Transcript Poland

POLAND
Privatisation Plans & Investment Opportunities
Mikołaj Budzanowski - Minister of State Treasury
Paweł Tamborski - Deputy Minister of State Treasury
January 2013
Poland – a distinctive economy…
GDP: 0.7%
Inflation: 4.5%
Population: 63m
• Located in the centre of Europe offering stable
economic fundamentals
GDP: 3.0%
Inflation: 2.5%
Population: 82m
• Well educated and highly productive society
GDP: 4.3%
Inflation: 3.9%
Population: 38m
GDP: 1.7%
Inflation: 1.9%
Population: 11m
GDP: 3.3%
Inflation: 4.1%
Population: 5m
GDP: 1.7%
Inflation: 2.3%
Population: 63m
• Political stability
GDP: -1.6%
Inflation: 3.6%
Population: 11m
• Investment incentives
GDP: 2.5%
Inflation: 5.8%
Population: 21m
GDP: 3.1%
Inflation: 3.6%
Population: 6m
GDP: 0.7%
Inflation: 3.1%
Population: 46m
CEE - GDP(b) and Population (2011)
GDP: 5.5%
Inflation: 4.2%
Population: 3m
GDP: 1.7%
Inflation: 3.9%
Population: 10m
GDP: -6.9%
Inflation: 3.1%
Population: 11m
Real GDP growth rate (c)
600
40
514
38
418
30
400
299
300
20
215
190
200
140
21
8
100
11
0
Poland
Note:
Austria
11
10
96
10
Population (m)
GDP (USD bn)
500
43
5
3
0
Greece
Czech Romania Hungary Slovakia Lithuania
Rep.
GDP (USDbn) 2011
Population (m)
Map: 201 1 GDP, Inflation & Population data 2011 (Eurostat, OECD)
(a) Refers to population age 25-34 yrs. (b) GDP at current prices in USD c) Ministry of Finance
* The Convergence Programme – 2012 update
2
… the fastest growing European economy
Cumulative GDP growth rates (a) 2008-2011
15.8
15
8
10
6.5
5
3.5
3.1
2.8
2.7
2.7
2.5
2.3
1.7
0.2
0
0
-2.2
-2.4
-3
-3.1
-3.4
-3.5
-4.2
-5.7
Lithuania
Italy
Danemark
Hungary
United Kingdom
Portugal
Slovenia
Spain
Finland
Luxembourg
EU
Romania
France
Netherlands
Germany
Belgium
Bulgaria
Austria
Czech Republic
Cyprus
Sweden
Malta
Slovakia
Poland
Source: (a) Ministry of Finance, European Commission, Central Statistical Office (GUS), calculation by the Ministry of Finance
Estonia
-8.8
-15
-9.2
-11.9
Latvia
-1
Greece
-0.5
Ireland
-0.5
-5
-10
3
Stimulus packages contribute to economic stability
and development
►
►
EUR 67bn up to 2013
72% of EU funds
already allocated*
Government
stimulus
►
►
Source:
Note:
EU funds
inflow
Infrastructure
spending
Wide range of fiscal and
pension reforms to
reduce public finance
deficit to ca. 3% of GDP
and public debt to 52%
of GDP in 2012
Significant FDI inflows to
Foreign Direct
Poland: EUR 68.6bn
Investments
(2006-2011)
Shale gas
►
Government spending
forecast 2009-2012:
for roads EUR 23bn
for rail EUR 4bn
►
The Energy Information
Administration estimates
Poland’s shale gas resources at
5.23tcm**
Ministry of Transport, Construction and Maritime Economy, National Bank of Poland, National Cohesion Strategy, EIU report as of March 2012.
Currency conversion based on USD/PLN exchange rate of 3.1891 as of May 4 2012
*As of February 2012 ** Trillion cubic metres
4
Stable monetary policy…
Prudent monetary policy
•
National Bank of Poland interest rates (%)
Inflation
National Bank of Poland’s medium term inflation target
2.5% ± 1 percentage point (since 2004)
 Nov 2012: 2.8% y/y (core inflation 1.7% y/y)
 2013 e: 2.7%
 Avg CPI inflation : 3.0% (since 2004)
•
25bp interest rate cut to 4.25% (6 Dec 2012); NBP has
signalled further cuts.
