Asian Cinema section will present the latest movies from the continent. “Focus: Hong Kong” will showcase both classic and new titles from the Chinese outpost, which has a long history of filmmaking. There will also be a retrospective of films by Japanese director Tetsuya

Nakashima as well as a marathon of Asian thrillers and horror movies.

Two pictures will have their European premieres at the festival: “Hanyut/Almayer’s Folly,” by Malaysian director U-Wei Bin Haji Saari, and “Homostratus” from Vietnam’s Siu Pham. Other notable festival entries include two of the candidates for the next year’s Academy Award Best Foreign Film category.

“The Grandmaster” by Wong Kar-Wai and Anthony Chen’s “Ilo Ilo” are Hong Kong’s and Singapore’s nominees for the coveted award.

Jacek Ciesnowski

Tickets start at z∏.17

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