Poland Today Business Review+ No. 054

No. 054 / 29th September 2014 / www.poland-today.pl / magazine, conferences, portal, newsletter

1 year subscription: EUR 690 (PLN 2760)

Newsletter Editor: Lech Kaczanowski

[email protected]

tel. +48 607 079 547

Sales Contact: James Anderson-Hanney

[email protected]

tel. +48 881 650 600

MANUFACTURING & PROCESSING

Off-road vehicle maker Polaris launches production in Opole page 2

Concrete paver giant Libet ac-quires its 15th factory in Po-land page 3

BANKING & FINANCE

Warsaw Stock Exchange puts Vienna merger plans on hold page 3 Alior Bank prepares equity boost to finance Meritum Bank acquisition page 4

ENERGY & RESOURCES

Siemens begins construction of EUR 160m heat & power unit in Gorzów page 5

PROPERTY & CONSTRUCTION

Office investments in regional cities to reach record level this year page 5

RETAIL

Upscale interior goods chain Almi Decor goes bankrupt page 8 Retail sales increase 1.7% y/y in August page 9

RETAIL PROPERTIES

Multi Corporation gets build-ing permit for huge mixed-use project in Gdańsk city centre page 9

EMPLOYMENT

Report: Poland still needs to make labour market more flexible page 10

OPINION

Team sports have a winning formula for Poland page 11

KEY FIGURES

Up-to-date macroeconomic figures, currency & stock market data and lots of other hard-to-find info pages 12-14

Zomato seeks to hire more than 60 staff in Poland over the coming 12 months. Image: Zomato

Zomato acquires Zomato acquires Zomato acquires Zomato acquires Poland's top foodie sitePoland's top foodie sitePoland's top foodie sitePoland's top foodie site Having completed similar acquisitions in Slovakia and the Czech Republic in recent weeks, Indian Zomato has taken over Po-land's most popular restaurant discovery site Gastronauci.pl. BR+ talks to Pramod Rao, Director of International Operations at Zomato, about their plans for the business. page 7

Trimetis to create 250 IT jobs in LublinTrimetis to create 250 IT jobs in LublinTrimetis to create 250 IT jobs in LublinTrimetis to create 250 IT jobs in Lublin Austrian IT consulting & outsourcing and company Trimetis is setting up its first Polish unit in Lublin. "We want to have 250 staff in Lublin by the end of 2017," Wolfgang Weber, Board Member at Trimetis tells BR+. page 6

Places are limited - book your place today at events.mergermarket.com/cee-poland2014Please use the registration code PT14 when booking

2 OCTOBER 2014 THE WESTIN, WARSAW

CROSS-BORDER OPPORTUNITIES WITHIN EASTERN EUROPE

CEE M&A AND PRIVATE EQUITY FORUM 2014

Mergermarket’s Central & Eastern European M&A Forum is taking place this Thursday. Don’t miss out – make sure you join us to hear from expert speakers who will share their thoughts on the key deal trends likely to be seen in the CEE region over the next year.

Confirmed speakers include:

• Roland Haidner, Director of M&A, Telekom Austria

• Bohdan Malaniuk, Deputy Head of M&A, CEZ

• Przemysław Schmidt, Board Member, Czerwona Torebka SA

• Krysztof Krawczyk, Managing Partner, Innova Capital

• Robert Manz, Managing Partner, Enterprise Investors

• Piotr Nocen, Managing Partner, Resource Partners

• Bart Dujczynksi, Investment Director, Kulczyk Investments

• Tomasz Blicharski, Associate Director, Mid Europa Partners

• Till Burges, Principal, HarbourVest

• Artur Tomala, Managing Director, Goldman Sachs

• Alexander Merwart, Director, Leveraged Finance, Commerzbank

• Dominique Le Maire, Managing Director, Unicredit

• Michal Surowski, Head DCM Poland, Societe Generale CIB

• John-Paul Warszewski, Managing Director, Nomura International plc

• Ivan Meloun, Head of Acquisition & Leveraged Finance, CSOB

• Tomasz Kwiecien, Managing Director, Mezzanine Management

• Maciej Dyjas, CEO, Eastbridge Group

• Dominika Zbychorska, Director of M&A, PZU

For a full line-up of speakers, to download the agenda or register your place, please visit: mergermarketgroup.com/event/cee-poland2014; email [email protected] or call +44 (0) 207 010 6219

CMS_LawTax_CMYK_18-27.eps

Strategic partners:

Media partners:

Internationally engaged

Poland Today September CEE advert_297x210_V1_VC.indd 1 14/08/2014 17:40:06

weekly newsletter # 054 / 29th September 2013 / page 2


OffOffOffOff----road vehicle maker road vehicle maker road vehicle maker road vehicle maker Polaris launches Polaris launches Polaris launches Polaris launches production in Opoleproduction in Opoleproduction in Opoleproduction in Opole

The NYSE-listed off-road vehicle (ORV) maker Po-laris has launched production at its first manufactur-ing facility outside of North America, located in the south-western Polish city of Opole. The 33,000 sq.m built-to-suit building was developed by Panattoni and together with interior fit-out and installation of production lines the whole project was completed in little more than a year. The plant will produce approximately 35 different ORV vehicle models in 2015 and ship them to six sub-sidiaries and over thirty distributors in the Europe, Middle East and Africa (EMEA) region. Shipments to customers should begin in Q1 2015, Polaris said. Opole will also house research and design for the Europe, Middle East and Africa markets allowing vehicles to be tailored to local needs. Employee training has al-ready begun at the Opole facility which will employ 300 people in 2015. "I can confirm that at full capacity, assuming that our market projections prove correct, we expect to have over 500 employees in Opole," Bogusław Dawiec, Di-rector of Operations at Polaris Poland told Poland To-day back in April. "We are starting to seek out local suppliers and as the production volume increases we intend to gradually expand our local supplier base." Developed at the cost of PLN 100m (excluding ma-chinery), the Polaris plant is comprised of a 25,600 sq.m production hall, a 3,400 sq.m warehouse, as well as offices and staff facilities with a total floor area of

3,981 sq.m. The building features include a 2,500 me-ter product test track and energy saving paint systems. This facility is built on nearly 30 acres, within the Wałbrzych Special Economic Zone. According to ear-lier announcements, the manufacturer's first Euro-pean factory for off-road vehicles will be making 25,000 quads and small all-terrain vehicles per year, to be delivered to Europe, Middle East and Russia.

Panattoni built the factory building for Polaris in lit-tle more than half a year. In the future, the US manu-facturer plans to add a logistics centre and dealer-ship at the site. Image: Panattoni

"With a stated goal of a third of our total company sales outside North America, the Opole facility is a cornerstone for our international growth plans, as it provides both a timely capacity increase and a local-ized manufacturing presence that allows us to provide the best possible experience for our customers across Europe, the Middle East and Africa," said Scott Wine, Polaris Chairman and CEO, at the grand opening at the plant last week.

Allowing Polaris to manufacture products locally for the EMEA region, the Opole facility will improve the

supply chain and help the company keep up with strong demand for its wide range of products. "With our engineering and manufacturing assets in Poland, we will be able to develop and manufacture products specifically for this market. We will reduce the order lead time for our customers and will be able to provide better customer service. We also have op-portunities to source more of our component parts lo-cally from suppliers within the region. This will be a big benefit to this entire region," said Suresh Krishna, Vice President, Europe, Middle East and Africa. The NYSE-listed Polaris is a major player in the pow-ersports industry with annual 2013 sales of USD 3.8bn (+18% y/y) and net income of USD 381m (+22% y/y). The company designs, engineers, manufactures and markets off-road vehicles, including all-terrain vehi-cles (ATVs) and its trademark Ranger and RZR side-by-side vehicles (all three products lines will be made in Opole) as well as snowmobiles, motorcycles and on-road electric/hybrid powered vehicles. Polaris is among the global sales leaders for both snowmobiles and off-road vehicles but it has also established a pres-ence in the heavyweight cruiser and touring motorcy-cle market with the Victory and Indian brands. With close to 5,000 employees worldwide, Polaris seeks aims to become a "highly profitable, USD 5+ bn global enterprise," according to its strategy. In 2010 Europe's ATV sales had been estimated at some EUR 2bn. There are no official figures on the number of quads in Poland, but some industry repre-sentatives speak of 80-100,000 units. These off-road vehicles (mainly inexpensive Chinese imports) used to be popular a couple of years ago, but a number of well-publicized accidents and the resulting tightening of regulations, accompanied by economic downturn, brought that boom to a halt.



