The bi-weekly business report by Bonnier

Poland is one of our POLAND focused centers of ”recruiting. | No 481 | 27 August 2012 | Creating transparency in emerging markets since 1991 | www.news2biz.com | Marcus Ryu, CEO of Guidewire Software PAGE 5

MANUFACTURING Thousands of Poles fall Sweden's Electrolux sets up regional CEE victim to Ponzi scheme head office in Warsaw PAGE 2 The August collapse of unregulated in- FINANCE vestment company Amber Gold left Agri sector bank BGZ goes 100% Dutch thousands of Poles wondering whether PAGE 4 after Rabobank's hefty bid they would ever see any of the PLN 90m PROPERTY & CONSTRUCTION they entrusted its founders, and raised a Skanska acquires premium Warsaw site lot of questions about the effectiveness in controversial deal PAGE 9 of Polish regulatory authorities. Operat- ENERGY & RESOURCES ing since 2009, Amber Gold was one of a Germany's RWE adds two wind farms number of Polish "para-banks" offering to its Polish portfolio PAGE 11 investors higher returns than those be- TRANSPORT & LOGISTICS ing given by formal banks. Established New Modlin Airport receives 0.2m by a convicted fraudster, the scheme at- passengers in first six weeks PAGE 13 tracted some 50,000 clients. PAGE 21 FOOD & AGRICULTURE HP seeks to create hundreds of service outsourcing jobs in Lodz. Photo: n2b archive GoodMills Group to invest PLN 50m in Most important updated Polish grain processing business PAGE 14 HP lands in Lodz with giant new project key figures in this issue IT & TELECOM Industrial output & PPI in July PAGE 4 Netia expands cooperation with IT giant HP has decided to expand its Global Delivery Centre be- Property investments in 1H PAGE 8 Sweden's Ericsson PAGE 17 yond Wroclaw, where the US company already employs close to Retail sales in July PAGE 21 RETAIL & SERVICE 2,500 staff. At its new location in the central Polish city of Lodz, CPI inflation & company results PAGE 23 SEE ALL KEY FIGURES PAGES 24–26 France's Carrefour bets on franchise as HP seeks to recruit several hundred employees to provide book- way forward in Poland PAGE 19 keeping, HR, and CRM services for international clients. PAGE 16 ECONOMY & POLITICS ALSO IN THIS ISSUE:

Poland's five-year bond yields drop to ▶ news2biz talks to Marcus Ryu, PAGE 5 their lowest level in history PAGE 22 Property investors stay busy Key CEE market in 1H 2012 CEO of Guidewire Software ▶ PKO orders mobile payment Although real estate investments in Central Property investment volume in EURm system from the Swedes PAGE 7 Europe fell by 40% in 1H 2012, in Poland the Poland ▶ US giant C.H. Robinson to acquire Bonnier Group/Äripäev publishes similar business reports on Esto- decline was merely 6% and outlook remains Poland's Apreo Logistics PAGE 14 nia , Latvia, Lithuania and China. As a subscriber you have access to Czech Rep. ▶ Danish-owned malting plant ex- your country report ten years back through our on-line archives at optimistic. With EUR 877m worth of assets Romania pands on exports to Asia PAGE 15 www.news2biz.com . Multiple user access available - Hungary transacted in 1H, Poland contributed 70% of ▶ US PerkinElmer to launch offshor- wri te co [email protected] or phone +372 667 0251. PAGE 8 0 100 200 300 400 500 700 the total transaction volume in CEE. 600 800 900 ing centre in Krakow PAGE 21

Little more than half a decade goods industry continues to experi- EUR 30m factory of kitchen hoods ago the Swedes chose Poland as ence robust growth. According to and plastic appliance components their European production hub. To- the domestic equipment makers' near Lodz, aims to boost the com- date, the company has invested in employer association CECED, over bined output of its Polish plants to excess of EUR 400m in Poland, with the first half of the year Polish facto- 3.8m units in 2012 and 4m units factories in Zarow (dishwashers), ries produced 6.1m large appliances, next year. Swedish Electrolux, one of the top Olawa (washing machines), marking a 5% increase y/y. South Korean Samsung, which investors in Poland's household ap- Swidnica (cookers & ovens), and "The current economic situation has recently launched production of pliance sector, has decided to estab- Siewierz (laundry dryers), together discourages consumers from really side-by-side refrigerators at the for- lish a regional headquarters covering employing some 4,200 staff. large investments such as new mer Amica plant in Wronki, seeks to Poland, Czech Republic, Slovakia, "In 2010 our production in Po- homes or even cars, instead making triple its production volume over the and the Baltic states, in the Polish land came to 3m units and last year many of them more likely to embark coming three years to become a capital. the figure was 3.4m, so the upward on small-scale home improvements number one in Europe. Currently, its tendency is clear," says Adam Cich. Polish production units can make "We are in the process of setting and therefore replace appliances. A "In April we received permission for 2,700 fridges and 1,800 washing up an international team of approx- much smaller expense, but still one a new project in Zarow. At the cost that gives some satisfaction. Perhaps machines per single shift. imately 20 professionals, based in of approximately PLN 42m we will Germany's BSH, maker of Bosch Warsaw, who will be coordinating that is why our sector is doing better launch production of narrower, and Siemens appliances, is to main- projects in sales, marketing, control- than others." 45cm-wide dishwashers. Further ex- tain production at 3m units this ling, human resources and product This positive outcome is also pansion will depend on market situ- year, while FagorMastercook is hop- development in the countries con- largely the result of huge invest- ation in Europe," says Adam Cich. ing for an 11% increase, to 1.3m cerned," Adam Cich, General Man- ments by global appliance producers units. ager Eastern Europe North at Elec- in Poland and relocation of produc- The main markets for Polish ap- trolux tells news2biz. "A regional HQ tion from Western Europe to the still pliances are Germany, France, and will enable us to react faster to much more cost-effective Poland. the UK, which together receive a half changing economic environment in of the sector's total exports. the region. Shared cultural values, geographical proximity, and similar customer preferences will help us maximize synergies of Electrolux operations in the region."

Poland is already home to Elec- trolux's global bookkeeping centre in Krakow. With some 450 staff the fa- cility handles accountancy and fi- Swedish steel and metal trader BE nancial processes for 21 Electrolux Group is doing poorly in its Central units in Europe and North America. and Eastern European business area Unlike Poland's automotive sec- which covers the Baltics, Poland, the tor, which has been badly hit by the Italy's Indesit, which has recently Czech Republic and Slovakia. In Q2 Eurozone crisis, the country's white embarked on the construction of a 2012 sales in CEE declined by no

less than 22% to SEK 239m (11% production has been in progress ered two jack-up platforms for us be- for Crist. Hochtief Solutions has re- during 1H 2012) which almost equal there since the beginning of the fore." cently commissioned the construc- to the market losses in the compa- year. The new ship built in Gdynia is tion of a further heavy-lift jack-up ny's two largest markets, Poland and Nasdaq OMX Stockholm listed BE 147 meters long, has a beam of 42 vessel from the Polish shipyard. The the Czech Republic. Group saw a turnover of SEK 5.9bn meters, and can operate at depths of vessel, dubbed "Vidar" is scheduled Following the Central and East- in 2011, but made just SEK 20m in up to 50 meters. With an 8,000- is to start operating in 2013. It will ern European business area's Q2/H1 profits after tax. The company, metric-ton payload and 1,500- be Hochtief's fourth heavy-duty result which came after a loss of SEK which is based in Malmö in southern metric-ton crane lift capacity, the craft, following its sister vessel, the 35m in 2011, the BE Group has de- Sweden, has 900 staff in ten coun- vessel is ideally suited for installing "Innovation", as well as the "Odin" cided to sell of its Czech operations tries. all types of offshore foundations - and "Thor" jack-up platforms, like- which include a production unit in and the only one of its kind any- wise delivered by Crist. The "Vidar's Prerov and a distribution centre in where in the world. The "Innovation" main features will be a 1,200-metric- Ostrava. Despite the difficulties, the can be deployed in erecting turbines ton crane, a loading capacity of up company remains in Poland where it with outputs of 5-10 MW and will to 6,500 metric tons, a powerful en- has a production unit in Trebaczew substantially reduce assembly and gine allowing speeds of up to 12 south of Warsaw and a sales office in service times for this latest genera- knots, and the ability to work in wa- Gdynia. tion of offshore wind turbines. ter depths of up to 50 meters. Paral- In 2011, BE Group invested SEK Hochtief and its partner designed lel to this order, Hochtief Solutions 14m in the Trebaczew unit which Polish Crist shipyard has delivered a the ship, which they will together has commissioned the construction covers 45,000 sq.m of which 4,000 EUR 200m special purpose vessel for operate and charter out. The vessel's of three large work pontoons. sq.m are under roof. The Swedes are German and Belgian investors. The first assignment will be at the Global "We also have to mention, that increasing production from the site "Innovation," which is said to the Tech I wind farm, which Hochtief almost 70% of the purchasing vol- gradually during 2012, but so far it most powerful crane jack-up vessel Solutions will be building in the ume comes from German suppliers, has not boosted sales figures. The on the market, marks Crist's German North Sea. for instance Schottel for the drive problem for BE Group in CEE has strengthening position as supplier of systems, Liebherr for the crane and been that compared to its operations vessels and components for Europe's Siemens for the jacking system," in Sweden and Finland, it has far too offshore industry. Trottnow stresses. many small customers. The investors behind the "Inno- "We have stopped selling inven- vation" are German construction tory products in Poland, typically for group Hochtief and GeoSea, part of smaller companies, and focused on the Belgian DEME group, which had Largely due to its high-performance selling pre-processed products from together created a dedicated com- fleet made in Poland and innovative Trebaczew," says Nikolai Makarov, pany HGO Infra Sea Solutions to solutions, Hochtief has made a name head of the CEE Business Area, to build and operate special-purpose for itself as a major player in the off- news2biz. "The aim is to focus on offshore jack-up vessels. shore wind market. The company of- large international clients," says "Construction of the big offshore fers planning, development, con- Makarov who also pints to the fact wind farms follow ambitious targets struction, and operation of offshore that the whole CEE market has seen and timelines," Ulrich Trottnow of farms, and is expecting work done in dropping steel prices year-to-year. Hochtief Solutions tells news2biz. the triple-figure millions in this seg- The facility in Trebaczew is BE "Crist was able to build the Innova- As demand for special-purpose ment in the coming years. Group's largest investment so far in tion in the requested timeline, quali- equipment exceeds current supply, "The offshore business in Germa- Central and Eastern Europe and ty and budget and they had deliv- the German company has more work ny, like in other EU-countries, is a

business with European dimensions. (see no 476 page 8). The EUR 50m a long term investor, to develop Together with our partner Deme we project is to create 400 jobs. BGZ, hence the offer," Rabobank's will build for example the EnBW Milou Verhaegh tells news2biz. Baltic 2 wind farm in the Baltic Sea." During the tender offer, which By 2020, up to 10,000 MW of had been extended since its original capacity is to be installed in German deadline of May 31st, almost all of offshore wind power installations, the outstanding shares in BGZ were and ten years later the figure is to offered to Rabobank, giving the reach 25,000 MW according to Ger- Dutch investor nearly 100% of man government targets. The Cen- shares in the Polish bank. According tral Federation of the German Con- It took the Polish government an aw- to many analysts, the long term ex- struction Industry (HDB) expects ful lot of time, despite the huge tensions of the hefty offer by the that EUR 25–30bn will be spent on premium on offer, to finally agree to Dutch buyer were indicative of some building wind farms in the North sell its remaining 25.5% stake in ag- kind of backroom bartering with the ricultural lender Bank BGZ to Dutch treasury ministry. For other inves- Sea and the Baltic Sea. A considera- ble chunk of that money is likely to co-operative Rabobank. tors, the offer was said to be a no land with Polish contractors, as the Owning 60% of BGZ, Rabobank brainer. country's ship making industry has placed a PLN 1.25bn (EUR 287m) been realigning lately to focus on bid in April for the remainder of the products and services for the off- bank (see no 477 page 5), offering a shore market. massive 54% premium to the share price on the Warsaw Stock Ex- Crist is the brainchild of two change. The offer was open to the Polish engineers, who set up the Polish state, which had a 25.5% in business two decades ago and have BGZ and holders of the 15% free since turned out 300 ships. With float. The government floated BGZ a some 1,100 staff (including seasonal year ago, after failing to sell its re- workers), the shipyard builds vessels maining holding to Rabobank, alt- and steel structures for customers hough it had to reduce the stake it from Poland, Germany, Norway, sold to a mere 12% due to weak Denmark, France, Belgium, Iceland, demand. the Netherlands and United States. Its turnover came to PLN 600m last year. In 2010 Crist acquired a dry- dock and other key production as- sets from the closed-down Gdynia shipyard, where it has since restored production., for PLN 213m. Earlier this year, Crist teamed up with Germany's Bilfinger Berger to "BGZ was on the list of scheduled build a factory of steel structures for privatizations of the Polish State The Dutch bid survived the deep- offshore wind towers in Szczecin Treasury. Rabobank is committed, as ening Eurozone problems in Q2 as

