MANAGEMENT BOARD
REPORT ON OPERATIONS OF
ECHO INVESTMENT S.A.
AND ITS GROUP
22
CONTENT
Message from CEO 4
CHAPTER 1 7
MANAGEMENT BOARD REPORT 7
General information about theCompany and its Group 8
Management Board 9
Supervisory Board 10
The Strategy of Profitable Growth in action 11
Business model 13
Selected financial data of the Echo Investment Group 14
The main figures disclosed in the annual financial statements of Echo Investment S.A.
and its Group 15
Operating segments of Echo Investment Group 20
Ownership structure of Echo Investment S.A. and description of shares 22
Volume of the Company’s shares and bonds held by managing and supervising persons 23
Major events in 2020 and material agreements for the operation of the Company
and its Group 24
Material post-balance sheet events 29
Residential segment – market outlook and Echo Investment business activities 32
Oce segment – market outlook and Echo Investment business activities 37
Retail segment – market outlook and Echo Investment business activities 40
Our employees and diversity policy 43
How we manage risk 48
Portfolio of properties 55
Main investments in 2020 – acquisition of plots 64
Output markets and sources of supplies of materials, goods and services 65
Composition of the Group 67
Financial liabilities of the Company and its Group 72
O-balance sheet liabilities 76
Information on dividend policy and dividend 85
Assessment of financial resources management and investment plan feasibility 86
Factors and one-o events influencing the financial result in 2020 and in Q4 2020 91
External and internal factors significant for the development of Echo Investment S.A.
and its group 93
Remuneration of the Management Board and Supervisory Board 94
Seasonal or cyclical nature of operations 96
Significant court, arbitration or public administration proceedings 96
Information on borrowings granted in 2020, including to related entities 97
Agreements concluded with an entity authorised to audit financial statements 98
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Other disclosures required by law 99
The impact of the COVID-19 pandemic on the operations of Echo Investment Group 100
CHAPTER 2 105
STATEMENT ON THE APPLICATION OF CORPORATE GOVERNANCE PRINCIPLES 105
The Articles of Association of the Company and the most important corporate governance
documents 106
Systems of internal control and risk management 110
Rules for amending the Company’s articles of association 113
The procedure of the general meeting, a description of shareholders’ rights
and the manner of exercising them 113
Composition and changes in the management board 114
Description of principles regulating the appointment and dismissal of managerial
sta and their rights 117
Composition of the Supervisory Board and its changes 119
Company’s supervisory board – rules of operation 122
Composition of the Audit Committee and its changes 125
The responsibilities ofthe Audit Committee 126
Investment Committee 128
Echo Investment S.A. shareholding structure and shareholders’ rights 129
CHAPTER 3 130
STATEMENT OF THE MANAGEMENT BOARD 130
Contact 132
31.
32.
4
Message from CEO
I am pleased to present to you the financial report of Echo Investment for 2020, the publication of
which coincides with the 25th anniversary of our company’s presence on the Warsaw Stock Exchange.
During this time we have managed to complete almost 200 projects in over 30 Polish cities, we have
gained experience and gathered the best team necessary to create large, city-forming ‘destinations’
projects that meet the needs of cities and complement them.
Last year we earned PLN 122 million of net profit, what was the result of hand over to clients 1,505
apartments, growth in value of our commercial projects under construction, as well as completed
Resi4Rent projects
e strategic directions
Taking into account the new reality in which we operate, social trends, and changing client pref-
erences, our company focuses on growing the residential sector. Apartments for sale and for rent
account today for about a quarter of our assets. Due to the high prospects for this sector in Poland
and the lower need for external financing of this business, it is our ambition to increase significantly
proportion of residential assets in our balance sheet. A lower level of indebtedness of the entire
Group will be the positive result of this strategy.
It is worth emphasizing that we intend to keep our business diversified. We will maintain our strong
position in the oce sector, as well as remain active in the retail sector focusing on destination pro-
jects where food and beverage is a crucial element.
We are ready to implement this strategy. In recent years, we have focused on the purchase of large
plots of land, where complex and perfectly designed attractive parts of the city can be built. In
February this year, we concluded a preliminary agreement for the purchase of a 66% stake in the
Wrocław-based developer Archicom, as a result of which the Echo-Archicom group will become the
biggest residential developer in Poland.
Residential sector
In 2020 we hit records both in sales and handovers of apartments. We managed to sign 1,570 sales
contracts with clients, what outperformed last year’s results by 16%. At the same time, clients received
their keys to 1,505 apartments, what meant a 19% increase compared to 2019. The sales only in Q4
2020 amounted to 464 units, while handovers – 792.
In 2020, we completed the construction of eleven projects in Warsaw, Łódź, Poznań and Wrocław.
We are constantly expanding our oer: last year, we have started the construction and sale of apart-
ments in seven projects which added almost 1,300 apartments to the oer.
After finalizing the purchase of the majority stake in Archicom, only in 2021 our group will start
construction of 7,000 apartments. apartments for sale and rent. The acquisition is in line with our
strategic goal of becoming a nationwide leader in the residential sector.
DEAR SHAREHOLDERS,
PARTNERS AND CLIENTS,
5
Resi4Rent
We are consistently developing Resi4Rent - the largest private company with apartments for rent in
Poland. Currently, Resi4Rent has nearly 1.8 thous. apartments in Wrocław, Łódź and Warsaw. Dur-
ing 2021 we will complete another 460 apartments and start a construction of more than 3 thous.
additional units. Ultimately, by 2025, it will oer 10 thousand. apartments in the six largest Polish
cities - in Warsaw, Kraków, Łódź, Wrocław, Gdańsk and Poznań.
Oces
Last year, Echo Investment’s oce department focused on completing the construction of oce
buildings as scheduled and on providing tenants for them. We have commissioned five buildings with
a total area of over 125,000 sqm. At the end of the year, their average lease level exceeded 60%, but
the current level of leasing and our advanced talks bring this ratio closer to approx. 85% now, that
is making the buildings ready to be sold on the market.
Already in the first quarter of 2021, we sold Villa Oces in Warsaw and we are conducting advanced
talks about the sale of other buildings. Our oce projects continue to win the trust of financial insti-
tutions due to their high quality and the central locations in the dierent cities. In 2020, we obtained
financing for the construction of the MidPoint71 projects in Wrocław and Fuzja in Łódź in the total
amount of over EUR 90 million.
Our company focuses on growing the residential sector. Apartments
for sale and for rent account today for about a quarter of our assets.
Due to the high prospects for this sector in Poland and the lower need
for external nancing of this business, it is our ambition to increase
signicantly proportion of residential assets in our balance sheet.
A lower level of indebtedness of the entire Group will be the positive
result of this strategy.
We are ready to implement this strategy. In recent years, we have
focused on the purchase of large plots of land, where complex and
perfectly designed attractive parts of the city can be built. In February
this year, we concluded a preliminary agreement for the purchase of
a 66% stake in the Wrocław-based developer Archicom, as a result of
which the Echo-Archicom group will become the biggest residential
developer in Poland.
e retail sector
The retail sector was hit the hardest during the pandemic, mainly due to three lock-downs and con-
tinually protracted restrictions. It has been a focus for our leasing and management departments to
reach an agreement with tenants on principles for returning shopping centers. Through marketing
campaigns and consistent brand building, we hope to quickly rebuild the footfall and turnover of
Libero and Galeria Młociny, in close cooperation with our tenants.
The most important event for our retail projects in 2020 was the opening of the first Primark store in
Poland in Galeria Młociny in Warsaw. It was one of the most anticipated debuts on the Polish market,
which definitely strengthens the attractiveness of this project. Bringing the brand to Poland is one
of the greatest successes of the leasing department of Echo Investment.