Concrete paver giant Concrete paver giant Concrete paver giant Concrete paver giant Libet acquires its 15th Libet acquires its 15th Libet acquires its 15th Libet acquires its 15th factory in Poland factory in Poland factory in Poland factory in Poland

Warsaw-listed Libet, the country's largest producer of concrete pavers, has entered an agreement to acquire a production plant in Toruń. The acquisition, which is expected to be finalized by October 20, will give the company access to three large urban markets of Toruń, Bydgoszcz, and Włocławek. "This acquisition is in line with our strategy that fo-cuses on making Libet products available in every cor-ner of the country. This acquisition will not only give Libet direct access to Toruń, Bydgoszcz, Włocławek and the surrounding markets, but also enable us to significantly shorten the distance to clients who have so far been served by our factories in Pomerania, War-saw, and Łódź, says Libet CEO Thomas Lehmann. The Toruń unit was launched only a few years ago with the support of EU funding. It includes a single, modern production line. "It's a modern plant with a substantial production po-tential. We expect this acquisition to boost our total annual revenues by some 8-10% and positively impact our operating margin due to reduction in logistics costs. Last but not least, it opens up a large new mar-ket for our "premium" range," Lehmann says. Libet's strategic objective is for the high-margin "pre-mium" products to represent approximately a half of its revenues by the end of 2015. Since the beginning of this year the company has introduced more than 50 new products.

In addition to the Toruń takeover, which brings the to-tal number of Libet production plants in Poland up to 15, the company is hoping to acquire 2-3 additional factories as well as gravel quarries in Poland over the next five years.

Libet is the second largest producer of concrete pavers in Poland with a 22% market share in the total market, and a 34% share in the premium segment. Although concrete pavers are Libet's main product, the Com-pany produces also kerbs, flagstones etc. Its consoli-dated turnover totalled PLN 220m last year and net earnings topped PLN 6.1m.

Libet's current strategy focuses on "premium" prod-ucts, which are essentially concrete pavers that imi-tate stone. Image: Libet

The majority shareholder in Libet (via a Luxembourg-based SPV) is private equity fund Innova Capital, which acquired a 100% stake in the company, together with Libet's management, in 2010. Since the acquisi-tion, Libet has improved its financial performance, ex-panded its product offer, and increased its presence in the North of Poland through several acquisitions.

BANKING & FINANCE

Warsaw Stock Warsaw Stock Warsaw Stock Warsaw Stock ExchangeExchangeExchangeExchange puts Vienna puts Vienna puts Vienna puts Vienna merger plans on holdmerger plans on holdmerger plans on holdmerger plans on hold

The Warsaw Stock Exchange (WSE) has sus-pended plans for a merger with its regional competi-tor, the Vienna-based CEE Stock Exchange Group (CEESEG), which unites the Vienna, Budapest, Ljubl-jana and Prague bourses. Talks over a potential alli-ance have been going on since April 2013, with neither party reporting any progress to-date. "The WSE management board has decided to focus on the Polish market and exploiting its potential. The bourse isn't taking into consideration a capital alliance with CEESEG," Warsaw exchange chief executive Pawel Tamborski said last week. "Our goal is to grow organically and strengthening the international posi-tion of the bourse," Tamborski added. The announcement has come as a bit of a surprise, as upon Tamborski's appointment as WSE's boss earlier this year, Treasury Minister Włodzimerz Karpiński said that one of the new CEO's priorities would be to lead the process of a potential merger with Vienna. Karpiński referred to his former deputy as a man who "who knows the Vienna merger project well" and one, who would make a "trustworthy partner in negotia-tions for the Austrians." Despite the discouraging news from Poland, CEESEG representatives said last week a tie-up with Warsaw "remains one of many options for the Vienna Ex-change." The Vienna bourse had warmed up to the tie-up concept after losing out to Warsaw in the race for regional top spot. Other, smaller regional exchanges


that it operates, in Prague, Budapest and Ljubljana, have been registering only modest growth. Warsaw's exchange has grown fast over the past few years, rid-ing a wave of Polish economic growth and overtaking Vienna to become the biggest exchange in central Europe.

WSE capitalization in PLNm, year-end*

0

100

200

300

400

500

600

700

1998 2000 2002 2004 2006 2008 2010 2012 **2014

Source: WSE *) domestic stocks **) as of September 24, 2014

The Polish treasury ministry, which owns a majority stake in the Warsaw exchange, said in a statement it expects the bourse to present an updated strategy aimed at increasing market liquidity. The bourse needs to find new sources of growth as IPOs have slowed and a Polish pension reform curbed the ability of local pension funds, major players on the exchange, to in-vest in stocks. According to the ministry, the WSE may return to consolidation talks with foreign partners in a couple of years. Created in 1991 to facilitate privatization, WSE lists 463 companies on its main market, including PKO BP, the largest Polish bank, and PZU, the country's biggest insurer, with a combined value of about PLN 930bn (including PLN 631bn worth of domestic stocks) as of

September 24. The number of companies doubled in the last decade, with 81 new listings in 2007 and 23 last year. The main shareholder in the exchange is the Pol-ish Treasury, which holds 35% of its shares and a vot-ing majority. The bourse was privatized in 2010 through an IPO. Since 15 April 2013 the WSE has been running NYSE Euronext's Universal Trading Platform, which allows Warsaw to accept high-frequency orders but also binds it through a technological partnership with the global giant. Earlier this year the WSE has acquired 30% stock in the UK-based multilateral trading facility Aquis Exchange Ltd, which launched at the end of November 2013, enabling trading in top British, French and Dutch securities.

BANKING & FINANCE

Alior Bank prepares Alior Bank prepares Alior Bank prepares Alior Bank prepares equity boost to finance equity boost to finance equity boost to finance equity boost to finance Meritum Bank Meritum Bank Meritum Bank Meritum Bank acquisitionacquisitionacquisitionacquisition

Alior Bank hopes to sell as many as 2.4m new shares, representing nearly 3.3% in its increased capital, to fund the purchase of its small local rival Meritum Bank ICB SA, the Warsaw-listed lender said in a regulatory statement last week. Alior also plans to sell subordinated bonds. Alior confirmed it had engaged in official negotiations with Meritum's owners, private equity fund Innova Capital, the European Bank for Reconstruction and Development (EBRD) and WCP COOP-ERATIEF U.A. Based on Alior's current share price, the equity boost may reach PLN 200m. Alior plans to

finalize talks and sign agreement before the share-holders’ vote on the share sale planned for Oct. 22, it said. Founded shortly after the 2008 collapse of US invest-ment bank Lehman Brothers by Italian group Carlo Tassara, controlled by Franco-Polish billionaire Ro-main Zalewski, who injected some EUR 450m into the Polish start-up, in less than four years Alior created Poland's third largest branch network (849 outlets as of end of June) and started generating profits. Since its PLN 2.1bn IPO in December 2012, Alior Bank has been seeking various ways to add clients, including cooperation with the T-Mobile's Polish unit on pro-viding banking services to the phone operator’s users and the purchase of a majority stake in an asset man-agement company last year. Meritum’s assets of PLN 3.15bn represent 10%of Alior’s balance sheet, based on the banks’ first-half earnings statements. The Meritum takeover is to help Alior expand in the consumer banking business, the bank said in the statement. Meritum’s cooperation with "one the lead-ing retailers in Poland" was an important factor in the deal, it added. Meritum cooperates with Tesco Plc’s Polish unit. Some of Meritum shareholders may buy Alior’s new shares. Alior’s controlling investor Carlo Tassara SpA, which is seeking to sell its stake in the bank and has until June 2016 to complete the disposal, will keep its 25% holding after the share sale, Alior said. In the first half of 2014 Alior Bank’s consolidated net profit exceeded PLN 151.6m (+18% y/y), while its net operating income totalled PLN 883.6m (+22y/y), in-cluding PLN 575m from interest income and PLN 167m from fees and commissions. As at the end of June 2014, a total value of loans granted by Alior Bank to customers equalled PLN 21.9bn, while the value of de-


posits collected amounted to PLN 21.4bn. The figures were higher than those recorded in the corresponding period of the previous year, by 26% and 12% respec-tively. These results bolstered the bank’s share in the credit market to reach 2.6% and in the deposit market the figure came to 2.5%. Alior Bank maintains its stra-tegic objective to acquire a 4% share in the Polish banking market by 2016. As of end of June Alior had 2.33m customers (includ-ing more than 2.2m retail and 120,000 corporate), up from 1.7m a year earlier. In Q2 alone the bank at-tracted 95,000 new retail clients. The bank's capital adequacy ratio (CAR) rose to total 13.1% as at the end of the reporting period, while the capital Tier 1 ratio has reached the level of 11.5%.