well as downgrade's from Moody's dropped from 11.3% to 9.5% over California-based Guidewire Inc for mented more than 100 core systems for both Rabobank and BGZ in mid- the same period. its new products-oriented IT system, projects in 13 countries. In the fi- June. In fact, the ratings agency said "This controlling stake gives instead of awarding to contract to nancial year ended July 2011, it was only the Rabobank offer - and Rabobank increased flexibility to Polish IT giant Asseco. With a turno- Guidewire's sales revenues came to presumed parental support - that promptly deal with more strategic ver in the region of USD 200m, the USD 172.5m and its net income to- kept BGZ from a further cut. "The issues such as the capital position of US software firm is approximately taled USD 35.6m. Guidewire has current three notches of uplift in Bank BGZ. The bank will remain seven times smaller than its Polish customers in 16 countries, including BGZ's long-term rating of Baa2 - listed at the Warsaw stock exchange, competitor and the PZU deal will the US, Australia, Russia, Japan, which remains one of the highest of in line with customary practice in mark their debut in Poland. Germany, France, Italy, Finland, Western European bank subsidiaries Poland," says Ms. Verhaegh. Lately PZU has been trying very Brazil and the UK. in the region - is driven solely by pa- BGZ Bank has 396 branches with hard to shed its image of a rigid, bu- rental support assumptions," a further nine under development reaucratic Moloch, dating back to its Moody's analysts wrote on June 19. and manages close to 0.58m ac- monopolistic market position during Earlier reports suggested that the counts, with some 0.2m clients ac- communist times. The recent logo Dutch bank was looking to offload tively using online banking. change, supported by a massive ad- some non-core assets in a bid to In late 2011 BGZ launched an vertising campaign, and the new IT raise capital ratios, but their alleged online savings platform BGZOptima, platform are part of these efforts. quest for cash in no way affected modeled after Rabobank's PZU explains that the current 17- their appetite for BGZ shares. RaboDirect. year-old product IT system has "Our aim has been and will be to "BGZOptima can be regarded a ceased to comply with its needs, es- strengthen BGZ, with a distinct focus success to date. We launched pecially due to its lack of flexibility. on serving the food and agricultural BGZOptima in November 2011 and PZU sought new underwriting, poli- sectors and rural communities in Po- since then BGZ Optima has acquired cy administration and billing sys- land. There's sufficient room for around 55.000 clients and raised tems to provide a strong foundation growth in this space." PLN 2.5bn." to bring products to market faster, BGZ's original plan (see no 468 better serve its more than 10,000 In the first half of 2012 the BGZ page 5) was to acquire 100,000 cli- agents, and support multi-channel Group saw its net earnings total PLN ents and PLN 2.5bn in deposits in communications with policyholders 39.5m, down from PLN 60.3m in two years. Looks like the financial and agents. The new system will be January-June 2011. This significant target was met in little more than implemented as a pilot project in H1 The flexibility and scalability of contraction was mainly due to net half a year. of 2013, while the client base and Guidewire solutions was said to be impairment losses on loans and ad- insurance policies will gradually mi- the main reason PZU chose their vances, which increased by PLN grate to the new framework by platform. Guideware's CEO & found- 104m i.e. 194%. It was mainly the 2015, the company reported. er Marcus Ryu told news2biz result of higher impairment allow- The NYSE-listed Guidewire Soft- POLAND his company had already ances for the corporate loans, in- ware is a provider of core system inked another contract in Poland, cluding construction sector, which software to the global proper- with an undisclosed party. saw one of BGZ's large clients file for ty/casualty insurance industry. Be- Guidewire has set up a Polish sub- bankruptcy. sides California, the company has of- sidiary Guidewire Software Poland The bank's assets totaled PLN It came as a bit of a surprise to mar- fices in Beijing, Dublin, Hong Kong, and its local alliance partners in- 35.1bn in June, up from PLN ket observers when Poland's biggest London, Munich, Paris, Sydney, To- clude Sollers Consulting and Ernst & 28.1bn, whereas its solvency ratio insurer PZU selected an offer from kyo, and Toronto and it has imple- Young Poland.

PZU is the market leader in the MR: Guidewire’s Polish subsidi- ing to recruit across Europe, in the Polish insurance services market, ary has four Polish employees since Americas, in Japan, and in Australia. particularly in property and casualty February and is actively recruiting in insurance, with 32.6% market share Poland and our other European at the end of 2011. It is the oldest countries. We have the ability to hire Polish insurance group with the Marcus Ryu: The scope of the employees in England, Ireland, broad range of insurance and finan- PZU implementation is consistent France, Germany, Italy and Poland. MR: Guidewire has a regional cial products. The principal product with other "tier one" implementation Guidewire works in 16 countries but Consulting Services Center in Dub- group offered by PZU is a motor in- projects which Guidewire is engaged we only open entities in countries lin, Ireland, and we do not have cur- surance for retail and corporate cus- in. 40% of Guidewire's customers where we hire employees. Guidewire rent plans for a 2nd regional center. tomers. PZU Zycie is the market overall - and 90% of our customers is actively seeking other opportuni- In the event that we decide to open leader in Polish life insurance ser- in Europe - have over USD 1bn in ties in the Polish non-life insurance a second regional center we will cer- vices in terms of gross written pre- premiums. We also have 12 custom- market, and we have signed a se- tainly consider Poland amongst our miums - 30.8% market share at the ers with over USD 5bn in premiums. cond customer since the PZU an- choices. We have high regard for the end of 2011. PZU is in our top 30 customers by nouncement. It is an insurer we are strong talent pool in the country and Under its current strategy, the total premium, and in our top 15 not able to publicly name at this look forward to substantially grow- PZU group focuses on maintaining customers in its number of policy- time. ing our Polish subsidiary over time. profitable growth and its lead posi- holders. tion on the Polish insurance services market. Since 2009 PZU has down- sized its workforce by some 3,600 employees, and in July the company MR: Each Guidewire system of- came to an agreement with trade MR: As with all core system re- MR: Guidewire is actively recruit- fers a highly functional set of fea- unions regarding restructuring of placements for insurance companies, ing across Europe, and Poland is one tures out of the box - designed to further 955 jobs. the PZU project will be highly de- of our focused centers of recruiting. perform the specific tasks the given "The new IT system will make it manding and complex. PZU will We typically recruit people with a system is intended for. Insurers often possible to implement a multichan- need disciplined scope management, computer science background in- configure their Guidewire systems to nel, integrated sales and customer timely decision-making, and compe- cluding Java or C Sharp skills. meet their unique geographical or service model aimed at achieving tent internal staff assigned to the Guidewire employees go through a regulatory requirements. Our sys- full process automation," PZU's CEO program. PZU is a high-performing recruiting process, an intense 4-7 tems are designed to make this kind Andrzej Klesyk said in a statement. organization that is well aware of week training program, and a formal of configuration possible and in fact More automation certainly means the requirements to succeed, and certification test. Our employees the changes that the insurer makes fewer clerks. they have put in place appropriate from Poland have completed our are protected from future version strategies to mitigate risk. training and shadow program with upgrades they take from Guidewire impressive results. We are continu- which enables them to preserve the ing to recruit in Poland and expect configuration changes they have to significantly increase the number made while taking advantage of of full-time Polish employees in our functional enhancements provided organization. Our Polish consultants by the new software release. Anoth- like all European consultants are er major advantage of a standard- committed to accepting assignments ized product is that it incorporates throughout Europe. We are continu- the insights and best practices across

many different insurers - at this Swedish Accumulate. The value of mobile wallet service is based on re-download, reinstall and reactivate point, the 130+ insurers in the contract remains undisclosed. Accumulate's mobile financial ser- the mobile client app. Guidewire's customer community. Unlike other Polish banks, which vices platform Mobile Everywhere, With a staff of 30, Accumulate are testing SIM-centric mobile plat- which will be also the basis for the operates from offices in Stockholm, forms (whereby one's SIM card es- PKO system. London and Beijing. Since its first sentially plays the role of a payment WyWallet enables person-to- commercial launch in 2004 its solu- MR: Guidewire's software prod- card), PKO BP has gone for an appli- person money transfers, paying for tions have seen more than 100m ucts share a common technology cation-based system. By download- SMS-services like public transport, unique installations. platform making them more cost- ing a smart phone app, users get ac- ticketing, voting using WyWallet PKO BP has already inked its effective for an insurer to operate, cess to their bank account or pre- mobile app, online shopping, top-up main framework agreement with HP maintain, and enhance. They share paid card. After logging in, they can of prepaid cards. WyWallet also for implementation of the mobile functional attributes so that the in- pay for shopping at stores, make supports point of sale payments us- platform, and it is currently discuss- surer's IT staff can work on each sys- cash withdrawals, or purchases ing NFC (near field communication) ing details with the two providers. tem interchangeably with little if any snacks from vending machines. All and live tests in Swedish shops have Accumulate will provide the tech- additional training. Our applications transactions have to be confirmed been underway in since July. Al- nology, while HP is responsible for also share a common data model with a PIN code. ready after this summer more ser- project management, all integration which facilitates the exchange of in- "SIM-centered solutions often vices and features will be launched and customer support. The platform formation between them. This is a store and communicate sensitive in- for the WyWallet mobile wallet us- is to be launched by the end of the key benefit to an underwriter for in- formation (like card number, CCV, ers. year. PKO BP's key competitor, the stance who can now access the claim expiry date, account number) during Italian-owned Pekao bank is to be information of a policyholder upon a transaction. In the Accumulate so- ready with its mobile financial ser- renewal to ensure they are correctly lution no sensitive data is stored on vices offering in early autumn. assessing the risk. They can do this the mobile nor communicat- is real-time which is a huge change ed/transmitted upon payment," ex- over what the insurer can do with plains Lars Aase, Vice President their existing systems which are of- Marketing at Accumulate. Mr. Aase ten built on older technology. declined to talk about the PKO deal citing contractual obligations. PKO's system will be similar to the WyWallet service, which Swe- den's four leading mobile network Boasting best in class mobile se- operators (Telia, Tele2, Telenor and curity, PKO's system will handle all 3), launched in June. The mobile mobile payment, mobile banking wallet joint venture is the first ser- and mobile security fea- vice of its kind and one that has tures/functions on a single platform. been covering 97% of the mobile us- It will work on almost all mobiles: ers in Sweden from the start. Android, iPhone, Java, Blackberry Aiming to keep up to date with its Swedish mobile payment solu- and Windows Mobile/Phone and it smaller competitors, Poland's lead- tions company Accumulate has been will be independent of mobile opera- ing lender PKO BP has named the part of the development of WyWallet tor, network or mobile subscription suppliers of a mobile financial ser- from the start. The mobile technolo- type. Moreover, it allows for easy vices platform: US giant HP and gy and security behind the WyWallet updates without having the user to