In 2020, the leasing process of Warsaw Brewery retail space was also completed. Tenants are finishing
their premises and – with our support – they are getting ready to open their business.
Financial position
The financial situation of Echo Investment is stable. In 2020, we generated over PLN 122 million of
consolidated net profit, and at the end of the period, we had cumulated PLN 327 million of cash on
our accounts. In 2020 we have acquired attractive land properties for 275,000 sqm of residential
and service space. With such a strong financial situation and an impressive land bank, we are ready
to implement our strategy.
I encourage you to read our financial report for 2020 in detail.
Yours sincerely
Nicklas Lindberg
CEO of Echo Investment
CHAPTER 1
MANAGEMENT
BOARD REPORT
8
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
Echo Investment Group’s core activity consists in the construc-
tion, lease and sale of oce and retail buildings, construction
and sale of residential buildings as well as trade in real estate.
The parent company Echo Investment S.A., with its oce in
Kielce, al. Solidarności 36, was registered in Kielce on June 30,
1994. Echo is a Joint Stock Company entered in the National
Court Register under no. 0000007025 by the District Court in
Kielce, 10th Economic Division of the National Court Register.
Since 5 March 1996, the Company’s shares are listed at the War-
saw Stock Exchange on the regulated market, sector – WIG
– Real Estate. The parent entity is Lisala Sp. z o.o., and the ulti-
mate parent of the group is WING IHC Zrt. The Company was
established for an indefinite period of time.
General information about
theCompany and its Group
Kielce
1996
First listing of Echo Investment
on the WSE.
9
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
Management Board
Professional CV’s of the Board
Members are presented in the
Corporate Governance section on
page 114.
Nicklas
Lindberg
President of the Board,
CEO
Maciej
Drozd
Vice-President
of the Board,
CFO
Artur
Langner
Vice-President
of the Board
Marcin
Materny
Member of the Board
Rafał
Mazurczak
Member of the Board
Waldemar
Olbryk
Member of the Board
Małgorzata
Turek
Member of the Board
10
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
Margaret
Dezse
Independent
Supervisory Board
Member
Chair of the Audit
Committee
Supervisory Board
Noah M.
Steinberg
Chairman
Tibor
Veres
Deputy Chairman
Sławomir
Jędrzejczyk
Independent
Supervisory Board
Member
Deputy Chairman
of the Audit Committee
Maciej
Dyjas
Supervisory Board
Member
Nebil
Senman
Supervisory Board
Member
Audit Committee
Member
Bence
Sass
Supervisory Board
Member
Péter
Kocsis
Supervisory Board
Member
Professional CV’s of the Board
Members are presented in the
Corporate Governance section on
page 119.
11
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
The Strategy of Profitable
Growth in action
In 2016, the Management Board of Echo Investment prepared
and introduced the Strategy of Profitable Growth with the ap-
proval of the Supervisory Board. The strategic directions con-
firmed in 2020 place particular emphasis on the Group’s devel-
opment in the residential sector and increasing the importance
of multifunctional, large destination projects in the pipeline.
EFFECTS OF THE STRATEGY OF PROFITABLE GROWTH IMPLEMENTATION
LEADERSHIP Actions
Echo Investment is the largest development company
operating in Poland in terms of the number and area of
projects implemented. We are active in three sectors of
real estate: oce, retail and residential – including new
sector of apartments for rent. The strategy of profitable
growth assumes that Echo Investment will be one of the
top developers in each of these sectors separately. Our
large scale of operations will allow for the optimal use of
resources.
• Strengthening the position in the residential sector
by taking bigger share in the market: from c.a. 600
apartments sold annually until 2015 to c.a. 1,570 units in
2020;
• Purchase in 2021 of a majority stake in the residential
developer Archicom, making the group one of the top
three developers selling apartments and a leader in
terms of the number of apartments under construction
(including Resi4Rent);
• Preparation of residential projects allowing for further
advancement in the ranking;
• Entering a new market niche of apartment for rent by
developing a company Resi4Rent in cooperation with a
reputable financial partner;
• Maintaining the leading position in the oce market (in
terms of space under construction and preparation, as well
as rental);
• Search for new business niches, including in short-term
rental (through the development of CitySpace);
• Maintaining the leading position in the retail sector (in
terms of relations with tenants and innovative approach);
• Strengthening our competitive advantage by preparation
and construction of multifunctional projects that enable
us to combine dierent competencies and implement
projects faster.
LARGE DESTINATION PROJECTS Actions
Echo Investment’s many years of experience in three real
estate sectors gives a competitive advantage consisting
in the ability to implement large, multifunctional and city-
-forming projects. Thanks to this, the Group can buy larger
areas, with regard to which the unit price is lower and the
competition among buyers is much smaller. Combining the
functions provides for faster completion of the project and
comprehensive design of the urban space.
• The construction of projects combining oce, retail, enter-
tainment and residential functions – Warsaw Brewery, Moje
Miejsce (Beethovena), Reset in Warsaw and Fuzja in Lodz
with very good social reception;
• Preparation of other multifunctional projects at ul. Towaro-
wa 22 in Warsaw, Wita Stwosza in Kraków, Opieńskiego in
Poznań, KEN in Warsaw, Kapelanka in Kraków and Widze-
wska in Łódź;
• Signing preliminary agreement for a plot in Sluzewiec
Przemysłowy, Warsaw (Empark);
• Search for other large areas for multifunctional purposes.
12
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
EFFECTS OF THE STRATEGY OF PROFITABLE GROWTH IMPLEMENTATION
DEVELOPMENT ACTIVITY Actions
The adopted business model focuses on the development
activity, which consists of operations such as the purchase
of a plot (real estate), project preparation, construction,
leasing, sale of apartments, active management to increase
the market value and then sale of finished oce and
retail projects in optimal time for the possible return ratio,
capital management, market expectations and trends.
Echo Investment does not want to be a long-term owner
of completed projects and the income from oce or retail
rent accounts for a minority portion of its total revenue.
Commercial and residential properties under construction
constitute majority of the group’s assets.
• Separation of working oce and retail assets in 2016 to
another company – EPP and sale of all of its shares in
2016-2018;
• Sales of finished oce and retail project in optimal time
for the possible return ratio, capital management, market
expectations and trends – including sales of buildings still
remaining under construction or soon after their comple-
tion;
• Conducting the sales process of residential projects in
such a way that 80% of units are sold at the time of com-
pletion;
• Provision of development services to external companies
for remuneration.
FOCUS ON POLAND Actions
It is the largest country and real estate market in Central
and Eastern Europe. Echo Investment, as an entity which
has operated here for over two decades, knows its potential,
realities and principles of functioning very well. We focus
on the execution of projects in seven most important cities
of the country, which are the most attractive and liquid
real estate markets: Warsaw, Tri-City, Wrocław, Poznań,
Katowice, Kraków and Łódź.
• Purchase of real estate for future projects only in the seven
largest Polish cities;
• Disposal of non-core projects abroad;
• Disposal of non-core projects (including in Częstocho-
wa, Kielce, Kraków, Lublin, Poznań, Koszlin, Słupsk and
Warsaw).
STRATEGIC COOPERATION WITH RELIABLE PARTNERS Actions
Echo Investment values long-term business relations
with reliable partners, that created synergies for both
sides. Development activities of Echo Investment are
complementary to these entities. Such cooperation
facilitates expanding Echo’s scale of operation, accelerates
speed of projects implementation and limits risks. Echo
Investment assumes entering into joint-ventures for projects
requiring significant capital expenditures, providing its
partners with services such as development, planning,
leasing, accounting etc. Partners may also be oered by
Echo with priority to acquire ready projects on market
conditions. Material agreements between Echo Investment
and its partners need to be discussed and approved by the
Supervisory Board.