ENERGY & RESOURCES

Siemens begins Siemens begins Siemens begins Siemens begins construction of EUR construction of EUR construction of EUR construction of EUR 160m160m160m160m heat & power heat & power heat & power heat & power unit in Gorzówunit in Gorzówunit in Gorzówunit in Gorzów

A Siemens-led consortium has broken ground on a new combined heat & power plant in the Polish city of Gorzów Wielkopolski. Last week, the investor, PGE GiEK, a subsidiary of Poland's top utility PGE, held a cornerstone laying ceremony at the site of the project which is to be commissioned in early 2016. The Gorzów plant will have an electric capacity of 138 megawatts (MW) and a thermal capacity of 90 MW. Thanks to combined heat and power, the plant's fuel efficiency rating will be 84%. The order value for Sie-mens, including a long-term service agreement for the main components, is about PLN 686m (EUR 160m).

Within the scope of turnkey construction, Siemens will deliver two SGT-800 gas turbines, one SST-400 steam turbine, three 11 kilovolt (kV) generators and two heat recovery steam generators. In addition, Sie-mens was awarded a long-term 12 years maintenance agreement for the gas turbines. What's interesting about the Gorzów plant, is that it will be fired with ni-trogen-rich, local natural gas from gas reserves in western Poland. This type of gas has a lower calorific value than conventional natural gas. "We chose the Siemens solution because their plant of-fers a very high efficiency, so that it can generate elec-tricity at a very affordable cost," said Jacek Kac-zorowski, CEO of PGE GiEK. "The district heating makes the plant even more economical. Furthermore, we can use our local natural gas reserves to fire the turbines."

The new heat & power plant in Gorzów will have an efficiency rating of 84%. Image: Siemens

The gas (281m cb.m per annum) will be supplied by Polish gas giant PGNiG under a 20-year agreement es-timated at PLN 3bn. By relying on fuel extracted in di-rect vicinity of the Gorzów plant, the latter can count on substantial savings. The sources of gas will include the recently Lubiatów oil and gas drill that PGNiG launched last year at the cost of PLN 1.7bn, expecting

to extract 100m sq.m of gas and 300,000 tons of crude oil per annum. The Gorzów power plant will replace a currently used coal-fired block at the same location. The combined cycle power plant with district heat extraction will be able to generate electricity in a much more efficient and environmentally friendly manner. Compared to the old coal-fired power plant, the new plant will pro-duce 95% less sulphur dioxide emissions, more than 30% less nitrogen dioxide emissions and more than 95% less particulate emissions.

PROPERTY & CONSTRUCTION

Office investments in Office investments in Office investments in Office investments in regional cities to reach regional cities to reach regional cities to reach regional cities to reach record level this yearrecord level this yearrecord level this yearrecord level this year

As valuations in Warsaw are becoming too high, and regional markets are turning mature, office buildings in Poland's other key cities are attracting a growing number of property investors. According to property consultancy JLL, this year's total office investment volume outside Warsaw is likely to hit a record EUR 400m, up from EUR 156m in 2013 and the previous record of EUR 346m achieved in pre-crisis 2006. "Moreover, investor activity is going to continue in Q1 2015, with significant transactions expected in Wro-cław or Tri-City”, says Tomasz Puch, Head of Office and Industrial Capital Markets, JLL. In 1H, an estimated EUR 750m worth of properties changed hands in Poland, including EUR 220m out-side of Warsaw. The largest office transaction in the regional cities in H1 was the sale of office properties from the portfolio of Arka BZ WBK Property Mar-


ket Fund, including Quattro Forum in Wrocław, Wi-nogrady Business Center in Poznań, Red Tower in Łódź and Alfa Plaza in Tri-City to Octava FIZAN. The second largest transaction this year (and the larg-est single transaction) was the sale of Lubicz Office Centre by Peakside to Griffin Group. Another very significant deal was Skanska's sale of Wrocław office building Green Day to GLL. According to JLL stats, the largest office transaction in the last 10 years outside Warsaw was the EUR 100m sale of the Bema Plaza project in Wrocław by Ghe-lamco to Deka Immobilien in 2008. The consultancy is hinting that considering the deals currently in the pipeline Ghelamco's record is likely to be broken this year. August saw another huge deal involving Ghe-lamco, which sold three buildings (T-Mobile Office Park and Łopuszańska Business Park in Warsaw and Katowice Business Point in Katowice) for EUR 192m to Starwood Capital. "Warsaw is still attracting the majority of investors, and the specific character and the size of this market means that most spectacular transactions take place there. However, since last year we have seen growing interest from investors in major agglomerations out-side the capital city, as shown in this year’s transac-tions in Kraków, Wrocław, Tri-City, Poznań, Łódź and Katowice. This activity has been triggered by several factors. It stems from the fact that Warsaw has be-come increasingly expensive, and after a number of flagship transactions, few products have remained on sale. Furthermore, this interest is encouraged by the growing maturity of office markets outside the capital city which, in turn, engenders trust from investors," says Tomasz Puch. "When Warsaw is taken out of the equation, the most active markets are Wrocław and Kraków. Investors are generally on the lookout for prime properties. The growing volume of office investment transactions out-

side Warsaw is also facilitated by the changing strate-gies of several local developers. These companies are more open to new solutions, e.g. joint ventures or sharing a part of the developer’s profit. Some owners are ready to renegotiate and extend lease agreements in order to make their projects more attractive and valuable," he adds.

SERVICES & BPO

Austrian IT firm Austrian IT firm Austrian IT firm Austrian IT firm Trimetis to employ 250 Trimetis to employ 250 Trimetis to employ 250 Trimetis to employ 250 at new Lublin cenat new Lublin cenat new Lublin cenat new Lublin centerterterter

Austrian IT consulting & outsourcing and company Trimetis is setting up its first Polish unit in Lublin with plans for up to 250 placements over the coming years. The centre's focus will be software develop-ment, software testing and quality assurance as well as application (lifecycle) management. "We want to reach the 250 headcount by the end of 2017," Wolfgang Weber, Management Board Member at Trimetis tells Poland Today. "We believe that we can get very qualified and talented people in Lublin, a city that offers good education level, good universities, and infrastructure. Lublin's other pull factors include its considerable size, taken together with the sur-rounding area, strong support from local authorities and the fact that the local market is not as overheated as Tier1 cities such as Warsaw, Krakow, etc.." Established in 2012 by a group of seasoned executives with long-term experience in business consultancies, Trimetis offers a range of IT services, including soft-ware development, testing, and quality assurance. Its clients include BMW, Volkswagen, Audi, Raiffeisen Bank, Postbank, Unicredit, Daimler, SAP or E&Y. Al-

though most of its clients at the moment originate from the DACH region (Germany, Asutria, Switzer-land), Trimetis is hoping to win contracts also in Po-land.

"We do consulting, technology services and (expert) sourcing. Our business model is to serve mainly Cen-tral European clients, but out of our Hub in Lublin we want to deliver particularly IT services. In practice, the latter will provide our CE-clients with software development and quality assurance services in terms of providing qualified staff but also in delivering pro-jects independently," explains Mr. Weber.

The company is currently seeking Java developers with good English and in mid-term it will recruit also .NET experts as well as software testers, test manag-ers, and SAP specialists. It is hoping to establish coop-eration with Lublin universities. German language skills are welcome, but not esential.

The city of Lublin has recently intensified its promo-tional efforts, focusing on the business services indus-try, and the strategy is beginning to pay off. In recent months it attracted a large project from US contact centre company Convergys as well as British IT ser-vices firm Mobica.