of Galeria Tecza in Kalisz by Polish nificant deals are said to be under signed a preliminary agreement with developer Rank Progress to US preliminary agreements and/or due Union Investment’s UniImmo: Blackstone for EUR 37m. In another diligence. Deutschland open-ended fund for regional city, Olsztyn, Arka Fund the sale of the Manufaktura shop- sold the Alfa Centrum mall to ping and entertainment center in Rockspring for EUR 84m. Lodz in central Poland. The German investor has agreed to acquire the landmark property with a gross Although in 1H 2012 the CEE real lettable area of 91,000 sq.m for a estate market saw a 40% y/y drop in reported EUR 350-400m. In the of- volumes transacted, reaching EUR fice sector, another German fund Al- 1.26bn, in the case of Poland the de- lianz Real Estate has purchased cline came to merely 6%, according Warsaw Financial Center for EUR to a recent CEE Investment Market 210m (see in-briefs). report by property consultancy Jones "At the mid-year point we esti- Lang LaSalle (JLL). Poland remained mate prime office yields to be at the most active market over that pe- 6.25%, retail yields at 5.75%n and riod with more than 70% of the total warehouse yields at around 8.0%. volume (EUR 877m). We forecast prime yields to remain JLL experts emphasize that in stable in the short term but this will spite of the general market slow- The office market witnessed six highly depend on how the situation down, investor sentiment towards major deals, the largest one being in the Eurozone and the banking Poland remains very positive. Total the sale of Harmony Office Centre II sector evolves in the coming months. assets transacted included over EUR in Warsaw's Mokotow district to The yield gap between prime and 283m in offices, almost EUR 460m Spain's Azora for EUR 54m. The secondary product is 100 to 200 bps in retail and some EUR 113m in the seller was Polish developer Eko Park. and we remain this spread to remain industrial sector. The second largest deal saw Spanish "We believe that the overall in- in place." According to JLL, the high trans- fund Falcon Investments (arm of vestment sentiment and outlook for In related news, Poland ranked action volume was largely a result of CBREI) sell its Renaissance Building Poland will continue to be good with as number 19 globally in JLL's Glob- postponed 2011 closings as virtually in Warsaw to GLL Partners for a ru- the total investment volume settling al Transparency Index, a survey that none of the most significant transac- mored EUR 27m. between EUR 2bn and EUR 2.5bn, calculates transparency in 97 real es- tions were both initiated and sealed As for the industrial segment, the marking only a slight decline from tate markets worldwide based on 83 in the January-June period. The full-year volume is likely to reach the exceptionally strong 2011, when different factors. With transparency largest deal completed in 1H 2012 the record 2007 level, when EUR EUR 2.75bn worth of properties of the country's real estate market was the sale of the 77% stake in the 318m worth of properties changed were transacted," says Tomasz described as "high" Poland was put mixed-use retail and office scheme hands. The 1H saw Hines acquire Trzoslo, Head of Capital Markets on par with Western European mar- Zlote Tarasy in Warsaw. Dutch ING the Prologis portfolio at just below CEE at JLL. kets such as Germany, Denmark, Real Estate sold the property to a EUR 100m which together with the Indeed, the past few weeks have Norway, Belgium, Ireland and Spain, consortium of Unibail-Rodamco and sub EUR 10m Ideal Idea deal almost seen another two major deals, which and ahead of its CEE peers. CBRE PFCE for a reported price fo matched the total 2011 transaction together represent approx. two EUR 475m. Other major transactions volume in the industrial segment thirds of the 1H volume. Apsys, in the retail sector included the sale (EUR 116m). A number of other sig- Fonciere Euris and Rallye have

Despite its laudable cause, which 2000, the government were to give nect it to our Atrium developments is defined as "investigating crimes Ruch a different property in ex- on Aleja Jana Pawla. However this against the Polish nation" and shed- change for the IPN building, but no requires some more pieces to the jig- ding light onto certain poorly re- such transaction has ever taken saw puzzle and we are right now Skanska Property Poland, the devel- searched parts of the country's re- place. Ruch also sought to sell the trying to secure them," says Mr. opment arm of Sweden's construc- cent history, the IPN has earned an building to IPN, but the Finance Lindberg. tion giant Skanska has made head- infamous reputation for its meddling Ministry failed to provide the neces- lines in the Polish media after it ac- in current politics. The communist sary funding. Although officially the quired an office building in central secret service files, which remain in lack of additional funding for IPN is Warsaw that houses the Institute of IPN's care, have been repeatedly part of the large-scale spending cuts National Remembrance (IPN), a used by the populist Law & Justice the government embarked on last controversial state institution creat- (PiS) party to bash political oppo- year, the opposition views the deci- ed back in 2000 to investigate nents, including the legendary Soli- sion as politically motivated. Communist and Nazi crimes. darity leader Lech Walesa. Over the The IPN had been renting the years, PiS leaders have been among The Swedish-owned construction building from the listed press distri- the staunchest defenders of the insti- group Skanska has launched a new bution and retail giant Ruch. The tute, which employs many radical "We acquired the IPN building as a subsidiary Skanska Residential De- latter used to belong to the state, but historians. In small wonder then, business investment and quite frank- velopment Poland to join its Polish since 2010 majority ownership in that PiS were the first to raise alarm ly it came to a surprise to us that a office development business and Ruch has been in private hands. As when IPN's headquarters changed transaction like this would stir up so Skanska SA – one of the largest con- part of its ongoing restructuring, the hands. much political debate. However, we struction companies on in the coun- company has been disposing of all are a developer; we are not involved try. sorts of non-core assets, including in party politics and we will treat The residential unit has just bro- the attractively located IPN property. our tenant the way we would treat ken ground on its first project, Park The building in question is situ- any other. Any issues we will work Ostrobramska, for which the Swedes ated at Rondo Daszynskiego, at the out through discussions with our acquired a 7ha site last year in War- corner of Warsaw's key thorough- tenant as we usually do," says saw's Praga district some 5km east fares: Prosta and Towarowa, and sits Nicklas Lindberg, President of of the city centre. The project will almost directly on top of a future Skanska Commercial Development include some 1,700 residential units subway station. Its surroundings Europe (CDE), Skanska's business and its first two buildings (7 & 13 have transformed over the past years unit that develops properties in Cen- stories respectively, housing a total from industrial wasteland into one tral and Eastern Europe, to of 300 apartments) are already un- of Warsaw's top office destinations. news2biz. der construction with completion A number of huge office projects, "Our interest in the property in scheduled for 2013 and 2014. The such as Ghelamco's Warsaw Spire, the longer perspective is also as a average price is PLN 7,000 (EUR are currently under construction in developer - the building is right next 1,700) per sq.m. direct vicinity of the IPN building to a future metro station and we be- The company is getting ready for and many other skyscrapers are in IPN used to pay Ruch monthly lieve that this is where Warsaw's another project in Warsaw's the pipeline. This may explain rent of PLN 30,000, before the land- central business district will expand, Mokotow district (Jasminowa St.) Skanska's decision to get involved in lord raised the figure in excess of Tishman Speyer is here; our own with 800 units. Due to its fantastic the project, despite the unpleasant PLN 100,000 in May. Under an Green Corner is here and we have location in Warsaw's most sought- political undertones. agreement with Ruch from October plans for the area that would con- after district, close to major thor-

oughfares but also parks and green- market suffers from a record supply access to construction from own ery, this undeveloped area is said to of completed dwellings while banks group which is a definite bonus for be the new development hotspot in are very reluctant when it comes to us," says Lindberg. Warsaw. This is where billionaire financing homes. The worsening In Mr. Lindberg's mind the extra Leszek Czarnecki, owner of the economic conditions are bound to investments in keeping a green pro- Getin group, has built his mansion, only aggravate this situation in a file for the development do not con- so Skanska will be certainly aiming short to medium term. Moreover, flict with the focus on price. at wealthy customers with its next the company's residential develop- "We have seen the sustainability project. ment business in the Nordics, Czech thinking spread in commercial de- Similar to its sister company, the Republic and Slovakia has been in velopments over the past years and office developer Skanska Property doldrums for some time, forcing the as for Skanska, this is just the way Poland, the residential arm aims to company to write off SEK 380m in we build now and we are sure this focus on "building green," reducing June and cut about 150 jobs (mainly trend will extend into residential the environmental footprint of its in Sweden). construction as well. We believe that projects. One shall see whether the clients will focus the environment Polish customers will agree to pay aspect but also on the fact that in extra to live in eco-friendly apart- this way we reduce living costs in ment blocks. Should the resulting "We want to get into the residential the long term," says Lindberg. savings prove substantial (Skanska market to build apartments that Skanska SA is one of the largest argues that its technology may bring Poles can afford. Most of the resi- construction companies in Poland, water and energy bills down by up dential units that are left on the with sales of PLN 4.8bn and operat- to 40%), perhaps they will. market date back from the boom pe- ing gains of PLN 489m. The compa- riod when developers did not focus ny employs some 7,700 staff. In ad- on the price," says Nicklas Lindberg, dition to its construction business as President of Skanska Commercial well as office and residential devel- Development Europe (CDE), opment units, the Swedish giant is Skanska's business unit responsible present in Poland via Skanska Infra- for property development in Central structure Development which partic- and Eastern Europe, to news2biz. ipates in public-private partnership A key aspect in building what projects. Poles can afford to reduce the size of Skanska is one of the world's ten apartments. largest construction companies, em- "The standard unit in our ploying 53,000 employees in select- Ostrobramska development is a two- ed home markets in Europe (Swe- room apartment of 55 sq.m. Our key den, Norway, Finland, Poland, Czech for getting back into the market is to Republic, Slovakia, Hungary, UK), Skanska's return to the residen- focus on price, from finding the right the US and Latin America. In 2011, tial sector (years ago the company locations, like we have done in NASDAQ OMX listed Skanska turned built an apartment complex in War- Praga and Mokotow, and in the rest over SEK 123bn (EUR 13.8bn) saw's Zoliborz district) at this partic- of the development process as well - ular moment has raised many an and letting the buyer enjoy the bene- eyebrow, however, as the Polish fits. We are a developer and we have

With 15 wind turbines of the Macias, Member of the Management Gamesa G90 type, the 30 MW Board of RWE Renewables Polska, Taciewo borders directly on the told news2biz. "Our plan is to invest 32MW Piecki wind farm commis- about PLN 2bn in Poland by the end sioned by RWE Innogy back in 2010. of 2015." Seven turbines of the same kind, Overall, RWE Innogy now oper- with a hub height of 100 meters and ates six onshore wind farms in Po- a rotor diameter of 90 meters, were land: Suwalki with over 41MW has installed at the 14MW Krzecin farm, been on stream since 2009, followed which is located near RWE's 35MW by Tychowo (35 MW), Piecki (32 Warsaw-based United Oilfield Ser- wind farm at Tychowo that has been MW) , Krzecin (14MW) and Taciewo vices (UOS), which earlier this year supplying electricity to the grid since (30MW). received a EUR 21m capital injection the end of 2010. from private equity fund Enterprise Investors (see no 475), has just bro- ken ground on its logistics base in Łowicz, 75km west of Warsaw. Thanks to the investment, starting from next year, the company's brand new fleet of trucks with fracturing and drilling equipment will be able to easily access all of Poland, a third of which is covered by shale explora- tion concessions. Located on a 12-ha site in the Lodz special economic zone, the PLN 35m project will include seven build- ings with a combined area of 8,862 "Taciewo and 152MW now mark With more than 72,000 employ- sq.m. With Japanese-owned Kajima the midpoint of our Polish develop- ees, RWE is one of Europe's five Poland as the general contractor, the ment targets. We intend to operate leading electricity and gas compa- investment is to reach completion by With the acquisition of two wind about 300MW in Poland in 2015. nies. In fiscal 2011, RWE recorded the end of the year, creating some farms, RWE Innogy, the renewable Owing to the excellent Polish wind just below EUR 52bn in revenue. 120 jobs. Around the same time, energy division of German utility gi- sites, we are on a good path and in- The largest RWE subsidiary in UOS is to receive 63 custom-made ant RWE, has boosted its installed tend to continue our investments Poland is RWE Polska, which plays a trucks with specialist equipment for capacity in Poland up to 152 MW. here. At present, our Nowy Staw dual role – of an electricity trading fracking which will be stationed in The most recent additions to wind farm with a capacity of 39MW company and a business unit re- Łowicz. Overall, the company is in- RWE's Polish portfolio are wind is under construction [see no 479 sponsible for development of the vesting USD 118m into customized, parks in Krzecin (70km southeast of page 8; ed.]. It is due to be commis- RWE Group in Poland. In 2011 RWE state-of-the-art equipment, including Szczecin) and Taciewo (10km sioned early in 2013," commented Polska sold 6,354 GWh worth of the said 60,000 horsepower truck northwest of Suwalki, near the bor- Hans Bünting, CEO of RWE Innogy. electricity and its revenues came to and a production-ready drilling rig. der with Lithuania), both developed "Development of wind energy is PLN 2.77bn. RWE Polska employs UOS offers seismic, drilling and by Spain's Gamesa. RWE's priority in Poland," Robert 610 staff. well completion services to compa-