• Partnership with EPP on large and capital-intensive
commercial as well as multi-functional projects (Galeria
Młociny, Towarowa 22 in Warsaw), in which Echo has 30%
stake and conducts the development and leasing process
for remuneration;
• Partnership with a global fund manager on the
development of Resi4Rent, in which Echo Investment
holds 30% stake and for which it provides development
services for fee.
13
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
CONSTRUCTION
LAND ACQUISITION
CASH
DIVIDEND
DESIGN
& PERMITTING
SALE
MARKETING
LEASING,
ACTIVE PROPERTY
MANAGEMENT
Business model
Echo Investment Group runs the entire investment
process in-house, starting with acquisition of proper-
ty, through obtaining administrative permits, financ-
ing and oversight of construction, to leasing, com-
pletion, active property management to increase
its value, taking decision of sale and execution of
this decision in optimal moment from return, cash
management, expectation and market trends. These
steps are taken in most cases through the special
purpose vehicles (SPV). The core business of Echo
Investment Group falls into the following categories:
1.
construction, lease, active property management
to increase its value and sale of oce buildings,
2.
construction, lease, active property management
to increase its value and sale of retail buildings,
3. construction and sale of residential apartments
4. provision of services (general contractor, manag-
ing contractor, leasing, consulting etc.).
14
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
Selected financial data of the
Echo Investment Group
CONSOLIDATED FINANCIAL DATA OF THE ECHO INVESTMENT GROUP
[PLN ‘000] [EUR ‘000]
as at
31.12.2020
as at
31.12.2019
as at
31.12.2020
as at
31.12.2019
Revenue 1 212 854 880 133 271 077 204 596
Operating profit 338 167 450 153 75 582 104 643
Gross profit 176 612 398 188 39 473 92 563
Profit attributable to shareholders of the parent
company
122 093 299 532 27 288 69 629
Cash flows from operating activities (70 736) (82 396) (15 810) (19 154)
Cash flows from investment activities (752 895) (132 358) (168 275) (30 768)
Cash flows from financing activities 658 433 267 517 147 162 62 187
Net cash flow (165 198) 52 763 (36 922) 12 265
Total assets 5 630 796 4 810 429 1 220 160 1 129 606
Equity attributable to equity holders of the parent 1 684 685 1 562 365 365 061 366 882
Long-term liabilities 1 939 376 1 970 451 420 251 462 710
Short-term liabilities 2 006 861 1 277 735 434 875 300 043
Number of shares 412 690 582 412 690 582 412 690 582 412 690 582
Profit (loss) per one ordinary share 0,30 0,73 0,07 0,17
Book value per one share 4,08 3,62 0,88 0,85
15
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
2018
2 769
2 935
2019
The main figures disclosed in the
annual financial statements of Echo
Investment S.A. and its Group
Echo Investment S.A. Echo Investment Group
ASSETS AND LIABILITIES
– Non-current assets
– Current assets
– Assets held for sale
ASSETS’ STRUCTURE
23%
72%
28%
PLN 3 281 thous.
49%
28%
PLN 5 631 thous.
ASSETS’ VALUE
PLN MLN
5 631
2020
3 281
2020
2018
3 892
4 810
2019
Echo Investment S.A. Echo Investment Group
16
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
NONCURRENT ASSETS’ STRUCTURE
CURRENT ASSETS’ STRUCTURE
EQUITY AND LIABILITIES
– Interests in subsidiaries,
joint-ventures and associates
– Interests in joint-ventures and
associates
– Long-term nancial assets
– Investment properties
– Investment properties under
construction
– Borrowings granted
– Other
– Inventory
– Trade and other receivables
– Borrowings granted
– Short-term nancial assets
– Receivables due to other taxes
– Cash and other cash equivalents
– Other
– Equity
– Long-term liabilities
– Short-term liabilities
– Liabilities related to assets held for sale
40%
1%
32%
28%
6%
12%
32%
7%
3%
35%
5%
4%
6%
46%
13%
PLN 2 368 thous.
22%
20%
9%
PLN 912 thous.
40%
PLN 3 281 thous.
50%
28%
11%
PLN 2 765 thous.
58%
29%
7%
35%
20%
1%
PLN 1 596 thous.
PLN 5 631 thous.
Echo Investment S.A.
Echo Investment S.A.
Echo Investment S.A.
Echo Investment Group
Echo Investment Group
Echo Investment Group
17
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
0,1
0,05
2018 2019
55
2018
83
2019
PROFIT AND LOSS ACCOUNT
REVENUE PLN MN
1 213
2020
Echo Investment S.A. Echo Investment Group
OPERATING
PROFIT PLN MN
144
2020
Echo Investment S.A. Echo Investment Group
GROSS PROFIT PLN MN
2020
78
Echo Investment S.A. Echo Investment Group
NET PROFIT PLN MN
Echo Investment S.A. Echo Investment Group
NET PROFIT
PER SHARE PLN
0,14
2020
Echo Investment S.A. Echo Investment Group
713
2018
880
2019
2018 2019
68
30
404
450
2018 2019
338
2020
42
21
2019
2017
78
2020
0,74 0,73
2018 2019
0,3
2020
122
2020
305 300
2018 2019
2020
177
2018 2019
424
398
2018
430
313
2019
330
2020
18
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
CASH FLOW
CASH FLOW
MLN PLN
OPERATING
CASH FLOW MLN PLN
CASH FLOW
ON INVESTING
ACTIVITY MLN PLN
Echo Investment S.A.
Echo Investment S.A.
Echo Investment S.A.
Echo Investment Group
Echo Investment Group
Echo Investment Group
-286
203
-41
– Cash ow on investing activity
– Cash ow on investing activity
– Cash ow on nancing activity
– 2018
– 2019
– 2020
– 2018
– 2019
– 2020
-753
-39
-132
-71
142
-82
-753
658
-71
-41
138
6
-286
282
-70
19
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
-340
268
-466
114
CASH FLOW
ON FINANCING
ACTIVITY MLN PLN
CASH FLOW
– 2018
– 2019
– 2020
203
658
Echo Investment S.A. Echo Investment Group
20
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
– Assets
– Liabilities
ASSIGNMENT OF ASSETS AND LIABILITIES TO SEGMENTS
AS AT 31 DECEMBER 2020 PLN MLN
Oce RetailResidential Non-allocatedResi4Rent
5 631 mlnpln
Total value of assets as at
31.12.2020
3 946 mln pln
Total value of liabilities as at
31.12.2020
ASSIGNMENT OF ASSETS
TO SEGMENTS PLN ‘000
31.12.2020 31.12.2019
Residential 1 179 869 1065493
Oce 2 943 537 2027505
Retail 975 625 954277
Resi4Rent 202 765 326788
Non-allocated 329 000 436366
Total 5 630 796 4810429
ASSIGNMENT OF LIABILITIES
TO SEGMENTS PLN ‘000
31.12.2020 31.12.2019
Residential 534 817 435065
Oce 1 195 128 724347
Retail 409 463 373026
Resi4Rent 8 674 210265
Non-allocated 1 798 155 1505484
Total 3 946 237 3248186
Operating segments of
Echo Investment Group
All items contain proportional data to the shares of
the Echo Investment group in the projects.