Mobica has set up its fifth Polish unit in Lublin, plan-ning to recruit some 100 software testers and pro-grammers for two expert teams: mobile technologies and quality assurance. Mobica's existing Polish offices in Warsaw, Łódź, Bydgoszcz and Szczecin, employ 600 programmers, who work on projects for global clients.

US customer management company Convergys Cor-poration has launched a contact centre in Lublin, ex-pecting to create approximately 250 new jobs by the end of the year. Similar to the Trimetis centre, Con-


vergys has chosen Lublin's Nord Office Park as loca-tion for its offices.

According to Mariusz Sagan, head of Lublin's strategy and investor support centre, its existing BPO/SSC/ITO centres are providing employment for an estimated 7,000 Lublin residents. Some 2,000 of those jobs have been created since 2010.

ONLINE BUSINESS

Indian online Indian online Indian online Indian online rerererestaurant listings staurant listings staurant listings staurant listings platform Zomato platform Zomato platform Zomato platform Zomato acquires Polish peeracquires Polish peeracquires Polish peeracquires Polish peer

What do Poles do when they want to check out a res-taurant they'd never been to before booking a table? The internet literate ones browse Gastronauci.pl, a restaurant review site created by Ola Lazar in 2007. Last week her business became part of Indian-owned online and mobile restaurant and discovery service Zomato, which acquired Gastronauci for an undis-closed amount. Following a number of acquisitions in recent weeks, Zomato is present in 16 countries.

"We have had great success in building a strong and engaging user base for Gastronauci in Poland since 2007. This is an exciting new chapter for us and we look forward to working with Zomato and use their technology and product expertise to bring a new en-hanced experience for both consumers and mer-chants," said Gastronauci founder and CEO, Ola Lazar, who will focus on developing her table booking service Stoliczku.

The transaction is to reach completion by early No-vember, after which the Gastronauci team will be working closely with Zomato on building and rolling out an integrated product. Gastronauci's website and mobile app helps users in Poland look for places to dine out or order in from a database of over 26,000 restaurants across the country.

"Ola and the Gastronauci team have built an excellent product that has a significant mind share in Poland. We are very happy to welcome Gastronauci into the Zomato family. Both Zomato and Gastronauci are committed towards building the best platform possible to connect users and the restaurant industry. We are excited to work on building an integrated product combining our technology with Gastronauci's exhaus-tive reach in Poland," said Deepinder Goyal, founder and CEO of Zomato.

The Indian platform has been aggressively expanding its global footprint over the past months, while also strengthening its presence in existing markets. In July, the Delhi-based startup said it wanted to reach 22 in-ternational markets in 24 months. Zomato's interna-tional expansion is being financed with the USD 37m funding Zomato received from Sequoia Capital and InfoEdge in October 2013, taking its valuation to USD 161m.

Its recent acquisitions include MenuMania, a top player in New Zealand, that became part of Zomato in July 2014. In August 2014, Zomato acquired Lunchtime.cz and Obedovat.sk, the Czech Republic's and Slovakia's restaurant guides respectively, for a combined amount of USD 3.25m. This may give one a rough benchmark as regards the possible value of the Gastronauci deal, which concerns a market that is much larger than these two countries combined. With key players in Poland, Slovakia and the Czech Repub-lic in its portfolio, Zomato has become an undisputed

leader in Central and Eastern Europe's restaurant dis-covery space. Zomato, founded in New Delhi in 2008, is a compre-hensive online restaurant and nightlife guide, listing over 262,000 restaurants across India, UAE, UK, the Philippines, South Africa, New Zealand, Brazil, Portu-gal, Chile, Indonesia, Turkey, Qatar, and Sri Lanka. In-fo Edge (India) Ltd and Sequoia Capital have invested a total of USD 53.5m into the business to-date. Zomato has forayed into print as well, launching the Citibank Zomato Restaurant Guide in 2012, and The Connois-seur's Guide to Eating Out in 2013. It employs more than 800 staff globally.

Poland Today talks to: Pramod Rao, Director, International Operations at Zomato Photo: Zomato

• PT: In little more than a month you've acquired key restaurant review sites in Poland, Slovakia, and the Czech Republic. Is this focus on Central and Eastern Europe deliberate? Can you explain the logic behind it? Pramod Rao: Yes, in Europe, we are focusing first on Central and Eastern Europe as the local landscape here is less competitive and we see significant market potential. We have acquired great products and teams in the region and it should be an easy win for us going ahead. We are also looking to expand further in CEE and beyond. Sweden, Finland, Norway, Belgium are potential markets we are looking to enter in the near future.


• PT: Your global organization includes 800+ staff and you've already launched recruitment in Poland. How many employees will the Polish Zomato organi-zation include, initially and in medium-to-long term? What kinds of positions will those be, mainly? PR: Currently, we have the team of Gastronauci of about 10 people. We are looking to scale up to a team of 75 in Poland over the next 12 months. In the imme-diate future, we are looking to build a core team of 15 to 20 across the functions Content, Sales and Market-ing. Some of the key positions we are looking for are Content Head, Senior Content Associates, Sales Head, Area Sales Managers and Marketing Associate. • PT: Will you be unifying all services under the Zomato brand, or rather keep the local brands, like Gastronauci, which are well known to users? PR: Yes, we will be unifying all services under the Zomato brand. For example, in Poland, we will mi-grate all of the content and user accounts from Gastronauci to the polish version of Zomato and redi-rect traffic to our page. The change is not going to be immediate and it will take close to 3 months to make the transition as smooth as possible. • PT: How would you explain the business model be-hind Zomato? Where does the revenue come from? Are you profitable in any of the markets where Zomato operates? PR: Our business model revolves around hyper local advertising relevant to users' needs. We provide res-taurants the option to reach out to a highly targeted audience via our advertising options. All of the reve-nue currently comes from our website. 50% of our 23 million monthly visitors come via our app which we haven't monetized yet. We plan to introduce hyper lo-cal advertising options on our apps in the near future as well. We have also recently introduced a freemium product for restaurant owners to connect and engage with users on Zomato more effectively. We will also start payments for both delivery and dine-ins that us-

ers will be able to use via the Zomato app. Merchants can provide the option to users to make payments through a swift one-swipe transaction. Currently, we are profitable in India, have broken even in UAE and 6 other markets are close to breaking even in the imme-diate future.

• PT: In the case of Poland - in what way will Zomato's acquisition of Gastronauci contribute to the latter platform? Will users & merchants benefit in any way?

PR Both users and merchants will be introduced to a new enhanced experience going ahead. There will be a lot more focus on social discovery of restaurants from the point of view of a user. They will be able to not just consumer and contribute content but also be able to engage with the platform much more via social fea-tures. They can follow other users on Zomato of their choice, build their network of foodies and discover restaurants based on the recommendations of their network. Merchants will have access to a host of tools to increase their visibility to this targeted audience and connect and engage with users in a more effective way on our platform.

RETAIL

Upscale interior goods Upscale interior goods Upscale interior goods Upscale interior goods chain Almi Decor goes chain Almi Decor goes chain Almi Decor goes chain Almi Decor goes bankruptbankruptbankruptbankrupt

Furniture and interior goods chain Almi Decor, which at the peak of its expansion had some upscale 40 outlets in Poland's leading shopping centers, is about to close down. Its owner, Polish company Ade Line has filed for bankruptcy in a Wrocław court.

Established in the 1990s by Polish entrepreneurs Zbigniew Mrozek and Maria Koszucka, Almi Decor in-troduced the concept of luxury living to the Polish market, selling carefully selected furniture and objects in immaculately designed stores that employed pro-fessional interior designers, cooperated with home de-cor magazines, looking considerably more attractive than ones run by its competitors. The business seemed to be going well and in 2007 the company even started getting ready for an IPO. Encouraged by the success, Ade Line launched a se-cond brand, Flo, with funky interior goods and novelty items that targeted a younger clientele. The Flo chain grew up to some 20 outlets at one point, but it was also the first of the two to go under, as Ade Line shut all of its stores last year. The reality check came with the financial crisis, which reminded the Poles how shaky the foundations of their newfound prosperity really were. It also triggered re-cession in the residential sector, resulting in lower demand for all things home. At the same time, e-commerce exploded, giving clients with a taste for glamorous interiors plenty of of new, competitively prices sources of furniture and goods. Meanwhile, Almi Decor kept paying prime rents in Poland's best shopping centers and trying to charge premium prices for items savvy shoppers could find elsewhere for less. The business model began to creak. According to the last available data, in 2013 Ade Line posted a PLN 1.2m net loss on PLN 95m turnover. The owners of Almi Decor have been looking for an inves-tor, however, to no avail. Some market insiders blamed the fact that Ade Line remains in conflict with its pre-vious investor, IDM brokerage, reportedly over the company's abandoned IPO plans. It looks like Almi Decor is about to follow in Flo's footsteps and vanish from the market for good.


