Develia S.a.GPW: DVL

Short interim consolidated financial statements 06_2020

Sep 30, 2020 at 9:39 PM UTC · Issued by Develia S.a.

DEVELIA S.A. GROUP

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD OF 6 MONTHS, ENDED 30 June 2020

INCLUDING THE INDEPENDENT AUDITOR'S REVIEW REPORT

DEVELIA S.A. GROUP

Interim Condensed Consolidated Financial Statements for the period of 6 months ended 30 June 2020

(PLN '000)

TABLE OF CONTENTS

Interim Condensed Consolidated Statement of Financial Position ...........................................................................	4
Interim Condensed Consolidated Statement of Comprehensive Income..................................................................	5
Interim Condensed Consolidated Statement of Cash Flows ......................................................................................	7
Interim Condensed Consolidated Statement of Changes in Equity...........................................................................	8
Additional explanatory notes.......................................................................................................................................	10
1.	General Information ................................................................................................................................................	10
2.	Composition of Group .............................................................................................................................................	10
3.	Changes in Structure of Group ...............................................................................................................................	11
4.	Composition of Management Board of Parent Undertaking....................................................................................	12
5.	Approval of Interim Condensed Consolidated Financial Statements ......................................................................	12
6.	Basis for Preparation of Interim Condensed Consolidated Financial Statements ...................................................	12
7.	Significant Values Based on Professional Judgement and Estimates ....................................................................	13
8.	Significant Accounting Principles (Policies) ............................................................................................................	16
9.	New Standards and Interpretations Published But Not Effective Yet ......................................................................	16
10.	Seasonal or Cyclical Character of Develia S.A. Group's Operations ......................................................................	17
11.	Information on Operating Segments .......................................................................................................................	17
12.	Sales revenue .........................................................................................................................................................	19
13.	Profit /(loss) on investment property .......................................................................................................................	21
14.	Financial income .....................................................................................................................................................	21
15.	Financial expenses .................................................................................................................................................	22
16.	Income Tax .............................................................................................................................................................	22
	16.1.	Tax Expense................................................................................................................................................	22
	16.2.	Deferred Income Tax ...................................................................................................................................	23

17. Indication of Effects Produced by Changes in Structure of Economic Entities, Including Following Business Combination, Take-Over, Disposal of Group Subsidiaries, Long-Term Investments, Division, Restructuring and

	Discontinuation of Operations .................................................................................................................................	24
18.	Property, plant and equipment ................................................................................................................................	24
19.	Non-Current Receivables........................................................................................................................................	24
20.	Land Classified As Fixed Assets.............................................................................................................................	25
21.	Investment Real Property and Non-Current Assets Classified as Held for Sale .....................................................	25
22.	Inventory .................................................................................................................................................................	28
23.	Trade and Other Receivables .................................................................................................................................	29
24.	Current financial assets ..........................................................................................................................................	29
25.	Cash and other cash equivalents............................................................................................................................	30
26.	Financial Liabilities..................................................................................................................................................	30
	26.1. Interest-bearing Bank Loans and Bonds......................................................................................................	30
	26.2. Other Liabilities on Account of Financial Instruments ..................................................................................	33
	26.3. Issue, Redemption of Equity Securities .......................................................................................................	33
	26.4. Taking out and Repaying of Bank Loans and Borrowings ...........................................................................	34
27.	Collateral.................................................................................................................................................................	34
	27.1. Security for Loans Granted to Finance Commercial Properties...................................................................	34
28.	Provisions ...............................................................................................................................................................	37
29.	Trade and Other Payables ......................................................................................................................................	38
30.	Accruals and Deferred Income................................................................................................................................	39
31.	Explanations to Statement of Cash Flow ................................................................................................................	39
	31.1. Change in Liabilities, Except for Loans and Borrowings ..............................................................................	39
	31.2. Other Adjustments .......................................................................................................................................	39
32.	Information Relating to Dividend Paid Out (or Declared) ........................................................................................	40
33.	Investment Liabilities...............................................................................................................................................	40
34.	Court Proceedings ..................................................................................................................................................	40
35.	Changes in Contingent Liabilities, After the End of Last Accounting Year ..............................................................	40
		2

	DEVELIA S.A. GROUP
	Interim Condensed Consolidated Financial Statements for the period of 6 months ended 30 June 2020
	(PLN '000)
36.	Transactions with Related Undertakings.................................................................................................................	41
37.	Financial Instruments..............................................................................................................................................	42
38.	Capital Management...............................................................................................................................................	42
39.	Effects of Announcement of COVID-19 Epidemic on Group's Current Operations.................................................	43
40.	Events After End of Reporting Period .....................................................................................................................	43

DEVELIA S.A. GROUP

Interim Condensed Consolidated Financial Statements for the period of 6 months ended 30 June 2020

(PLN '000)

Interim Condensed Consolidated Statement of Financial Position

as at 30 June 2020 (PLN'000)

		Note	30 June 2020	31 December 2019

Assets

A.	Non-current assets		1,243,789	1,234,709

1.	Intangible assets		341	334
2.	Property, plant and equipment	18	6,046	5,897
3.	Non-current receivables	19	8,938	8,699
4.	Land classified as fixed assets	20	86,775	86,603
5.	Investment property	21	1,104,729	1,096,679
6.	Non-current prepayments and accrued income		560	1,089
7.	Deferred tax assets	16.2	36,400	35,408
B.	Current assets		1,765,364	1,562,934

1.	Inventory	22	1,201,661	1,062,028
2.	Trade and other receivables	23	40,735	123,356
3.	Income tax receivables		9,218	8,296
4.	Current financial assets	24	27,218	25,815
5.	Cash and Cash Equivalents	25	481,357	340,890
6.	Current prepayments and accrued income		5,175	2,549
C.	Non-current assets classified as held for sale	21	-	446,282

Total assets		3,009,153	3,243,925

Equity and liabilities

A.	Equity		1,510,123	1,492,111
I.	Equity attributable to shareholders of the parent		1,510,123	1,492,111

1.	Share capital		447,558	447,558
2.	Other capital		1,053,748	927,171
3.	Net profit/(loss)		8,817	117,382

II.	Minority interest		-	-

B.	Non-current liabilities		657,708	1,028,223

1.	Non-current liabilities on account of loans and bonds	26	577,097	898,717
2.	Non-current lease liabilities		19,042	18,769
3.	Provisions	28	4,765	5,319
4.	Deferred tax liability	16.2	56,804	105,418

C.	Current liabilities		841,322	706,818

1.	Current liabilities on account of loans and bonds	26	201,116	128,727
2.	Current lease liabilities		43,012	41,512
3.	Current trade and other payables	29	121,280	127,117
4.	Income tax payables		54,263	39,319
5.	Provisions	28	9,473	8,831
6.	Accruals and deferred income	30	412,178	361,312

D.	Liabilities arising from non-current assets classified as held for sale		-	16,773

Total equity and liabilities		3,009,153	3,243,925

DEVELIA S.A. GROUP

Interim Condensed Consolidated Financial Statements for the period of 6 months ended 30 June 2020

(PLN '000)

Interim Condensed Consolidated Statement of Comprehensive Income

for the period of 6 months ended 30 June 2020 (PLN '000)

		Period of 6 months	Period of 6 months
	Note	ended	ended
		30 June 2020	30 June 2019

Operating activity

Sales revenue	12	220,079	631,733

Revenue from sales of services		44,233	76,917
Revenue from sales of goods and products		175,846	554,816

Cost of sales		(128,514)	(393,358)

Pre-tax profit/(loss) on sales		91,565	238,375

Gain/(loss) on disposal of non-financial fixed assets		31	15
Profit /(loss) on investment property	13	(15,126)	(44,618)
Write-downs of Inventories		-	(363)
Selling and distribution cost		(6,868)	(8,846)
General administrative expenses		(14,165)	(16,568)
Other operating income		2,323	1,728
Other operating expenses		(970)	(1,971)

Operating profit/(loss)		56,790	167,752

Financial income	14	1,996	10,659
Financial expenses	15	(43,427)	(20,268)

Pre-tax profit/(loss)		15,359	158,143

Income tax (tax expense)	16.1	(6,542)	(32,716)

Net profit/(loss)		8,817	125,427


Other comprehensive income subject to reclassification to financial result in
subsequent reporting periods
Cash flow hedges		11,352	(7,494)
Income tax relating to other components of comprehensive income		(2,157)	1,252

Other comprehensive income (net)		9,195	(6,242)


Total comprehensive income		18,012	119,185

DEVELIA S.A. GROUP

Interim Condensed Consolidated Financial Statements for the period of 6 months ended 30 June 2020

(PLN '000)

	Period of 6 months	Period of 6 months
	ended	ended
	30 June 2020	30 June 2019


Net profit/(loss) attributable to:	8,817	125,427

Equity holders of the parent	8,817	125,427
Minority interest	-	-


Comprehensive income attributable to:	18,012	119,185

Equity holders of the parent	18,012	119,185
Minority interest	-	-

Profit/(loss) per share attributable to equity holders of the parent (basic) (PLN)

Profit/(loss) per share attributable to equity holders of the parent (diluted) (PLN)

0.020.28

DEVELIA S.A. GROUP

Interim Condensed Consolidated Financial Statements for the period of 6 months ended 30 June 2020

(PLN '000)

Interim Condensed Consolidated Statement of Cash Flows

for the period of 6 months ended 30 June 2020 (PLN '000)

			Period of 6 months	Period of 6 months
		Note	ended	ended
			30 June 2020	30 June 2019

A.	Cash flows from operating activities
I.	Pre-tax profit/(loss)		15,359	158,143

II.	Total adjustments		(14,535)	(82,813)

1.	Depreciation and amortisation		978	711
2.	Foreign exchange gains/(losses)		16,570	(12,886)
3.	Interest and profit sharing (dividends)		18,917	21,159
4.	Profit (loss) on investing activities		-	-
5.	Profit(loss) on investment property		10,574	43,779
6.	Change in provisions		(4,344)	60
7.	Change in inventories		(138,834)	161,971
8.	Change in receivables		82,382	(14,962)
9.	Change in current liabilities except for loans and bonds	31.1	(4,250)	21,842
10.	Change in accruals and deferrals		48,769	(322,284)
11.	Income tax paid		(44,283)	(26,500)
12.	Other adjustments	31.2	(1,014)	44,297

III.	Net cash flow from operating activities (l+ll)		824	75,330
B.	Cash flows from investing activities
I.	Cash inflows		436,071	-
1.	Sale of intangible assets and property, plant and equipment		-	-
2.	Disposal of investment in property		436,071	-
II.	Outflows		(22,060)	(59,422)
1.	Acquisition of intangible assets and property, plant and equipment		(329)	(943)
2.	Investment in property		(21,731)	(58,479)

III.	Net cash flow from investing activities (l+ll)		414,011	(59,422)
C.	Cash flows from financing activities
I.	Cash inflows		4,413	121,181
1.	Loans and borrowings	26.4	4,413	61,181
2.	Issue of debt securities	26.3	-	60,000
II.	Outflows		(278,781)	(106,107)
1.	Repayment of loans and borrowings	26.4	(193,749)	(37,176)
2.	Redemption of debt securities	26.3	(65,000)	(50,000)
3.	Payment of liabilities arising from finance lease agreements		(426)	(159)
4.	Interest		(19,606)	(18,772)

III.	Net cash flows from financing activities (l+ll)		(274,368)	15,074

D.	Total net cash flows, (A.III+B.III+C.III)		140,467	30,982

E.	Change in cash flows in the Statement of Financial Position		140,467	30,982
F.	Cash and cash equivalents at the beginning of the period		340,890	467,698

G.	Cash and cash equivalents at the end of the period, including:	(F+D)	481,357	498,680
	- restricted cash		20	20

DEVELIA S.A. GROUP

Interim Condensed Consolidated Financial Statements for the period of 6 months ended 30 June 2020

(PLN '000)

Interim Condensed Consolidated Statement of Changes in Equity

for the period of 6 months ended 30 June 2020 (PLN '000)

		Other capital		Total capital

		Supplementary
	Share capital		Net profit/(loss)	attributable to	Minority interest	Total equity
	capital, reserve
	Other funds	shareholders of
		funds and
				the parent
		retained earnings


As at 01 January 2020	447,558	932,703	(5,532)	117,382	1,492,111	-	1,492,111

Net profit/(loss) for the period of 6 months ended 30 June 2020

Other comprehensive income for the period of 6 months ended 30 June 2020

-	-	-	8,817	8,817	-	8,817
-	-	9,195	-	9,195	-	9,195

Other comprehensive income for the period of 6 months	-	-	9,195	8,817	18,012	-	18,012
ended 30 June 2020


Transfer of profit for the previous period to undistributed profit	-	117,382	-	(117,382)	-	-	-

As at 30 June 2020	447,558	1,050,085	3,663	8,817	1,510,123	-	1,510,123

		Other capital		Total capital

		Supplementary
	Share capital		Net profit/(loss)	attributable to	Minority interest	Total equity
	capital, reserve
	Other funds	shareholders of
		funds and
				the parent
		retained earnings


As at 01 January 2019	447,558	893,164	(3,303)	160,380	1,497,799	-	1,497,799

Net profit/(loss) for 2019	-	-	-	117,382	117,382	-	117,382
Other comprehensive income for 2019	-	-	(2,229)	-	(2,229)	-	(2,229)

Total comprehensive income for 2019	-	-	(2,229)	117,382	115,153	-	115,153

Transfer of profit for the previous period to undistributed profit	-	160,380	-	(160,380)	-	-	-
Payment of dividend	-	(120,841)	-	-	(120,841)	-	(120,841)

As at 31 December 2019	447,558	932,703	(5,532)	117,382	1,492,111	-	1,492,111

DEVELIA S.A. GROUP

Interim Condensed Consolidated Financial Statements for the period of 6 months ended 30 June 2020

(PLN '000)

		Other capital		Total capital

		Supplementary
	Share capital		Net profit/(loss)	attributable to	Minority interest	Total equity
	capital, reserve
	Other funds	shareholders of
		funds and
				the parent
		retained earnings


As at 01 January 2019	447,558	893,164	(3,303)	160,380	1,497,799	-	1,497,799

Net profit/(loss) for the period of 6 months ended 30 June 2019

Other comprehensive income for the period of 6 months ended 30 June 2019

-	-	-	125,427	125,427	-	125,427
-	-	(6,242)	-	(6,242)	-	(6,242)

Other comprehensive income for the period of 6 months	-	-	(6,242)	125,427	119,185	-	119,185
ended 30 June 2019


Transfer of profit for the previous period to undistributed profit	-	160,380	-	(160,380)	-	-	-

Allocated to the payment of dividend	-	(120,841)	-	-	(120,841)	-	(120,841)

As at 30 June 2019	447,558	932,703	(9,545)	125,427	1,496,143	-	1,496,143

DEVELIA S.A. GROUP

Interim Condensed Consolidated Financial Statements for the period of 6 months ended 30 June 2020

(PLN '000)

Additional explanatory notes

1. General Information

The Develia S.A. Group ("the Group") comprises Develia S.A. (formerly known as LC Corp S.A.) and its subsidiaries (see Note 2). The Interim Condensed Consolidated Financial Statements of the Group cover the period of 6 months ended on 30 June 2020 and contain comparative data for the period of 6 months ended on 30 June 2019 and as at the 31 December 2019.