2 944
1 195
976
409
1 180
435
329
1 798
203
8,7
500
1 000
1 500
2 000
2 500
3 000
21
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
ALLOCATION OF COST OF SALES
TO SEGMENTS PLN ‘000
1.01.2020
– 31.12.2020
01.01.2019
- 31.12.2019
Residential (564 165) (401 728)
Oce (82 565) (57459)
Retail (21 923) (54245)
Resi4Rent (273 049) (91 168)
Non-allocated (27 321) (72 530)
Total (969 023) (677130)
GROSS SEGMENT CONTRIBUTION INCLUDING FX GAIN/LOSS
As at
31.12.2020 Residential Oce Retail Resi4Rent
Non-
-allocated
Gross profit (loss) on sales 243 831 164 531 34 007 33 730 13 949 (2 385)
Profit (loss) on investment property 228 985 - 216 426 12 717 - (158)
Share of profit (loss) of associates and joint ventures (9 567) - - (42 501) 32 934 -
Profit (loss) on FX derivatives (21 176) - (19 321) (8) - (1 847)
Foreign exchange gains/(losses) (83 904) (3 820) (45 685) (24 085) - (10 314)
Total gross profit on segments 358 170 160 711 185 428 (20 147) 46 882 (14 704)
Segments’ share in gross profit 100% 45% 52% -6% 13% -4%
ALLOCATION OF REVENUE
TO SEGMENTS PLN ‘000
01.01.2020
- 31.12.2020
01.01.2019
- 31.12.2019
Residential 728 694 555 521
Oce 116 573 76558
Retail 55 653 72511
Resi4Rent 286 998 97 894
Non-allocated 24 936 77 649
Total 1 212 854 880133
ASSIGNMENT OF REVENUE, COST OF SALES AND GROSS
PROFIT TO SEGMENTS FOR 2020 PLN ‘000
ALLOCATION OF GROSS PROFIT LOSS
TO SEGMENTS PLN ‘000
01.01.2020
- 31.12.2020
01.01.2019
- 31.12.2019
Residential 164 529 153 793
Oce 34 007 19099
Retail 33 730 18266
Resi4Rent 13 950 6 726
Non-allocated (2 385) 5 119
Total 243 831 203003
– Gross prot
– Cost of sales
– Total revenue
Residential Oce Retail
Resi4Rent
Non-allocated Total revenue
164 529
564 165
728 694
82 565
21923
273 049
27321
34 007
33730
13 950
2 385
116 573
55 653
286 998
24 936
1 212 854
22
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
Ownership structure of
Echo Investment S.A. and
description of shares
. Description of shares
The share capital of Echo Investment S.A.
is divided into 412,690,582 ordinary bear-
er shares of A, B, C, D, E and F series.
None of the shares has limited rights. The
Company’s share capital, i.e. the nominal
value of all the shares, amounts to PLN
20,635, and it was paid in cash. The nom-
inal value of one share is PLN 0.05. The
number of shares equals the number of
votes at the General Meeting of Share-
holders. The securities issued by Echo
Investment S.A. do not provide their own-
ers with any special controlling powers.
Echo Investment S.A. does not have any
information on limitations in exercising
the voting right or transferring ownership
rights by owners of its securities.
. Shareholding structure
The major shareholder of Echo Invest-
ment S.A. is Lisala Sp. z o.o., controlled
by Hungarian Wing IHC Zrt. The share-
holding structure information as it was on
December 31, 2020 and as on the balance
sheet day is based on notifications from
shareholders and information on the OFE
(Opened Pension Funds) portfolios com-
position as at December 31, 2020.
SHAREHOLDERS OF ECHO INVESTMENT S.A. HOLDING MORE THAN
5% OF THE SHARE CAPITAL AS AT 31 DECEMBER 2020
– Lisala Sp. z o.o. (Wing IHC Zrt and Grin Real
Estate partners)
– Nationale-Nederlanden OFE
– Aviva Otwarty Fundusz Emerytalny Aviva Santander
– Nicklas Lindberg – CEO
– Maciej Drozd – Vice-President, CFO
– Péter Kocsis – Member of the Supervisory Board
– Other
Number of shares:
272 375 784 –
55 833 698 –
27 350 695 –
538 676 –
221 765 –
44 000 –
56 325 964 –
66%
6.63%
13.53%
13.53%
0.13%
0.05%
0.01%
23
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
Volume of the Company’s shares
and bonds held by managing
and supervising persons
To the best of the Company’s knowledge,
among the persons in charge of Echo
Investment S.A. management or super-
visory functions, the shareholders and
bondholders of the Company are Nicklas
Lindberg, President of the Management
Board, Maciej Drozd Vice-president, CFO
To the best of the Company’s knowledge,
none of the other members of the Man-
agement Board or the Supervisory Board
is a shareholder or a bondholder of the
Company directly or indirectly as at the
VOLUME OF SHARES OF ECHO INVESTMENT S.A.
HELD BY MEMBERS OF THE MANAGEMENT BOARD AND
THE SUPERVISORY BOARD AS AT 31 DECEMBER 2020
Surname / Position in the company Number of shares held
Share in the capital
and votes at GMS
Nicklas Lindberg
President of the Board, CEO
538 676 0,13%
Maciej Drozd
Vice-President of the Board, CFO
221 765 0,05%
Péter Kocsis
Supervisory Board Member
44 000 0,01%
VOLUME OF BONDS OF ECHO INVESTMENT S.A.
HELD BY MEMBERS OF THE MANAGEMENT BOARD AND
THE SUPERVISORY BOARD AS AT 31 DECEMBER 2020
Surname / Position in the company Number of bonds held
Nicklas Lindberg
President of the Board, CEO
219 (code ECH0721)
229 (code ECH1022)
Maciej Drozd
Vice-President of the Board, CFO
219 (code ECH0522)
369 (code ECH0721)
50 (code ECH0923)
316 (code ECH1022)
and Péter Kocsis, member of the Super-
visory Board. Péter Kocsis has informed
the Company on the purchase od the
Company’s shares on August 14, 2020.
To the best of the Company’s knowledge,
previously Péter Kocsis did not hold any
shares or bonds of Echo Investment S.A.
date of publication of the report, none of
them was a shareholder or bondholder
on December 31, 2020 and during 2020,
and none of them concluded any transac-
tions for shares or bonds in the Company.
24
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
Major events in 2020 and material
agreements for the operation of
the Company and its Group
. Changes to the Supervisory Board
Following the sale of their 56% stake and thus the complete withdrawal from Echo Investment’s
share structure of the Pimco and Oaktree Capital Management funds, the following persons
resigned from the Supervisory Board, eective from December 13th, 2019: Karim Khairallah, the
Chairman of the Supervisory Board; Laurent Luccioni, the Vice-Chairman; and Sebastian A. Zilles,
a member of the Supervisory Board. As a result, at the Extraordinary General Meeting of Share-
holders held on January 9th, 2020, Noah Steinberg was appointed to the Supervisory Board and
assigned as its Chairman, while Tibor Veres became the Vice-Chairman of the Supervisory Board,
and Péter Kocsis and Bence Sass became Supervisory Board members for the current term. The
new Supervisory Board members have all been appointed from Hungarian company Wing, being
the new majority shareholder of Echo Investment.
Due to Mark Abramson resignation from his seat in the Supervisory Board and dismission of Ste-
fan Kawalec, the Ordinary General Meeting of the Shareholders ap pointed Margaret Dezse and
Sławomir Jędrzejczyk as independent members of the supervisory board on August 13th 2020.
The new members of the Supervisory Board also became members of the Audit Committee:
Mar garet Dezse as chair and Sławomir Jędrzejczyk as vice-chairman.
What is more, the Supervisory Board appointed the Investment Committee that will be responsible
for the ongoing evaluation of the activities in the field of purchasing and selling assets, financing
plans, the asset sales strategy development and the implemen tation of investment plans based
on the approved annual budget. The Investment Committee consist ed of Noah M. Steinberg,
Maciej Dyjas, Péter Kocsis, Bence Sass and Nebil Senman.