Poland's interior goods market is being estimated at some PLN 12bn. The leading player is Sweden's IKEA Retail with eight outlets and annual sales of PLN 2bn.

RETAIL

Retail sales Retail sales Retail sales Retail sales iiiincreasencreasencreasencrease 1111....7777% y/y in % y/y in % y/y in % y/y in AAAAugustugustugustugust

Polish retail sales rose at an annual rate of 1.7% in Au-gust (down from 2.1% y/y in July), on a 1.1% monthly decrease, the Central Statistics Office (GUS) said, con-firming worries about decelerating economic growth. The figure was largely in line with average projections. A closer look at the data shows that slowdown was chiefly due to a significant drop in sales of motor vehi-cles.

Retail sales in Poland (y/y)

-5%

0%

5%

10%

15%

Feb 12 Aug 12 Feb 13 Aug 13 Feb 14 Aug 14

Source: GUS

"Car sales fell in monthly terms by 15.1%, while cloth-ing and footwear as well as furniture and household appliances surprised on the upside, having risen by 4% and by 6%, respectively," commented BZ WBK ana-lysts. "According to our estimates, growth of retail

sales excluding cars remained quite stable at 2.2-2.4% y/y over the last few months," they added. The PAP Polish news agency analyst survey had shown consensus expectations for annual growth of 1.6% and a monthly decline of 0.9%. In real terms, Polish retail sales were up by 2.8% y/y in August after a 3.1% y/y increase in July, GUS added. "We are expecting a gradual improvement of retail sales, which should be supported by good labor market situation and rise in households’ real disposable in-comes. This, in our view, should support further grad-ual improvement of private consumption in the up-coming quarters," BZ WBK said.support further grad-ual improvement of private consumption in the up-coming quarters.

RETAIL PROPERTIES

MMMMulti Corporation gets ulti Corporation gets ulti Corporation gets ulti Corporation gets building permit for building permit for building permit for building permit for huge mixedhuge mixedhuge mixedhuge mixed----use project use project use project use project in Gdańsk city centrein Gdańsk city centrein Gdańsk city centrein Gdańsk city centre

Dutch-based property developer Multi Corporation has obtained a long-awaited permit for its flagship Polish development, the mixed-use scheme Forum Radunia in the centre of Gdańsk. Located in one of the northern Polish city's best locations, directly by the central train station and Old Town, Forum Radunia is to reach completion by the end of 2016, offering 62,000 sq.m of GLA. The project has been the stuff of talk in Gdańsk for nearly a decade, but due to its complexity and the number of parties involved, it has taken Multi a while

to get all the paperwork together. What's unusual about Forum Radunia, is that it will be partially devel-oped over existing train tracks, enabling the city to re-claim some 1.5ha of extremely valuable land. The investment is being developed as a public private partnership between Multi Development and the City of Gdańsk. Besides some 200 retail outlets, a 9-screen Multikino cinema, 1,100 parking spaces, numerous cafes and restaurants, Forum Radunia will incorporate a brand new Gdańsk historical museum, showcasing the legacy of this former Hansaetic city.

Forum Radunia was designed by Multi Corporation's in-house architectural studio T+T Design and the Polish arm of France's Sud Achitectes. Photo: Multi

"We aim to create lively, friendly, welcoming and modern urban space. Its unique location, at the exten-sion of the Royal Route, with access to all modes of public transportation in the Tricity and good connec-tion to the ring road will make Forum Radunia a new landmark of the city, attracting tourists and locals alike. There is huge interest in the project from the po-tential tenants," says Tomasz Matusiak, Managing Di-rector of Multi Development Polska. Multi has already inked pre-lease agreements with a number of domestic and international chains, includ-


ing C&A, Deichmann, Diverse, Douglas, H&M, Rossmann, Solar, Super-Pharm, SWISS, Triumph, Vis-tula, W.Kruk, Wólczanka, Yes and McDonald’s. The Gdańsk-based top Polish fashion retailer LPP will bring all of its brands (HOUSE, Mohito, Reserved, Sinsay, and home&you) to Forum Radunia. The fitness center will be operated by Pure Jatomi.

Although Multi Development is a major player in Eu-rope and Turkey, where it owns and/or manages 60 shopping centers with 5,200 shops and restaurants that receive 330m customers annually and turn over EUR 3.2bn, its presence in Poland has been very lim-ited to-date. In 2007 Multi had been involved in the 55,000 sq.m Forum Koszalin project in northern Po-land, but four years later it sold its stake in the devel-opment to Atrium European Real Estate.

EMPLOYMENT

Report: Poland still Report: Poland still Report: Poland still Report: Poland still needs to make labour needs to make labour needs to make labour needs to make labour market more flexiblemarket more flexiblemarket more flexiblemarket more flexible

With IT and outsourcing centres springing up all over Poland, it is clear that investors see value in the coun-try’s talent pool. However, Poland still has much work to do if it wants to improve the attractiveness of its la-bour market, according to Michał Młynarczyk, manag-ing director for recruitment firm Hays Poland.

Młynarczyk was commenting on his firm’s Global Skills Index report, which was released last week. The index scored Poland at 5.0 on a 10-point scale – mean-ing it’s not too much of either an employer’s market or an employee’s market. But Młynarczyk described the glass as half empty, saying, “it’s not great for either.

Theoretically, from the employer’s perspective, there are much better places to invest.” On the positive side, the report found that investors were still coming in and creating jobs, especially in manufacturing and IT. The country is seen as a “pre-mier location” for shared service centres, which are also developing from standard operational tasks to more advanced processes like HR, procurement & lo-gistics, marketing and strategic planning. It also found that a pick-up in export-oriented industries has con-tributed to a general lowering of the unemployment rate in Poland. However, Poland’s score in the report dropped from last year in labour market flexibility, despite the im-plementation of a set of reforms meant to deregulate professions. Młynarczyk said Poland’s score fell be-cause of new social taxes imposed on businesses, and because legislation is currently under consideration that would increase employers’ contribution to pen-sion insurance when employing someone on a task-based contract (umowa zlecenie). “If there’s one les-son in the report for the government, it’s that these things are being noticed,” he said. Poland also suffers from a significant talent mismatch issue: people graduating from Polish universities sim-ply don’t have the skills to fill the job vacancies firms have. On this point, however, Poland’s score improved from last year, because businesses and universities have begun to cooperate more extensively. At least 100 programmes exist in which employers and universities cooperate to teach skills that will land graduates jobs. But, according to Młynarczyk, “the problem is, it’s still not enough. We’re only half way there from the em-ployer’s perspective.” He added that these pro-grammes had been created almost exclusively on the initiative of employers, rather than universities or lo-cal governments. He favours creating a tripartite body

of employers, universities and the government, that could create a long-term, coordinated strategy to help universities manage curricula. That could help to ease wage pressure in Poland’s market for highly skilled jobs, especially in industries such as engineering, R&D, IT, pharmaceuticals and healthcare. Polish firms are struggling to find afford-able talent in these areas, especially as Europe’s econ-omy is picks up. Poland’s Western neighbours are lur-ing away Polish talent with higher salaries and better conditions. According to statistics office GUS, in 2013 2.2 million Poles left Poland – the highest emigration figure since 2007. Poland could address this issue by easing its immigra-tion policies to talent from the east, especially Ukraine. Poland’s eastern neighbour boasts plenty of highly skilled people that could fill the gap. But Poland’s im-migration regulations are onerous, and make no dis-tinction between high- and low-skilled immigrants. That means it is equally difficult for a Ukrainian soft-ware engineer to enter Poland as it is for a Ukrainian brick-layer. Młynarczyk suggested that the govern-ment should prioritise a set of professions that would receive favoured status, allowing Ukrainian IT special-ists, for example, to enter and work in Poland more easily. When it comes to Ukrainians, “Poland does not have an immigration policy in terms of those high-skilled employees,” said Młynarczyk. “We just kind of make it difficult for everyone.”

by Andrew Kureth.