Develia S.A. (the "Parent Undertaking", the "Company", the "Issuer", formerly known as LC Corp S.A.) was established by the Notarial Deed dated 3 March 2006. The Company's registered office is situated in Wrocław, Poland, at ul. Powstańców Śląskich 2-4. The Parent Undertaking has been entered into the register of entrepreneurs of the National Court Register maintained by the District Court for Wrocław-Fabryczna in Wrocław, the 4th Commercial Division of the National Court Register, under KRS No. 0000253077.

The Company has been assigned statistical identification number REGON 020246398.

The Parent Undertaking and the Group's subsidiaries were established for an indefinite period. The Parent Undertaking's primary activity is:

PKD 6420Z Activities of financial holding companies
PKD 6820Z Rental and management of own or leased real estate
PKD 4110Z Completion of construction projects related to putting up buildings
PKD 6810Z Buying and selling of own real estate
PKD 4120Z Construction works related to the completion of residential and non-residential buildings

There is no parent undertaking of Develia S.A. as at the date hereof nor was there any such entity throughout the period covered by these financial statements.

2. Composition of Group

As at 30 June 2020 and 31 December 2019, the Develia S.A. Group comprised the following subsidiaries of Develia S.A.:

		Effective share of Develia S.A.
Company name	Registered	30 June 2020	31 December 2019
office	Share in Capital	Share in Capital


Arkady Wrocławskie S.A.	Wrocław	100%	100%
Sky Tower S.A.	Wrocław	100%	100%
Warszawa Przyokopowa Sp. z o.o.	Wrocław	100%	100%
Kraków Zielony Złocień Sp. z o.o.	Wrocław	100% (directly and indirectly)	100% (directly and indirectly)
LC Corp Invest I Sp. z o.o.	Wrocław	100% (directly and indirectly)	100% (directly and indirectly)
LC Corp Invest II Sp. z o.o.	Wrocław	100%	100%
LC Corp Invest III Sp. z o.o.	Wrocław	100%	100%
LC Corp Invest VII Sp. z o.o.	Wrocław	100%	100%
LC Corp Invest VIII Sp. z o.o.	Wrocław	100%	100%
LC Corp Invest IX Sp. z o.o.	Wrocław	100%	100%
LC Corp Invest X Sp. z o.o.	Wrocław	100%	100%
LC Corp Invest XI Sp. z o.o.	Wrocław	100%	100%

DEVELIA S.A. GROUP

Interim Condensed Consolidated Financial Statements for the period of 6 months ended 30 June 2020

(PLN '000)

LC Corp Invest XII Sp. z o.o.	Wrocław	100%	100%
LC Corp Invest XV Sp. z o.o.	Wrocław	100%	100%
LC Corp Invest XVI Sp. z o.o.	Wrocław	100%	100%
LC Corp Invest XVII Sp. z o.o.	Wrocław	100%	100%
LC Corp Invest XIX Sp. z o.o. w likwidacji	Wrocław	100%	100%
LC Corp Invest XXI Sp. z o.o.	Wrocław	100%	100%
LC Corp Invest XXII Sp. z o.o. w likwidacji	Wrocław	100%	100%
LC Corp Invest XXIII Sp. z o.o. w likwidacji	Wrocław	-	100%
LC Corp Invest XXIV Sp. z o.o.	Wrocław	100%	100%
LC Corp Invest XV Sp. z o.o. Projekt 2 Sp. k.	Wrocław	100% (indirectly)	100% (indirectly)
LC Corp Invest XV Sp. z o.o. Projekt 4 Sp. k.	Wrocław	100% (indirectly)	100% (indirectly)
LC Corp Invest XV Sp. z o.o. Projekt 6 Sp. k.	Wrocław	100% (indirectly)	100% (indirectly)
LC Corp Invest XV Sp. z o.o. Projekt 7 Sp. k.	Wrocław	100% (indirectly)	100% (indirectly)
LC Corp Invest XV Sp. z o.o. Projekt 8 Sp. k.	Wrocław	100% (indirectly)	100% (indirectly)
LC Corp Invest XV Sp. z o.o. Projekt 9 Sp. k.	Wrocław	100% (indirectly)	100% (indirectly)
LC Corp Invest XV Sp. z o.o. Projekt 10 Sp. k.	Wrocław	100% (indirectly)	100% (indirectly)
LC Corp Invest XV Sp. z o.o. Projekt 11 Sp. k.	Wrocław	100% (indirectly)	100% (indirectly)
LC Corp Invest XVII Sp. z o.o. Projekt 20 Sp. k.	Wrocław	100% (directly and indirectly)	100% (directly and indirectly)
LC Corp Invest XVII Sp. z o.o. Projekt 21 Sp. k.	Wrocław	100% (indirectly)	100% (indirectly)
LC Corp Invest XVII Sp. z o.o. Projekt 22 Sp. k.	Wrocław	100% (directly and indirectly)	100% (directly and indirectly)
LC Corp Invest XV Sp. z o.o. Investments S.K.A.	Wrocław	100% (directly and indirectly)	100% (directly and indirectly)
Develia Invest Sp. z o.o.	Wrocław	100%	100%
LC Corp Service S.A.	Wrocław	100% (directly and indirectly)	100% (directly and indirectly)

As at 30 June 2020 and as at 31 December 2019, the share in the total vote held by the Parent Undertaking in its subsidiaries was equal to the share of the Parent Undertaking in the capitals of these entities.

3. Changes in Structure of Group

Acquisition and Sale of Subsidiaries Outside Group

No transaction consisting in the acquisition or sale of business units was completed by the companies belonging to the Group in the period of 6 months ended 30 June 2020.

Newly Established Entities and Changes within Group

The following changes occurred in the Group in the period of 6 months ended 30 June 2020:

On 11 May 2020, a resolution on initiating the liquidation of LC Corp Invest XXII Sp. z o.o. was carried.
On 13 June 2019, a resolution on initiating the liquidation of LC Corp Invest XIX Sp. z o.o. was carried, and on 29 March 2020, resolution on the completion of liquidation was adopted. Consequently, the company was removed from the National Court Register (KRS) on 14 July 2020.
On 13 June 2019, a resolution on initiating the liquidation of LC Corp Invest XXIII Sp. z o.o. was carried, and on 29 March 2020, resolution on the completion of liquidation was adopted. Consequently, the company was removed from the National Court Register (KRS) on 13 May 2020.
On 30 June 2020, LC Corp S.A. acquired from Kraków Zielony Złocień Sp. z o.o. all the rights and obligations of the limited partner in LC Corp Invest XV Sp. z o.o. Projekt 9 Sp.k.

DEVELIA S.A. GROUP

Interim Condensed Consolidated Financial Statements for the period of 6 months ended 30 June 2020

(PLN '000)

Apart from the aforementioned events, no other significant changes in the composition of the Group took place in the period from 01 January 2020 to 30 June 2020.

4. Composition of Management Board of Parent Undertaking

As at 01 January 2020, the Management Board of Develia S.A. was composed of the following persons:

Acting President of Management Board - Michał Hulbój
Member of Management Board - Mirosław Kujawski
Member of Management Board - Tomasz Wróbel
Member of Management Board, CFO - Paweł Ruszczak

On 26 February 2020, the Company's Supervisory Board, acting pursuant to Article 383(1) of the Commercial Partnerships and Companies Code, adopted a resolution under which the term of Mr Michał Hulbój's delegation to act as the President of the Management Board was extended for a period from 29 February 2020 to 29 May 2020.

On 14 May 2020, the Supervisory Board of the Company adopted a resolution under which Management Board President's duties would be entrusted for a temporary period to Mr Paweł Ruszczak, previously serving as Member of Management Board and CFO. He took the new role as of 30 May 2020, acting in his new capacity until the appointment of the President of Management Board.

As at 30 June 2020, the Management Board of Develia S.A. was composed of the following persons:

Acting President of Management Board - Paweł Ruszczak
Member of Management Board - Mirosław Kujawski
Member of Management Board - Tomasz Wróbel

5. Approval of Interim Condensed Consolidated Financial Statements

These interim condensed consolidated financial statements were approved by the Management Board on 08 September 2020.

6. Basis for Preparation of Interim Condensed Consolidated Financial Statements

These Interim Condensed Consolidated Financial Statements were prepared in accordance with the International Financial Reporting Standards ("IFRS") adopted by the EU, in particular with the International Accounting Standard No. 34.

As at the date of the approval of these financial statements for publication, on account of the ongoing process of introducing IFRS in the EU and the business activity conducted by the Group, the International Financial Reporting Standards, in terms of accounting principles adopted by the Group, vary from IFRS already approved by the EU.

IFRS comprise standards and interpretations accepted by the International Accounting Standard Board ("IASB") and the International Financial Reporting Interpretations Committee ("IFRIC").

These interim condensed consolidated financial statements were prepared using the historical cost method, except for investment real property and some derivative instruments which are measured at fair value.

The Interim Condensed Consolidated Financial Statements are presented in thousand Polish Zlotys ("PLN"), and all values included in the tables and descriptions, if not indicated otherwise, are given in PLN'000.

The Interim Condensed Consolidated Financial Statements were prepared on the assumption that the Group companies would continue as a going concern in the foreseeable future. As at the day of the approval of these Financial Statements, no circumstances were identified implying any threats to the continuation of the Group companies' business activity.

The Interim Condensed Consolidated Financial Statements do not contain all information and disclosures required for annual consolidated financial statements and they must be read together with the Group's consolidated financial statements for the year ended 31 December 2019, which was published on 12 March 2020.

DEVELIA S.A. GROUP

Interim Condensed Consolidated Financial Statements for the period of 6 months ended 30 June 2020

(PLN '000)

Information on the accounting principles adopted by the Group was presented in the annual consolidated financial statements of the Develia Group for the year ended 31 December 2019, published on 12 March 2020.

7. Significant Values Based on Professional Judgement and Estimates

The Management Board of the Parent Undertaking used their best knowledge of the applied standards and interpretations, and also the methods and principles of the valuation of particular items of the enclosed condensed consolidated financial statements. Preparing the financial statements in accordance with IFRS required the Company's Management Board to make some estimates and assumptions, which are reflected herein. The actual results may vary from these estimates. The financial data for the period of 6 months ended 30 June 2020 presented herein was not subject to auditor's examination.

Professional Judgement

In the process of applying the accounting principles (policies) to the issues specified hereinbelow, the professional judgement of the management was, apart from the accounting estimates, of the greatest importance.

Determination of Moment When, Upon Sale of Residential and Retail Premises, Risk Is Transferred to Client

The moment of transferring the control to the client determines when revenues from the sales of residential and retail premises can be recognised.

Upon the sale of residential and retail premises, the control is transferred to the client when each and every of the following conditions are fulfilled:

obtaining the occupancy permit for the buildings;
payment of 100% of the value of the premises, based on the developer agreement or preliminary agreement;
acceptance of the premises by the client, evidenced by the delivery and acceptance protocol;
signing of the developer agreement or notarial deed transferring the title.

In the case of the financing of part of the price by the state in accordance with the Act of 27 September 2013 on State Aid in the Purchase of the First Flat by Young People (MDM), the conditions set out in item (ii) are also met when a bank financing the client confirms the reservation of funds (the last instalment of the payment) for this purpose and when the developer agreement contains the relevant provision.

Land Classified As Fixed Assets

As at 30 June 2020, Land Classified as Fixed Assets concerned the land located in Malin, Wisznia Mała municipality in the Lower Silesian Voivodeship.

In view of the entry into force on 30 April 2016 of the provisions amending the Act of 11 April 2003 on the Shaping of the Agricultural System (Journal of Laws of 2012, item 803, of 2016, item 585, 1159) and the introduced restrictions on acquisition of agricultural property, an analysis was made to check the impact of the provisions of this act on the restrictions on the possibility of implementation of investment opportunities on the above-mentioned land.

This regulation introduced restrictions on the acquisition of agricultural real property with an area of more than 0.3 ha and not covered by the current spatial development plan in such a manner that the buyer of agricultural real property of at least 1 ha may be in principle only an individual farmer - a natural person, while other entities may acquire agricultural property only with the agreement of the President of the Agricultural Property Agency and in the cases provided by regulations. The restrictions imposed by the act apply also to shares and stocks in companies which own agricultural property, where the Agricultural Property Agency which is the owner of the agricultural property has the right of preemption of shares and stocks in these companies.

The introduced restrictions have an impact on the shaping of demand and supply on the agricultural land market by changing the profile of market participants and new legal terms of the sale of agricultural property, which results in a smaller number of agricultural real property sold after 30 April 2016.

The Group is the owner of land with the total area of 169 ha, located in Malin, Wisznia Mała municipality in the Lower Silesian Voivodeship, and currently there is no spatial development plan for this property, therefore in accordance with

DEVELIA S.A. GROUP

Interim Condensed Consolidated Financial Statements for the period of 6 months ended 30 June 2020

(PLN '000)

Article 2(1) of the above-mentioned Act, it is "agricultural property" and is subject to the above restrictions on the possibility of trade in this property.

Due to the acquisition of land by the Group with a view to implement a development project and the designation in the Study of land use conditions and directions of Wisznia Mała municipality of this property for residential areas, the Group, as at 30 June 2020, disclosed the property in the item Land qualified as non-current assets for development projects during a period of over 2 years, in the valuation by an independent valuer drawn up before the date of entry into force of the above-mentioned Act, used also as at 31 December 2019, since despite the restrictions introduced by the Act, the Group believes that there is still a possibility to use this land in a manner consistent with its intention and the Group does not intend to dispose of this property.