nies involved in oil and gas (both professionals as well as young engi- supplies of gas to the Baltic States, conventional and unconventional) neers and technicians," Ryszard which essentially means making the exploration and production in Po- Woronowicz of UOS tells news2biz. Baltic region less dependent on Rus- land. UOS founders have many years Poland is believed to have sub- sian gas. Both countries are current- of experience in the oil & gas service stantial shale gas reserves, with es- Poland and Lithuania have made ly building LNG terminals (Poland in industry in the United States. Be- timates ranging from 346bn cb.m to another baby step towards linking Swinoujscie and Lithuania in sides EI as a minority shareholder, 5.3 trillion cb.m (see no 474 page their natural gas pipeline systems, a Klaipedos). the investors behind UOS include 10). Some 20 companies, including project that they hope will increase The interconnector between Po- CSL Capital Management, an ener- global giants, are investing in explor- energy security in the Baltics. land and Lithuania will provide "a gy-focused private equity firm based ing for these reserves. So far, less The gas transmission operators in broader range of benefits, enabling in the US, and a number of private than 23 exploration wells have been both countries – Gaz-System in Po- access both to EU gas and global investors. UOS currently employs drilled throughout Poland. Another land and Lietuvos Dujos in Lithuania LNG markets," Joachim Hockertz, di- some 110 staff, including 65 special- 40 or so are to be completed by the – have selected Austria's ILF Consult- rector of commerce at Lietuvos ists and by the end of the year its end of the year. ing Engineers Polska to carry out a Dujos, said in a statement. He added workforce is to reach 500 people. "We have successfully completed feasibility study for the project, that the capability to transmit gas in Company representatives told a number of geophysical projects for which according to current plans both directions would lead to "a news2biz POLAND that their goal is our clients and we see huge demand could be completed in 2018. higher security of supply for the to transform UOS into a leading oil- for this type of services in Poland Co-financed by the European connected countries." field services company in the region and abroad. When it comes to hy- Commission within the Jan Chadam, president of the with a staff of 1,000-1,200 in a cou- draulic fracturing, we hope to be op- TransEuropean Energy Network management board of Gaz-System ple of years. erational by December, and we Program and the Baltic Energy Inter- said he expected that a "significant" should be ready for drilling in Q1 connection Plan, the project is part portion of the investment would be 2012. We hope to start drilling the of the development of the North- financed by Brussels, "because this is first well for our clients in Poland at South Energy Corridor in Europe. a priority project in the scope of the beginning of Q2 next year." eliminating energy islands in Eu- Shale formations started to be rope," he said. Indeed, most experts commercially exploited to great suc- agree that without public aid the cess beginning in the late 1990s in project will not be profitable. the United States and subsequently The pipeline will have an annual in other markets. The production of capacity of 2.3 cb.m of natural gas natural gas from shale formations and stretch 562 kilometers, the has rejuvenated the natural gas in- companies said, although with addi- dustry where such technologies have tional investments its capacity could been introduced, giving Poland some easily be doubled. According to ini- "As of July we had some 100 em- hope for reducing its dependence on tial estimates, the investment is to ployees, in line with plans, and their Russian imports. Gas price in the US cost EUR 472m with Poland ex- number will continue to grow. The have dropped below USD 70m per pected to foot two thirds of the bill. market is competitive, with many 1,000 cb.m, while Poland pays Gaz- Results of the feasibility study companies seeking oilfield special- prom some 6-7 times the amount. The operators hope that the pro- are set to be available in the first ists, but we haven't experienced any ject will lead to enhanced competi- quarter of 2013, which will deter- recruitment problems so far. We are tion in the regional gas market and mine further plans for linking the seeking both experienced mining will ensure safer and more reliable systems.

and international passenger flights. on board. Additionally, trains will be port handled 9.3m passengers, Currently it is only the Irish low-cost shuttling between the two Warsaw which represented 43% of Poland's carrier Ryanair and its Hungarian airports, Okecie (Chopin) and total airline traffic. competitor WizzAir that fly to Modlin. Modlin but the new airport is likely Travel by train from the Warsza- to become popular with charter op- wa Centralna railway station in the erators, especially at nighttime when city center to Modlin railway station airline traffic at Warsaw's main takes 44 minutes. Then it takes an- Chopin Airport is restricted. other 10 minutes to get from the sta- Starting next year life will get just a The low-cost Irish carrier Ryanair tion to the airport by bus. tiny bit easier for Poles with a taste says it plans to carry 1.5m passen- for luxury shopping and architectur- gers on routes from and to Modlin. al insanity in a desert setting, with The airline will be flying from Emirates and Qatar Airways launch- Modlin to 19 European airports— ing direct flights to Warsaw. Jokes starting with Brussels, Budapest, aside, the two Middle Eastern air- Dublin, London, Milan, Oslo, Rome lines may introduce some much- and Stockholm. The carrier will thus needed competition in flights from be operating a total of 109 connec- Poland to the Middle East, Africa tions from 10 Polish airports, includ- and Asia Pacific. ing Modlin. In 2011, Ryanair carried Qatar Airways first announced

a total of 75m passengers, and its plans to enter Poland in November CEO Michael O'Leary told a press last year, but the exact timeline of conference at Modlin that his goal is the entry has been undisclosed until to carry 5m passengers on routes now. In July 2012, its regional com- from and to Poland this year. petitor Emirates decided to launch As for Wizz Air, it will fly to flights from Warsaw to Dubai from 6 around 20 destinations from Modlin, February 2013. Qatar Airways re- to where the carrier has relocated its sponded with the announcement of During its six weeks in service, War- Warsaw hub. Sixteen modern Elf trains are op- a Warsaw-Doha connection, sched- saw's new Modlin airport welcomed It takes around 40 minutes to get erated on the line from Warszawa uled to launch on 5 December 2012. more than 200,000 travelers. from Warsaw city center to the new Centralna to Modlin railway station. The flights will be operated by Air- Opened on 15 July, the project looks airport by car and only a bit longer Each train has almost 190 seats for bus A320 aircraft, four times a week. destined to succeed and according to by rail. In June, rail carrier Koleje passengers. One taxi company intro- Qatar Airways Chief Executive estimated in 2013 it will become Po- Mazowieckie launched a train ser- duced a flat-rate service to Modlin, Officer Akbar Al Baker said the addi- land's 5th largest airport with more vice between Warsaw and Modlin, at PLN 99 (EUR 25) from downtown tion of Poland and Serbia demon- than 2m passengers – a capacity its with 14 trains daily. Passengers need Warsaw . strated the airline's commitment to terminal was designed for. By the to take a bus to get from Modlin Despite the launch of its first lo- launch destinations that are largely end of this year the figure is to reach railway station to the airport. The cal competitor, Warsaw's Chopin underserved. 900,000. buses, painted in the railway opera- airport welcomed 1.084m passen- "Over the past two to three years Located over 35km north of the tor’s colors, shuttle between the air- gers in July 2012, some 9% more we have identified great opportuni- city center, the airport is used by port and the railway station every 20 than in the same month of 2011. In ties to probe markets across Europe low-cost airlines for both domestic minutes and can take 70 passengers the whole of 2011 the Chopin air- that are largely underserved by full

service international airlines. We are very welcome on the routes from Po- with a capacity up to 120 cb.m and delighted to have subsequently land to South-East Asia, Middle East 24 tons. started services to some of these des- and Australia, which have been The company dates its origins tinations and are extremely pleased dominated by Russia's Aeroflot, back to 2003, when Dutch Vos Lo- by their performance so far," he said. German Lufthansa, and Turkish Air- gistics acquired Polish forwarder The 50% state-owned Qatar Air- lines. The most prospective destina- Euroad, headed by Grzegorz ways has seen rapid growth in just tions include China (Beijing, Shang- Bielowicki. Four years later, Polish- Europe's number one milling com- 15 years of operation, currently op- hai), Thailand (Bangkok, Phuket) American private equity company pany GoodMills Group is uniting its erating a modern fleet of 110 air- and India (Delhi). According to un- Tar Heel Capital, in which Polish operation under a single craft to 118 global destinations. official reports, their competitors are Bielowicki is one of managing part- brand with plans to strengthen its putting together new price lists ners, acquired the ailing former position in the retail segment. Over ahead of the upcoming market debut Euroad forwarding business in Po- the coming three years the Austrian- of Emirates and Qatar Airways on land from Vos Logistics and trans- owned flour maker plans to spend the Polish market. formed it into Apreo Logistics. some PLN 50m on boosting its pro- Abu Dhabi's Etihad, another air- In December 2010 Apreo and Tar duction, storage, and packing capac- line from the Persian Gulf operating Heel Capital expanded the business ity in Poland. in Europe, has just announced plans further by acquiring a significant So far, the company's five Polish to acquire Irish carrier Aer Lingus. portion of assets and business of the mills have been operating under dif- bankrupt operator Equus (including ferent logos (Diamant, Aurora, VK Transmlecz, EquusFresh, and Polska) but following the unification Spedycja Kolejowa i Drogowa). Prior of its European operations, to the acquisition, in 2010, Apreo GoodMills has decided to do the had PLN 130m in revenues, and the same in Poland. Officially, GoodMills The European arm of US logistics gi- following year the figure rose to Polska will launch on 1 October. ant C.H. Robinson seeks to acquire nearly PLN 300m. Based in Dubai, Emirates is the Polish forwarder Apreo Logistics. Founded in 1905, C.H. Robinson largest airline in the Middle East, fly- Although no official confirmation Worldwide, Inc., is a global provider ing to 122 cities in 72 countries has been issued as of yet, the inves- of multimodal logistics services, across six continents. Its fleet in- tor has asked the competition fresh produce sourcing, and infor- cludes 177 Airbus and Boeing air- watchdog UOKiK for permission to mation services to 37,000 customers craft, and it has orders for 90 Airbus seal the deal. through a network of more than 230 A380s, 20 of which are already in "At this time we do not have a offices and over 8,300 employees service. Emirates is a subsidiary of comment," Mike Wilken, PR manag- around the world. The company The Emirates Group, which has over er at C.H. Robinson, told news2biz. works with 53,000 transportation 50,000 employees, and is wholly Apreo Logistics offers warehouse providers worldwide. C.H. Robinson owned by the government of Dubai logistics, full truck load as well as turned over USD 10.3bn in 2011 directly under the Investment Cor- general cargo, bulk transport, sea and its net profits came to USD poration of Dubai, United Arab and air forwarding, rail forwarding, 432m. In Poland the company has Emirates. refrigerated transport, and tanker offices in Warsaw and Wroclaw. Although neither of the two car- transport services. It covers Europe, With annual output of 600,000 riers is particularly well known for Turkey, the Middle East and the CIS, tons, GoodMills Polska is the leading bargains, additional competition is managing a fleet of over 500 trucks supplier of flour to business custom-