OPINION

Team sports have a Team sports have a Team sports have a Team sports have a winning winning winning winning formula for formula for formula for formula for PolandPolandPolandPoland

The increasing popularity of sports – and especially team sports– will have a positive effect on Polish society

by Poland Today Editor Andrew Kureth

When I first came to Poland 13 years ago, I remember being disappointed at the general lack of excitement about, and participation in, sport.

Sure, people did play sports, and die-hard football fans watched the Polish league. But coming from the States as I do, where sport is ingrained in the culture, I was surprised that there wasn’t a weekly (or at least monthly) fixture that the entire family would sit down and watch; that more folks didn’t walk around with t-shirts and jerseys of their favourite teams; that univer-sities, not to mention high schools, didn’t have sport teams. Of course, some of that is cultural. Things are done dif-ferently in Europe, with kids tending to play for youth clubs rather than school teams as they do in the US. But still, my experience was that the participation rate

was pitifully low. Why was that, I asked my Polish friends at the time. They replied that when Poland began its transforma-tion process to a market economy, parents encouraged schooling at the expense of sport. The reasoning went that in the new capitalist rat-race economy, brains would be the difference between success or failure, having bread on the table or starving. Sport was a lux-ury that kids could not afford to waste their time on. Now there’s certainly nothing wrong with wanting one’s child to have an edge in the intelligence depart-ment, but that view was a misunderstanding of both the capitalist system and the value of sport. A proper capitalist economy rewards well-rounded individuals who excel at the things sport can teach, such as perse-verance through adversity, creative problem solving, hard work, discipline and teamwork. Over the years, however, things have begun to change. Ski-jumper Adam Małysz, the single Polish sport su-perstar back when I arrived in Poland, got kids excited about his discipline. Now Poland has a cadre of tal-ented jumpers and a relatively well-developed training system for them. Robert Kubica brought F1 racing into the limelight here. Justyna Kowalczyk has put Poland on the cross-country skiing map. Tennis players such as Agnieszka Radwańska and Jerzy Janowicz are serv-ing up exciting play. Cycling is increasing in popularity both as a pastime and as a spectator sport: Rafał Majka won the Tour de Pologne and saw success at the Tour de France this year. Long-distance running has ex-ploded: marathons are increasingly popular, and jog-ging has become the sport that the highest number of Poles say they participate in. But team sports, which teach cooperation and trust, are growing in popularity as well. Cooperation and trust are key social values that need to be reinforced in Poland if its economy is to succeed moving forward.

Leaders such as former Prime Minister Jan Krzysztof Bielecki and president of business advocacy Lewiatan Henryka Bochniarz emphasised this point at Poland Today’s Poland Transformed conference back in May. Witness the swift rise of Poles participating in sports such as rugby, American football and lacrosse. Even football, where Poland’s national team has had little success, is gaining in popularity. The game has long been by far the most popular spectator sport in Poland, but most fans opted to watch the other European leagues, as the Polish league floundered, mired in sloppy play, corruption, and hooliganism. It still can’t match the English Premier League, but play is getting better. And then, of course, there is volleyball. Both Poland’s men’s and women’s national teams have had a meas-ure of success for years. The men’s team even made it to the finals in 2006, when they lost to Brazil. But on September 21, the Polish men’s team became world champions. It was their first such championship since 1974, and in winning they beat three-time de-fending champions Brazil in a thrilling match on home soil. Poles were ecstatic, and in the following days all the media could talk about were the keys to the team’s victory and how it could continue to win with several veteran players announcing their retirement. The excitement has me even more optimistic for Po-land’s future. I’m a big believer in the positive influ-ence sport can have on individuals and communities. Over the past few weeks, as the world volleyball championships played out, Poland came together be-hind a team that worked together, trusted each other and persevered. The result was the ultimate victory. As Poles continue to get excited about such successes, the positive message that sport – and especially team sport – has to send will no doubt play a role in continu-ing to shape Polish society for the better.


KEY STATISTICS

Consumer PricesConsumer PricesConsumer PricesConsumer Prices

Data in (%) May '14 Jun '14 Jul '14 Aug '14

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

Food & bev -0.8 -0.4 -0.9 -0.3 -1.7 -1.1 -2.1 -1.6

Alcohol, tobacco +3.9 +0.2 +4.0 +0.1 +4.0 0.0 +3.8 0.0

Clothing, shoes -4.6 -0.1 -4.7 -0.8 -4.9 -2.8 -5.1 -2.7

Housing +1.6 0.0 +1.6 -0.1 +0.6 0.0 +0.6 +0.1

Transport -0.1 -0.4 -0.6 -0.2 -1.0 +0.8 -1.5 0.0

Communications -1.1 -0.1 +1.3 +2.4 +2.6 +1.2 +3.9 +1.3

Gross CPI +0.2 -0.1 +0.3 0.0 -0.2 -0.2 -0.3 -0.4

IIIInflationnflationnflationnflation

-1%

0%

1%

2%

3%

4%

Au

g 1

2

Oc

t 12

De

c 1

2

Fe

b 1

3

Ap

r 13

Ju

n 1

3

Au

g 1

3

Oc

t 13

De

c 1

3

Fe

b 1

4

Ap

r 14

Ju

n 1

4

Au

g 1

4

y/y m/m

Retail TurnoverRetail TurnoverRetail TurnoverRetail Turnover

Month Apr '14 May '14 Jun '14 Jul '14 Aug '14

m/m (%) +2.3 -2.7 -1.1 +4.7 -1.1

y/y (%) +8.4 +3.8 +1.2 +2.1 +1.7

Year 2009 2010 2011 2012 2013

Turnover in PLNbn 582.8 593.0 646.1 676.0 n/a

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

Residential ConstructionResidential ConstructionResidential ConstructionResidential Construction

Dwellings

(in '000 units)

2009 2010 2011 2012 2013 Jan-Aug

2014

y/y

(%)

Permits 178.8 174.9 184.1 165.1 138.7 105.8 +15.6

Commenced 142.9 158.1 162.2 141.8 127.4 99.5 +16.5

U. construction 670.3 692.7 723.0 713.1 694.0 705.7 -0.1

Completed 160.0 135.7 131.7 152.5 146.1 88.7 -2.9

Source: Central Statistical Office (GUS)

GGGGross Domestic Productross Domestic Productross Domestic Productross Domestic Product

Period Growth y/y unadjusted

GDP in PLN bn current prices

Current account def. in % of GDP

Q2 2014 +3.3% 413,457 -0.9%

Q1 2014 +3.4% 397,429 -1.0%

Q4 2013 +2.7% 455,528 -1.3%

Q3 2013 +2.0% 405,554 -1.9%

2013 +1.6% 1,635,746 -1.3%

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

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

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

Key Economic Data & ProjectionsKey Economic Data & ProjectionsKey Economic Data & ProjectionsKey Economic Data & Projections

Indicator 2011 2012 2013 *2014 *2015

GDP change +4.5% +1.9% +1.6% +3.1% +3.1%

Consumer inflation +4.3% +3.7% +0.9% +0.1% +0.9%

Producer inflation +7.6% +3.4% -1.3% -1.0% +1.1%

CA balance, % of GDP -5.0% -3.7% -1.4% -1.3% -2.0%

Nominal gross wage +5.2% +3.7% +3.4% +3.5% +4.0%

Unemployment** 12.5% 13.4% 13.4% 12.2% 11.7%

EUR/PLN 4.12 4.19 4.20 4.17 4.09

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

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

Sector Q3 2013 Q4 2013 Q1 2014 Q2 2014

A B A B A B A B

Coal mining 6,061 138 8,615 196 6,333 144 6,382 145

Manufacturing 3,625 158 3,690 161 3,663 160 3,743 163

Energy 6,021 183 6,736 205 6,358 193 6,020 183

Construction 3,766 160 3,895 166 3,706 158 3,884 166

Retail & repairs 3,408 145 3,456 147 3,544 151 3,577 153

Transportation 3,589 127 3,913 138 3,666 130 3,650 129

IT, telecoms 6,654 173 6,695 174 6,987 181 6,835 177

Financial sector 6,109 137 6,602 148 6,747 152 6,738 151

National average 3,652 145 3,823 152 3,895 155 3,740 149


Construction OutputConstruction OutputConstruction OutputConstruction Output

Month Feb '14 Mar '14 Apr '14 May '14 Jun '14 Jul '14 Aug '14

m/m (%) +18.7 +24.2 +3.2 +14.0 +16.9 +0.9 -5.4

y/y (%) +14.4 +17.4 +12.2 +10.0 +8.0 +1.1 -3.6

Year 2007 2008 2009 2010 2011 2012 2013

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

Source: The Central Statistical Office of Poland, GUS

Sentiment IndicatorsSentiment IndicatorsSentiment IndicatorsSentiment Indicators

Economic sentiment and consumer confidence indicators

-40

-20

0

20

De

c 1

1

Ma

r 12

Ju

n 1

2

Se

p 1

2

De

c 1

2

Ma

r 13

Ju

n 1

3

Se

p 1

3

De

c 1

3

Ma

r 14

Ju

n 1

4

Se

p 1

460

80

100

120 C onsumer confidenc e (le ft a xis)

Economic se ntiment (right axis)