Classification of Lease Agreements

The Group classifies lease according to IFRS 16.

Uncertainty of Estimates

The basic assumptions concerning the future have been discussed below as well as other key reasons for doubts occurring as at the balance sheet date and entailing a significant risk of the considerable adjustment of the book value of assets and liabilities in the following financial year.

Deferred Tax Asset

The Group recognises a deferred tax asset based on the assumption that a tax profit enabling its utilisation should be obtained in the future. Worse tax results obtained in the future could have the effect that this assumption might become groundless. Deferred income tax is presented in Note 16.2.

Fair Value of Investment Property

At the end of each quarter of an accounting year, the Group independently measures the fair value of its investment properties in EUR based on the model of investment capitalisation or maintains the valuation in EUR carried out by an independent valuer at the end of the preceding year (provided there were no significant indications to revaluation). At the end of each accounting year, the fair value of investment property is established or verified by an independent valuer. As at 30 June 2020, investment property is measured on the basis of valuations of valuers. Investment property and Non- current assets classified as held for sale are presented in Note 21.

Fair Value of Financial Instruments in the Form of Forward Contracts

The fair value of financial instruments in the form of forward contracts, measured at fair value through profit or loss, is determined on the last day of each quarter in a given accounting year and at the end of each accounting year on the basis of the valuation made by an institution which professionally measures such financial transactions (among others by the Bank) or on the basis of a financial model.

Fair Value of IRS and COLLAR Financial Instruments

The fair value of IRS and CAP financial instruments, covered by the cash flow hedge accounting, is determined on the last day of each quarter in a given accounting year and at the end of each accounting year on the basis of the valuation made by an institution which professionally measures such financial transactions (such as the bank).

Write-downs of Inventories

At the end of each reporting period, the Management Board verifies if there is any evidence pointing to the loss of value of its property development projects under implementation on the basis of sales reports, market research and other available evidence. Should the risk of the loss of value occur, the value of such projects is estimated employing the DCF method, which is used to establish the write-down of inventories. The DCF method is based on discounted cash flows generated within the approved investment schedules and proceeds from the sale of premises, allowing for the sale price of 1 square metre of usable floor area of flats in accordance with the current market situation. The discount rate takes account of the weighted average cost of external and own capital (WACC).

DEVELIA S.A. GROUP

Interim Condensed Consolidated Financial Statements for the period of 6 months ended 30 June 2020

(PLN '000)

The write-downs of inventories are estimated as at 30 June 2020 and may be subject to change depending on the fluctuation of market prices of land, selling prices of flats, construction costs, project completion schedules and discount rate calculations in the future. The actual results may vary from these estimates, which were calculated on the grounds of the data available as at the reporting date. It is also related to the uncertainty regarding the proper estimation of the market conditions in the following years. Consequently, valuation allowances may change in the following financial periods. Inventories and write-down of inventories are presented in Note 22.

Uncertainty Associated with Tax Settlements

The regulations concerning the tax on goods and services, corporate tax and burdens associated with social insurance are subject to frequent changes. These frequent changes make no appropriate reference points, inconsistent interpretations and few established precedents that might be applicable. The binding regulations also contain uncertainties, resulting in different opinions regarding the legal interpretation of tax regulations, both among public authorities and between public authorities and companies.

Tax settlements and other areas of activity (for example customs and foreign currency issues) may be subject to inspection by bodies authorised to impose high penalties and fines, and any additional tax liabilities arising from the inspection must be paid together with high interest. Having considered these conditions, the tax risk in Poland is greater than in countries with a more mature tax system.

Consequently, amounts presented and disclosed in financial statements may change in the future as a result of a final decision of a tax audit authority.

On 15 July 2016, changes were made to the Tax Ordinance Act in order to take account of the provisions of the General Anti-Avoidance Rule (GAAR). GAAR is to prevent the creation and use of artificial legal structures created in order to avoid the payment of tax in Poland. GAAR defines the avoidance of taxation as an action made above all in order to achieve a tax advantage, contrary - under given circumstances - to the object and purpose of the provisions of the tax act. In accordance with GAAR, such an action does not result in the tax advantage, if the operation was artificial. Any occurrence of (i) unjustified separation of operations, (ii) involvement of intermediary entities despite the lack of economic justification, (iii) elements that null or compensate each other and (iv) other actions having a similar effect to the previously mentioned, may be treated as a premise of artificial operations subject to GAAR. New regulations will require a much greater degree of professional judgement in assessing the tax consequences of individual transactions.

The GAAR clause should be applied to transactions made after its entry into force and transactions that had been carried out before the entry into force of the GAAR clause, but for which benefits were or are still being gained after the date of entry of this clause into force. The implementation of these provisions will enable Polish tax audit authorities to question the legal arrangements and agreements carried out by taxable persons, such as the restructuring and reorganisation of a group, provided, however, that such arrangements and agreements are related to the above clause.

The Group recognises and measures the assets or liabilities in respect of current and deferred income tax in compliance with the requirements of IAS 12, Income Tax on the basis of the tax profit (loss), tax base, unrelieved tax losses, unused tax exemptions and tax rates, taking into account the uncertainty associated with tax settlements.

The table below presents balance sheet figures of the above items as at 30 June 2020 and as at 31 December 2019:

	30 June 2020	31 December 2019

Deferred tax asset	36,400	35,408
Investment property measured at fair value	1,067,945	1,062,693
Non-current assets classified as held for sale and measured at fair value	-	446,282
Fair Value of Financial Instruments in the Form of Forward Contracts	(203)	239
Fair value of IRS and CAP financial instruments	(1,069)	(12,411)
Deferred tax liability	(56,804)	(105,418)
Write-down of land classified as fixed assets	(3,263)	(3,263)
Write-down of inventories	(124,794)	(124,934)

DEVELIA S.A. GROUP

Interim Condensed Consolidated Financial Statements for the period of 6 months ended 30 June 2020

(PLN '000)

8. Significant Accounting Principles (Policies)

The accounting principles (policies) applied to the preparation of these consolidated financial statements are consistent with those adopted to draw up the Group's consolidated financial statements for the year ended 31 December 2019, save for the following principles. The below changes to IFRS have been applied to these consolidated financial statements as of the date of their entry into force:

Amendments to IAS 1 "Presentation of Financial Statements" and IAS 8 "Accounting Policies, Changes in
Accounting Estimates and Errors" - Definition of Materiality - approved in the EU on 29 November 2019 (applicable to annual periods beginning on or after 1 January 2020);
Amendments to IFRS 3, "Business Combinations" - Definition of a Business - approved in the EU on 21 April 2020 (applicable to combinations for which the acquisition date is at the beginning of the first annual reporting period beginning on or after 1 January 2020 and to asset acquisitions that occur on or after the beginning of the aforesaid period);
Amendments to IFRS 9 "Financial Instruments", IAS 39 "Financial Instruments: Recognition and
Measurement" and IFRS 7 "Financial Instruments: Disclosures" - Interest Rate Benchmark Reform - approved in the EU on 15 January 2020 (applicable to annual periods beginning on or after 1 January 2020);
Amendments to References to the Conceptual Framework in IFRS - approved in the EU on 29 November 2019 (applicable to annual periods beginning on or after 1 January 2020).

The adoption of the standards and amendments to existing standards, as mentioned above, did not exert any considerable impact on the financial statements of the Group.

9. New Standards and Interpretations Published But Not Effective Yet

New standards and amendments to the existing standards which have been already issued by the IFRIC and approved by the EU, but are not in force yet:

As at the date of the approval of these Financial Statements, the European Union did not adopt any amendment to the existing standards / new standards or interpretations issued by the International Financial Reporting Interpretations Committee ("IFRIC"), which enter into force on a later date.

New standards and amendments to the existing standards which have been already issued by the IFRIC, but which have not been approved for application within the EU yet

Currently, IFRS in the form approved by the EU do not differ significantly from regulations issued by the International Financial Reporting Interpretations Committee ("IFRIC"), except for the following new standards and amendments to standards which as at the date of the publication of these statements were not approved for application within the EU (the below entry into force dates relate to the full version of standards):

IFRS 14 "Regulatory Deferral Accounts" (applicable to annual periods beginning on or after 1 January 2016) - the European Commission decided not to initiate the process of approving this temporary standard for application within the EU before the release of the final version of IFRS 14;
IFRS 17 "Insurance Contracts", with further amendments to IFRS 17, (applicable to annual periods beginning on or after 01 January 2023);
Amendments to IAS 1 "Presentation of Financial Statements" - Classification of Liabilities as Current or Non- current (applicable to annual periods beginning on or after 1 January 2022);
Amendments to IAS 16 "Property, Plant and Equipment" - Proceeds Before Intended Use (applicable to annual periods beginning on or after 1 January 2022);
Amendments to IAS 37 "Provisions, Contingent Liabilities and Contingent Assets" - Onerous Contracts - Cost of Fulfilling a Contract (applicable to annual periods beginning on or after 1 January 2022);
Amendments to IFRS 3 "Business Combinations" - Amendments to References to the Conceptual Framework including amendments to IFRS 3 (applicable to annual periods beginning on or after 1 January 2022);
Amendments to IFRS 4 "Insurance Contracts" - the Extension of the Temporary Exemption from Applying IFRS 9 (the expiry date for the temporary exemption from IFRS 9 was extended to annual periods beginning on or after 1 January 2023);
Amendments to IFRS 10 "Consolidated Financial Statements" and IAS 28 "Investments in Associates and Joint Ventures" - Sale or Contribution of Assets between an Investor and its Associate or Joint Venture and

DEVELIA S.A. GROUP

Interim Condensed Consolidated Financial Statements for the period of 6 months ended 30 June 2020

(PLN '000)

subsequent amendments (the date of entry into force of the amendments was postponed until research works on the equity method have been completed);

Amendments to IFRS 16 "Lease"- Covid-19-Related Rent Concessions (applicable to annual periods beginning on or after 1 June 2020. Early application is permitted also for financial statements which have not been approved yet for publication on 28 May 2020. This amendment applies also to interim reports).
Amendments to miscellaneous standards "Improvements to IFRS (the 2018-2020 cycle)" - amendments made as part of the IFRS Annual Improvement Process (IFRS 1, IFRS 9, IFRS 16 and IAS 41) are designed mainly to deal with non-conformitiesand ensure the consistency of terminology (amendments to IFRS 1, IFRS 9 and IAS 41 are applicable to annual periods beginning on or after 1 January 2022. Amendments to IFRS 16 concern only an illustrative example, hence no entry into force date has been set).

The Group is in the process of verification of the impact of the above-mentioned standards on its financial situation, performance and the scope of information presented in financial statements.

According to the Group's estimates, the above-mentioned new standards and amendments to existing standards would not have had major impact on the financial statements if they had been applied by the Group at the balance-sheet date.

Apart from regulations approved by the EU, there is also hedge accounting for a portfolio of assets and liabilities, the principles of which have not been approved for application within the EU yet.

According to the Group's estimates, the application of hedge accounting for a portfolio of assets or financial liabilities under IAS 39, "Financial Instruments: Recognition and Measurement" would not have any significant impact on the financial statements, if the standard in question had been approved for application as at the balance-sheet ate.

10. Seasonal or Cyclical Character of Develia S.A. Group's Operations

The operations of the Develia S.A. Group are not seasonal by nature. They are related to the investment cycles of the implemented property development projects, which is particularly noticeable in the recognition of the proceeds from the sale of residential and retail premises. In accordance with IFRS 15, such proceeds can only be recognised when practically all risks and benefits related to given premises have been transferred to the client and the revenue can be measured in a reliable manner. Consequently, the sales results in a given period depend on the value of the premises transferred to the clients in accordance with the above definition.

11. Information on Operating Segments

For management purposes, the Group distinguishes three reporting operating segments:

rental services segment
property development activity segment
holding (other) activity segment

The Group measures the results of operating segments on the basis of sales revenue and gross sales result. The results of other operating activity and financial activity are managed at the Group's level and are not allocated to operating segments.

The tables presented below show data concerning revenues and profits of the Group's individual segments for the period of 6 months ended 30 June 2020 and 30 June 2019 and concerning assets and liabilities as at 30 June 2020 and 31 December 2019.

Period of 6 months ended		Property	Holding (other)
Rental services	development	TOTAL
30 June 2020	activity
	activity


Operating activity

Sales revenue	44,193	175,845	41	220,079

Revenue from sales of services	44,192	-	41	44,233

DEVELIA S.A. GROUP

Interim Condensed Consolidated Financial Statements for the period of 6 months ended 30 June 2020

(PLN '000)

Revenue from sales of goods and products	1	175,845	-	175,846

Cost of sales	(18,681)	(109,833)	-	(128,514)

Pre-tax profit/(loss) on sales	25,512	66,012	41	91,565

Gain/(loss) on disposal of non-financial fixed assets	-	(23)	54	31
Profit /(loss) on investment property	(15,126)	-	-	(15,126)
Write-downs of Inventories	-	-	-	-
Selling and distribution cost	(255)	(6,613)	-	(6,868)
General administrative expenses	(4,588)	(9,559)	(18)	(14,165)
Other operating income	801	1,265	257	2,323
Other operating expenses	(199)	(735)	(36)	(970)

Operating profit/(loss)	6,145	50,347	298	56,790

Financial income	793	814	389	1,996
Financial expenses	(41,964)	(75)	(1,388)	(43,427)

Pre-tax profit/(loss)	(35,026)	51,086	(701)	15,359

Income tax (tax expense)	2,504	(9,188)	142	(6,542)

Net profit/(loss)	(32,522)	41,898	(559)	8,817


Other comprehensive income subject to reclassification to financial result in subsequent reporting periods
Cash flow hedges	11,352	-	-	11,352
Income tax relating to other components of	(2,157)	-	-	(2,157)
comprehensive income


Other comprehensive income (net)	9,195	-	-	9,195


Total comprehensive income	(23,327)	41,898	(559)	18,012


Period of 6 months ended		Property	Holding (other)
Rental services	development	TOTAL
30 June 2019	activity
	activity


Operating activity

Sales revenue	76,813	554,805	115	631,733

Revenue from sales of services	76,802	-	115	76,917
Revenue from sales of goods and products	11	554,805	-	554,816

Cost of sales	(24,558)	(368,800)	-	(393,358)