ers, but its goal is be just as success- to these markets is Danish Malting malt. The company is sourcing ports by a half and this year a fur- ful with individual clients. This will Group Polska (DMGP), which ex- spring and winter barley mainly lo- ther 15% growth is expected. require stronger promotion of its re- pects its turnover to grow by nearly cally in Lower Silesia and it has de- "We are even supplying special tail brand Maka Basia and improved a quarter this year, largely due to veloped substantial storage capacity malt to the UK and for Guinness in cooperation with grocery chains and growing exports. to maintain constant supply of raw Ireland," says Jørgensen. wholesalers. "They don't grow barley out there materials throughout the entire sea- Unlike dark barley malt, pilsner "Becoming a leading grain pro- and due to the massive import of son. malt is a low-margin product, and in cessing company in Poland is one of toys and electronic devices we have this segment Polish malting plants our strategic goals for the coming from China, the transport costs are have to compete with Czech and years," Rafał Salomon, CEO of very reasonable," says Kim Slovak producers. Of the total pils- GoodMills Polska told a press con- Jørgensen, CEO of Danish Malting ner malt used by Polish breweries, ference. Group, to news2biz. "We mount a some 70% comes from domestic The GoodMills Group is located big plastic bag inside the container producers, and the rest has to be in Vienna and leads seven country and fill it up with malt and we ship imported. organizations with in total 29 mills. it to Asia for USD 1,000 which is As Poland's beer market seems to With more than 3m tons of wheat roughly what it costs to send it down have reached the point of saturation, processed and more than EUR 1bn the road here," says Jørgensen. there is little space for growth for in revenues, it is the leading milling Part of the Carlsberg Group, Dan- malt producers. Cost-cutting brewer- company in Europe and one of the ish Malting Group entered Poland in ies increasingly often turn to cheap- top four players worldwide. The 2004 with the acquisition of two er malt substitutes, especially with subsidiaries of the GoodMills Group malting plants, one in Sierpc and a barley prices expected to go up as a much smaller plant in Strzegom, result of drought in the US, Ukraine, are located in Germany, Austria, Po- land, Czech Republic, Hungary, Ro- thus immediately becoming one of and Russia. mania and Bulgaria. The Group also the leading malt producers in the "The production in Strzegom is "Fortunately, the recent harvest has a minority stake in a leading country. In Denmark, DMG has one very much a manual one, the vol- has given good quality barley in both Greek milling company. The malting plant located in Vordingborg umes are much lower, but the profits Poland and Denmark. However, GoodMills Group is owned by 100 km south of Copenhagen. per unit are much higher," says Kim globally harvest problems in US and Leipnik-Lundenburger Invest "When we took over the plants, Jørgensen. Russia have pushed feed grains pric- Beteiligungs AG which in turn be- they looked like something from an- Danish Malting Group sells 90% es to a very high level giving also longs to the financial sector giant other planet, but we have invested a of its Pilsner malt to the Carlsberg very high prices for malting barley. Raiffeisen. lot in them and expanded capacity, group. When is come to special Thanks to the good harvest, all of so that for instance in Strzegom we malts, some 60% of its output is sold the Danish and Polish barley basical- now have four roasters," says to companies outside the group, ly has the right quality for malt. This Jørgensen. mainly to European breweries and is in big contrast to the harvest last Following the sizeable invest- food companies (malt is being wide- year, so we only foresee problems ments, both plants have been largely ly used in the bakery and confec- with the price and not the quality," If you ever happen to order a pint of automated and computerized, alt- tionery sectors as well), but also to says the CEO whose company will ale or any other dark beer in Malay- hough the Strzegom unit still uses its exotic destinations such as the start using the barley from this year's sia, Cambodia, or Laos, you will be original, over 100-year-old Galland aforementioned South-East Asian harvest a month from now. likely to end up drinking a beverage and Linz systems to produce small markets, as well as Sri Lanka, Nepal, Last year DMGP turned over PLN made from Polish malt. The main but unique quality batches of pils- Malawi and the Dominican Republic. 135m and net-earned PLN 8.2m. supplier of caramel and black malt ner, Munich, caramel and black Last year the plant boosted its ex- This year the respective figures are

to reach PLN 167m and PLN 13m. milk cows increased by 5%. Howev- and equipment to EU quality stand- ucts dropped by 30% on the back of The Polish units have a combined er, the total stock had been shrink- ards. growing global production, unfavor- staff of 50. ing steadily, from 2.667m cows in The situation is hardly better for able currency exchange rates, and 2007 down to 2.466 last year. An- small dairy processors, especially economic crisis, which affects a nual milk production per cow had those making only basic types of growing number of countries. Po- gone up by some 10% since 2006, products. Retailers are pressurizing land's dairy industry exports approx- topping 5,000 l in 2011. The num- them to cut prices, citing shrinking imately a fifth of its output and pric- ber of active dairy farmers shrank spending power and worsening eco- es on foreign markets directly influ- from an estimated 480,000 in 2004, nomic conditions, while farmers are ence prices at home. prior to Poland's EU accession, down demanding better rates on milk, to some 167,000 and experts believe pointing to growing production Following years of solid growth, the figure is bound to go down to costs. dark clouds are beginning to form 100,000 in not-so-distant future. As of March 2012, 309 dairy over Poland's dairy sector. In the plants were registered with Polish first quarter of the year prices of key veterinary authorities, including 18 dairy products dropped by 20-30% with suspended operations. The and outlook for the near future is number of milk purchasers topped grim. 287 last year, of which only two Although dairy companies (ex- thirds of which submitted financial cluding ice cream makers) turned reports. over a record PLN 26.3bn last year, Although consolidation in the their financial results declined, processing industry is a fact, many mainly due to higher prices of raw say its pace could be faster. Small materials. Milk purchase prices rose producers and cooperatives are not by nearly 14% last year, while retail exactly enthusiastic about joining up prices increased by only 7%. In the with the leading players, while the case of processed products the in- latter are primarily interested in get- crease ranged from 4% to 8%. Con- At the beginning of the year pro- ting access to more milk suppliers. sequently, the industry saw its gross ducers had been hoping to keep pro- Experts argue that in many cases it profit slide by more than 7%, down curement prices unchanged, fearing may be more beneficial for large to PLN 583m, according to figures that their lowering might bring dairy firms to wait for their small provided by the IERiGZ agri sector about a reduction in milk supply, but competitors to go bankrupt and then think tank. most have since been forced to re- simply take over their supply con- Results of the recent census show consider their stance. Hence, dairy tracts. It is insufficient milk supply, that Poland's dairy sector has under- farmers are squeezed between a rock not scarce processing capacity, that gone massive consolidation, with the and a hard place, with fuel, fertiliz- remains the key issue for the sector. IT & outsourcing giant Hewlett- number of milk producers dropping er, and feed costs going up, and pro- Dairy exports, which have quad- Packard is opening a global service by a half over the past eight years. cessors cutting the price they are rupled since Poland's EU accession center in the Polish city of Lodz in Over the 2007-2011 period milk ready to pay for fresh milk. To make to total EUR 1.35bn last year, have Q4 2012, the company announced. production per farm doubled, reach- the matters even worse, many farm- likewise been negatively impacted The project will create hundreds of ing 26,000 l per year, while the ers are still repaying loans they drew by the global situation. In March and new jobs for graduates with foreign number of producers with 10-49 to pay for upgrading their buildings April prices of exported dairy prod- language skills.

"Initially we will recruit candi- mark in merely three years and cur- Education too is a bonus for the city: Technology campus. The first com- dates fluent in Italian and German, rently it has an estimated 2,500 em- Lodz is home to both a university pleted building within the University but further languages will be added ployees in the Lower Silesian city, and a technical university, both of Business Park offers 19,300 sq.m m in time. One of the key characteris- including some 200 foreigners. which have good reputations. Be- of Class-A office space and 300 park- tics of our Global Business Centre is sides its solid talent pool and central ing spaces. The building has seven cultural and language diversity and location, HP mentioned growing floors, with each floor 2,700 sq.m in therefore the linguistic scope of our traffic at the local airport among size on average. Lodz centre will be broad and we do Lodz's main assets. As of end of 2011 there were 37 not intend to limit it to only a few At 11%, unemployment remains service outsourcing centers in Lodz selected languages," Renata Sima, quite high in Lodz, compared to oth- with a combined staff of 7,700 em- managing director of the Lodz centre er major Polish cities and the local ployees, making it’s the fourth larg- told news2biz. authorities are hoping the HP project est BPO market after Warsaw, Kra- Similar to the Wroclaw center, in the city to catch up in size with kow and Wroclaw. Currently the the Lodz will support the business the Wroclaw centre. largest BPO investor in Lodz is the activities of HP global customers, "Our goal is constant develop- Indian giant Infosys. The company's providing Business Process Out- ment an innovation, and similar to current Lodz facilities are getting sourcing (BPO) services to external the Wroclaw center, the Lodz loca- cramped, prompting the company to contractors in finance and account- tion will be developing over time. At move to a new office building in the ing, HR, payroll and customer rela- "When HP arrived in Wroclaw this moment we are planning to cre- city to house its 1,000 local employ- tionship management. back in 2005 we were operating ate several hundred positions but we ees. According to estimates, total from a single office. Now we have are ready for further expansion in employment in Poland's BPO sector three office locations in Wroclaw the future." will come in excess of 100,000 next and HP is one of the best known year. employers on the local market. We recruit students, graduates and high- ly skilled specialists and our goal is to keep growing to become Poland's best employer." The key pull factor in Lodz's case "The two centers will operate in was availability of qualified staff, as tandem, as a single business unit due to the ongoing investment and their employees will exchange boom, competition in Wroclaw is experiences, know-how, and sup- becoming a problem for BPO em- port. It is not our intention to differ- ployers. Like others, HP has decided entiate the two centers based on to spread its service centers across a The summer of 2012 has been a their specialization. As for the Lodz number of destinations within Po- HP has signed an agreement to busy period for Swedish communica- center, however, it will be working land. The former textile heartland of lease office space in the University tions technology giant Ericsson's primarily for external clients, at least Poland, Lodz is located in the middle Business Park developed by Globe Polish unit. Shortly after securing a initially." of the country, only 130 kilometers Trade Centre (GTC) in Lodz. The huge contract with mobile operators HP's initial plan for Wroclaw was from Warsaw, while the recent University Business Park is between Polkomtel and Aero2 (see no 480 to recruit 1,000 staff in five years. opening of the A2 motorway to the Kościuszki Avenue and Wólczańska page 16), the Swedes inked a four- The company achieved that bench- capital has slashed travelling times. Street near the Lodz University of year managed services agreement

with Netia, Poland's leading fixed- work we have done together to pro- ing and implementing GSM and center includes two mirror locations line telecom. vide high-quality, unified services to WCDMA networks, as well as mi- (in Katowice and Bytom, connected Under the contract, Ericsson is Netia Group's entire user base, in- crowave transmission, IP and packet via an fiber optic cable), ensuring responsible for the maintenance and cluding the users added through core solutions. full backup of customer data. Locat- management of Netia Group's net- Netia's recent acquisition of opera- Ericsson's offering comprises ser- ed on a 1.5ha guarded site, the cen- works, as well as supporting the tors Telefonia Dialog and Crowley." vices, software and infrastructure ter is to be gradually expanded. T- provision of services to the opera- The Warsaw-based Netia is one within information and communica- Systems is renting a part of the cen- tor's residential and business users. of the largest Poland-based inde- tions technology for telecom opera- ter under a 3-year Service Level Although the deal is an extension of pendent fixed-line telephony opera- tors and other industries. Today Agreement. an earlier agreement with Netia, its tors. Its service portfolio comprises a more than 40% percent of the Its first Polish data center enables geographical footprint has been ex- range of fixed-line telecommunica- world's mobile traffic goes through T-Systems to offer its clients com- panded to include Telefonia Dialog tions services including voice, data Ericsson networks and we support prehensive data storage and back-up and Crowley, two networks that transmission and internet access, as customers’ networks servicing more services, relocation and infrastruc- joined Netia Group in late 2012. well as wholesale network services. than 2.5bn subscribers. ture consolidation as well as a range Moreover, as part of the agree- Last year Netia turned over PLN Founded in 1876, Ericsson is of cloud computing services that are ment, some 190 Netia employees are 1.5bn and its operating profit topped headquartered in Stockholm, Swe- all the rage these days in the tele- to be transferred to Ericsson PLN 304m. As of Q1 2012 the com- den and it is listed on NASDAQ coms sector. The agreement covers two main pany had 912,000 broadband and OMX, Stockholm and NASDAQ, New "Guaranteed continuity of ser- areas: services provision, and the 1.77m voice clients. Its workforce of York stock exchanges. The company vice, high technical standards and transfer of contracts concerning em- more than 2,800 employees is to be operates in 180 countries and em- full data storage protection are all ployees, assets and agreements of downsized by some 500 staff by the ploys more than 100,000 people. In key aspects of a data center. Also Netia Group. About 190 additional end of 2012. 2011 its net sales were SEK 226.9bn important for us was data transmis- Netia Group employees will be Earlier this summer, Polish oper- (USD 35bn). sion speed and power supply securi- transferred to Ericsson Poland. ators Polkomtel and Aero2 have ty, which we achieved via direct ac- chosen Ericsson to supply WCDMA cess to fiber optic network and two and LTE infrastructure in Poland. independent power lines," says Under the agreement, Ericsson will Maciej Plebanski, head of sales de- also provide a range of services in- partment at T-Systems Poland. cluding design, deployment, integra- Deutsche Telekom's corporate cus- Using a global infrastructure of tion and support for the upgraded tomer arm T-Systems launched its data centers and networks, T- mobile broadband network for a pe- first data center in Poland in July. Systems operates information and riod of three years, followed by an The company has rented a dedicated communication technology (ICT) automatic extension for an indefinite unit at 3Services Factory, a newly systems for multinational corpora- Valter D'Avino, Vice President period. The upgrades will allow for built collocation facility in Katowice. tions and public sector institutions. and Head of Managed Services, Er- expanded WCDMA and LTE cover- Founded by German industrial With approximately 47,600 employ- icsson, says: "The contract we signed age in northern and western Poland group PCC and Silesian fiber optic ees in 20 countries worldwide T- with Netia in 2006 was one of the to keep pace with rapid uptake of network operator TKP SA, 3Services Systems generated revenue of first worldwide fixed-line Ericsson smartphones and increased demand Factory is easily accessible from A1 around EUR 9.2bn in the 2011 fi- contracts. This is the second time we for mobile broadband. and A4 motorways as well as nancial year. prolonged this managed-services Ericsson has been a partner of Pyrzowice (Katowice) and Balice Katowice is one of 90 data pro- partnership, and it is a clear Polkomtel, one of Poland's top three (Kracow) airports. The energy effi- cessing center worldwide managed acknowledgement from Netia of the mobile operators since 2002, provid- cient, high security data processing by T-Systems. The company has