. Wing’s announcement of a tender for an additional 10.04% stake in
Echo Investment
Due to Wing indirectly exceeding the threshold of 33% of the shares of Echo Investment and of
the votes at the General Meeting of Shareholders, on February 3rd, 2020 the Hungarian company
announced a tender oer for an additional 41,444,928 of Echo Investment’s shares, entitling it to a
further 10.04% of the total number of the votes at the General Meeting of Shareholders, at a price
of PLN 4.65 per share. Subscriptions started on February 21st, 2020 and ended on March 18th,
2020. As a result of the tender, Wing increased its stake to 66% and of the votes at the General
Meeting of Shareholders of Echo Investment. The tender oer was conducted through brokerage
house Santander Biuro Maklerskie.
. Purchase of three plots with first generation shopping centres in
Kraków, Poznań and Łódź
On December 1, 2020, Echo Investment signed final purchase agreement for plots situated on ul.
Opieńskiego in Poznań, ul. Widzewska in Łódź and ul. Kapelanka in Kraków. These sites, which
belonged to companies owned by Tesco Group, are in excellent locations and fit into Echo In-
vestment’s consistent strategy of continuing to expand the residential part of its business. The
company is planning to develop mixed use projects on all the plots, which will include 4,000
apartments, retail space and (in Kraków) a building with oce functions. The total area of the
acquired plots amounts to 190,000 sqm. The net price amounted to EUR 41.6 million.
4,000
e number of apartments that
could potentially be built on the
plots in Łódź, Kraków and Poznań
to be acquired from Tesco
25
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
Warsaw Brewery
complex in Warsaw
This is the latest transaction concluded between Echo Investment and Tesco. At the end of last
year, the developer bought the Tesco centre on al. Komisji Edukacji Narodowej in Warsaw’s Kabaty
district from the retail chain. This property is located next to the Kabaty metro station.
. Construction works completion in the Warsaw Brewery complex
In 2020, Echo Investment completed nearly all construction work on the Warsaw Brewery com-
plex. Remaining fit-out works in historic buildings, the last plantings and the arrangement of
public spaces are to be completed in 2021.
The Villa Oces building obtained an occupancy permit on April 15, 2020 and WeWork clients,
as well as Accenture already work on its premises. The Malthouse Oces was provided with
an occupancy permit on September 1, and its first tenants - law firm Allen & Overy and Grupa
Żywiec – are currently working there. In July 2020, the occupancy permit was granted for the
building Resi4Rent Warszawa Browary with 450 apartments for rent out of which c.a. 80% are
already rented out. The occupancy permit for another building – the Malthouse Apartments
(Warsaw Brewery E) was granted in October. The building has 81 high-standard apartments that
are already being fitted-out by their owners.
The Warsaw Brewery is the first city-forming, mixed-use ‘destination’ project of Echo Investment.
The complex combine residential, oce, retail and entertainment functions and is situated on a
plot of almost 4.5 ha between ul. Grzybowska, ul. Krochmalna, ul. Wronia and ul. Chłodna.
26
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
. The issue of PLN 150 million of bonds and the purchase of bonds for
redemption
Under the company’s Bond Issue Programme, which could go up to a maximum value of PLN 1bil-
lion, in cooperation with mBank S.A., on June 2, 2020 Echo Investment issued bonds worth a
total of PLN 150 million to institutional investors. The nominal value and issue price of each bonds
was PLN 10,000. They were issued for the period ending on May 31, 2024. The interest on the
bonds was determined based on the variable WIBOR 6M rate supplemented by the investors’
margin. The interest will be paid in semi-annual periods. The bonds are to be redeemed on the
redemption date at their par value. The bonds that were issued are not secured and are traded
on the alternative trading system operated by the Warsaw Stock Exchange.
At the same time, on June 1, 2020 the company purchased for redemption 1,005 own bonds
bearing the ISIN code PLECHPS00258, 9,340 bonds with the code PLECHPS00282 and 349
bonds with the code PLECHPS00308. The unit par value of each bond was PLN 10,000.
. Securing a construction loan for the MidPoint71 oce building
On July 22, 2020 Echo Investment secured a loan for the construction of the MidPoint71 oce
building, which is under development in Wrocław. PKO Bank Polski granted Echo Investment a
EUR 54.4 million construction loan as well as a PLN 7 million VAT loan. Once the construction
work is complete, the construction loan is to be converted into an investment loan. The loan is
due to mature on June 30, 2026.
MidPoint71, which is being constructed on ul. Powstańców Śląskich in the city, will have 37,000
sqm of oce space. Construction work started at the end of 2019, and the first tenants are due
to move into the building in the fourth quarter of 2021. One of these will be Pyszne.pl, which will
move its Wrocław headquarters to the building, where it will occupy 3,500 sqm. The ground
floors of the oce building will include services, a restaurant and comfortable common areas.
Medusa Group is responsible for the architectural design of the 14-storey building.
Echo Investment has been investing in Wrocław for 15 years, with MidPoint71 being the compa-
ny’s eighth oce project in the city, after Aquarius Business House, Nobilis, Sagittarius Business
House, West Gate and West Link. In 2020 the first stage of the West 4 Business Hub oce com-
plex on ul. Na Ostatnim Groszu was also completed .
MidPoint71
in Wrocław
27
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
Echo Investment issued four-year coupon bonds
worth PLN 100 million covered by the PKO Para
-
solowy - FIO Investment Fund. The bearer bonds ma-
ture on August 5, 2024. The interest rate is calculated
based on the variable six-month WIBOR (Warsaw In-
The Ordinary General Meeting of the Shareholders of
Echo Investment was held on August 13, 2020. It was
attended by shareholders entitled to over 86% of the
votes. The shareholders unanimously approved the
reports of the management board on the activities of
Echo Investment S.A. and its Group for 2019, as well
as separate and consolidated financial statements.
The OGM also decided to allocate the profits for 2019
as follows:
−
the net profit generated by the company in the fi-
nancial year 2019, amounting to PLN 21,412,312.65,
was allocated for distribution among all share-
holders;
− the profit intended for distribution was increased
by the sum of PLN 184,932,978.35 from the Div-
idend Fund (PLN 206,345,291 in total) and was
allocated for distribution among all shareholders;
− the sum of PLN 206,345,291 was included in the
dividend, paid on October 21, 2019 as a dividend
advance;
−
the dividend corresponds to the amount of the
dividend advance payment, therefore it was de-
The Management Board of Echo Investment on Sep-
tember 3, 2020 concluded an issue agreement with
Bank Pekao S.A., establishing a program for the issu-
ance of unsecured ordinary bearer bonds up to the
total amount of the issued and outstanding bonds
of EUR 100 million.
Bonds issued pursuant to the Issuance Program will
be oered for purchase without the need to draw
up a prospectus or information memorandum. On
the issuance date the Bonds will be registered in the
depository maintained by Krajowy Depozyt Papi-
terbank Oered Rate) plus a margin and is to be paid
in semi-annual periods. The bonds issued are not
secured and are traded under the alternative trading
system operated by the Warsaw Stock Exchange.
cided that the company would not pay additional
funds from the profit for the financial year 2019.
In subsequent resolutions, the shareholders dis-
charged all members of the management and super-
visory boards from their duties, and made changes
to the supervisory board, including those relevant to
the resignation of Mark Abramson. The OGM recalled
Stefan Kawalec from the supervisory board and ap-
pointed Margaret Dezse and Sławomir Jędrzejczyk
as independent members of the supervisory board.
The OGM also introduced several changes to the
company’s articles of association. These resulted
from, among other reasons, new regulations or were
of a reorganizational nature. The significant chang-
es introduced include empowering the supervisory
board to adopt annual budgets and business plans
for the company and its subsidiaries. The sharehold-
ers also adopted a remuneration policy for members
of the management and supervisory boards.
erów Wartościowych S.A. and it will be introduced
to trading in an alternative trading system operated
by Warsaw Stock Exchange (Giełda Papierów War-
tościowych w Warszawie S.A.).