Pre-tax profit/(loss) on sales	52,255	186,005	115	238,375

Gain/(loss) on disposal of non-financial fixed assets	-	-	15	15
Profit /(loss) on investment property	(44,618)	-	-	(44,618)
Write-downs of Inventories	-	(363)	-	(363)
Selling and distribution cost	(514)	(8,332)	-	(8,846)
General administrative expenses	(4,707)	(11,166)	(695)	(16,568)
Other operating income	46	1,613	69	1,728
Other operating expenses	(885)	(311)	(775)	(1,971)

Operating profit/(loss)	1,577	167,446	(1,271)	167,752

Financial income	8,482	1,451	726	10,659
Financial expenses	(13,552)	(1,510)	(5,206)	(20,268)

Pre-tax profit/(loss)	(3,493)	167,387	(5,751)	158,143

Income tax (tax expense)	129	(31,578)	(1,267)	(32,716)

Net profit/(loss)	(3,364)	135,809	(7,018)	125,427


Other comprehensive income subject to reclassification to financial result in subsequent reporting periods
Cash flow hedges	(7,494)	-	-	(7,494)

				18

DEVELIA S.A. GROUP

Interim Condensed Consolidated Financial Statements for the period of 6 months ended 30 June 2020

(PLN '000)

Income tax relating to other components of	1,252	-	-	1,252
comprehensive income


Other comprehensive income (net)	(6,242)	-	-	(6,242)


Total comprehensive income	(9,606)	135,809	(7,018)	119,185

		Property	Holding (other)
As at 30 June 2020	Rental services	development	TOTAL
activity
		activity

Assets and liabilities

Total assets, including:	1,226,048	1,455,958	327,147	3,009,153

Non-Current Receivables	8,938	-	-	8,938
Investment property	1,104,729	-	-	1,104,729
Inventory	977	1,200,684	-	1,201,661
Current financial assets	-	27,218	-	27,218
Cash and Cash Equivalents	81,469	116,151	283,737	481,357
Non-current assets classified as held for sale	-	-	-	-
Total liabilities, including:	616,086	869,163	13,781	1,499,030

Liabilities on account of loans and bonds	447,718	330,495	-	778,213
Accruals and deferred income	6,320	395,592	10,266	412,178

		Property	Holding (other)
As at 31 December 2019	Rental services	development	TOTAL
activity
		activity

Assets and liabilities

Total assets, including:	1,649,887	1,518,135	75,903	3,243,925

Non-Current Receivables	8,699	-	-	8,699
Investment property	1,096,679	-	-	1,096,679
Inventory	6	1,062,022	-	1,062,028
Current financial assets	239	25,576	-	25,815
Cash and Cash Equivalents	66,266	242,737	31,887	340,890
Non-current assets classified as held for sale	446,282	-	-	446,282
Total liabilities, including:	726,709	974,408	33,924	1,735,041

Liabilities on account of loans and bonds	564,729	462,715	-	1,027,444
Accruals and deferred income	6,662	344,126	10,524	361,312

12. Sales revenue

Revenue from the rental of office space and the shopping and service centre and related services

Revenue from sales of services

Period of 6 months	Period of 6 months
ended	ended
30 June 2020	30 June 2019
44,233	76,917

44,233	76,917

DEVELIA S.A. GROUP

Interim Condensed Consolidated Financial Statements for the period of 6 months ended 30 June 2020

(PLN '000)

Revenue from the sale of residential and retail premises	175,845	553,615
Other (*)	1	1,201

Revenue from sales of goods and products	175,846	554,816

Total revenue from customer agreements	220,079	631,733

- in 2019, this item includes mainly land sold

The Group's activity is conducted within Poland. Within the period of 6 months ended 30 June 2020, the Group's operating activities involving the rental of commercial real property concerned two retail and office centres: Arkady Wrocławskie and Sky Tower in Wrocław and an office building: Wola Retro in Warsaw. Until 29 January 2020, rental services were provided also in an office building Wola Center in Warsaw. The development activity is conducted in Gdańsk, Katowice, Cracow, Warsaw and Wrocław.

DEVELIA S.A. GROUP

Interim Condensed Consolidated Financial Statements for the period of 6 months ended 30 June 2020

(PLN '000)

13. Profit /(loss) on investment property

	Period of 6 months	Period of 6 months
	ended	ended
	30 June 2020	30 June 2019
Revenue from sales of real estate	436,071	-
Value of real estate sold	(436,071)	-
Changes in real estate value in EUR within the period	(50,198)	-
Change in real estate valuation in respect of altered EUR to PLN exchange rate within the period	53,173	(21,537)
Change in real estate valuation in respect of expenditures incurred within the period	(13,525)	(22,242)
Costs of sales transaction (net of costs relating to the repayment of financial liabilities)	-	-
Costs of sales transaction (costs relating to the repayment of financial liabilities)	-	-
Adjustment for linearisation of revenues from rental	(3,055)	(3,116)
Adjustment for linearisation of revenues from rental (COVID-19)	(1,521)	-
Other	-	2,277

Total	(15,126)	(44,618)

The below table presents details relating to Profit /(Loss) on Investment Property in the period of 6 months ended 30 June 2020:

Period of 6 months ended	Arkady	Wola	Sky Tower	Wola Retro	TOTAL
30 June 2020	Wrocławskie	Center

Revenue from sales of real estate	-	436,071	-	-	436,071
Value of real estate sold	-	(436,071)	-	-	(436,071)
Changes in real estate value in EUR within the period	(26,528)	-	(23,670)	-	(50,198)
Change in real estate valuation in respect of altered EUR to PLN	11,205	2,130	25,101	14,737	53,173
exchange rate within the period

Change in real estate valuation in respect of expenditures incurred	(851)	-	(12,674)	-	(13,525)
within the period

Costs of sales transaction (net of costs relating to the repayment of	-	-	-	-	-
financial liabilities)

Costs of sales transaction (costs relating to the repayment of	-	-	-	-	-
financial liabilities)

Adjustment for linearisation of revenues from rental	-	-	(175)	(2,880)	(3,055)
Adjustment for linearisation of revenues from rental (COVID-19)	(768)	-	(753)	-	(1,521)

Total	(16,942)	2,130	(12,171)	11,857	(15,126)

14. Financial income

	Period of 6 months	Period of 6 months
	ended	ended
	30 June 2020	30 June 2019
Revenue from bank interest	1,969	2,374
Surplus of positive over negative foreign exchange differences	-	8,252
Valuation of financial instruments	-	-
Other	27	33

Financial income	1,996	10,659

DEVELIA S.A. GROUP

Interim Condensed Consolidated Financial Statements for the period of 6 months ended 30 June 2020

(PLN '000)

15. Financial expenses

	Period of 6 months	Period of 6 months
	ended	ended
	30 June 2020	30 June 2019
Interest, commission on bonds and loans (uncapitalised portion)	10,105	17,540
Interest on lease	691	867
Cost of discounting acquisition of subsidiary	-	696
Surplus of negative over positive foreign exchange differences	17,161	-
Valuation of financial instruments	454	90
Tax expense on share capital increases in subsidiaries	2	-
Cost arising from closed hedging transactions *	14,845	-
Other	169	1,075

Financial expenses	43,427	20,268

- cost arising from the closing of transactions hedging against an increased interest rate risk for a loan taken for the construction and funding of the Wola Center real property in connection with its sale

16. Income Tax

16.1. Tax Expense

The main components of tax expense for the period of 6 months ended 30 June 2020 and 30 June 2019 are as follows:

	Period of 6 months	Period of 6 months
	ended	ended
	30 June 2020	30 June 2019
Disclosed in Profit or Loss
Current income tax
Current income tax expense	(58,488)	(16,600)
Adjustments of current income tax from previous years	183	(340)
Deferred Income Tax
Associated with temporary differences and their reversal and tax losses	51,763	(15,776)

Tax expense shown in the consolidated profit or loss	(6,542)	(32,716)

Disclosed in Other Comprehensive Income
Tax on net profit/(loss) on account of changes in the effective portion of cash flow hedges	(2,157)	1,252

Tax benefit/(tax expense) disclosed in other comprehensive income	(2,157)	1,252

DEVELIA S.A. GROUP

Interim Condensed Consolidated Financial Statements for the period of 6 months ended 30 June 2020

(PLN '000)

The reconciliation of income tax on the gross financial result before taxation at the statutory tax rate, with income tax calculated at the Group's effective tax rate for the period ended 30 June 2020 and 30 June 2019 is as follows:

	Period of 6 months	Period of 6 months
	ended	ended
	30 June 2020	30 June 2019
Gross profit /(loss) before tax on continued operations	15,359	158,143
Profit /(loss) before tax on discontinued operations	-	-

Gross profit/(loss) before tax	15,359	158,143


Tax at the statutory tax rate applicable in Poland: 19% (2019: 19%)	2,918	30,047
Non-tax-deductible costs	99	488
Undisclosed/adjusted tax losses	(85)	53
Undisclosed/adjusted temporary differences (other than tax losses) in relation to which no	3,093	(118)
deferred tax was created

Differences in tax value and balance-sheet value of inventories	-	-
Settlement of discount of share acquisition price and deferred payment interest	-	233
Minimum tax on commercial real property, which did not lead to the reduction of income tax	-	287
Previous years' tax adjustments	(60)	(92)
Other	577	1,818

Tax at the effective tax rate of 42.6% (2019: 20.7 %)	6,542	32,716

16.2. Deferred Income Tax

Deferred income tax arises from the following items:

Statement of financial position	Deferred income tax expense for
the period ended

30 June 2020	31 December	01 January 2019	30 June 2020	31 December
2019	2019

Deferred tax liability

Accrued interest and discounts on borrowings, bonds, notes and deposits

Valuation of investment property

Difference in the value of tangible assets (tax and balance-sheet depreciation)

Difference in the value of other assets (tax value and book value)

Other

Gross deferred tax liability

Deferred tax assets

Valuation of investment property

Provisions and prepayments and accrued income

Accrued interest and discounts on borrowings, bonds and notes

Foreign exchange differences

(9,051)	(6,852)	(7,684)	(2,199)	832
-	(29,502)	(68,033)	29,502	38,531
(45,848)	(57,587)	(58,173)	11,739	586
-	-	-	-	-
-	(464)	(1,038)	464	574

(54,899)	(94,405)	(134,928)

6,729	-	-	6,729	-
4,093	5,338	2,928	(1,245)	2,410
5,523	4,757	6,081	766	(1,324)
5,656	2,567	4,859	3,089	(2,292)

DEVELIA S.A. GROUP

Interim Condensed Consolidated Financial Statements for the period of 6 months ended 30 June 2020

(PLN '000)

Difference in the value of other assets (tax value and book value)

Losses potentially deductible from future taxable income

Other

Gross deferred tax assets

4,058	5,936	9,780	(1,878)	(3,844)
8,061	3,358	5,851	4,703	(2,493)
375	2,439	1,723	(2,064)	716

34,495	24,395	31,222

Deferred tax expense			49,606	33,696

Net deferred tax asset	36,400	35,408	11,175



Net deferred tax liability	(56,804)	(105,418)	(114,881)

Considering the specificity of the conducted activity, which involves the achievement of taxable revenue at a deferred time, the Group activates incurred tax losses until taxable income is achieved, taking into account the tax regulations concerning the possibility of settling such losses. The amount of an asset resulting from tax losses disclosed in deferred tax is presented in the table above.

As at 30 June 2020, the Group carried out an analysis of the recoverability of a created and potential deferred tax asset and did not create a deferred tax asset on account, among other things, of tax losses in companies in the amount of PLN 784,000 (and accordingly PLN 948,000 as at 31 December 2019), which can be used within the maximum period of up to five years from the end of the reporting period in which they occurred. In addition, the Group did not create a deferred tax asset in the amount of PLN 19,908,000 with regard to temporary differences between the balance-sheet and tax values of respective assets and liabilities items (and accordingly PLN 16,382,000 as at 31 December 2019).

Notes 2 and 3 present the composition of the Develia S.A. Group as at 30 June 2020 and as at 31 December 2019 was presented along with changes that occurred within the period of 6 months ended 30 June 2020.

18. Property, plant and equipment

During the period of 6 months ended 30 June 2020, the Group purchased property, plant and equipment totalling PLN 242,000 (in the year ended 31 December 2019, it was: PLN 1,487,000).

In the period of 6 months ended 30 June 2020, the Group entered into a lease agreement for 13 passenger cars. The value of right-of-use assets was PLN 452,000.

In the period of 6 months ended 30 June 2020, the Group did not enter into any significant sale transactions regarding property, plant and equipment items.

As at 30 June 2020, there are no significant contractual liabilities arising from the purchase of property, plant or equipment.

19. Non-Current Receivables

Under Non-current receivables the Group discloses the amounts of security related to timely loan servicing and required under long-term loan agreements:

As at 30 June 2020:

Security deposit of EUR 500,000 (PLN 2,233,000) in Arkady Wrocławskie S.A.;

1. Amount withheld on a debt servicing account in an amount of PLN 6,705,000 in Sky Tower S.A.;
As at 31 December 2019:
1. Security deposit of EUR 500,000 (PLN 2,129,000) in Arkady Wrocławskie S.A.;

DEVELIA S.A. GROUP

Interim Condensed Consolidated Financial Statements for the period of 6 months ended 30 June 2020

(PLN '000)

Amount withheld on a debt servicing account in an amount of PLN 5,570,000 in Sky Tower S.A.;

Security deposit for IRS servicing in an amount of PLN 1,000,000 in Warszawa Przyokopowa Sp. z o.o. The sums stated above will be released by the bank upon loan repayment.
20. Land Classified As Fixed Assets

As at 30 June 2020, this item includes land of PLN 86,775,000 (as at 31 December 2019 of PLN 86,603,000), which is intended for development during a period of over 2 years. The write-down as at 30 June 2020 and 31 December 2019 did not change and was PLN 3,263,000.

In view of the entry into force on 30 April 2016 of the provisions amending the Act of 11 April 2003 on the Shaping of the Agricultural System (Journal of Laws of 2012, item 803, of 2016, item 585, 1159) and introduced restrictions on acquisition of agricultural property, an analysis was made to check the impact of the provisions of this act on the restrictions on the possibility of implementation of investment opportunities on the land owned (see Note 7).

Due to the acquisition of land by the Group with a view to implementing a development investment and allocation in the Study of land use conditions and directions of Wisznia Mała municipality of this property to residential areas, as at 30 June 2020 the Group discloses the property in the item Land qualified as non-current assets for development during a period of over 2 years, in the valuation by an independent valuer drawn up before the date of entry into force of the above-mentioned act, since despite the restrictions introduced by the Act (which in practice prevent the disposal of this property), there were no other considerations that might affect the current measurement and there is still a possibility to use this land in a manner consistent with the intention of the Group and the Group does not intend to dispose of this property.