•
GDP forecasts: 2.2% - 2013; 2.5% - 2014
7.0
6.0
5.0
4.25
4.0
3.0
2.0
1.0
0.0
Inflation Forecast
FX Developments
5%
5.21
4%
3%
4.20
2.7%
3.23
2%
1%
Source: IMF, National Bank of Poland, Global Insight World Overview, Ministry of Finance
5
… and fiscal policy
Key drivers behind fiscal policy
• A widening fiscal deficit in 2009 and 2010 related to automatic stabilizers, tax cuts and accumulation of large infrastructure
projects in 2009-2012 (mainly EURO 2012)
• Expenditure (mainly infrastructure) financed by EU funds made up over 10% of total expenditure
• Since 2011 a strategy of systematic deficit reduction has been in place
• Government deficit expected to fall to 3.4% of GDP in 2012, 3.1% of GDP in 2013
• Government targets:
‐ public debt/GDP to fall to 51.4% in 2013; 2015 expected slightly above 50%
‐ 2013 target budget deficit PLN 35.6bn – actual deficit levels tend to be below budget
Budget deficit execution (PLN bn)
Government budget balance (% GDP)
60
50
52
45
45
41
40
40
35
28
30
31
35
27
30
25
27
24
24
200 8
200 9
32
25
16
20
10
0
200 4
200 5
200 6
200 7
Deficits assumed in Budget Acts
201 0
201 1
201 2f*
Actual deficits
Source: Ministry of Finance ; (a) The Convergence Programme – 2011 update
6
Privatisation via the Stock Exchange
7
Polish Privatisation Programme 2012–2013
Why privatise?
 To transform and strengthen the domestic economy and capital markets
 Promote Warsaw as a financial centre in the CEE region
 To raise budgetary proceeds (est. privatisation proceeds in 2013 of EUR 1.2bn)
Privatisation Programme
 ca. 260 companies earmarked for privatisation (e.g. energy, food, transport,
metallurgy, chemicals, services, coal mining, real-estate, defence, agriculture)
 The Ministry intends to sell off all of its holdings in 85% of companies included
in the Privatisation Programme
 The Ministry will retain majority/controlling stakes in companies of strategic
importance (mainly energy, financial and defence companies)
Privatisation Methods
Capital Markets
 IPO and follow-on offerings
pipeline
 Civic Shareholding
The intention is to to retain
decision-making and intellectual
capital creation in Poland.
*Exchange rate as of May 4, 2012: 1 USD = 3,1891
Trade Sale
 Negotiations following a public
invitation, public tender, public
auction
 Direct sale to secure know-how
and consolidated ownership
 Price is the only selection criterion
 Additional investor commitments
8
Privatisation via the Stock Exchange
Privatisation Plan 2012-2013
 Many companies earmarked for
privatisation are already listed
 Timing is dependant on market
conditions
Key Sectors




Chemical
Energy
Financial institutions
Mining
WSE
Listed
Listed
Listed
Listed
Not Listed
Listed
Listed
Listed
Listed
Not Listed
Listed
Not Listed
Not Listed
Not Listed
Company
Ciech
ZA Pulawy ***
Grupa Azoty Tarnow***
ENEA
Energa
PGE*
PKO BP*
PZU*
WSE
PHN S.A.
JSW**
Kompania Węglowa**
Katowicki Holding Węglowy**
Węglokoks**
Note: *
Sector
Chemicals
Chemicals
Chemicals
Energy
Energy
Energy
Financial Institutions
Financial Institutions
Financial Institutions
Real Estate
Mining - Coal
Mining - Coal
Mining - Coal
Mining - Coal
State Hldg %
38.72%
00.00%
45.13%
51.78%
84.18%
61.89%
33.39%
35.19%
35.00%
100%
56.18%
100%
100%
100%
- Companies of strategic importance included in the Privatisation Plan
** - Companies under the supervision of the Ministry of Economy
*** - New shareholding as part of the consolidation process (21 Jan 2013)
9
Core Companies
Core Companies
 The Treasury has identified core companies
which are considered to be of strategic
importance to the country
 The Treasury will sell tranches but will retain
majority/controlling stakes
 The priority is to increase corporate governance
standards, professionalism, transparency and
quality in those companies
Professional Management and Supervisory
Board selection procedures
Compensation and Incentives Schemes for
Management
Corporate governance
Listed
Listed
Listed
Listed
Listed
Listed
Listed
Listed
Company
PGE*
Tauron
PKO BP*
PZU*
KGHM
PGNiG
Grupa Lotos
PKN Orlen
Sector
Energy
Energy
Financial Institutions
Financial Institutions
Metals & Mining
Oil & Gas
Oil & Gas
Oil & Gas
State Hldg %
61.89%
30.03%
33.39%
35.19%
31.76%
72.41%
53.19%
27.52%
* companies included in the Privatisation Plan 2012-13
Apply Best Practice in Corporate Governance
 To assure professional management and
supervision of companies
 The goal is to create long-term value for all
shareholders of publicly listed state-owned
companies
Code of Best Practice for WSE listed
companies
10
Overview of key holdings (1)
Energy Sector
Energa
Enea
The company’s operations are based on
electricity trading, generation and
distribution. Its distribution network covers
20% of the country. It is the 3rd largest
energy group in Poland with total
production capacity of 3,189 MW.