more than 120,000 sq.m of data cen- Biedronka that has taken Poland by the franchise network Carrefour Ex- ter space at its disposal as well as a storm. Biedronka's operator, press, which includes small super- global IP Virtual Private Network Jeronimo Martins Dystrybucja markets (with a floor area of 100- with 78,000 nods, 1,000 edge rout- turned over PLN 25.3bn last year, 500 sq.m) and convenience stores ers and 360,000 routers and switch- becoming Poland's fourth largest (up to 100 sq.m). es at customer locations, which corporation. "We enter only such projects made it one of Europe's top data Carrefour has fallen in the same where we are certain the will be center outsourcing firms alongside trap as other hypermarket operators beneficial for both parties con- HP, IBM, and CSC last year, accord- - Tesco, Auchan, and Real. Namely, cerned. We provide shop owners ing to Gartner. the Poles seem to have ran out of with a whole range of crucial tools, Deutsche Telekom is one of the time and patience to shop at their including a well-known logo, know- world's leading integrated telecom- giant outlets. Parading with huge how, tested format and inventory, munications companies with more trolleys amid towering hypermarket marketing plans, good prices, and than 129m mobile customers (in- shelves has somehow lost its appeal. reliable logistics. It's a win-win situa- cluding 14.5m in Poland), almost People want to get their shopping tion and the benefits are measura- 34m fixed-network lines and 17m done quickly, without traffic jams ble," Carrefour Polska CEO Jean broadband lines (as of March 31, and queues, and be able to find fresh Anthoine Milhomme tells news2biz. 2012). The Group provides fixed- produce. Hypermarkets score rather "In all of 2012 we plan to open more network, mobile communications, low on all points. than 200 franchise outlets and we Internet and IPTV products and ser- want to maintain that pace in the vices for consumers, and ICT solu- years to come," he adds. tions for business and corporate cus- That would boost the size of the tomers. Deutsche Telekom is present Carrefour Express franchise chain in around 50 countries and has over (which currently includes more than 235,000 employees worldwide. The 230 outlets), well in excess of 400 Group generated revenue of EUR stores. The pace indeed has been 58.7bn in the 2011 financial year - impressive – in July alone seven new over half of it outside Germany (as shops were added to the chain. of December 31, 2011). The past year was tough for French Besides Carrefour Express, the retail giant Carrefour worldwide as French retailer operates regular su- well as in Poland and the company permarkets under the Carrefour is reassessing its position on the lo- Market logo as well as Carrefour hy- cal market. permarkets – overall more than 500 Globally, the company saw its shops. The company has also 40 net earnings drop 14%, down to shopping centers and a number of EUR 371m, while its sales stagnated. gas stations, adjacent to its outlets. In Poland, Carrefour's sales revenues "As for new hypermarkets, we dropped from PLN 9.1bn in 2010 plan to launch one by the end of down to PLN 8.95bn in 2011 and it Carrefour noticed this trend a 2013 and another one in the follow- seems the French are lacking any while ago, when it shifted focus to ing year," says Milhomme. idea as to how to challenge the Por- smaller formats. Its current strategy Last year Carrefour gave a major tuguese discount grocery chain in Poland prioritizes expansion of facelift to some of its hypermarkets

in Warsaw, making them more cus- new boss with hard choices. Britain’s and indirectly in real estate in North "It is true that TK Development tomer-friendly and appealing. Time Tesco, France's Auchan and U.S. America, Europe and Asia-Pacific. has been less active in Poland for the will tell whether this strategy brings Wal-Mart are seen as potential buy- The firm’s clients include institu- past couple of years, but I think that more customers to their stores. ers of eastern Europe assets. “Its tions, pension plans, endowments reflects the general decrease in the central and eastern European assets and foundations, and individual in- number of transactions in that mar- could represent a great opportunity vestors and its European private eq- ket," says Clausen. "There is no for Auchan, an operator who is well uity investments span 15 countries doubt, however, that Poland will established in Russia, Poland and with approximately EUR 4bn cur- remain a very important market for Romania," said Milos Ryba, an ana- rently under management. A major us. Just take its size and the coun- lyst at research firm PlanetRetail, investor in the region, Heitman has try's economic development. I be- quoted by Reuters. over 50 people across Europe in its lieve there are still plenty of oppor- offices in London, Warsaw, Luxem- tunities in Polish retail property sec- bourg and Moscow. tor. We may have a few weaker "We upgraded our shops in Opened in November 2009 and years, but we'll see what happens Arkadia, Targowek and Reduta fully let ever since, the 16,500-sq.m. later," says Clausen. shopping centers and we find the re- Galeria Tarnovia includes a super- sults satisfactory. Work is underway market of about 2,000 sq.m and spe- in Galeria Mokotow and we have cialty stores of about 14,500 sq.m. identified another three outlets in TK Development said the sale price the most prestigious locations and for this property was in the region of with the highest potential, to be EUR 40m. modernized." In a EUR 95m deal to be concluded As for the Jelenia Gora project, Some believe employing more by the end of August, Denmark's TK the Danes had acquired a plot of cash register clerks would make a Development is selling two Polish land in the southwestern Polish city much bigger difference than any im- projects to US fund Heitman. The and have an option for additional provements in layout and design, transaction concerns the company's land for the development of a shop- but the new look certainly does existing shopping centre Galeria ping centre of approx. 24,000 sq.m. make Carrefour's superstores a bit Tarnovia in Tarnów and a new de- The project will comprise a super- more friendly. velopment project in Jelenia Góra. market of about 3,500 sq.m and re- Shortly before this issue of Through the agreement, the Chi- tail, restaurant and service premises news2biz went to press, a report by cago-based Heitman assumes a 70 % of about 20,500 sq.m. Crucially, the Heitman joins the project with a Reuters suggested that Carrefour shareholding in the said projects, zoning plan for the area is in place, 70 % ownership interest at the cur- may choose to sell non-core assets in enabling the Danes to realize a small and the letting of premises has start- rent development stage, and the fu- countries like Romania, Turkey, Po- profit upon completion of the trans- ed. ture development of the project, in- land and Indonesia, among others, action, free up cash resources and "We have the planning permits cluding the construction of the pro- aiming to make between EUR 1bn obtain an additional, future profit for this project and we are preparing ject, will take place in partnership and EUR 3bn from the sale. from fee income from the jointly to enter the construction phase," with the US investor. The total pro- The world's number two retailer owned company in respect of devel- Frede Clausen, CEO of TK Develop- ject value is expected to be around allegedly needs the cash to fund a opment, letting and construction ment tells news2biz. "We retain a EUR 55m. According to TK Devel- revival plan for its struggling Euro- management services. 30% share in the Jelenia Gora de- opment, the partnership will allow pean hypermarkets, as tight finances Heitman manages approximately velopment so we will continue pav- for a more optimal exploitation of and dire economic times leave its EUR 21bn in assets invested directly ing the way for this project." the group’s resources, including eq-

uity allocation, as Heitman will functions including customer care, Kraków. PerkinElmer applied for make financing available pro rata to finance and IT." and received a Multi-Annual Support their ownership interest. The center, which is projected to Programme (MASP) grant, used to The Danish developer intends to open by the end of September, is ex- support the creation of jobs within sell its remaining shares in both pro- pected to become operational by the Poland, from the Polish govern- jects after 2015. beginning of next year. PerkinElmer ment." TK Development, which used to is at the beginning stages of its re- The company supplies lab testing be a much more active player on the cruitment process for the center, in- products and technology for Polish market, has changed its strat- cluding recruiting for leadership po- healthcare and environmental moni- egy to focus on forming partnerships sitions. toring. Its human health division with third party investors for its ex- "We looking for highly talented provides diagnostic, biopharma and isting and future projects in a move individuals with outstanding foreign life sciences research instruments, to better allocate the company's eq- language skills who have a passion reagents and software, while its en- uity, diversify the risk, and capitalize for making a difference," says Was- vironmental health unit encom- passes analytical instrumentation on its development expertise. The co, stressing PerkinElmer's dedica- Heitman deal is in line with this new tion to advancing quality and lon- and laboratory services. approach. gevity of life all around the world. "Poland itself is a market for "In Kraków, we are also offering a PerkinElmer where we supply a rare opportunity to participate in range of solutions and services from starting the new Shared Service Cen- prenatal and newborn screening and ter." life science research to environmen- Krakow is one of the top destina- tal and food testing." tions in Poland for offshoring and A USD 2.1bn global technology nearshoring projects. According to company, PerkinElmer employs estimates, the existing 55 business more than 7,000 staff in over 150 Following in the footsteps of other process outsourcing and shared ser- countries around the world. global medical technology giants vices centers in the city employ some such as Bayer (see 477 page 3) and 26,000 people. Recently Belgium's BecktonDickinson (see no 480 page Euroclear Bank and US Brown 21), US lab testing specialists Brothers Harriman (see no 480 page PerkinElmer has decided to set up a 4) have confirmed plans to invest in shared services centre in Poland. Krakow, each intending to hire up to "Our new service center in Kra- 500 employees. kow will provide advanced and lo- "Although we evaluated several calized support capabilities to both other locations, PerkinElmer recog- new and existing customers in nized that Poland is becoming a France, Italy, Spain as well as burgeoning international center with Southeastern and Eastern Europe," access to local highly educated and Perkin Elmer's Vice President Steph- multi-lingual employee talent. The Greed, ignorance and poor judiciary anie Wasco tells news2biz. "Perkin- Polish government has been very make for a rather disastrous mix. As Elmer will employ approximately 80 supportive and helpful as the com- we hinted in our front page article in personnel in Krakow in a variety of pany establishes a presence in the last issue of news2biz POLAND,

the recent downfall of Polish domes- that have something to hide often cy, the media revealed that he had tic airline OLT was merely a prelude "forget" to do so. seven past fraud convictions, which to a much bigger story involving a The KNF has been warning about should have precluded him from be- massive Ponzi scheme created by 28- Amber Gold for several years, plac- ing the chief executive of a legally year-old Polish national Marcin ing it on a watch list along with 16 registered company. In mid-August Plichta. other companies for operating with- he announced the company would The collapse of Plichta's unregu- out a banking license, but was una- be liquidated and money paid back lated investment company Amber ble to get the prosecutor's office to to investors over time, something Gold in August has left thousands of show much interest. The promise of most observers find very unlikely. Poles wondering whether they hefty gains and Plichta's talk of spec- Although substantial, the value would ever see any of the PLN 90m tacular returns on his investments of Plichta's assets the authorities they entrusted the "entrepreneur" was enough for an estimated 50,000 have been able to secure to-date, and raised a lot of questions about Poles to invest with Amber Gold. represents only a fraction of its dues. the effectiveness of Polish regulatory Plichta's business ended up in Several hundred clients are already authorities. media spotlight in July, when his preparing a class action lawsuit, Operating since 2009, Amber airline OLT Express, a project he fi- while the prosecutor’s office is inves- Gold is one of a number of Polish nanced with Amber Gold's money, tigating allegations of fraud. Six dif- "para-banks" offering investors high- went bankrupt. The airline's down- ferent charges were made against er returns than those being given by fall increased concern over the Plichta, including illegal collection of formal banks, as well as engaging in health of Amber Gold, which was funds and misinforming financial of- high-interest lending, all without running into trouble following a ficials about the company's dealings. falling under the scrutiny of the warning issued by the KNF that The opposition is demanding Polish Financial Supervision Authori- banks dealing with unregulated creation of a special parliamentary ty (KNF), the banking regulator. lenders face a "reputational risk," probe to find out how an individual At a time when banks are paying prompting banks to shut down Am- with multiple convictions was able only about 6% a year on deposits ber Gold’s accounts. to legally establish a financial and (backed by state guarantees), which airline businesses on a nationwide are also subject to a 19% capital scale. The case has become a politi- gains tax, Amber Gold was promis- cal headache for Prime Minister ing an untaxed guaranteed return of Donald Tusk, in large part because up to 16.5% for investments in gold. critics say the government failed to The company spent millions on ad- move more quickly, but also because vertising and even though its ads his son, 30-year-old Michal Tusk, did and banners could be found virtually public relations work for OLT Ex- everywhere, Amber Gold never filed press. even the minimal accounting results required of all registered companies, making it impossible to find out any details about its investment strategy. In Poland, the penalty for failing to Although Plichta denied running issue financial statements is relative- a pyramid scheme and blamed his ly small and therefore companies troubles on a government conspira-