21. Investment Real Property and Non-Current Assets Classified as Held for Sale

Investment property

As at 30 June 2020, the Group's investment property includes:

retail and office centres: Arkady Wrocławskie and Sky Tower in Wrocław,
office buildings: Wola Retro in Warsaw
office buildings under preparation: Wrocław, Kolejowa street

			Value adjustment
			for right of
30 June 2020	Value EUR	Value PLN	perpetual usufruct	TOTAL
			to land acc. to
			IFRS 16
Investment property already constructed
Arkady Wrocławskie	48,060	214,636	12,245	226,881
Sky Tower	115,670	516,582	-	516,582
Wola Retro	71,890	321,061	3,421	324,482
Investment property in preparation				-
Wrocław, Kolejowa	n/a	31,897	4,887	36,784

				1,104,729

DEVELIA S.A. GROUP

Interim Condensed Consolidated Financial Statements for the period of 6 months ended 30 June 2020

(PLN '000)

			Value adjustment
			for right of
31 December 2019	Value EUR	Value PLN	perpetual usufruct	TOTAL
			to land acc. to
			IFRS 16
Investment property already constructed
Arkady Wrocławskie	54,000	229,959	11,835	241,794
Sky Tower	120,970	515,151	-	515,151
Wola Retro	71,020	302,439	3,309	305,748
Investment property under construction
Wrocław, Kolejowa	n/a	29,098	4,888	33,986

				1,096,679

As at 30 June 2020, the fair values of investment properties: Arkady Wrocławskie and Sky Tower were established on the basis of valuation made by professional real estate valuers.

As at 30 June 2020, the fair value measurement of Wola Retro in Warsaw was made on the basis of an appraisal made by a professional real estate valuer and included expenditures incurred, increasing thus the property value as at the valuation date, compared to the value as at the balance-sheet date.

Market values of the property in question have been estimated in the income approach, using the investment method and the judgement at the Level Three, as defined in IFRS 13. Input data considered for the valuation included, among other things, investment plans, information relating to planned development including plans, descriptions and budgets, as well as environmental surveys. The income approach and the investment method are based on the assumption that the value of a property depends on the rental income that can be obtained from the property and the capitalisation rate. Income from the property is due to rental agreements and in the case of free surface with the use of market rental rates. The rate of return, known as capitalisation rate, is determined on the basis of the analysis of similar transactions on the market in a given financial year.

Valuation is expressed in the currency of the invoiced rents, i.e. in EUR and converted into PLN at the average NBP exchange rate at the date of the end of the accounting period.

The reconciliation of changes to the balance-sheet values of investment property in the period ended 30 June 2020 and the year 31 December 2019 is presented in the table below:

	Period of 6	Year ended 31
	months ended
	December 2019
	30 June 2020


At the beginning of the reporting period	1,096,679	1,929,475

Recognition and Settlement of Right of perpetual usufruct according to IFRS 16	520	36,882
Acquisition of land for the construction of investment property	-	26,028
Capital expenditure incurred	20,234	97,862
Reclassification of non-current assets classified as held for sale 1)	-	(949,318)
Revaluation of property fair value (EUR/PLN conversion)	51,043	(2,005)
Revaluation of property fair value (inter alia: due to changes in the EUR valuation of property,	(63,747)	(42,245)
finishing works and selling costs)


At the end of the reporting period	1,104,729	1,096,679

The reclassification results from the conclusion of a sales and purchase agreement for two real properties: Silesia Star in K atowice and Retro Office House in Wrocław, as well as the conclusion of the Preliminary Sales and Purchase Agreement for Wola Center in Warsaw.

DEVELIA S.A. GROUP

Interim Condensed Consolidated Financial Statements for the period of 6 months ended 30 June 2020

(PLN '000)

Non-current assets classified as held for sale

As at 30 June 2020, there are no non-current assets classified as held for sale.

As at 31 December 2019, the Group's Non-current assets classified as held for sale included:

Wola Center office building in Warsaw

				Value
				adjustment for
31 December 2019	Value EUR	Value PLN	right of	Costs of real	TOTAL
perpetual	estate sale

				usufruct to land
				acc. to IFRS 16
Non-current assets classified as held for sale
Wola Center	101,900	433,941	16,773	(4,432)	446,282

						446,282

The reconciliation of changes to the balance-sheet values of Non-currentAssets Classified As Held For Sale in the period ended 30 June 2020 and the year 31 December 2019 is presented in the table below:

	Period of 6	Year ended 31
	months ended
	December 2019
	30 June 2020


At the beginning of the reporting period	446,282	-

Recognition and Settlement of Right of perpetual usufruct according to IFRS 16	-	1,100
Capital expenditure incurred	-	(3,006)
Reclassification from investment real property 1)	-	949,318
Reclassification to inventory	(973)	-
Disposal of real property 2)	(447,439)	(482,522)
Revaluation of property fair value (EUR/PLN conversion)	2,130	(16,051)
Revaluation of property fair value (inter alia: due to changes in the EUR valuation of property,	-	(2,557)
finishing works and selling costs)


At the end of the reporting period	-	446,282

The reclassification results from the conclusion of a sales and purchase agreement for two real properties: Silesia Star in K atowice and Retro Office House in Wrocław, as well as the conclusion of the Preliminary Sales and Purchase Agreement for Wola Center in Warsaw.
In 2020, the sale of the "Wola Center" real property in Warsaw, in 2019, the sale of "Silesia Star" in Katowice and "Retro Office House" in Wrocław

Disposal of "Wola Center" Real Property in Warsaw

On 24 September 2019, a subsidiary wholly owned by the Company: Warszawa Przyokopowa Spółka z ograniczoną odpowiedzialnością ("WP"), acting as the seller, and a company controlled by Hines European Value Fund SCSp, based in Luxembourg, i.e. Gisla Spółka z ograniczoną odpowiedzialnością, acting as the purchaser (currently: Wola Center sp. z o.o.), entered into a Preliminary Sales and Purchase Agreement (PSPA) under a transaction concluded between companies and concerning the sale of the perpetual usufruct right to parcels of land located at 33 Przyokopowa Street in Warsaw, including the right of ownership to an office building erected on the said land, known as the "Wola Center" building, along with tangible and intangible assets related to the said real property, which are owned by WP and covered by the PSPA.

Entering into a final sales and purchase agreement was conditional upon the satisfaction of, among other things, the following conditions precedent:

Concurrent tax interpretations supporting a position adopted by the Parties being issued, and
All necessary approvals for the Transaction being obtained by the Parties, and

DEVELIA S.A. GROUP

Interim Condensed Consolidated Financial Statements for the period of 6 months ended 30 June 2020

(PLN '000)

A letter - issued by the lending bank - relating to the repayment of loans taken out by WP for the construction of the building in question, and
The purchaser being given a loan decision for the partial financing of the transaction, and
The seller's title to the real property designated for disposal could not be changed adversely, and
Surety being granted by the Company to the purchaser.

The total price of the transaction was agreed by the Parties at EUR 101,900,000 (plus an applicable amount of VAT and transaction costs).

Furthermore, in accordance with the arrangements between the Parties, the Company represented to the purchaser that it stood surety for the seller and debtor, giving a guarantee that:

The seller would perform the obligations and discharge the liabilities of Warszawa Przyokopowa, acting as the seller, arising from agreements covering the subject-matter of the transaction, and
The Company would incur debts of WP arising from obligations and liabilities of WP under the final sales and purchase agreement, if the seller has ceased its operations, has gone into liquidation or has been dissolved, which circumstances were described in the surety arrangements,
The contractual penalty would be paid, should the purchaser withdraw from the agreement due to reasons attributable to the seller

On 29 January 2020, in pursuance of the preliminary agreement of 24 September 2019, an Issuer's subsidiary - Warszawa Przyokopowa sp. z o.o. entered into a final sales and purchase agreement with an entity which was not related to the Issuer, concerning the sale of the perpetual usufruct right to parcels of land located at 33 Przyokopowa Street in Warsaw, including the right of ownership to an office building erected on the said land, known as the "Wola Center" building, along with tangible and intangible assets related to the said real property for a price of EUR 101,900,000 (plus an applicable rate of VAT and transaction costs). The transaction price received was designated for the full repayment of a bank loan of EUR 45,246,208.46, taken out under an agreement concluded by Company with BNP Paribas Bank Polska S.A., with its registered office in Warsaw, for the purpose of the construction of the "Wola Center" building. The entire security provided in connection with the loan agreement and agreements hedging against foreign exchange risk and interest rate risk (hedging agreements) expired upon the said repayment.

The aforesaid property constituted assets classified under the "Rental services" segment in the consolidated financial statements of the Develia S.A. Group.

22. Inventory

	30 June 2020	31 December 2019
Work in progress	1,251,540	1,050,545
Finished products	42,847	105,395
Value adjustment for right of perpetual usufruct to land according to IFRS 16	32,068	31,022
Write-downs of Inventories	(124,794)	(124,934)

Total inventories	1,201,661	1,062,028

As at 30 June 2020, Borrowing costs of PLN 52,571,000 (as at 31 December 2019 they amounted to PLN 47,767,000) were capitalised in the value of Inventory.

Changes in the write-downs of inventories were as follows:

	Period of 6 months	Year ended 31
	ended
	December 2019
	30 June 2020


At the beginning of the reporting period	124,934	129,838

Increase	-	394
Used	(140)	(5,298)
Decrease	-	-

DEVELIA S.A. GROUP

Interim Condensed Consolidated Financial Statements for the period of 6 months ended 30 June 2020

(PLN '000)

At the end of the reporting period	124,794	124,934

As at 30 June 2020 and 31 December 2019, no item of inventory was pledged or mortgaged, except for the mortgage mentioned in Note 27.

23. Trade and Other Receivables

30 June 2020

31 December 2019

Trade receivables

State budget receivables (without income tax)

Receivables arising from funds blocked in deposit accounts and designated for real estate acquisition

Other receivables from third parties

17,081	13,877
22,057	86,965
-	21,525
1,597	989

Total receivables (net)	40,735	123,356

Adjustment taking account of deferred income (*)	(1,595)	(1,595)
Valuation allowance for receivables	(9,963)	(10,459)

Gross receivables	52,293	135,410

As at 30 June 2020 and 31 December 2019, the Group recognised receivables on account of accrued penalties and damages in the amount of PLN 1,595,000 and PLN 1,595,000 respectively, net of deferred income resulting therefrom.

Changes in the write-down of receivables were as follows:

	Period of 6 months	Year ended 31
	ended
	December 2019
	30 June 2020


At the beginning of the period	10,459	9,419

Increase	928	4,735
Used	(622)	(3,150)
Decrease	(802)	(545)

At the and of the period	9,963	10,459

24. Current financial assets

Financial instruments - forward transactions Cash in open trust accounts

30 June 2020

31 December 2019

-239

27,21825,576

27,21825,815

DEVELIA S.A. GROUP

Interim Condensed Consolidated Financial Statements for the period of 6 months ended 30 June 2020

(PLN '000)

25. Cash and other cash equivalents

	30 June 2020	31 December 2019
Cash on hand and in a bank account	98,690	206,540
Bank deposits	382,667	134,350

Total cash and cash equivalents, including:	481,357	340,890


- restricted cash	20	20

Cash in a bank account bears interest according to floating interest rates. Short-term deposits are made for different periods, from one day to three months, depending on the Group's current demand for cash, and bear interest at interest rates negotiated for such periods.

26. Financial Liabilities

26.1. Interest-bearing Bank Loans and Bonds

Non-current	Entity	Interest rate	Repayment	30 June 2020	31 December
date	2019

Bank loan in EUR (a)	Arkady Wrocławskie S.A.	Euribor 3M+margin	31 Dec 2022	62,364	59,421
Bank loan in EUR (b)	Warszawa Przyokopowa Sp. z	Euribor 1M+margin	30 Jun 2026	-	184,071
o.o.

Bank loan in EUR (c)	Sky Tower S.A.	Euribor 3M+margin	20 Dec 2022	188,411	179,867
	LC Corp Invest XVII Sp. z o.o.
Bank loan in EUR (d)	Projekt 22 Sp. k.	Euribor 3M+margin	28 Nov 2027	111,390	103,881
	(Wola Retro)
	LC Corp Invest XVII Sp. z o.o.
Bank loan in PLN (e)	Projekt 22 Sp. k.	Wibor 3M+margin	28 Nov 2020	-	-
	(Wola Retro)
Bond scheme (f)	Develia S.A.	Wibor 6M+margin	20 Mar 2020	-	-
Bond scheme (g)	Develia S.A.	Wibor 6M+margin	10 May 2021	-	84,899
Bond scheme (h)	Develia S.A.	Wibor 6M+margin	10 May 2021	-	14,990
Bond scheme (i)	Develia S.A.	Wibor 6M+margin	6 Oct 2021	24,984	24,978
Bond scheme (j)	Develia S.A.	Wibor 6M+margin	6 Oct 2021	14,972	14,962
Bond scheme (k)	Develia S.A.	Wibor 6M+margin	5 Jun 2022	49,818	49,770
Bond scheme (l)	Develia S.A.	Wibor 6M+margin	28 Feb 2022	44,858	44,815
Bond scheme (n)	Develia S.A.	Wibor 3M+margin	19 Oct 2022	19,639	65,561
Bond scheme (o)	Develia S.A.	Wibor 3M+margin	22 May 2023	59,592	59,519

				576,028	886,734

DEVELIA S.A. GROUP

Interim Condensed Consolidated Financial Statements for the period of 6 months ended 30 June 2020

(PLN '000)

Current	Entity	Interest rate	Repayment	30 June 2020	31 December
date	2019

Bank loan in EUR (a)	Arkady Wrocławskie S.A.	Euribor 3M+margin	30 Jun 2021	7,690	7,327
Bank loan in EUR (b)	Warszawa Przyokopowa Sp. z	Euribor 1M+margin	30 Jun 2021	-	7,317
o.o.