Energy Sector
Tauron
The second largest domestic producer of
electricity in Poland and one of the largest
business entities in Poland. TAURON
Group’s activities include : coal mining,
electricity generation from conventional
and renewable sources, electricity
distribution, and electricity supply to retail
customers.
Energy generation, distribution and
trading company - provides electricity to
2.5 m households, ca. 300,000
companies (17% market share). Energa’s
distribution covers one-quarter of
Poland’s area. The company generates
ca. 4.5 mn MWh of electricity in 54
manufacturing facilities.
Energa’s
installed capacity is ca. 1,200 MW (3%
market share).
PGE Polska Grupa Energetyczna
(PGE)
Poland’s largest power producer and
supplier, and one of the biggest heat and
energy companies in CEE. Due to a
combination of its own fuel resources
(lignite), power generation and final
distribution networks, PGE guarantees safe
and stable power supply to over 5 million
households, businesses and institutions.
Coal Mining Sector
Real Estate
Jastrzębska Spółka
Węglowa (JSW)
The largest producer of high quality
coking coal and a significant coke
producer in the European Union. The
Company is also a producer of steam
coal, sold mainly to power plants and
CHP plants.
Polski Holding Nieruchomości (PHN)
One of the biggest commercial real estate
companies in CEE. It was established as a
result of consolidation of state owned
companies linked to the real estate market.
Ultimately it will change its business profile
into three segments: office, commercial and
logistics.
11
Overview of key holdings (2)
Financial Sector
Powszechny Zakład Ubezpieczeń (PZU)
PKO Bank Polski (PKO BP)
PKO BP is Poland's largest bank and one of the
oldest in continuous operation. In recent years
the bank has consolidated its market
leadership. It operates the largest banking
network in Poland with over 1,200 branches and
nearly 2,000 smaller outlets.
PZU is the largest insurance group in the CEE in
terms of written premiums (PFSA). It has a
broad range of insurance and financial
products. PZU is the market leader in Polish
property and casualty insurance in terms of
gross written premiums (33% market share),
and life insurance (26% market share).
One of the largest producers of copper and
silver in the world. KGHM possesses its own
copper ore deposit and its own integrated
production structure, comprising three
mines, two copper smelters, a wire rod plant
and auxiliary units supporting the core
business. KGHM acquired Canadian Quadra
FNX Mining in March 2012 through which it
now has operations in Arizona, Canada and
Chile.
WSE is the largest securities exchange in
CEE. It is one of the most dynamically
growing capital markets in Europe. The WSE
operates a regulated market of equity and
derivative instruments, and the alternative
stock market NewConnect for growing
companies.
Oil & Gas Sector
Copper & Silver Sector
KGHM Polska Miedź
Warsaw Stock Exchange (WSE)
Polskie Górnictwo
Naftowe
i Gazownictwo (PGNiG)
PGNiG is the largest Polish oil
and gas exploration and
production company. It is a
leader in natural gas segments
in Poland and the largest
importer of natural gas.
PKN Orlen (Orlen)
Grupa Lotos
PKN ORLEN is one of Central
Europe’s largest refiners of crude
oil. The company specialises in
processing crude oil into worldclass unleaded petrol, diesel,
heating oil, and aviation fuel, as
well as plastics and other
petroleum related products.