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

Producer PricesProducer PricesProducer PricesProducer Prices

Month Feb'14 Mar'14 Apr'14 May'14 Jun'14 Jul'14 Aug'14

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

y/y (%) -1.4 -1.3 -0.7 -1.0 -1.8 -2.1 -1.5

Year 2007 2008 2009 2010 2011 2012 2013

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

Construction PricesConstruction PricesConstruction PricesConstruction Prices

Month Feb'14 Mar'14 Apr'14 May'14 Jun'14 Jul'14 Aug'14

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

y/y (%) -1.7 -1.6 -1.5 -1.5 -1.4 -1.2 -0.9

Year 2007 2008 2009 2010 2011 2012 2013

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

Industrial OutIndustrial OutIndustrial OutIndustrial Outputputputput

Month Feb '14 Mar '14 Apr '14 May '14 Jun '14 Jul '14 Aug '14

m/m (%) -1.8 +9.4 -2.3 -1.7 -0.1 +2.0 -8.5

y/y (%) +5.3 +5.4 +5.4 +4.4 +1.7 +2.3 -1.9

Year 2007 2008 2009 2010 2011 2012 2013

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


TTTTraderaderaderade

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

EXPORTS in PLN bn IMPORTS in PLN bn

Jan-Jul

2014 y/y (%)

share (%)

2013 share (%)

Jan-Jul 2014

y/y (%)

share (%)

2013 share (%)

Food and live animals 42,121 +6.3 10.7 69,304 10.9 28,562 +5.2 7.3 47,906 7.4

Beverages and tobacco 5,724 +15.8 1.5 8,624 1.4 2,366 +2.8 0.6 4,150 0.6

Crude materials except fuels 9,655 +3.6 2.5 15,744 2.5 12,436 -1.6 3.2 21,585 3.3

Fuels etc 16,270 -6.1 4.1 30,013 4.7 42,903 +3.3 10.9 75,539 11.7

Animal and vegetable oils 1,115 +9.2 0.3 1,864 0.2 1,531 +04 0.4 2,646 0.4

Chemical products 36,076 +4.6 9.2 59,103 9.3 58,772 +6.5 15.0 92,917 14.3

Manufactured goods by material 78,475 +3.1 20.0 129,915 20.3 70,529 +6.5 18.0 112,392 17.3

Machinery, transport equip. 150,231 +7.5 38.3 239,434 37.5 129,867 +3.7 33.1 216,608 33.4

Other manufactured articles 51,908 +11.7 13.2 82,816 13.0 37,818 +14.8 9.6 58,210 9.0

Not classified 629 n/a 0.2 1,782 0.2 8,044 n/a 1.9 16,242 2.6

TOTAL 392,204 +6.0 100 638,599 100 392,828 +5.0 100 648,195 100

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

EXPORTS in PLNbn IMPORTS in PLN bn

No Country Jan-Jul

2014 share 2013 share No Country

Jan-Jul 2014

share 2013 share

1 Germany 101,201 25.8% 162,548 25.1% 1 Germany 85,393 21.7% 142,161 21.7%

2 UK 25,021 6.4% 42,138 6.5% 2 Russia 44,274 11.3% 79,578 12.1%

3 Czech Rep. 23,969 6.1% 40,110 6.2% 3 China 38,226 9.7% 61,127 9.3%

4 France 22,469 5.7% 36,367 5.6% 4 Italy 21,433 5.5% 34,940 5.3%

5 Russia 17,355 4.4% 34,069 5.3% 5 Netherlands 14,647 3.7% 25,409 3.9%

6 Italy 18,212 4.6% 27,958 4.3% 6 France 15,374 3.9% 25,041 3.8%

7 Netherlands 15,808 4.0% 25,707 4.0% 7 Czech Rep. 13,558 3.5% 24,054 3.7%

8 Ukraine n/a n/a 18,020 2.8% 8 USA 9,482 2.4% 17,431 2.7%

9 Sweden 11,081 2.8% 17,581 2.7% 9 UK 10,269 2.6% 17,184 2.6%

10 Slovakia 9,795 2.5% 17,099 2.6% 10 Belgium 9,768 2.5% 15,137 2.3%


CurrencyCurrencyCurrencyCurrency

Central Bank average rates

as of 26 September 2014

100 USD 327.76 ↑

100 EUR 417.81 ↓

100 GBP 535.17 ↑

100 CHF 346.08 ↓

100 DKK 56.13 ↓

100 SEK 45.42 ↓

100 NOK 51.18 ↓

10,000 JPY 300.68 ↑

100 CZK 15.19 →

10,000 HUF 134.17 ↓

100 USD/EUR against PLN

300

350

400

450

11 O

ct 13

20 D

ec 13

4 M

ar 14

13 M

ay 14

21 Jul 14

26 Sep 14

USD EUR

MMMMoney Supplyoney Supplyoney Supplyoney Supply

in PLN m May '14 Jun '14 Jul '14 Aug '14

Monetary base 162,246 173,096 164,008 167,008

M1 557,651 572,376 570,507 574,529

- Currency outside banks 119,649 120,828 122,209 124,986

M2 975,001 980,090 985,769 1,003,128

- Time deposits 435,386 426,351 434,256 448,037

M3 991,120 996,171 1,002,137 1,020,561

- Net foreign assets 142,260 144,033 152,864 162,129 Monetary base: Polish currency emitted by the central bank and money on accounts held with it. M1= currency outside banks + demand deposits M2= M1+ time deposits (inc in foreign currencies) M3= the broad measure of money supply Source: NBP