Bank loan in EUR (c)	Sky Tower S.A.	Euribor 3M+margin	30 Jun 2021	8,208	10,124
	LC Corp Invest XVII Sp. z o.o.
Bank loan in EUR (d)	Projekt 22 Sp. k.	Euribor 3M+margin	30 Jun 2021	2,393	310
	(Wola Retro)
	LC Corp Invest XVII Sp. z o.o.
Bank loan in PLN (e)	Projekt 22 Sp. k.	Wibor 3M+margin	28 Nov 2020	-	-
	(Wola Retro)
Bond scheme (f)	Develia S.A.	Wibor 6M+margin	20 Mar 2020	-	65,886
Bond scheme (g)	Develia S.A.	Wibor 6M+margin	10 Nov 2020 /	85,394	618
10 May 2021

Bond scheme (h)	Develia S.A.	Wibor 6M+margin	10 Nov 2020/	15,074	109
10 May 2021

Bond scheme (i)	Develia S.A.	Wibor 6M+margin	06 Oct 2020	249	309
Bond scheme (j)	Develia S.A.	Wibor 6M+margin	06 Oct 2020	148	184
Bond scheme (k)	Develia S.A.	Wibor 6M+margin	05 Dec 2020	107	166
Bond scheme (l)	Develia S.A.	Wibor 6M+margin	28 Aug 2020	681	757
Bond scheme (m)	Develia S.A.	Wibor 6M+margin	19 Oct 2020	34,160	34,157
Bond scheme (n)	Develia S.A.	Wibor 3M+margin	20 Jul 2020	46,560	693
Bond scheme (o)	Develia S.A.	Wibor 3M+margin	24 Aug 2020	249	342

				200,913	128,299

Loan at Arkady Wrocławskie taken out in EUR on 28 February 2008 with a syndicate of banks: ING Bank Śląski
S.A. and Santander Bank Polska S.A. On 29 December 2017, the Company and Santander Bank Polska S.A. executed an amendment to the syndicate loan agreement of 28 February 2008 to extend the period of financing granted under the loan agreement. The amount of loan granted under the said amendment is EUR 25,000,000, and the loan repayment date was fixed for 31 December 2022. Prior to entering into the above amendment, i.e. on 27
December 2017, an amendment to the loan agreement was executed between Arkady Wrocławskie S.A. and ING Bank Śląski S.A. and Santander Bank Polska S.A., forming the previous syndicate of lending banks, under which ING Bank Śląski S.A. assigned to Santander Bank Polska S.A. its receivables against the Company arising from the loan granted within the framework of a syndicate of banks, and Santander Bank Polska S.A. accepted the said assignment becoming thus the sole lender. At this moment, all the entitlements, rights and claims (including the entire collateral), and all the risks and obligations relating to the loan were assigned to Santander Bank Polska S.A..
On 21 March 2019, Arkady Wrocławskie S.A. paid off a portion of a bank loan in an amount of EUR 5,000,000 to Santander Bank Polska S.A., which was granted under the syndicate loan agreement of 28/02/2008, with further amendments. On 28 March 2019, Arkady Wrocławskie S.A. and Santander Bank Polska S.A. executed an amendment to the syndicate loan agreement of 28/02/2008 to revise the committed amount and alter the repayment schedule. On 27 April 2020, Arkady Wrocławskie S.A. and Santander Bank Polska S.A. executed an amendment to the loan agreement of 28 February 2008, including further modifications thereto, under which the payment of principal instalments originally due for payment on 31 March 2020 and 30 June 2020 was rescheduled on the date of final loan repayment, i.e. on 31 December 2022. Further, under the aforesaid amendment, the Bank decided to refrain from the verification of debt service ratios for Q1 and Q2 2020. On 29 July 2020, Arkady Wrocławskie S.A. and Santander Bank Polska S.A. executed an amendment to the loan agreement of 28 February 2008, including further modifications thereto, under which the payment of principal instalments originally due for payment on 30 September 2020 and 31 December 2020 was rescheduled on 31 July 2020. Further, under the aforesaid amendment, the Bank decided to refrain from the verification of debt service ratios for Q3 and Q4 2020. On 31 July
2020, the principal in the amount of PLN 3,858,000 was paid off. On 27 August 2020, Arkady Wrocławskie S.A. and
Santander Bank Polska S.A. executed an amendment to the loan agreement of 28 February 2008, including further modifications thereto, under which the payment of certain principal instalments originally due for payment on 31

DEVELIA S.A. GROUP

Interim Condensed Consolidated Financial Statements for the period of 6 months ended 30 June 2020

(PLN '000)

March 2021 and 30 June 2021 was rescheduled on or before 31 August 2020. The principal amount in the amount of PLN 1,927,000 was repaid in full on 31 August 2020.

The loan at Warszawa Przyokopowa Sp. z o.o. was taken out pursuant to the agreement of 15 July 2011 with BNP Paribas Polska S.A. in the amount of up to EUR 49,000,000 for the partial financing of the construction of Wola Center office building development in Warsaw. On 26 June 2014 the company concluded an amendment to the Loan Agreement pursuant to which the maximum amount was increased to EUR 55,000,000. On 20 September 2018, the company concluded an amendment to the Loan Agreement, pursuant to which the amount of investment loan was increased and the loan term extended. The amount of investment loan determined in the aforesaid Amendment may not be higher than EUR 54,335,241.03, of which two new loan tranches made available under and provided for in the Amendment cannot be higher than EUR 7,000,000 and EUR 6,000,000 respectively. On 29 January 2020, Warszawa Przyokopowa Sp. z o.o. repaid in full the bank loan obtained under an agreement concluded on 15 July 2011 with BNP Paribas Polska S.A., including further amendments thereto, in a total amount of EUR 45,246,208.46 and settled transactions hedging against a risk associated with an increase in interest rates, concluded as at the date of repayment, in the total amount of EUR 3,468,899.70.
The loan at Sky Tower S.A. taken out in EUR pursuant to the agreement of 29 December 2012 concluded with a syndicate of banks Getin Noble Bank S.A. and Alior Bank S.A., including further amendments thereto. On 29 June 2020, Sky Tower S.A. concluded an amendment to the loan agreement of 29 December 2012, including further modifications thereto, with a syndicate of banks comprised of Getin Noble Bank S.A. and Alior Bank S.A., under which the payment of principal instalments originally due for payment on 30 June 2020 and 30 September 2020 was rescheduled on the date of final loan repayment, i.e. on 20 December 2022. Further, under the aforesaid amendment, the Banks decided to refrain from the verification of debt service ratios for Q2 and Q3 2020.
The loan at LC Corp Invest XVII Sp. z o.o. Projekt 22 Sp. k. taken out pursuant to the agreement of 20 December 2017 with a syndicate of banks: mBank Hipoteczny S.A. and mBank S.A. up to the amount of EUR 34,187,000 for the partial financing of Wola Retro in Warsaw.
The revolving loan at LC Corp Invest XVII Sp. z o.o. Projekt 22 Sp. k. taken out under the agreement of 20 December 2017 with a syndicate of banks: mBank Hipoteczny S.A. and mBank S.A. up to the amount of PLN 7,000,000 for financing and refinancing the payment of VAT in respect of costs related to Wola Retro Project in Warsaw.
Coupon bonds - the issue of 20 March 2015, including 65,000 five-year unsecured coupon bonds of PLN 1,000 each and a total nominal value of PLN 65,000,000 under a Bond Issue Agreement concluded with the banks Pekao S.A., having its registered office in Warsaw, and mBank S.A., having its registered office in Warsaw. On 20 March 2020, the Company redeemed the bonds.
Coupon bonds - the issue of 10 May 2016, including 85,000 five-year unsecured coupon bonds of PLN 1,000 each and a total nominal value of PLN 85,000,000 under a Bond Issue Agreement with the redemption date set at 10 May 2021 concluded with the banks Pekao S.A., having its registered office in Warsaw, and mBank S.A., having its registered office in Warsaw. On 23 December 2016, the assimilation of bonds of these series with bonds issued on
19 August 2016 took place on the "Catalyst" bond market.
Coupon bonds - the issue of 19 August 2016, including 15,000 five-year unsecured coupon bonds of PLN 1,000 each and a total nominal value of PLN 15,000,000 under a Bond Issue Agreement with the redemption date set at 10 May 2021 concluded with the banks Pekao S.A., having its registered office in Warsaw, and mBank S.A., having its registered office in Warsaw. On 23 December 2016, the assimilation of bonds of these series with bonds issued on 10 May 2016 took place on the "Catalyst" bond market.
Coupon bonds - the issue of 6 October 2016, including 25,000 five-year unsecured coupon bonds of PLN 1,000 each and a total nominal value of PLN 25,000,000 under a Bond Issue Agreement with the redemption date set at 6 October 2021 concluded with the banks Pekao S.A., having its registered office in Warsaw, and mBank S.A., having its registered office in Warsaw. On 25 April 2017, the assimilation of bonds of these series with bonds issued on 27 October 2016 took place on the "Catalyst" bond market.
Coupon bonds - the issue of 27 October 2016, including 15,000 five-year unsecured coupon bonds of PLN 1,000 each and a total nominal value of PLN 15,000,000 under a Bond Issue Agreement with the redemption date set at

DEVELIA S.A. GROUP

Interim Condensed Consolidated Financial Statements for the period of 6 months ended 30 June 2020

(PLN '000)

6 October 2021 concluded with the banks Pekao S.A., having its registered office in Warsaw, and mBank S.A., having its registered office in Warsaw. On 25 April 2017, the assimilation of bonds of these series with bonds issued on 6 October 2016 took place on the "Catalyst" bond market.

Coupon bonds - the issue of 5 December 2017, including 50,000 five-year unsecured coupon bonds of PLN 1,000 each and a total nominal value of PLN 50,000,000 under a Bond Issue Agreement with the redemption date set at 5 June 2022 concluded with the banks Pekao S.A., having its registered office in Warsaw, and mBank S.A., having its registered office in Warsaw.
Coupon bonds - the issue of 28 February 2018, including 45,000 four-year unsecured coupon bonds of PLN 1,000 each and a total nominal value of PLN 45,000,000 under a Bond Issue Agreement with the redemption date set at 28 February 2022 concluded with the banks Pekao S.A., having its registered office in Warsaw, and mBank S.A., having its registered office in Warsaw.
Coupon bonds - the issue of 19 October 2018, including 34,000 two-year unsecured coupon bonds of PLN 1,000 each and a total nominal value of PLN 34,000,000 under a Bond Issue Agreement with the redemption date set at 19 October 2020 concluded with mBank S.A., having its registered office in Warsaw.
Coupon bonds - the issue of 19 October 2018, including 66,000 four-year unsecured coupon bonds of PLN 1,000 each and a total nominal value of PLN 66,000,000 under a Bond Issue Agreement with the redemption date set at 19 October 2022 concluded with mBank S.A., having its registered office in Warsaw. The Company received calls for early redemption in the total amount of PLN 46,000,000, the early redemption date falls on 20 July 2020.
Coupon bonds - the issue of 22 May 2019, including 60,000 four-year unsecured coupon bonds of PLN 1,000 each and a total nominal value of PLN 60,000,000 under a Bond Issue Agreement with the redemption date set at 22 May 2023 concluded with mBank S.A., having its registered office in Warsaw.

The allocation of respective loans, bonds to operating segments is presented in Note 11.

26.2. Other Liabilities on Account of Financial Instruments

As at 30 June 2020 and 31 December 2019, the fair value measurement of transactions hedging the risk of an interest rate increase, of the IRS, COLLAR and forward type, was recognised under Liabilities on account of loans and bonds and totalled:

	30 June 2020	31 December 2019
Non-current	1,069	11,983
Current	203	428

Total	1,272	12,411

FX Forward Transaction Conducted by LC Corp Invest XVII Sp. z o.o. Projekt 22 Sp. k.

On 26 March 2020, LC Corp Invest XVII Sp. z o.o. Projekt 22 Sp. k. entered into, pursuant to a framework agreement of 8 February 2018, a foreign exchange forward transaction which included forward and derivative operations relating to the performance of a loan agreement and extended the settlement period of the unsettled transaction to its maturity, i.e. 31 March 2020. A new settlement date was set for the unsettled amount of PLN 11,478,000 - 30 September 2020. The nominal value of the aforesaid transaction at a base rate amounted to EUR 2,626,000.

26.3. Issue, Redemption of Equity Securities

On 20 March 2020, 65,000 five-year unsecured coupon bonds of PLN 1,000 each and a total nominal value of PLN 65,000,000 were redeemed.

After the balance-sheet date, i.e. on 20 July 2020, 46,000 four-year unsecured coupon bonds of PLN 1,000 each and a total nominal value of PLN 46,000,000 were redeemed.

DEVELIA S.A. GROUP

Interim Condensed Consolidated Financial Statements for the period of 6 months ended 30 June 2020

(PLN '000)

Changes to Documentation of Bond Issue Programme

On 5 March 2020, the Issuer and mBank S.A. concluded an amendment to the programme agreement of 2 October 2018 ("the Programme Agreement") under which the Issuer set up a bond issue programme for its bonds up to the total amount (nominal value) of issued and outstanding bonds of PLN 400,000,000 ("the Issue Programme"). The amendment to the Programme Agreement is designed to adapt both the Programme Agreement and documentation relating to the Issue Programme to amended provisions of law that apply to the issue of bonds. Bonds issued under the amended Issue Programme ("the Bonds") will be tendered for purchase pursuant to Article 33(1) or (2) of the Bonds Act of 15 January 2015.

Taking out and Repaying of Bank Loans and Borrowings

In the period of 6 months ended 30 June 2020, Arkady Wrocławskie S.A. pursuant to the amendment of 27 April 2020 did not repay the instalments of the loan in EUR taken out with Santander Bank Polska S.A. As at 30 June 2020, the total outstanding amount after conversion into Polish Zlotys was PLN 70,054,000. After the balance-sheet date, the principal amounts of PLN 3,858,000 and PLN 1,927,000 were paid off on 31 July 2020 and 31 August 2020 respectively.
In the period of 6 months ended 30 June 2020, Warszawa Przyokopowa Sp. z o.o. completely repaid the loan taken out in EUR to BNP Paribas Polska S.A. in the amount PLN 191,303,000.
In the period of 6 months ended 30 June 2020, Sky Tower repaid, in accordance with the repayment schedule, the instalments of the loan taken out in EUR to a syndicate of banks: Getin Noble Bank S.A. and Alior Bank S.A. in the amount of PLN 2,446,000. As at 30 June 2020, the total outstanding amount after conversion into Polish Zlotys was PLN 196,619,000.
In the period of 6 months ended 30 June 2020, LC Corp Invest XVII Spółka z ograniczoną odpowiedzialnością Projekt
22 Sp. k., according to a loan agreement with mBank Hipoteczny S.A., concerning a loan taken out in EUR and designated for the partial financing of Wola Retro Project in Warsaw, drew down funds in the total amount 4,413,000. As at 30 June 2020, the total outstanding amount after conversion into Polish Zlotys was PLN 113,783,000.