Lotos Group is a vertically
integrated
oil
company,
whose business encompasses
exploration
for
and
production of crude oil,
processing of crude oil, as
well as wholesale and retail
sale of high-quality petroleum
products.
12
Overview of key holdings (3)
Chemical Sector
In July 2012 ZA Tarnow announced its acquisition of ZA Pulawy. Both companies stand to benefit from significant synergies.
Following the transaction, the Ministry of Treasury may dispose part of its stake in the combined entity. Significant increase in
value for shareholders is expected due to the possible synergies and size of the combined entity.
Zakłady Azotowe Puławy (ZAP)
Grupa Azoty Tarnow
Ciech
One of Poland’s largest chemical
companies, ZAP has been the leader in
the Polish fertiliser sector for over forty
years. The company concentrates on
the production of nitrogen fertilisers
for agricultural needs, and production
of chemicals which make up 40% of
overall production. Also a leading
producer of caprolactam and nitrogen
fertilisers.
ZAP is the world’s 3rd largest
melamine producer with ca. 10 %
global market share, and 20%
European market share.
Poland’s largest chemical company.
Possesses unique competences in:
• construction plastics (polyamides,
polyoxymethylene, compounds)
• caprolactam
• mineral fertilisers
Ciech Group is one of the Europe’s
chemical market leaders. It comprises
over 40 companies and counts itself
among the 50 largest business
organisations in Poland.
The main products of the Group are:
soda ash (the second largest producer
in Europe), epoxy & polyester resins,
plant protection chemicals and
fertilisers, as well as other chemical
products which are used in the glass,
furniture, chemical, food, agriculture
and construction industries.
It also produces a large number of other
chemical products, renowned on both
domestic and international markets.
The company is the country’s sole
producer of polyacetal.
13
Appendix – Poland’s Capital Markets
14
Priority of the Polish government
Domestic Issuers
International Issuers
43 on the main market / 8 on the alternative
market. Listings from 20 countries including:
Hungary, Slovenia, Ukraine, Israel, Lithuania,
Bulgaria, Estonia, France, UK.
396
423
POLAND’S CAPITAL MARKET
MAIN MARKET
NEWCONNECT
Other nonState
27,11%
JSW
2.02%
International trading flows with approx. 50% of all trading
volume generated by
international investors
•
Domestic institutional
investors (pension funds (OFE),
mutual funds, asset managers)
DERIVATIVES – options & futures
PZU
13.04%
PGNIG
5.33% PGE
7.82%
•
CATALYST
PKOBP
13.74%
LOTOS
1.41%
BOGDANKA
2.72%
TAURONPE
2.96%
KGHM
14.83%
PKNORLEN
9.03%
WIG 20 – privatised core companies
Source: Warsaw Stock Exchange and NewConnect websites, as of January 18, 2013
•
Active retail investor segment (18% 0f trading
flows on WSE main market)
Global and Domestic Investors
15
Warsaw Stock Exchange
Stable and Vibrant Platform to Raise Capital and partnership with NYSE
Number of New Companies Listed through an IPO in 2011(b)
Market Capitalisation (EURbn) – November 2012
591
Equity market cap (EUR bn)
27
217
126
MICEX/RTS
Istanbul SE
6
77
Warsaw SE
2
Wiener Börse
MICEX/RTS
Istanbul SE
Warsaw SE
Wiener Börse
Share Turnover Velocity (%)(c)
Domestic Market Capitalisation – CEE countries (a)
126
Equity market cap (EUR bn)
1
157.2
77
27
Poland
Austria
57.0
30
16
5
44.6
4
Czech Greece Hungary Bulgaria Slovakia
Republic
MICEX/RTS
Source: World Federation of Exchanges Members and Federation of European Securities Exchanges, Company data
Note: a) Oct 2012; exchange rate as of Oct 31,2012 1 USD = 0.7716 EUR b)Main Market c) March 2012 EOB value of share trading
Istanbul SE
Warsaw SE
29.8
Wiener Börse
16
Significant potential for future market development
Market Capitalisation / GDP - December 2011
Trading Velocity - 2011
(in %)
(in %)
152
145
90
137%
WSE - 5th European index futures exchange in 2011
Debt Markets – Bond Issuance 2010-2012
Volume Turnover (EUR Bn)
1 855
4%
1%
1%
Bratislava
8%
1 620
1 525
1 614
18,533.10
Ireland
Cyprus
Slovakia
Bucharest
Romania
Vienna
Greece
Source: FESE
Czech Rep.
