Develia Group’s Strategy for Years 2021-2025

Report number 12/2021

Legal basis: Article 17(1) of MAR - inside information

The Management Board of Develia S.A. (“the Issuer” or “the Company”) inform that today, i.e. on 18 February 2021, the Supervisory Board have approved the Develia Group’s Strategy for the years 2021-2025, devised by the Company’s Management Board (“the Strategy”).
The said Strategy aims to present potential for Develia’s growth based on the analysis of the company, market and competitors. It has been envisaged under the Strategy that the Company’s value will be increased by expanding the scale of operations and, at the same time, providing foundations for the Group’s further growth in selected real property market segments. The Group plans to focus on the housing segment and substantially lower capital commitment in the office and retail segments, and reinvest funds recovered in the market areas which offer best prospects, including flats and PRS. If there are insufficient prospects for the expected growth, the Group will consider expanding its operations by entering new geographical markets (selected big and medium-sized cities) and carrying out projects/products in the higher segment, consequently increasing the share in it.
As part of the Strategy, the Develia Group plan to:
– Substantially expand the scale of operations in the housing segment to the sales level of 3,100 flats in 2025 (CAGR 18%);
– Carry out disinvestment of the office and retail portfolio and contemporaneous development of the residential units segment for institutional customers (PRS), and consequently, increase capital committed to the housing segment of 85% of equity;
– Considerably improve return on equity (ROE), achieving the yearly level of 15%;
– Actively create and participate in significant, new market trends, also through entering into partnerships, alliances and M&A;
– Actively build the brand of a solid employer and a business partner and a modern developer, while taking care of positive relations with and loyalty from employees and clients;
– Direct its operations to a positive impact on the environment and adapt selected projects to the city context. Another objective is to strengthen the position of a reliable local community partner, which assumes responsibility for natural environment. As for the housing products, the Group plan also to extend the scope of such products and distinguish them to a greater extent in terms of ecology, functionality, modernity and friendly environment;
– Commence co-operation with a selected partner on a JV basis in the warehousing sector, using land owned in Malin and partial disinvestment.
The Strategy performance indicators developed for evaluation purposes cover such areas as:
– Payment of 75% of adjusted net profit and additionally PLN 100m in the period from 2021 to 2025, despite foreseeable growth;
– Reaching dividend potential greater than PLN 650m (2021-2025);
– Allocation of an average annual budget of PLN 350m to be spent by the Group for land acquisition and M&A and development of land bank for over 10,000 premises in 2025, ensuring further profitable growth of the Company for years to come;
– Implementation of repeatable PRS projects – 300-400 premises per year, providing support by the development of an operating platform for rental management, if necessary;
– Maintaining debt at a level corresponding to industry benchmarks (net debt/equity 0.30-0.49);
– The Malin Project – making first profits in the years 2024-2025.
The Strategy also sets Management Board goals for 2021:
– Selling 1,750 – 1,850 premises under development and preliminary sales agreements;
– Delivery of 1,800 – 1,900 premises;
– Another 1,500 – 1,700 premises added to the offer;
– Disposal of the “Wola Retro” building (2021/2022);
– Preparation of the “Sky Tower” building for disposal;
– Commencement of the first housing project in the institutional rental segment (PRS).
The Strategy has been enclosed with this Current Report as an attachment.
Data and figures contained in the Strategy do not constitute any forecast or estimates of future performance, including of financial results of Develia S.A. They only serve to provide information on the Issuer’s and the Develia Group’s envisaged areas of activity and Develia Group and the potential directions in which they could extend their operations in the years 2021-2025.

Due to the fact that the foregoing information has an important impact on the perspectives of the Issuer’s growth, it has been deemed to meet criteria laid down in Article 7(1) of the Regulation of the European Parliament and of the Council (EU) No. 596/2014 of 16 April 2014 on market abuse.