27. Collateral

As at 30 June 2020, the following main collateral, categorised into below groups, was used as security for the repayment of loans.

27.1. Security for Loans Granted to Finance Commercial Properties

1. Security for the bank loan agreement concluded by Arkady Wrocławskie S.A.:

capped mortgage (loan in EUR) - up to the amount of EUR 37,500,000;
Pledge on the shares of Arkady Wrocławskie S.A. held by Develia S.A. - up to the amount EUR 37,500,000;
Registered pledge on bank accounts (loan in EUR) - up to the amount of EUR 37,500,000;
Assignment of rights arising from rental agreements, insurance and guarantees under agreements with contractors;
Declaration on submission to enforcement pursuant to Article 777 of the Code of Civil Procedure with regard to 113,700,000 ordinary registered shares held by Develia S.A. of a nominal value of PLN 1.00, each being a part of the share capital of Arkady Wrocławskie S.A., encumbered with registered pledge, under financial and registered pledge agreement, on shares as security for the repayment of secured debt;
Deposit of EUR 500,000.

2. Security for transactions hedging against interest rate risk (COLLAR) (hedging agreement), established by Arkady

Wrocławskie S.A.:

Contractual mortgage of up to PLN 8,250,000;
Declarations on submission to enforcement pursuant to Article 777 of the Code of Civil Procedure up to the total amount of PLN 8,250,000;

3. Security for the bank loan agreement concluded by Warszawa Przyokopowa Sp. z o.o., which expired on 29 January

2020 following the repayment of loan liabilities:

Contractual capped mortgage of the highest priority up to the amount of EUR 75,957,124.43;

DEVELIA S.A. GROUP

Interim Condensed Consolidated Financial Statements for the period of 6 months ended 30 June 2020

(PLN '000)

Financial and registered pledges on accounts receivable from bank accounts with a power of attorney to manage the accounts;
Registered pledge on all shares of Warszawa Przyokopowa Sp. z o.o. together with a financial pledge;
Assignment to secure the borrower's rights arising from all agreements concluded by the Borrower;
Subordination agreement on claims from other borrower's creditors being the borrower's partners, making them junior to the claims of the bank resulting from the Agreement;
Declaration on submission to enforcement pursuant to Article 777 of the Code of Civil Procedure for a total amount of up to EUR 82,500,000;

4. Security for the transactions hedging against foreign exchange risk and interest rate risk (hedging agreements), established by Warszawa Przyokopowa Sp. z o.o. pursuant to the framework agreement of 1 June 2012, which expired on 29 January 2020 following the repayment of liabilities:

Contractual mortgage of up to PLN 135,000,000;
Declarations on submission to enforcement pursuant to Article 97 of the Banking Law up to the total amount of PLN 135,000,000.

5. Security for the agreement on a bank loan taken out by Sky Tower S.A.:

Contractual mortgage of the highest priority of up to EUR 90,000,000;
Financial and registered pledges on accounts receivable from bank accounts with a power of attorney to manage the accounts;
Declaration on submission to enforcement pursuant to Article 97 of the Banking Law and Article 777 of the Code of Civil Procedure;
Registered pledges on all shares of Sky Tower S.A., together with a financial pledge of up to EUR 90,000,000;
Assignment to secure the borrower's rights arising from all agreements concluded by the Borrower;
Subordination agreement on claims from other borrower's creditors being the borrower's partners, making them junior to the claims of the bank resulting from the Agreement.

6. Security for the transactions hedging against foreign exchange risk and interest rate risk (hedging agreements), established by Sky Tower S.A. pursuant to the framework agreement of 27 December 2012:

Contractual mortgage of the highest priority of up to EUR 44,000,000;
Declaration on submission to enforcement pursuant to Article 97 of the Banking Law.

7. Security for the bank loan agreement signed by LC Corp Invest XVII Sp. z o.o. Projekt 22 Sp.k.:

Contractual mortgage of up to EUR 36,280,500.00 established on parcels of land owned by LC Corp Invest XVII Sp. z o.o. Projekt 22 Sp. k. in favour of mBank Hipoteczny S.A.;
Contractual mortgage of up to EUR 15,000,000.00 established on parcels of land owned by LC Corp Invest XVII Sp. z o.o. Projekt 22 Sp. k. in favour of mBank S.A.;
Contractual mortgage of up to PLN 10,500,000.00 established on parcels of land owned by LC Corp Invest XVII Sp. z o.o. Projekt 22 Sp. k. in favour of mBank S.A.;
Declaration of the borrower on voluntary submission to enforcement towards mBank Hipoteczny S.A. of up to EUR 36,280,500.00 pursuant to Article 777(1)(5) of the Code of Civil Procedure, in respect of any pecuniary liabilities of the Company towards the Bank resulting from the Loan agreement;
Declaration of the borrower on voluntary submission to enforcement towards mBank Hipoteczny S.A. of up to EUR 15,000,000.00 pursuant to Article 777(1)(5) of the Code of Civil Procedure, in respect of any pecuniary liabilities of the Company towards the Bank resulting from the Loan agreement;
Declaration of the borrower on voluntary submission to enforcement towards mBank S.A. of up to PLN 10,500,000.00 pursuant to Article 777(1)(5) of the Code of Civil Procedure, in respect of any pecuniary liabilities of the Company towards the Bank resulting from the Loan agreement;
Agreement on the assignment of claims from all agreements concluded by the borrower connected with the project implemented on the property;
Registered pledges on the rights to cash in all bank accounts of the Borrower up to the highest sum of security in the amount of EUR 36,280,500.00 in favour of mBank Hipoteczny S.A.;
Registered pledges on the rights to cash in all bank accounts of the Borrower up to the highest sum of security in the amount of EUR 15,000,000.00 and PLN 10,500,000 in favour of mBank S.A.;
Subordination agreement on accounts receivable concluded by the borrower, Develia S.A. and other subsidiaries of the Issuer - LC Corp Invest XVII Sp. z o.o. and LC Corp Invest I Sp. z o.o., making them subordinated creditors, and

DEVELIA S.A. GROUP

Interim Condensed Consolidated Financial Statements for the period of 6 months ended 30 June 2020

(PLN '000)

mBank S.A. and mBank Hipoteczny S.A. as senior creditors, including the assignment to secure all subordinated accounts receivable for the bank in accordance with the above agreement;

Support agreement concluded by the borrower, mBank Hipoteczny S.A., mBank S.A. and Develia S.A. as the guarantor, pursuant to which the guarantor will be obliged, among other things, to provide financial support to the borrower under the circumstances specified in the agreement;
Declaration of Develia S.A. on its submission to enforcement pursuant to Article 777 of the Code of Civil Procedure in conjunction with the above-mentioned support agreement up to EUR 3,576,261.90;
Surety agreement concluded by the borrower, mBank Hipoteczny S.A., mBank S.A. and Develia S.A., under which Develia S.A. will stand surety for the borrower up to a partial amount of the borrower's liabilities as a result of achieving a certain level of DSCR ;
Commitment to enter into a support agreement with the borrower, mBank Hipoteczny S.A., mBank S.A. and Develia S.A. as the guarantor, pursuant to which the guarantor will be obliged, among other things, to provide financial support to the borrower under the circumstances specified in the agreement;
Declaration of Develia S.A. on its submission to enforcement pursuant to Article 777 of the Code of Civil Procedure in conjunction with the above-mentioned support agreement up to EUR 558,660.50;
Registered pledge in favour of mBank Hipoteczny S.A. established by LC Corp Invest XVII Sp. z o.o. - a subsidiary of the Issuer, with regard to the rights and obligations due to LC Corp Invest XVII Sp. z o.o. as the general partner of the borrower to secure the repayment of secured accounts receivable up to the highest sum of security in the amount of EUR 36,280,500.00 together with a declaration on submission to enforcement pursuant to Article 777 of the Code of Civil Procedure;
Registered pledge in favour of mBank S.A. established by LC Corp Invest XVII Sp. z o.o. - a subsidiary of the Issuer, with regard to the rights and obligations due to LC Corp Invest XVII Sp. z o.o. as the general partner of the borrower to secure the repayment of secured accounts receivable up to the highest sum of security in the amount of EUR 15,000,000.00 together with a declaration on submission to enforcement pursuant to Article 777 of the Code of Civil Procedure;
Registered pledge in favour of mBank S.A. established by LC Corp Invest XVII Sp. z o.o. - a subsidiary of the Issuer, with regard to the rights and obligations due to LC Corp Invest XVII Sp. z o.o. as the general partner of the borrower to secure the repayment of secured accounts receivable up to the highest sum of security in the amount of PLN 10,500,000.00 together with a declaration on submission to enforcement pursuant to Article 777 of the Code of Civil Procedure;
Registered pledge in favour of mBank Hipoteczny S.A. established by Develia S.A. with regard to the rights and obligations due to the limited partner of the borrower to secure the repayment of secured accounts receivable up to the highest sum of security in the amount of EUR 36,280,500.00 together with a declaration on submission to enforcement pursuant to Article 777 of the Code of Civil Procedure;
Registered pledge in favour of mBank Hipoteczny S.A. established by Develia S.A. with regard to the rights and obligations due to the limited partner of the borrower to secure the repayment of secured accounts receivable up to the highest sum of security in the amount of EUR 15,000,000.00 together with a declaration on submission to enforcement pursuant to Article 777 of the Code of Civil Procedure;
Registered pledge in favour of mBank Hipoteczny S.A. established by Develia S.A. with regard to the rights and obligations due to the limited partner of the borrower to secure the repayment of secured accounts receivable up to the highest sum of security in the amount of PLN 10,500,000.00 together with a declaration on submission to enforcement pursuant to Article 777 of the Code of Civil Procedure;
Registered pledge on the enterprise (a set of movables and transferable rights) in favour of mBank Hipoteczny S.A. established by the borrower with regard to the rights and obligations due to the limited partner of the borrower to secure the repayment of secured accounts receivable up to the highest sum of security in the amount of EUR 36,280,500.00 together with a declaration on submission to enforcement pursuant to Article 777 of the Code of Civil Procedure;
Registered pledge on the enterprise (a set of movables and transferable rights) in favour of mBank S.A. established by the borrower with regard to the rights and obligations due to the limited partner of the borrower to secure the repayment of secured accounts receivable up to the highest sum of security in the amount of EUR 15,000,000.00 together with a declaration on submission to enforcement pursuant to Article 777 of the Code of Civil Procedure;
Registered pledge on the enterprise (a set of movables and transferable rights) in favour of mBank S.A. established by the borrower with regard to the rights and obligations due to the limited partner of the borrower to secure the repayment of secured accounts receivable up to the highest sum of security in the amount of PLN 10,500,000.00 together with a declaration on submission to enforcement pursuant to Article 777 of the Code of Civil Procedure;

DEVELIA S.A. GROUP

Interim Condensed Consolidated Financial Statements for the period of 6 months ended 30 June 2020

(PLN '000)

8. Security for transactions hedging against foreign exchange risk and interest rate risk (hedging agreements), established by LC Corp Invest XVII Sp. z o.o. Projekt 22 Sp.k. pursuant to the framework agreement as security for the loan agreement in favour of mBank S.A.:

Next ranking contractual mortgage of up to PLN 32,235,000, subordinated to the mortgage established as security for the investment loan and revolving loan for VAT on land owned by LC Corp Invest XVII Sp. z o.o. Projekt 22 Sp. k.;
Registered pledges on the rights to cash in all bank accounts of the Borrower up to the highest sum of security in the amount of PLN 32,235,000 in favour of mBank S.A.;
Declaration on submission to enforcement pursuant to Article Article 777 of the Code of Civil Procedure of up to PLN 32,235,000.

28. Provisions

The amounts of provisions and the reconciliation presenting the changes in their position during the reporting period are shown in the table below:

	Retirement and		Provision for
	disability
	Disputes and	disposal of
	benefits and	Other		Total
	litigation	investment
	bereavement
		property
	payment


As at 01 January 2020	22	3,274	10,805		49	14,150

Created	-	288	-		107	395
Reclassification	-	-	4,432		-	4,432
Used	-	-	(4,691)		-	(4,691)
Reversed	-	(11)	-		(37)	(48)

As at 30 June 2020, including:	22	3,551	10,546		119	14,238


- non-current	22	-	4,743		-	4,765
- current	-	3,551	5,803		119	9,473

DEVELIA S.A. GROUP

Interim Condensed Consolidated Financial Statements for the period of 6 months ended 30 June 2020

(PLN '000)

	Retirement and		Provision for
	disability
	Disputes and	disposal of
	benefits and	Other		Total
	litigation	investment
	bereavement
		property
	payment


As at 01 January 2019	22	3,046	-		14	3,082

Created	-	473	10,805		37	11,315
Used	-	(245)	-		(2)	(247)
Reversed	-	-	-		-	-

As at 31 December 2019, including:	22	3,274	10,805		49	14,150


- non-current	22	-	5,297		-	5,319
- current	-	3,274	5,508		49	8,831

29. Trade and Other Payables

	30 June 2020	31 December 2019
Trade payables	87,392	87,210
State budget liabilities (without income tax)	3,233	5,076
Liabilities on account of security deposits	30,350	33,757
Liabilities on account of dividend	-	-
Other liabilities	305	1,074

TOTAL, including:	121,280	127,117


- non-current	-	-
- current	121,280	127,117

An analysis of maturity of trade and other payables as at 30 June 2020 as well as 31 December 2019 is presented below:

	30 June 2020	31 December 2019
up to 1 year	121,280	127,117
between 1 year and 5 years	-	-
above 5 years	-	-

	121,280	127,117

DEVELIA S.A. GROUP

Interim Condensed Consolidated Financial Statements for the period of 6 months ended 30 June 2020

(PLN '000)

30. Accruals and Deferred Income

	30 June 2020	31 December 2019
Accrued expenses on account of salaries and wages	6,080	6,857
Accrued expenses on account of holidays not taken	1,525	1,074
Accrued expenses on account of additional payments for perpetual usufruct	-	-
Accrued expenses on account of the audit of financial statements	127	282
Other	2,853	2,852

Accrued expenses	10,585	11,065


Accrued rental revenues	6,294	6,512
Accrued revenues from the sale of flats	395,287	343,660
Other deferred income	12	75

Deferred income	401,593	350,247



Accruals and deferred income	412,178	361,312

31. Explanations to Statement of Cash Flow

31.1. Change in Liabilities, Except for Loans and Borrowings

	Period of 6 months	Period of 6 months
	ended	ended
	30 June 2020	30 June 2019
Balance-sheet change in liabilities, except for loans and bonds	(5,837)	145,734
Investment Liabilities	1,587	(120,841)
Liabilities on account of acquisition of shares	-	(3,051)

Change in liabilities	(4,250)	21,842

31.2. Other Adjustments

Valuation of forward instruments Reclassification of open trust accounts

Application of IFRS 16 "Lease"

Other

Other adjustments

Period of 6 months	Period of 6 months
ended	ended
30 June 2020	30 June 2019
442	90
(1,642)	3,784
(265)	40,571
451	(148)

(1,014)	44,297

DEVELIA S.A. GROUP

Interim Condensed Consolidated Financial Statements for the period of 6 months ended 30 June 2020

(PLN '000)

32. Information Relating to Dividend Paid Out (or Declared)

After the balance-sheet date, i.e. on 31 August 2020, the Ordinary General Meeting of Develia S.A. adopted a resolution on the payment of dividend on the following principles:

Amount of dividend: PLN 44,755,831.10
Amount of dividend per share: PLN 0.10
Number of shares subject to dividend: 447,558,311 shares
Record date: 18 September 2020
Dividend payment date: 02 October 2020

33. Investment Liabilities

As at 30 June 2020, the Group does not plan to incur any significant expenditures on property, plant and equipment and intangible assets and does not have any significant contractual obligations whose subject matter is the acquisition of property, plant and equipment and intangible assets.