Cyprus
WSE
Slovenia
Athens
6
NOMX
8
NYSE
Euronext
11
Budapest
11
OsloBors
12
D.Boerse
13
Malta
57% 51%
46%
17% 16% 14%
16
Hungary
18
Bulgaria
Italy
20
Czech
Rep.
21
Austria
27
Poland
Germany
27
Ireland
34
Malta
Norway
Source: FESE
NYSE
Euronext
UK
NOMX
38
Bulgaria
48
Ljubljana
103% 93% 91%
81% 75%
791
837
478
405
4,968.26
233
549.45
452.70
84.65
14.77
6.58
3.84
1.39
0.02
EUREX Euronext. Spanish NASDAQ Warsaw Austrian ATHEX Oslo Børs Budapest Bucharest Prague
Liffe Exchanges OMX
Stock Derivates Derivatives
Stock
Stock
Stock
Nordic Exchange Market Market
Exchange Exchange Exchange
Source: FESE
79 95 46 12
15 6
0.01
Germany
France
United
Kingdom
Austria
Poland
2010
15 14 3
2 2 3
Czech
Republic
Slovak Romania
Republic
2011
2 2 2
0 1 2
49 4 0
4 9 0
Latvia
Greece
Hungary
2012 YTD
Source: Dealogic
Source: FESE (LSEG data from WFE) as of 31st December 2011, Dealogic as of 16th April 2012
Note: Domestic market capitalization includes regulated and exchange-regulated markets, and foreign-incorporated companies with sole listing on exchange in question.
17
Domestic Pension Funds - a key liquidity driver of WSE
Continued Inflow of Funds Despite Recent Changes to the Pension System
Pension Funds (a)* - AUM
Mutual Funds (a)* - AUM
EUR bn
56
12,4
29
11,7
13,8
13,1
34
35
45
14.4
mn
57
EUR bn
mn
34
15.5
14.9
3.5
25
21
2.1
15
3.3
23
29
18
2.5
2.5
29
2.4
1.4
N0. of
Funds:
2005
2006
2007
2008
2009
2010
2011
15
15
15
14
14
14
14
Assets Under Management
N0. of
Funds:
2005
2006
2007
2008
2009
2010
2011
215
281
381
499
578
658
744
Assets Under Management
Clients
Clients
Retail Investors Contribute to WSE Market Liquidity
(b)
Number
of brokerage
accounts
15
15
14 in Poland
14
15
(‘000)
3%
10 %
997
1,029
1,133
2007
2008
7%
10%
853
909
2005
2006
2009
14
14
30 %
1%
1,477
1,498
1,529
2010
2011
October
2012
WSE Equity - Turnover Breakdown (%)(c)
Annual growth of the total number of brokerage accounts
(a) KNF-Financial
(b)
Supervision Authority - statistics, Chamber of Fund and Asset Management
* PLN/EUR: PLN 3.9517 average exchange rate for 2005-2011
WSE internet portal, KNF-Polish Financial Supervision Authority - statistics, KDPW, Chamber of Fund and Asset Management ( c) Investors in stock exchange turnover 2011 - presentation
18
Polish Retail Investors
Unique Support for Liquidity across WSE Segments
 Akcjonariat Obywatelski (Civic Shareholding Programme) - a long term programme initiated by the
Ministry of Treasury during the IPO of PZU and further developed during the privatisation of Tauron, WSE
and JSW
 The aim is to increase the participation of Polish individuals in the domestic capital markets and
Privatisation Programme, and also to encourage Poles to actively manage their savings
 Successful participation in IPOs
Company
PGE
PZU
Tauron
WSE
JSW
IPO Date
Oct- 2009
May-2010
Jun-2010
Oct-2010
Jul-2011
85,ooo
250,000
230,000
323,000
168,000
No of subscribers
 Today individual investors generate ca.
 18% of trading flows of WSE Main market
 77% of trading flows on NewConnect
 46% of trading flows in future contracts
 64% of trading flows in options
19
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Contact us
Capital Markets Department
Tel. (+48 22) 695 97 04
Fax (+48 22) 695 87 01
E-mail: [email protected]
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Tel. (+48 22) 695 90 90
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