Bonds will be issued as unsecured ordinary bearer
bonds denominated in EUR and bearing interest at
a fixed or variable interest rate, with a maturity not
exceeding 5 years. The final parameters of the Bonds
will be determined through talks with investors and
will be subject to approval of the Company’s Man-
agement Board.
. The issue of PLN 100 million of bonds for an institutional investor
. The Ordinary General Meeting of Shareholders
. Establishment of a bond issuance program for the issuance
denominated in EUR and the first issuance
28
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
. Construction loan for oce
buildings in Fuzja project in Łódź
Echo Investment has gained a loan for the construc-
tion of three oce buildings included in the multi-
functional Fuzja project in Łódź. In accordance with
the contract, Bank Pekao will grant Echo Investment
nearly EUR 34 million in construction and investment
loans, as well as PLN 10 million in VAT loan. The total
funding period concludes on January 31, 2026. The
loan agreement was signed on November 17th, 2020.
The main tenant of the two oce buildings already
in development is Fujitsu Poland Global Delivery
Center – which is one of the world’s largest providers
of infrastructure and IT support. The buildings will
become a part of the entire urban space of Fuzja. A
historical wall is designed to be a part of one of these
buildings. The fragment was a part of the old build-
ing of the bleach, mangle and dryer. The buildings
have been designed in accordance with the BREEAM
certification guidelines and will be constructed and
used with respect for the environment, which will be
reflected, inter alia, in low energy consumption, low
atmospheric emissions, as well as the use of envi-
ronmentally friendly building and finishing materials.
Bank Pekao has been a partner of Echo Investment
for many years. It financed the company’s developer
projects, including the construction of the Villa Oc-
es and the Malthouse Oces in the Warsaw Brewery
complex.
Construction works on Fuzja oce buildings in Łódź, where Fujitsu will locate its headquarter.
29
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
Material post-balance
sheet events
. Conclusion of a preliminary
agreement on the acquisition
of a majority stake of shares in
Archicom S.A.
On February 17, 2021 the Management Board of Echo
Investment entered into a preliminary agreement
with Dorota Jarodzka-Śródka, Kazimierz Śródka
and Rafał Jarodzki on the acquisition of a stake of
Archicom S.A. shares representing in total approxi-
mately 66.01% of the share capital and entitling to a
total of approximately 65.99% of votes. The price for
the shares will be PLN 425 million. Echo Investment
will pay PLN 237 million on the transaction day and
the remaining PLN 188 million in bonds issued with
a maturity date of 3.5 years, bearing interest at an
annual rate of 5%. The signing of the final agreement
and the closing of the transaction shall be subject to
the consent of the President of the Oce of Compe-
tition and Consumer Protection.
The transaction will exclude the development busi-
ness carried out outside the Wrocław agglomeration
and two development projects in Kraków, as well as
the architectural design studio - these assets will re-
main in the hands of the sellers. The development
projects will be sold to Dorota Jarodzka-Śródka and
Rafał Jarodzki for PLN 131 m million (paid in two
instalments), and the design studio will be sold to
Dorota Jarodzka-Śródka and Kazimierz Śródka for
PLN 2.4 million.
In addition, on the closing date of the transaction
an option agreement shall be executed under which
Echo Investment S.A. or an entity designated by
the company shall be entitled to purchase the Ar-
chicom S.A. shares remaining in the hands of the
sellers, representing 8.31% of the share capital and
carrying 13.32% of total votes at the general meeting.
The option will be exercisable until March 15, 2023.
At the end of 2020 in Wrocław and Kraków Archicom
has c.a. 2,000 apartments under construction and
4,200 in preparation. After completion of the trans-
action, the Echo-Archicom Group will be the largest
residential developer in Poland, having started the
construction of a total of 7 thousand apartments for
sale and rent in 2021. The acquisition is in line with
Echo Investment’s strategic goals of becoming a Pol-
ish nationwide leader in the residential sector.
Archicom has been operating mainly on the Lower
Silesian market and has been listed on the Stock Ex-
change since 2016. The company has grown out of a
family-owned architectual design oce and has 160
completed projects to its credit, including the revital-
ized Wrocław Brewery complex, the award-winning
Olimpia Port estate and the first exclusive Platinum
Lofts in Wrocław. Archicom is a strong, recognizable
brand with nearly 15% share in the Wrocław residen-
tial market.
30
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
. Sale of Villa Oces building
Echo Investment Group has concluded final sale
agreement of Villa Oces building being part of the
Warsaw Brewery complex. It was acquired by KGAL
Group, a leading independent investment and asset
manager. The building was sold for approximately
EUR 86.7 million.
The transaction value was reduced, inter alia, by the
value of the rent-free periods, the partial value of
capitalized rents on premises not handed over to
tenants, the value of arrangement works, and other
costs. As a result, the price payable at closing was
EUR 69.3 million plus VAT. After the space is hand-
ed over to all tenants, the price will be increased
to EUR 76.6 million plus VAT. In addition the seller
received a separate fee related to the completion
of arrangement works on the tenants’ premises and
the repair of defects in the total amount of EUR 4.6
million plus VAT.
As part of the transaction, the parties have also con-
cluded a building quality guarantee agreement and
a rental guarantee agreement. The second one pro-
vides a guarantee to the buyer that the seller will
cover rent payments and service charges for parts of
the building that have not been yet rented and those
that have been rented, but for which rent reductions
or rent-free periods have been applied.
The Villa Oces building received an occupancy
permit in April 2020 and is already fully leased with
such companies as WeWork, Accenture and Etno
Café that occupies its ground floor. Soon a reputable
financial institution and Echo Investment, as well as
well-known Mediterranean restaurant will also move
into the building.
The 13-floor building of Villa Oces is located in the
immediate vicinity of the restored Schiele Villa, a
historical house of the former owner of the famous
brewery, near the entrance to the heart of Warsaw
Brewery. The structure is 55-meter high and its total
rental area amounts to 16,600 sqm.
Villa Oces in the
Warsaw Brewery
Complex in Warsaw.
31
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
. Bond issue of a total value of PLN
195 million
On March 17, 2021 institutional investors have ac-
quired Echo Investment’s bonds with a total value of
PLN 195 million. The obtained funds will be allocated
to the company’s development, particularly in the
promising residential sector.
The bonds have a 4-year maturity. Their interest
rate is based on the WIBOR 6M variable rate plus a
margin for investors. The agent of this new issue is
mBank S.A. Echo Investment plans to allocate the
money obtained from the bond issue to finance the
development of its business and to repay the bonds
maturing at the end of Q1 of this year.
The issued bonds are not secured and will be entered
into the market in the alternative trading system of
the Warsaw Stock Exchange.
Due to issue of bonds, the Company redeemed 1,475
own bonds with a nominal value of PLN 10,000 each
(ISIN code PLECHPS00225).
32
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
Residential segment – market outlook
and Echo Investment business activities
. Residential market
In Poland’s six largest metropolitan areas (Warsaw,
Kraków, Wrocław, the Tri-City, Poznań and Łódź)
sales of new apartments in 2020 exceeded 53,000.
This represents a 19% drop compared to 2019, but
JLL analysts stress that in the era of the pandemic,
this is an exceptionally good result, especially con-
sidering the second, much more dangerous wave
of the pandemic and the recession in the economy.
The new supply in 2020 was 4,400 less than the
number of apartments sold. Developers marketed
24% fewer apartments throughout the year than in
2019. This left 48 thousand new apartments on of-
fer in the primary market at the end of December
Compared to other sectors of the economy, the
residental segment is getting through the dicult
situation perfectly. The good condition of the real es-
tate development at the beginning of 2020 allowed
development companies to make rational decisions
and quickly adapt their operating mechanisms to
the new conditions.
last year. Compared to the end of 2019, none of the
analysed markets recorded a decrease in prices of
apartments remaining on oer. On an annual basis,
prices increased the least in Poznań (3%) and the
most in Kraków (12%).