In 2020, the Group envisaged to incur expenditures on investment projects (inventories and investment properties) in the amount of about PLN 902,000,000.

34. Court Proceedings

As at 30 June 2020, there are no significant proceedings before the court or arbitration or public administration authorities with regard to liabilities or receivables of Develia S.A. or its subsidiaries, the value of which would have an important bearing on the financial standing of the Group companies. The subsidiary undertakings of Develia S.A. are parties to court and public administration proceedings whose value is insignificant for their operations or financial standing. The vast majority of other cases relate to claims lodged by subsidiaries of Develia S.A. against their debtors. Provisions for legal actions are shown in Note 28.

35. Changes in Contingent Liabilities, After the End of Last Accounting Year

As from the end of the last financial year, there have been no significant changes in contingent liabilities or contingent assets of the Group companies, except for contingent liabilities arising from real estate development, relating to contingent fees for the removal of trees, whose total amount was PLN 5,193,000 (as at 31 December 2019, such contingent liabilities amounted to PLN 5,411,000).

In pursuance of the Sales and Purchase Agreements covering two real properties: Silesia Star in Katowice and Retro Office House in Wrocław, described in section 2.1, the Company furnished the Purchasers, Ingadi spółka z ograniczoną odpowiedzialnością ("Ingadi") and Artigo spółka z ograniczoną odpowiedzialnością ("Artigo"), with rent guarantees issued for a five-year period (covering, inter alia, not leased floor areas), secured by suretyship provided by the Company (as the surety of LC Corp Invest XVII Sp. z o.o. Projekt 20 Sp. k. ("P20") and LC Corp Invest XVII Sp. z o.o. Projekt 21 Sp. k. ("P21"), acting as the Sellers and debtors). In relation to the aforesaid suretyship, the Company will guarantee that:

obligations and liabilities arising from the Final Agreements will be discharged by P20 and P21, and
obligations and liabilities of P20 and P21 relating to finish works to be done by tenants designated in the Final Agreements will be discharged by P20 and P21, and
obligations and liabilities of P20 and P21 arising from the rent guarantee agreements contemplated in the Preliminary Sales and Purchase Agreements will be discharged by P20 and P21, and
the Company will incur debts of P20 and P21 arising from obligations and liabilities of P20 and P21 under the Final Agreements and rent guarantee agreements if the Sellers have ceased their operations, have gone into liquidation or have been dissolved, which circumstances will be described in the surety arrangement.

In pursuance of the Preliminary Sales and Purchase Agreement covering the real property called Wola Center in Warsaw, described in Note 21, the Company has undertaken to the Purchaser, Gisla Spółka z ograniczoną odpowiedzialnością (currently Wola Center Sp. z o.o.), to stand surety for the Seller, Warszawa Przyokopowa Spółka z ograniczoną odpowiedzialnością, and the debtor. Under the said commitment the Company guaranteed that:

The Seller would perform the obligations and discharge the liabilities of Warszawa Przyokopowa, acting as the Seller, arising from agreements covering the subject-matter of the Transaction, and

DEVELIA S.A. GROUP

Interim Condensed Consolidated Financial Statements for the period of 6 months ended 30 June 2020

(PLN '000)

The Company would incur debts of WP arising from obligations and liabilities of WP under the FSPA, if the Seller has ceased its operations, has gone into liquidation or has been dissolved, which circumstances were described in the surety arrangements,

Apart from the contingent liabilities representing security for bank loans described in detail in Note 27 and the above- described contingent fees relating to the removal of trees and arising from the real property sales and purchase agreements entered into, as at 30 June 2020, Group Companies did not have any other significant contingent liabilities.

36. Transactions with Related Undertakings

The following tables show the total amounts of transactions concluded with related undertakings for the period of 6 months ended 30 June 2020 and 30 June 2019, as well as for the year ended 31 December 2019:

30 June 2020

			Receivables	Liabilities to		Financial
		Purchases from	from related	related	Financial
Related undertaking	Sales to related	expenses
related	undertakings	undertakings	income
undertakings	(interest,
	undertakings	(trade and	(trade and	(interest)
		discounts)
			financial)	financial)


Shareholders	-	-	-	-	-	-

Undertakings related through	-	-	-	-	-	-
shareholders


Management and Supervisory Board

Management Board of parent undertaking	-	3,999 (*)	-	-	-	-
and subsidiaries

Supervisory Board	-	296 (*)	-	-	-	-


(*) Remuneration paid
31 December 2019

			Receivables	Liabilities to		Financial
		Purchases from	from related	related	Financial
Related undertaking	Sales to related	expenses
related	undertakings	undertakings	income
undertakings	(interest,
	undertakings	(trade and	(trade and	(interest)
		discounts)
			financial)	financial)


Shareholders	-	-	-	-	-	-

Undertakings related through	-	-	-	-	-	-
shareholders


Management and Supervisory Board

Management Board of parent undertaking	44	14,213 (*)	-	-	-	-
and subsidiaries

Supervisory Board	-	627 (*)	-	-	-	-


(*) Remuneration paid

DEVELIA S.A. GROUP

Interim Condensed Consolidated Financial Statements for the period of 6 months ended 30 June 2020

(PLN '000)

30 June 2019

			Receivables	Liabilities to		Financial
		Purchases from	from related	related	Financial
Related undertaking	Sales to related	expenses
related	undertakings	undertakings	income
undertakings	(interest,
	undertakings	(trade and	(trade and	(interest)
		discounts)
			financial)	financial)


Shareholders	-	-	-	-	-	-

Undertakings related through	-	-	-	-	-	-
shareholders


Management and Supervisory Board

Management Board of parent undertaking	-	8,134 (*)	-	-	-	-
and subsidiaries

Supervisory Board	-	306 (*)	-	-	-	-


(*) Remuneration paid

37. Financial Instruments

The table below shows the balance sheet values of all financial instruments of the Group in a breakdown by respective categories of assets and equity and liabilities, pursuant to IFRS 9:

	30 June 2020	31 December 2019
Assets measured at amortised cost
536,191	411,556

Non-Current Receivables	8,938	8,699
Trade and other receivables (net of budget receivables)	18,678	36,391
Cash in open trust accounts	27,218	25,576
Cash and other cash equivalents	481,357	340,890
Assets measured at fair value through profit or loss
-	239

Fair Value of Financial Instruments in the Form of Forward Contracts	-	239
Financial liabilities measured at amortised cost
957,042	1,197,355

Liabilities on Account of Loans and Bonds	776,941	1,015,033
Lease liabilities	62,054	60,281
Trade and other payables (net of budget liabilities)	118,047	122,041
Liabilities measured at fair value through profit or loss
-	-
Fair Value of Financial Instruments in the Form of Forward Contracts
203	-
Hedging Financial Instruments
1,272	12,411
Fair value of IRS and CAP financial instruments
1,069	12,411

The fair values of the above presented items are close to their balance sheet values.

38. Capital Management

The main purpose of the Group's capital management is to maintain a good credit rating and safe capital ratios which would support the Group's operating activity and increase the value for its shareholders.

The Group manages the capital structure and modifies it as a result of changes in economic conditions. In order to maintain or adjust the capital structure, the Group can change the payment of dividend to shareholders, return capital to shareholders or issue new shares. In the period ended 30 June 2020 and in the year ended 31 December 2019, there were no changes in the objectives, rules and processes binding in this area.

DEVELIA S.A. GROUP

Interim Condensed Consolidated Financial Statements for the period of 6 months ended 30 June 2020

(PLN '000)

The Group monitors the condition of capital by means of a leverage ratio, which is calculated as a ratio of debt to equity. The Group's rules determine this ratio as not higher than 5. The Group's debt includes interest-bearing loans, bonds, liabilities on account of the acquisition of a subsidiary undertaking, trade payables and other liabilities.

	30 June 2020	31 December 2019
Liabilities on Account of Loans and Bonds	776,941	1,015,033
Trade and Other Payables	121,280	127,117

A. Debt	898,221	1,142,150

B. Equity	1,510,123	1,492,111

Leverage ratio (A/B)	0.6	0.8

39. Effects of Announcement of COVID-19 Epidemic on Group's Current Operations

An important factor that affected the Group's current operations in H1 2020 was the state of COVID-19 epidemic announced in that period.

January and February 2020 saw very good sales, however, after that period the Group recorded a significant drop in the number of new sales contracts concluded in April 2020, and although May and June saw increasing sales volume, the result for the entire quarter and half year was worse than in corresponding periods of 2019.

After the balance-sheet date, i.e. in the period between July and August 2020, the higher number of flats sold could be observed (higher sales than in the corresponding period of the previous year). Consequently, the current sales figures give an optimistic outlook on the situation of the housing market and its prospects.

In Q2, due to an outbreak of the epidemic, the Group decided to change its investment plan, delaying the implementation of some housing projects, starting to phase individual projects over a longer period and changing the order of construction works for multi-stage projects - with next stages being chosen for implementation in consideration of a changing market situation.

Furthermore, the Group also noted a delay in the process of issuing administrative decisions, e.g. decisions on building permit, which stemmed from the fact that time limits for administrative authorities to give such decisions were suspended on account of the epidemic.

The Management Board monitor, on a daily basis, works progress on sites, and no major effects of the epidemic on project schedules were observed. As regards projects already completed and scheduled to be completed in this year, no delays in delivering premises to clients are envisaged by the Group.

The COVID-19 pandemic had also a considerable impact on the Group's operations in the commercial segment, it was reflected in revenues and cash flows generated by commercial buildings with a significant share in commercial floor space - these changes resulted in a lower value of investment real property - Arkady Wrocławskie and Sky Tower by a total of EUR 11,240,000.

Apart from the aforesaid impact, the fact of announcing the COVID-19 pandemic has not affected the liquidity of the Group companies dramatically and it has had no significant bearing on the valuation of major financial items (such as inventory, receivables and provisions). Furthermore, the Group companies have met financing conditions set out in loan agreements.

40. Events After End of Reporting Period

After the balance-sheet date, i.e. after 30 June 2020, no significant events that might have a major impact on financial results presented herein were observed, however, other events occurred:

LC Corp Invest XIX Sp. z o.o. was removed from the National Court Register (KRS) on 14 July 2020.
On 28 August 2020, a resignation from the Supervisory Board, effective as at 31 August 2020, was tendered by the Supervisory Board Chairman - Michał Hulbój.
On 30 August 2020, a resignation from the Supervisory Board, effective as at 31 August 2020, was tendered by the Supervisory Board Member - Grzegorz Grabowicz.
On 31 August 2020, a resignation from the Supervisory Board, effective as at 31 August 2020, was tendered by the Supervisory Board Member - Michał Wnorowski.

DEVELIA S.A. GROUP

Interim Condensed Consolidated Financial Statements for the period of 6 months ended 30 June 2020

(PLN '000)

On 31 August 2020, the Ordinary General Meeting of Develia S.A. appointed Mr Robert Pietryszyn, Mr Piotr Pinior and Mr Marek Szydło to the Supervisory Board.
On 31 August 2020, the Ordinary General Meeting of Develia S.A. adopted a resolution on the payment of dividend in the amount of PLN 44,755,831.10 (PLN 0.10 per share), setting the record date for 18 September 2020 and the date of dividend payment for 2 October 2020.
On 31 August 2020, the Ordinary General Meeting of Develia S.A. adopted a resolution on the merger pursuant to Article 492(1)(1) of the Commercial Partnerships and Companies Code between Develia S.A. and LC Corp Invest
XXI Sp. z o.o., based in Wrocław ("the Acquired Company 1") and LC Corp Invest XXIV Sp. z o.o., based in Wrocław, ("the Acquired Company 2") through the transfer to the Acquiring Company - as the sole shareholder in the Acquired Company 1 and 2 - of the entire assets of both Acquired Companies (merger through take-over). Relevant resolutions were carried on the same day by the Acquired Company 1 and the Acquired Company 2.
On 31 August 2020, the Ordinary General Meeting of the Issuer adopted the Remuneration Policy for Management Board and Supervisory Board Members.
On 2 September 2020, the Issuer communicated its intention to issue bonds as part of a bond issue scheme up to the total amount (nominal value) of issued and outstanding bonds of PLN 400,000,000, with such issuance being subject, however, to satisfactory conditions on the debt securities market (maturity - three years, floating interest rate).
On 7 September 2020, Mr Marek Szydło tendered his resignation from the Supervisory Board, which was effective as from 8 September 2020.

	The document has been signed by a qualified electronic signature
Paweł Ruszczak	Mirosław Kujawski	Tomasz Wróbel
acting President of Management	Member of Management Board	Member of Management Board
Board
Lidia Kotowska	Anna Gremblewska-Nowak	Michał Michalczyk
Director of Accounting	Chief Accountant	Head of Financial Reporting and
Department		Consolidation

Wrocław, 08 September 2020