Events having a significant estimated effect on profit or loss for 2021

In connection with the publication of the consolidated annual report for 2021 planned on 30 March 2022, the Management Board of Develia S.A., the “Issuer”, informs that the estimated effect of significant events on the consolidated gross profit of the Capital Group Develia SA for 2021 is PLN 6 024 000, which is equivalent to an increase in the consolidated gross profit. Detailed events affecting the consolidated result are presented below in I-III.

I.

The Capital Group Develia S.A., in its result for the year 2021, recognised amounts resulting from a significant change in the exchange rate of EUR and having a significant effect on the gross profit or loss in the period, i.e.:

• for the year 2021 cumulatively (from 01.01.2021 to 31.12.2021):
  • a decrease in the fair value of investment property measured in EUR and translated into PLN, amounting to PLN 2 983 000. The above-indicated amount will be included in the consolidated statement of comprehensive income under “Profit/(Loss) from real property for investment”
  • a decrease in the measured value of EUR loans incurred in connection with the construction of real property for investment amounting to PLN 2 741 000. The above-indicated amount will be recognised in the consolidated statement of comprehensive income under “Financial income”.

The effect of the above-described change in the exchange rate of EUR (as at 31 December 2021, EUR 1 was PLN 4.5994, i.e., the exchange rate decreased by PLN 0.0154 compared to the exchange rate of EUR as at 31 December 2020, that was, PLN 4.6148), on the consolidated gross profit or loss of the Group for the year 2021 amounted to PLN 242 000 and decreased the consolidated gross profit by the corresponding amount.

• for the fourth quarter of 2021 (from 01.10.2021 to 31.12.2021):
  • a decrease in the fair value of investment property measured in EUR and translated into PLN, amounting to PLN 6 488 000. The above-indicated amount will be recognised in the consolidated statement of comprehensive income under “Profit/(Loss) from investment property”
  • a decrease in the measured value of EUR loans incurred in connection with the construction of investment property amounting to PLN 3 395 000. The above-indicated amount will be recognised in the consolidated statement of comprehensive income under “Financial income”.

The effect of the above-described change in the exchange rate of EUR (as at 31 December 2021, EUR 1 was PLN 4.5994, i.e., the exchange rate decreased by PLN 0.0335 compared to the exchange rate of EUR as at 30 September 2021, that was, PLN 4.6329), on the consolidated gross profit or loss of the Group for the fourth quarter of 2021 amounted to PLN 3 093 000 and decreased the consolidated gross profit by the corresponding amount.

A change in the exchange rate of EUR is non-monetary and does not affect the current standing and operating activities of companies from the Capital Group Develia S.A.

II.

The Capital Group Develia S.A. in its profit or loss for the year 2021 recognised significant amounts resulting from a significant change in the fair value of the real property for investment and having a significant effect on the gross profit or loss in the period, i.e.:

• in connection with the conclusion of the contract of sale of ownership interest in land with the Sky Tower building, the fair value of the investment property Sky Tower – amounting to EUR 82 392 000 as at 31.12.2021 – decreased. As a result of recognising the property value, the gross result decreased by PLN 2 796 000.
• a change in the value of the real property Arkady Wrocławskie with the fair value amounting to
  EUR 37 600 000 as at 31.12.2021. As a result of recognising the property value, the gross result for 2021 decreased by PLN 3 220 000. The amount was recognised in the profit or loss for the fourth quarter of 2021.
• a change in the value of the real property Wola Retro with the fair value amounting to EUR 71 300 000 as at 31.12.2021. As a result of recognising the property value, the gross result for 2021 decreased by PLN 15 074 000. The amount was recognised in the profit or loss for the fourth quarter of 2021.
• expenditure incurred on investment property totalling PLN 9 878 000
• settlements due to the linearisation of lease income amounting to PLN 2 237 000
• creation of provisions for the contract of sale of the investment property Sky Tower in Wrocław in the amount of PLN 17 209 000
• revaluation of provisions for the contracts of sale of the investment property Silesia Star in Katowice and Retro Office House in Wrocław totalling minus PLN 154 000.
• other changes – minus PLN 7 000.

The above-mentioned amounts will be recognised under “Profit/(Loss) from investment property” and will decrease the consolidated gross profit.

The values of the Group’s real property for investment as at 31 December 2021 are presented below:

• Arkady Wrocławskie – EUR 37 600 000 + investment grounds with the carrying value of PLN 19 566 000;
• Sky Tower – EUR 82 392 000;
• Wola Retro – EUR 71 300 000;
• and investment grounds in Malin – PLN 70 090 000.

The value of the Group’s investment property as at 30 September 2021 is presented below:

• Arkady Wrocławskie – EUR 38 300 000;
• Sky Tower – EUR 82 255 000;
• Wola Retro – EUR 74 160 000;
• and investment grounds in Malin – PLN 70 090 000.

The value of the Group’s investment property as at 31 December 2020 is presented below:

• Arkady Wrocławskie – EUR 38 300 000;
• Sky Tower – EUR 83 000 000;
• Wola Retro – EUR 72 200 000;
• and investment grounds in Malin – PLN 70 090 000.

The indicated changes in value will be recognised in the consolidated statement of comprehensive income under “Profit/(Loss) from investment property”

III.

The Management Board decided to reassess the value of impairment losses on inventories in the Capital Group Develia S.A. through reversal of impairment losses created in the past years with reference to

• the Słoneczne Miasteczko project in Krakow in the amount of PLN 10 865 000,

and the Ceglana Park project in Katowice in the amount of PLN 45 976 000.

The Management Board of Develia S.A. decided to change the value of impairment losses in connection with the increase in prices of premises in the above-mentioned investment property and the adoption of a local zoning plan for Ceglana Park, which will allow fulfilling the Issuer’s objectives and, as a consequence, considerably increase the anticipated return on the above-mentioned projects.

The effect of the above-described change amounted to PLN 56 841 000 and increased the consolidated gross result.

IV.

Develia S.A., in its profit or loss for the year 2021, recognised significant amounts having a significant effect on the gross profit or loss in the period due to:

• received dividends and share in profit totalling PLN 122 669 000 in the statement of comprehensive income for 2021, including PLN 31 800 000 recognised in the fourth quarter of 2021,
• along with a change of impairment losses on the Issuer’s interests and shares in subsidiaries amounting to PLN 3 985 000. This amount will increase the separate profit or loss of the Issuer for 2021. In the fourth quarter of 2021, the amount of PLN 3 220 000 was recognised in the company’s profit or loss as an increase.

The aforementioned items have no effect on the consolidated financial statements of the Group Develia S.A.

The above-given information is a reflection of the Management Board’s knowledge at the date of publication of the report and is estimated only.

This information, in the opinion of the Issuer’s Management Board, is confidential within the meaning of Art. 17 par. 1 of the Regulation No 596/2014 of the European Parliament and of the Council (EU) of 16 April 2014 on market abuse.