2018
64,8
65,7
50,7
72,8
2017
67,5
48,3
2019
65,4
64
50,3
2020
53
48,5
48
– Apartments sold
– Apartments launched for sale
– Apartments on oer
Source: JLL
10
15
20
5
25
30
35
40
45
55
65
50
60
70
75
APARTMENTS SOLD, LAUNCHED FOR SALE AND OFFER VOLUME
THOUS.
Perspectives of each
market sectors in
comming 12 months:
– Very optimistic
– Optimistic
– Neutral
– Pesimistic
– Very pesimistic
33
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
– Warsaw
– Wrocław
– Poznań
– Kraków
– Try-City
– Łódź
Source:
JLL
AVERAGE PRICES OF APARTMENTS ON OFFER ON THE PRIMARY MARKET
PLN/SQM, INCLUDING VAT, IN DEVELOPER’S STANDARD
4 000
5 000
6 000
7 000
8 000
9 000
10 000
11 000
Price
[PLN]
2016
1Q 2Q 3Q 4Q
2017
1Q 2Q 3Q 4Q
2018
1Q 2Q 3Q 4Q
2019
1Q 2Q 3Q 4Q
2020
1Q 2Q 3Q 4Q
At the end of 2020, the oer of developers in the
analyzed cities was approximately equal to the an-
nual sales. The exception was Warsaw, where due to
a clear slowdown in new supply, the oer amounted
to less than nine months’ sales.
According to JLL experts, there are many indications
that in 2021 demand will remain at a level similar to,
or slightly higher than, last year. Importantly, this will
not require price reductions, as demand continues
to be strongly influenced by Poles’ desire to improve
their housing conditions (especially in the context of
fears of further lockdowns), near-zero interest rates
and high inflation, that result in money from deposits
in banks being transferred to the real estate market.
The important sign of the good prospects for the
residential market in Poland is the growing number
of professional entities which intend to build port-
folios of apartments for rent. Their interest confirms
the opinion about the Polish residential market as a
stable and safe place for investing capital. In Poland
in 2020, we recorded transactions worth approxi-
mately EUR 260 million, which were connected both
in the segment of apartments for rent and student
depots. JLL highlights that at the end of the year,
transactions of significant value were in advanced
negotiations and should be finalized in the first
months of 2021. Its analysts estimated that at the
end of last year the number of apartments in the
institutional rental sector was around 4,500, with
another 17,000 under construction or in preparation.
34
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
.. Echo Investment’s performance
in the residential sector
In 2020 Echo Investment hit records both in sales
and handovers of apartments. It managed to sign
1,570 sales contracts with clients, what outperformed
last year’s results by 16%. At the same time, clients
received their keys to 1,505 apartments, what in turn
means a 19% increase compared to 2019. The sales
only in Q4 2020 amounted to 464 units, while hand-
overs – 792.
RESIDENTIAL PROJECTS OF ECHO INVESTMENT,
CONSTRUCTION OF WHICH BEGAN IN 2020
Project and address Usable area
Number of
apartments
Targeted
completion
Osiedle Krk I
Kraków, ul. Zapolskiej
9 800 218 IV Q 2021
Osiedle Krk II
Kraków, ul. Zapolskiej
9 800 218 II Q 2022
Bonarka Living I
Kraków, ul. Puszkarska
8 000 143 IV Q 2021
Osiedle Jarzębinowe VIII
Łódź, ul. Okopowa
6 100 101 IV Q 2021
Fuzja II
Łódź, ul. Tymienieckiego
12 400 240 II Q 2022
Osiedle Enter Ia
Poznań, ul. Naramowice
6 400 118 IV Q 2021
Stacja Wola II
Warsaw, ul. Ordona
13 700 249 II Q 2022
Total 66 200 1 287
RESIDENTIAL PROJECTS OF ECHO INVESTMENT,
WHICH CONSTRUCTION WAS COMPLETED IN 2020
Project and address Usable area
Number of
apartments Completion
Fuzja I
Łódź, ul. Tymienieckiego
14 300 282 IV Q 2020
Osiedle Jarzębinowe VI
Łódź, ul. Okopowa
3 300 52 IQ 2020
Osiedle Jarzębinowe VII
Łódź, ul. Okopowa
6 100 105 IV Q 2020
Malthouse Apartments (Warsaw Brewery E)
ul. Grzybowska
5 700 81 IV Q 2020
Stacja 3.0
Wrocław, ul. Mińska
12 100 242 IV Q 2020
Osiedle Reset II
Warsaw, ul. Taśmowa
12 200 255 III Q 2020
Apartamenty Esencja
ul. Grabary
12 400 260 IV Q 2020
Widoki Mokotów
Warsaw, ul. Puławska
4 800 79 II Q 2020
Moje Miejsce
Warsaw, ul. Beethovena
13 300 251 II Q 2020
Osiedle Jaśminowe IV
Poznań, ul. Sielawy
5 300 103 IQ 2020
Ogrody Graua
Wrocław, ul. Gdańska
4 000 57 II Q 2020
Total 73 900 1 767
35
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
The pandemic has had a transformative eect on
social habits and the ways space is used, which in
turn has influenced the design and construction of
apartments. After several weeks of analysing the
behaviour and needs of those living in cities, Echo
Investment’s designers adapted its residential pro-
jects under construction to these new conditions
and to buyers’ changed expectations. These in
-
clude features to increase security levels, such as
a resident identification system that automatically
opens the door for them and summons an elevator to
take them to their floor – without the need to touch
buttons in the common areas. In the design and ar-
rangement of the apartments, Echo Investment’s
architects also provided greater options for easily
adapting the space for home oce requirements.
For the last 25 years Echo Investment has built 89
residential projects with almost 10 thousand units
and in 2020, as one of the few development com-
panies in Poland, it increased the number of apart-
ments sold. Its first project was made in Kielce at
Manifestu Lipcowego Street, and the most recog-
nizable projects include Małe Naramowice Rynek in
Poznań, Kościuszki Apartments in Cracow, Malthouse
Apartments in the multifunctional Warsaw Brewery
complex and Fuzja, that is part of the revitalized
complex following former Scheibler’s plants in Łódź.
On February 18, 2020 Echo Investment signed a
preliminary purchase agreement of a 66% shares
of the Wrocław-based Archicom company from
its founders. Once the transaction is finalized, the
Echo-Archicom group will be the largest residential
developer in Poland – only in 2021 it will start the
construction of 7,000 apartments for sale and rent.
The acquisition is in line with Echo Investment’s stra-
tegic goal of becoming a nationwide leader in the
residential sector.
At the end of 2020 in Wrocław and Kraków Archicom
has c.a. 2,000 apartments under construction and
4,200 in preparation. The design oce which Ar-
chicom originates from and the remaining assets in
other cities are not the subject of the acquisition.
Archicom has been operating mainly on the Lower
Silesian market since 1986, and since 2016 it has been
listed on the Warsaw Stock Exchange. It grew out
of a family design oce with 160 completed invest-
ments, including the revitalized Browary Wrocławsk-
ie complex, the multi-award-winning Olimpia Port
estate, as well as the first exclusive Platinum Lofts in
Wrocław. Archicom is a strong, recognizable brand
with almost a 15% share in the Wrocław residential
market. Both companies will operate under a com-
mon strategy and in one capital group. The combi-
nation of the forces of both companies strengthens
the group’s position of the strongest developer with
the greatest potential in Wrocław.