CCCCreditreditreditredit

The financial sector's net lending in PLN bn,

loan stock at the end of period

Type of loan May' 14 Jun' 14 Jul' 14 Aug' 14

Loans to customers 930,652 940,703 939,641 950,774

- to private companies 273,360 276,709 274,549 277,482

- to households 574,800 578,639 581,447 587,136

Total assets of banks 1,660,583 1,667,783 1,678,129 1,718,251

Source: Central Bank NBP

IIIInterest ratesnterest ratesnterest ratesnterest rates

Average weighted annual interest rates

on loans to non-financial corporations

Term / currency Feb '14 Mar '14 Apr '14 May '14 Jun '14 Jul '14

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

PLN (up to 5 y ) 4.8% 4.9% 4.8% 4.8% 4.8% 4.7%

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

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

EUR (up to 1m EUR) 2.0% 1.9% 2.0% 2.0% 1.9% 1.7%

EUR (over 1m EUR) 3.4% 3.3% 3.0% 2.7% 3.4% 3.1%

Warsaw Inter Bank Offered Rate (WIBOR) as of 26 Sept 2014

Overnight 1 week 1 month 3 months 6 months

2.41% 2.55% 2.45% 2.32% 2.30%

Central Bank (NBP) Base Rates

Reference Lombard NBP deposit Rediscount

2.59% 4.00% 1.00% 2.75%

Stock ExchangeStock ExchangeStock ExchangeStock Exchange

Warsaw Stock Exchange, rates in PLN

WIG-20 stocks in alphabetical

order

Price 26 Sep

'14

Change 19 Sep

'14

Change end of

'13

↓ Alior Bank 82.47 -5% +1%

↑ Asseco Pol. 45.64 +2% -1%

↓ Bogdanka 108.5 -5% -14%

↓ BZ WBK 397 -2% +2%

↓ Eurocash 31.1 -3% -35%

↓ Grupa Lotos 28.65 -3% -19%

↓ JSW 31.17 -4% -41%

↑ Kernel 25.2 +1% -34%

↓ KGHM 127.9 -3% +8%

↓ LPP 9,680 -3% +8%

↓ mBank 491.1 -4% -2%

↓ Orange Pol. 11.31 -5% +15%

↓ Pekao 191.2 -2% +7%

↓ PGE 20.8 -4% +28%

↓ PGNiG 5.13 -1% 0%

↓ PKN Orlen 41.59 -5% +1%

↓ PKO BP 38.86 -3% -1%

↑ PZU 484.7 +2% +8%

→ Synthos 4.73 0% -14%

→ Tauron 5.28 0% 21%

Source: Warsaw Stock Exchange

Key indices

as of 26 September 2014

WIG Total index

55554444,,,,574574574574....21212121 Change 1 week -2% ↓

Change end of '13 +6% ↑

WIG-20 blue chip index

2,2,2,2,484484484484....02020202 Change 1 week -2% ↓

Change end of ' +3% ↑

WIG Total closing index

last three months

49,000

50,000

51,000

52,000

53,000

54,000

55,000

56,000

27 Jun 14

21 Jul 14

12 A

ug 14

4 Sep 14

26 Sep 14


Poland Today Sp. z o. o.

ul. Złota 61 lok. 100,

00–819 Warsaw, Poland

tel/fax: +48 22 464 82 69

mobile: +48 694 922 898,

+48 602 214 603

www.poland-today.pl

Business Review+ Editor

Lech Kaczanowski

office: +48 22 412 41 69

mobile: +48 607 079 547

[email protected]

Business Review+ Subscription

1 year- EUR 690 (PLN 2760)

6 months- EUR 375 (PLN 1480)

3 months- EUR 245 (PLN 980)

Sales Director

James Anderson-Hanney

mobile: +48 881 650 600

james.anderson-hanney@poland-

today.pl

Publisher Richard Stephens

Financial Director Arkadiusz Jamski

Creative Director Bartosz Stefaniak

New Business Consultant

Tomasz Andryszczyk

RRRRegional Dataegional Dataegional Dataegional Data

Poland's regions

(main cities indicated

in brackets)

Industrial output

Jan-Aug 2014 *

Monthly wages (PLN)

Jan-Aug 2014**

Unemploy-ment

Aug 2014

New dwellings Jan-Aug 2014

Indus-

try

Constru-

ction

Indus-

try

Constru-

ction

in '000 % Num-

ber

Index *

Dolnośląskie (Wrocław) 102.4 113.1 4,403 4,228 129.0 11.2 8,335 79.3

Kujawsko-Pomorskie (Bydgoszcz) 104.7 109.6 3,447 3,304 128.0 15.8 3,901 94.2

Lubelskie (Lublin) 102.8 82.8 3,742 3,099 115.9 12.6 3,317 84.9

Lubuskie (Zielona Góra) 115.1 106 3,483 3,081 48.3 13.1 1,811 89.6

Łódzkie (Łódź) 100.6 109.9 3,740 3,315 131.7 12.4 4,195 101.9

Małopolskie (Kraków) 100.7 107.1 3,827 3,391 139.9 10.0 10,236 99.6

Mazowieckie (Warszawa) 100.5 104.3 4,623 5,048 258.0 10.1 18,863 106.3

Opolskie (Opole) 105.9 122.3 3,649 3,549 43.7 12.3 1,168 102.8

Podkarpackie (Rzeszów) 102.9 110.8 3,425 3,124 134.8 14.5 4,231 105.8

Podlaskie (Białystok) 106.9 120.4 3,323 3,904 61.5 13.3 2,539 109.9

Pomorskie (Gdańsk-Gdynia) 108.5 121.8 4,041 3,470 96.0 11.3 6,208 85.1

Śląskie (Katowice) 100.7 109.2 4,572 3,552 181.5 9.9 6,642 94.7

Świętokrzyskie (Kielce) 108.3 100.9 3,444 3,296 77.8 14.6 1,960 122.1

Warmińsko-Mazurskie (Olsztyn) 104.5 107.1 3,293 3,153 95.2 18.4 2,681 99.1

Wielkopolskie (Poznań) 106.5 104.0 3,767 3,784 120.7 8.1 8,894 99.8

Zachodniopomorskie (Szczecin) 104.1 103.0 3,559 3,487 91.0 15.2 3,718 100.9

National average 103.4 107.2 4,016 3,831 1,853.2 11.7 88,699 97.1

*) Index 100 = same period of the previous year. ** without social taxes

Sources: Central Statistical Office GUS, NBP, C&W

Foreign Direct Investment (EUR m)Foreign Direct Investment (EUR m)Foreign Direct Investment (EUR m)Foreign Direct Investment (EUR m)

Quarter Q4 '12 Q1 '13 Q2 '13 Q3 '13 Q4 '13 Q1 '14

in Poland 2,886 175 -3,020 1,885 -2,899 2,771

Polish DI -1,203 957 2,588 -1,449 1,575 562

Year 2008 2009 2010 2011 2012 2013

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

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

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

Period 2011 2012 2013 Q3 '13 Q4 '13 Q1 '14

Trade balance -10,059 -5,175 2,309 1,094 151 1,159

Services, net 4,048 4,642 5,249 1,032 1,257 1,245

CA balance -18,519 -14,191 -4,984 -2,086 -1,415 -766

CA balance vs GDP -5.0% -3.7% -1.3% -1.9% -1.3% -1.1%

Source: NBP, BZ WBK, PKO BP

UUUUnemploymentnemploymentnemploymentnemployment

Registered unemployed, in ‘000 and

% of population in working age

1,800

2,000

2,200

2,400

2,600

Q3 1

1

Q1

12

Q3

12

Q1

13

Q3

13

Q1

14

Q3 1

4

6

9

12

15 number (left axis) % (right axis)

Source: Central Statistical Office GUS

IndustrIndustrIndustrIndustrial ial ial ial PropertiesPropertiesPropertiesProperties

by region, 1H 2014

Existing stock, sq.m

Under const ruction, sq.m

Va-cancy ratio

Effective rents EUR/ sq.m/mth

Warsaw central 617,000 8,000 14.7% 1–5.0

Warsaw suburbs 2,137,000 14,000 11.3% 1.9–3.2

Central Poland 1,107,000 59,000 11.7% 1.9-3.1

Poznań 1,100,000 316,000 1.9% 2.3–2.9

Upper Silesia 1,576,000 57,000 7.9% 2.3–3.1

Wrocław 939,000 315,000 6.2% 2.4–3.0

Tri-city 215,000 45,000 4.2% 2.2–3.7

Kraków 159,000 11,000 1.9% 3.5-4.0

Homes & CHomes & CHomes & CHomes & Commercialommercialommercialommercial PropertiesPropertiesPropertiesProperties

City

New apartments* Offices 1H'14 Retail rents**1H'14

Q2 '14

PLN/sq.m

Change

y/y

Headline

rents**

Vacancy

ratio

Retail

centres

High

streets

Warsaw 7,924 -2.0% 11 -25 13.35% 100-120 148

Kraków 6,389 +6.0% 13.5-14.5 3.6% 35-40 78

Katowice 5,602 -3.7% 11.5-13.8 5.4% 35-40 50

Poznań 6,552 +3.3% 14-15 11.5% 35-40 62

Łódź 4,936 +2.6% 11.5-12.5 10.6% 35-40 78

Wrocław 6,092 +2.0% 14.15 10.9% 35-40 45

Tricity 6,092 -4.9% 12.8-13.5 11.5% 35-40 40

*avg, offer-based ** EUR/sq.m/month; Prime units 100-150 sq.m

Country Credit Country Credit Country Credit Country Credit RatingsRatingsRatingsRatings

Agency rating outlook

Fitch Ratings A- stable

Standard & Poor's A- stable

Moody's A2 stable

Source: Rating agencies

Real EarningsReal EarningsReal EarningsReal Earnings

Average gross wage vs inflation.

100

120

140

160

180

Aug10

Apr11

Dec11

Aug12

Apr13

Dec13

Aug14

Wage CPI

Index 100 = Jan 2005. Source: GUS

Documents

Poland Today Business Review+ No. 054