24 | No 481 | 27 August 2012 | © Bonnier Group/Äripäev | POLAND

KEY FIGURES

INFLATION CONSUMER PRICE INDEX CONSTRUCTION PRICE INDEX

column A: 100 = current 12 months; column B: 100 = previous month On monthly basis Jan '12 Feb '12 Mar '12 Apr '12 May '12 Jun '12 Jul '12 6% Year-on-year Apr '12 May '12 Jun '12 Jul '12 100 = previous month 99.9 99.9 100.0 100.0 99.9 99.9 99.9 5% Month-on-month Sector A B A B A B A B 4% 100 = same month prev year 101.5 101.4 101.3 101.1 100.9 103.3 100.1 3% Food & beverages 103.2 100.2 102.7 100.8 105.4 100.7 105.0 98.0 Year 2005 2006 2007 2008 2009 2010 2011 2% Alcohol, tobacco 105.0 100.2 104.7 100.2 104.1 100.1 103.8 100.2 100 = previous year 103.0 103.2 107.4 104.8 100.2 99.9 101.0 1% Clothing, footwear 97.4 103.1 95.4 99.8 95.0 99.1 94.9 97.6 0% Housing 106.0 100.9 105.8 100.1 105.8 100.1 105.3 100.2 RESIDENTIAL CONSTRUCTION -1% Transport 108.7 101.2 108.1 99.7 108.2 99.8 106.8 98.8 Dwellings in '000 2006 2007 2008 2009 2010 2011 Jan-Jul '12 y/y Jul 11

Jul 12 Jan 11 Jul 10 Sep 11 Sep Jan 12 Mar 11 Sep 10 Sep Nov 11 May 11 Mar 12 Nov 10 May 12 Communications 101.2 100.0 102.3 100.0 103.3 100.0 103.6 100.0 Permits (no of units) 168.4 247.7 230.1 178.8 174.9 184.1 102.7 -1.8%

Gross CPI 104.0 100.6 103.6 100.2 104.3 100.2 104.0 99.5 Source: The Central Statistical Office of Poland, GUS Commenced 138.0 185.1 174.7 142.9 158.1 162.2 92.0 -3.0% Source: The Central Statistical Office of Poland, GUS Under construction 626.5 677.9 687.4 670.3 692.7 723.0 736.2 +1.9% PRODUCER PRICE INDEX Completed 115.4 133.7 165.2 160.0 135.7 131.7 79.5 +22.2% GROSS WAGES On monthly basis Jan '12 Feb '12 Mar '12 Apr '12 May '12 Jun '12 Jul '12 Source: The Central Statistical Office of Poland, GUS A: average monthly wages in PLN (without taxes); B: indexed average wages, 100=2005 100 = previous month 100.1 99.5 100.1 100.6 100.4 99.5 99.8 Sector Q2 2011 Q3 2011 Q4 2011 Q1 2012 100 = same month prev year 107.9 106.0 104.4 104.3 105.2 104.4 103.7 COMMERCIAL PROPERTY MARKET A B A B A B A B Year 2005 2006 2007 2008 2009 2010 2011 Industrial properties Existing stock, Under const- Vacancy Effective rents Coal mining 6,164 140 6,073 138 7,820 178 5832 133 100 = previous year 100.7 102.0 102.0 102.2 103.4 102.1 107.6 by region, 2H 2011 sq.m ruction, sq.m ratio EUR/sq.m/mth Manufacturing 3,322 145 3,352 146 3,395 148 3,422 149 Note: Producer prices are prices of industrial goods excluding VAT and other taxes. Warsaw central 3.9–5.8 Energy, gas, heating 5,339 162 5,560 169 6,132 186 5,937 180 2,630,000 96,000 17.3% Source: The Central Statistical Office of Poland, GUS Warsaw suburbs 2.0–3.2 Construction 3,683 157 3,776 161 3,858 164 3,622 154 Central Poland 940,000 49,000 10.4% 2.0–3.1 Retail & repairs 3,253 139 3,233 138 3,370 144 3,357 143 INDUSTRIAL OUTPUT INDEX Poznan 946,000 64,000 4.6% 2.4–2.9 Transport, logistics 3,338 118 3,370 119 3,683 130 3,356 119 On monthly basis Jan '12 Feb '12 Mar '12 Apr '12 May '12 Jun '12 Jul '12 Upper Silesia 1,386,000 47,000 7.8% 2.7–3.1 IT, telecoms 6,424 167 6,361 165 6,325 164 6,550 170 100 = previous month 94.9 99.0 110.7 92.5 104.5 98.0 97.7 Wroclaw 649,000 63,000 9.1% 2.4–3.0 Finance, insurance 6,275 141 5,891 132 5,823 131 6,384 143 100 = same month prev year 109.0 104.6 100.7 102.9 104.6 101.2 105.2 Gdansk 140,000 30,000 10.9% 3.3–4.0 National average 3,573 142 3,593 143 3,771 150 3,664 146 Year 2005 2006 2007 2008 2009 2010 2011 Krakow 116,000 19,000 8.7% 4.0

100 = previous year 104.0 111.6 110.7 103.6 96.5 109.8 107.7 SENTIMENT INDICATORS

Source: The Central Statistical Office of Poland, GUS Apartments* Offices 1H'12 Retail rents** 2H'11 Economic sentiment and consumer confidence indicators, seasonally adjusted City Jun '12 Change Rents** Vacancy Retail High 20 Consumer confidence (left axis) 120 Economic sentiment (right axis) PLN/sq.m y/y centres streets RETAIL TRADE 0 100 Warsaw 6,960 -11.5% 15-25 7.4% 75-77 83-85 at current prices Mar '12 Apr '12 May '12 Jun '12 Jul '12 Index 100 = previous month 115.7 97.6 100.9 100.2 101.3 -20 80 Krakow 5,949 -7.7% 14-15 6.8% 37-40 77-79

Index 100 = same month prev year 110.7 105.5 107.7 106.4 106.9 Katowice 3,378 -9.1% 12-15.5 9.9% 45-47 56-58 -40 60 Year 2007 2008 2009 2010 2011 Poznan 5,161 -7.7% 14-16 10.3% 37-40 56-58 Jul 11 Jul 12 Jul 10 Jan 11 Apr 11 Oct 11 Jan 12 12 Apr

Jan 10 10 Apr Oct 10

Oct 09 Lodz 3,724 -12.8% 11-13 14.5% 32-35 29-32 Turnover in PLN bn 517.4 564.7 582.8 593.0 n/a Wroclaw 5,323 -8.6% 15-15.5 3.9% 37-40 44-48 Index 100 = previous year 116.0 113.3 104.3 105.5 111.6 The economic sentiment (1990-2010 average = 100) is a composite made up of five sectoral Gdansk (Tricity) 5,062 -8.0% 12-14 9.1% 37-40 35-38 Source: The Central Statistical Office of Poland, GUS confidence indicators, which are arithmetic means of seasonally adjusted balances of answers to a selection of questions closely related to the reference variable. Source: Eurostat Source: Open Finance, C&W, JLL *median, transaction-based ** EUR/sq.m/month

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CURRENCY INTEREST RATES STOCK EXCHANGE Central Bank average rates 100 USD/EUR against PLN Average weighted annual interest rates on loans to non-financial corporations Warsaw Stock Exchange , rates in PLN WIG Total index 24 Aug as of 24 August 2012 500 EUR Term / cu rrency Jan '12 Feb '12 Mar '12 Apr '12 May '12 Jun '12 WIG-20 Price Change Change 100 USD 326.80 ↓ USD PLN (up to 1 year) 6.6% 6.3% 6.1% 6.2% 6.3% 6.2% in alphabetical order 24 Aug '12 10 Aug '12 end of '11 41,852.69 100 EUR 410.12 ↑ 450 PLN (up to 5 y ) 7.3% 7.3% 7.3% 7.2% 7.3% 7.3% ↑ Asseco Poland 46.75 +3% -4% Change 10 Aug 0% → 100 GBP 517.83 ↓ PLN (over 5 y) 6.8% 6.8% 6.8% 6.8% 6.8% 6.9% 400 ↓ Bogdanka 123.3 -1% +19% Change end of '11 +11% ↑ 100 CHF 341.47 ↑ PLN (total) 7.0% 6.9% 6.9% 6.9% 6.9% 7.0% → Boryszew 0.51 0% -19% Includes all stocks quoted on the 100 DKK 55.07 ↑ 350 EUR (up to 1m EUR) 2.9% 2.7% 2.6% 2.4% 2.3% 2.3% ↓ BRE 314.6 -2% 28% WSE main market 100 SEK 49.64 ↑ EUR (over 1m EUR) 5.0% 5.2% 3.4% 2.9% 5.8% 3.1% 300 ↑ GTC 6.31 +2% -32% 100 NOK 56.01 ↓ ↓ Handlowy 80 -8% +18% WIG-20 blue chip index 24 Aug 10,000 JPY 416.11 ↓ 250 Warsaw Inter Bank Offered Rate (WIBOR) as of 24 August 2012 ↓ JSW 91.5 -1% +9% 100 CZK 16.44 ↑ Overnight 1 week 1 month 3 months 6 months ↑ Kernel 73.7 +1% +6% 2,283.08 24 Oct 24 11 23 Dec 11 12 23 Feb 12 Apr 24 25 Aug25 11 26 Jun 12 10,000 HUF 147.40 ↑ Aug24 12 4.81% 4.83% 4.91% 5.11% 5.13% ↑ KGHM 132.4 +2% +20% Change 10 Aug -1% ↓ Source: The Central Bank of Poland, Narodowy Bank Polski Central Bank (NBP) Base Rates ↓ Lotos 26.29 -3% +13% Change end of '11 +6% ↑ Reference Lombard NBP deposit Rediscount MONEY SUPPLY ↓ Pekao 152.7 -1% +8% 4.75% 6.25% 3.25% 5.00% in PLN m Mar '12 Apr '12 May '12 Jun '12 Jul '12 ↓ PGE 18.5 -8% -11% WIG Total closing index Source: The Central Bank of Poland, Narodowy Bank Polski Monetary base 137,314 155,333 139,298 140,323 141,419 ↓ PGNiG 4.0 -7% -2% the last three months

M1 454,287 448,746 464,009 462,655 464,957 ↓ PKN Orlen 37.92 -4% +12% CREDIT 43 000 - Currency outside banks 99,883 101,302 102,324 103,808 103,003 ↑ PKO BP 34.99 +2% +9% 42 000 The financial sector's net lending in PLN bn , loan stock at the end of period M2 859,995 854,776 867,102 868,782 869,059 ↓ PZU 362 -2% +17% 41 000 Type of loan Mar '12 Apr '12 May '12 Jun '12 Jul '12 - Time deposits 414,712 415,289 412,434 415,639 415,833 → Synthos 5.59 0% +27% 40 000 Loans to customers 853,105 859,783 874,989 871,973 864,421 39 000 M3 874,496 870,551 884,151 884,725 886,873 → Tauron 4.86 0% -9% 38 000 - Net foreign assets in EURm 28,519 28,374 33,436 35,769 35,769 - to private companies 253,670 254,127 259,740 259,397 259,397 ↑ TP SA 16.94 +2% -2% 37 000 Monetary base : Polish currency emitted by the central bank and money on accounts held with it. - to individuals 455,156 456,933 468,526 463,821 458,218 ↓ TVN 7.57 -6% -27% 36 000 Total assets of banking institutions 1,509,060 1,512,482 1,571,043 1,558,457 1,546,330 M1= currency outside banks + demand deposits M2= M1+ time deposits (inc in foreign currencies) Source: Warsaw Stock Exchange

Jul 10 18 Jun 01 Aug 01 Aug 24 M3= Source: The Central Bank of Poland, Narodowy Bank Polski May 24 the broad measure of money supply. Source: The Central Bank of Poland, NBP TRADE Poland exports and imports according to commodity groups, according to SITC classification Poland's ten largest markets, ranked according to 2011 in PLN bn EXPORTS in PLN bn IMPORTS in PLN bn EXPORTS IMPORTS Jan-Jun Share Share Jan-Jun Share Share Jan-Jun Jan-Jun Jan-Jun 2012 2011 Share Jan-Jun 2012 2011 Share No Country Share 2011 Share No Country Share 2011 Share 2011=100 Jan-Jun '11 Jan-Jun '12 2011=100 Jan-Jun '11 Jan-Jun '12 2012 2012 Food and live animals (0) 28,307 120.8 8.8% 9.7% 51,526 9.3% 21,382 109.4 6.6% 6.8% 40,133 6.5% 1 Germany 74,295 25.5% 145,764 26.1% 1 Germany 67,298 21.2% 139,087 22.3% Beverages and tobacco (1) 3,804 121.0 1.2% 1.3% 6,986 1.3% 1,884 113.3 0.6% 0.6% 3,659 0.6% 2 UK 19,277 6.6% 36,014 6.4% 2 Russia 46,186 14.6% 75,226 12.1% Crude materials except fuels (2) 7,234 111.5 2.4% 2.5% 13,044 2.4% 11,214 113.1 3.3% 3.5% 21,217 3.5% 3 Czech Rep. 18,408 6.3% 34,837 6.2% 3 China 27,742 8.8% 54,221 8.7% Fuels etc (3) 14,256 108.9 4.9% 4.9% 27,040 4.9% 41,920 115.6 12.1% 13.2% 78,414 12.8% 4 France 18,214 6.2% 34,206 6.1% 4 Italy 16,400 5.2% 33,622 5.4% Animal and vegetable oils (4) 425 96.9 0.2% 0.2% 1,106 0.2% 1,358 108.2 0.4% 0.4% 2,688 0.4% 5 Italy 15,219 5.2% 29,753 5.3% 5 France 12,591 4.0% 26,013 4.2% Chemical products (5) 26,883 113.1 8.9% 9.2% 49,445 8.9% 44,195 101.1 14.6% 14.0% 87,143 14.2% 6 Russia 14,940 5.1% 25,109 4.5% 6 Netherlands 11,933 3.7% 23,388 3.8%

Manufactured goods by material (6) 62,849 109.7 21.5% 21.6% 117,599 21.2% 56,341 100.8 18.7% 17.8% 111,160 18.1% 7 Netherlands 12,901 4.4% 24,405 4.4% 7 Czech Rep. 11,767 3.7% 23,223 3.7%

Machinery, transport equipment (7) 110,206 104.4 39.6% 37.8% 216,590 39.0% 99,521 104.7 31.8% 31.4% 194,428 31.6% 8 Sweden 7,897 2.7% 15,931 2.9% 8 UK 7,753 2.4% 16,339 2.6%

Other manufactured articles (8) 36,591 109.8 12.5% 12.6% 70,574 12.7% 28,616 101.2 9.5% 9.0% 60,169 9.8% 9 Hungary n/a n/a 14,314 2.6% 9 USA 7,691 2.3% 14,139 2.3%

Not classified (9) 1,106 n/a 0.0% 0.2% 859 0.1% 10,271 n/a 2.4% 2.3% 15,417 2.5% 10 Ukraine 7,732 2.7% 13,854 2.5% 10 Belgium n/a n/a 13,781 2.2%

TOTAL 291,661 109.3 100% 100% 554,769 100% 316,702 109.3 100% 100% 614,428 100% Source: The Central Statistical Office of Poland, Glowny Urzad Statystyczny (GUS)

26 | No 481 | 27 August 2012 | © Bonnier Group/Äripäev | POLAND

GDP UNEMPLOYMENT GENERAL INFORMATION Reports for professionals at current prices Registered unemployed, in ‘000 and % of population in working age Population: 38.3m (2011 census) doing business in Eastern Europe & China Period Growth y/y GDP in PLN bn GDP per capita Current account 2500 number (left axis) 15 Currency: Polish Zloty (PLN) % (right axis) unadjusted current prices in USD def. in % of GDP In power: President Bronislaw Komorowski 2200 12 Most seats in parliament Civic Platform PO (39%, Q1 2012 +3.5% 370,450 n/a -4.4% news2biz Q4 2011 +4.3% 429,665 n/a -4.3% PM Donald Tusk), Law & Justice PiS (30%). 1900 9 AS Äripäev, Pärnu mnt 105 Elections: Q3 2011 +4.2% 376,204 n/a -4.6% 2015 general, 2015 presidential EE-19094, Tallinn, Estonia Most important tax rates: Q2 2011 +4.2% 369,558 n/a -4.9% 1600 6 phone: +372 667 0251 fax: +372 667 0265 Income tax: individual 18% and 32% corporate 19% 2011 +4.3% 1,524.659 n/a -4.3% e-mail: [email protected] Q1 11 Q1 Q2 Q2 11 Q3 11 11 Q4 Q1 12 Q2 Q2 12 Q1 10 Q1 Q2 Q2 10 10 Q3 10 Q4 Q4 09 Q4 VAT : 23% (main), 8% (selected goods), 5% (food) 2010 +3.9% 1,416,392 19,747 -4.7% web: www.news2biz.com Social tax: 31-35% 2009 +1.6% 1,344,384 17,989 -3.9% Source: The Central Statistical Office of Poland, GUS news2biz POLAND 2008 +5.1% 1,275,432 17,493 -4.8% news2biz LITHUANIA Source: The Central Bank of Poland, Narodowy Bank Polski, BZ WBK REGIONAL DATA news2biz LATVIA Poland's regions Industrial output Monthly wages (PLN) Unemployment New dwellings news2biz ESTONIA CURRENT ACCOUNT (main cities indicated Jan-Jul 2012 * Jan-Jul 2012 ** Jan-Jul 2012 Jan-Jul 2012 news2biz CHINA excerpts shown in EUR m 2009 2010 2011 Q3 ‘11 Q4 ‘11 Q1 ‘12 in brackets) Industry Construction Industry Construction in '000 % Number Index * Investments, companies, market trends, key figures. Trade balance -5,427 -8,893 -10,112 -2,263 -2,814 -2,165 Dolnoslaskie (Wroclaw) 104.5 105.3 4,015.96 4,007.04 142.4 12.4 7,799 140.8 Published on-line every 2 weeks. Services, net 3,427 2,334 4,341 1,138 714 798 Kujawsko-Pomorskie (Bydgoszcz) 105.6 103.4 3,196.99 3,102.56 136.4 16.5 3,271 106.0 Independent news research since 1991. Direct investments, net 6,235 3,759 10,340 3,236 2,456 -1,681 Lubelskie (Lublin) 109.9 121.4 3,512.91 2,978.05 118.8 12.9 3,900 115.1 On-site journalists in Poland, Lithuania, Latvia, Current account balance -12,152 -16,493 -15,917 -4,459 -5,021 -4,344 Lubuskie (Zielona Gora) 100.6 83.4 3,220.47 2,824.89 57.2 14.9 1,814 114.4 Estonia, China and Sweden. Source : The Central Bank of Poland, Narodowy Bank Polski Lodzkie (Lodz) 114.3 101.0 3,453.65 3,166.91 141.9 13.0 3,833 124.2

Malopolskie (Krakow) 105.1 93.4 3,640.51 3,148.36 145.5 10.5 7,963 116.7 FOREIGN DIRECT INVESTMENT Publisher Mazowieckie (Warszawa) 102.3 112.9 4,319.00 4,877.22 252.0 10.1 16,379 131.5 Bonnier Group/AS Äripäev in EUR m Opolskie (Opole) 108.3 90.3 3,378.82 3,109.70 47.4 13.1 865 109.9 On quaterly basis Q4 '10 Q1 '11 Q2 '11 Q3 '11 Q4 '11 Q1 '12 Podkarpackie (Rzeszow) 105.4 103.7 3,119.59 2,844.61 140.5 15.1 3,618 118.5 in Poland 1,726 3,830 1,382 3,236 2,456 -1,681 Podlaskie (Bialystok) 108.0 98.9 3,104.15 3,586.65 64.4 13.8 2,230 112.6 Polish DI abroad -1,849 -2,003 -1,484 -131 -687 1,395 Pomorskie (Gdansk-Gdynia) 109.1 109.9 3,750.73 3,194.53 102.7 12.0 6,632 130.7 Year 2006 2007 2008 2009 2010 2011 Slaskie (Katowice) 96.6 114.3 4,453.57 3,470.53 187.1 10.1 5,034 105.3 in Poland 15,741 17,242 10,128 9,343 6,696 10,340 Swietokrzyskie (Kielce) 103.3 108.8 3,357.26 3,090.21 80.3 14.8 1,603 110.6 Editor-in-Chief Kertu Ruus [email protected] Polish DI abroad -7,122 -4,020 -3,072 -3,335 4,149 -3,722 Warminsko-Mazurskie (Olsztyn) 103.7 110.8 3,021.91 3,006.15 101.2 19.1 2,477 122.1 Senior Editor Peter Kyhn [email protected] Source: The Central Bank of Poland, Narodowy Bank Polski Wielkopolskie (Poznan) 108.5 103.1 3,537.15 3,512.61 134.3 9.1 7,780 111.7 Newsdesk Poland Lech Kaczanowski Zachodniopomorskie (Szczecin) 105.4 85.7 3,249.73 3,259.48 101.1 16.4 4,340 145.6 [email protected] KEY ECONOMIC DATA FORECAST National average 104.1 106.6 3,769.46 3,635.55 1,953.2 12.3 79,538 122.2 Customer Service Toomas Hõbemägi [email protected] Indicator *2009 *2010 *2011 2012 2013 * Index 100 = same period of the previous year. ** without social taxes

GDP change +1.6% +3.9% +4.3% +2.7% +2.5% Source: The Central Statistical Office of Poland, REAL EARNINGS Subscription prices e-access Consumer price inflation +3.5% +2.6% +4.3% +3.9% +2.6% Glowny Urzad Statystyczny (GUS) 170 Wage index CPI index 160 3 months (5 issues) EUR 260 Producer price inflation +3.3% +2.1% +7.6% +4.3% +2.3% 150 COUNTRY RATING 140 6 months (10 issues) EUR 460 CA balance, % of GDP -3.9% -4.7% -4.3% -3.2% -1.9% 130 Agency rating outlook 120 12 months (20 issues) EUR 790 Nominal gross wage change +4.4% +3.6% +5.0% +3.8% +4.0% 110 Fitch Ratings A- stable 100 Unemployment rate (year-end) 12.1% 12.4% 12.5% 13.4% 13.4% This edition completed 27 August 2012 Jul 11

Standard & Poor's A- stable Jul 12 Jul 08 Jul 10 Jul 09 Mar 11 Nov 11 Mar 12

EUR/PLN 4.33 3.99 4.12 4.26 4.15 Mar 10 Nov 10 Moody's Investor Service A2 stable Nov 08 Mar 09 Nov 09 Next issue on-line 10September 2012 Sources: BZ WBK, July 2012. *) actual figures where available Source: Rating agencies Development of the average gross wage and inflation. Index 100 = Jan 2005. Source: GUS