SALES AND HANDOVERS OF APARTMENTS
IN ECHO INVESTMENT UNITS
– Sales
– Handovers
2018
986
935
2019
1 357
1 263
2020
1 570
1 505
36
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
Resi4Rent Warszawa Browary – the rst Resi4Rent project opened in Warsaw
. Echo Investment’s Group
achievements on the market
of apartments for rent and its
outlook
Resi4Rent’s 2020 oering has expanded by nearly
a thousand apartments. The company took delivery
of three newly built projects from Echo Investment
- R4R Wrocław Kępa Mieszczańska, R4R Warszawa
Browary and R4R Warszawa Woronicza. Paradoxi-
cally, the pandemic situation has supported the rent-
al rate of Resi4Rent apartments. Some people plan-
ning to buy an apartment postponed transactions
and - until their professional situation is stabilized
- decided to rent an apartment from an institution.
Resi4Rent is the biggest private company oering
subscription-based apartments for rent, owned 30%
by Echo Investment. The remaining 70% of its shares
belong to a global fund. Echo Investment is also re-
sponsible for the preparation and construction of
Resi4Rent projects.
Currently, Resi4Rent has over 1,800 apartments on
oer in Wrocław, Łódź and Warsaw. In the first quar-
ter of 2021, the platform expanded by another 372
apartments in the R4R Warszawa Taśmowa project,
which just entered the lease oer. The company cur-
rently has five projects under construction, in which
about 1,200 units will be built. Ultimately, by 2025 it
will oer 10,000 apartments in the six largest Polish
cities - Warsaw, Kraków, Łódź, Wrocław, Gdańsk and
Poznań.
Each Resi4Rent apartment is finished, equipped with
basic kitchen furniture, appliances, and additional
furniture at request. In the rental price, tenants have
can use a Wi-Fi network, a dedicated service desk
and access to a panel that gathers all necessary in-
formation on contract, operation of apartment and
additional services for tenants.
37
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
Oce segment – market outlook and
Echo Investment business activities
. Oce market in Poland
Warsaw
Due to the global pandemic, the year 2020 was char-
acterized by unpredictability and challenges. Since
March, employees of most companies have switched
to remote working. In the following months, there
was a noticeable trend of returning to oces - in var-
ious models. In many cases, however, working from
home has worked well, raising many questions about
the future of work and the need for oce space.
Last year, 314 thousand sqm of oce space in War-
saw was provided within 16 projects. Their average
leasing level at the moment of putting into operation
was 86%. In quest of savings, a significant number of
companies decided to sublease part of their oce
space. However, a significant increase in the num-
ber of such oers did not result in transactions - in
the entire year only 15,4 thousand sqm of space was
leased in this way, which is approximately 2.5% of
the total demand.
The vacancy rate in Warsaw increased by 2.2 pp to
9.9%. Although this puts pressure on rents, accord-
Regional markets
JLL’s analysts estimate that last year the demand
for oce space in regional cities was only 16% lower
compared to 2019. Nevertheless, the demand from
the beginning of April to the end of December 2020
was as much as 35% lower compared to the same
period in 2019. The vacancy rate increased by 3.2 pp
through 2020. The total space of oce buildings un-
der construction is now the lowest in about 5 years.
A standout trend that has developed during the
pandemic in Poland is a growing number of sub
-
lease oers. At the end of 2020, there was nearly
150 thousand sqm of such space outside of Warsaw,
of which 30% was in Wrocław, 23% in Kraków and
20% in the Tri-City. Thanks to the variety of oers,
ranging from less than 100 sqm to even 11 thousand
sqm, both small companies and big corporations can
take advantage of such oers.
ing to CBRE, most landlords maintain transaction
rents, but showing more flexibility and oering ad-
ditional incentives.
If developers keep up the pace of ongoing oce
projects in Warsaw, the market will be expanded by
nearly 8% in 2021. However, CBRE’s analysts expect a
much smaller number and space of buildings to start
construction this year, which will be a reasonable
response to the increase in the vacancy rate, uncer-
tainty connected with the pandemic and its impact
on tenants’ decisions. On the other hand, it is noted
that an increasing number of projects is temporar-
ily taken out of use to be thoroughly modernized
- mainly in Służewiec and the city center.
A positive sign for the market is the gradual un-
blocking of tenants’ decisions to extend their leases
or relocate. Among such entities are international
corporations, which consider moving their support
functions here (nearsharing).
The demand for oce space outside of Warsaw in
2020 reached 582.2 thousand sqm, of which 38%
were renegotiations of contracts. As noted by JLL’s
analysts, during the pandemic (Q2-Q4 2020), the
share of contract renewals amounted to 49% - and
these were renewals for shorter periods than in case
of relocations. Interestingly, as much as 41% of the
demand was generated by IT and technology sec-
tors.
Last year, 36 new buildings totalling 393.3 thousand
sqm were delivered to the regional markets. The va-
cancy rate in Poland’s eight largest cities is 12.7%, a
3.2 pp increase compared to the end of 2019. For this
reason among others, JLL’s analysts note pressure
on rents.
Perspectives of each
market sectors in
comming 12 months:
– Very optimistic
– Optimistic
– Neutral
– Pesimistic
– Very pesimistic
38
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
MAIN OFFICE MARKETS IN POLAND KEY INDICATORS IN 2020
City
Existing
space
[sqm]
New
buildings
[sqm] Vacancy [%]
Gross
demand
[sqm]
Monthly
rental rates
[EUR/sqm]
Warsaw 5 912 500 314 000 9,9 602 000 18-24 EUR
(CBD)
Kraków 1 554 900 140 700 7,8 157 700 14-15,5 EUR
Wrocław 1 226 300 58 500 15 128 400 13,5-15 EUR
Katowice 589 700 61 300 9,2 65 000 13,6-14,5 EUR
Łódź 578 500 50 800 16,4 62 400 12,5-14 EUR
Source: JLL
. Echo Investment’s performance in
the oce sector
Last year, Echo Investment’s oce department
was focused on completing oce buildings under
construction according to schedule and providing
tenants for them. The company commissioned five
buildings with a total area of over 125 thousand sqm.
At the end of the year, their average occupancy lev-
el exceeded 60%, and the current occupancy level
and advanced negotiations bring this rate to approx.
85%. Last year the list of tenants in those buildings
was extended by such reputable companies as Syn-
ektik, SyzyGy Warsaw and Kan (Moje Miejsce, War-
saw), Sii Polska (West 4 Business Hub, Wrocław) or
ABB and Daikin (Face2Face, Katowice).
Currently, all buildings are occupied by tenants such
as Sii Polska or Pyszne.pl. In the first quarter of 2021,
the company sold the building of Biura przy Willi,
and is in advanced talks about selling other buildings.
For more information
on the sale of Villa
Oces see 10.2 section
on page 30.
ECHO INVESTMENT OFFICE BUILDINGS STARTED TO BE
CONSTRUCTED IN 2020
Project Usable area
Planned
completion
Fuzja C iD
Łódź, ul. Tymienieckiego
19 900 IQ 2022
ECHO INVESTMENT OFFICE BUILDINGS COMPLETED
IN 2020
Project Usable area Completion
Villa Oces (Brewery K)
Warsaw, ul. Grzybowska
16 700 II Q 2020
Malthouse Oces (Brewery GH)
Warsaw, ul. Grzybowska
29 000 III Q 2020
West 4 Business Hub I
Wrocław, ul. Na Ostatnim Groszu
15 600 III Q 2020
Moje Miejsce II
Warsaw, ul. Beethovena
17 200 IV Q 2020
Face2Face II
Katowice, ul. Grundmanna
26 400 IV Q 2020
Total 125 400
39
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
Haberbusch and Schiele street in the Warsaw Brewery.
The pandemic caused Echo Investment to analyze
the way of designing and used solutions which it
provides to tenants as a standard. The result was
to develop an equipment standard and the decision
that oce buildings must have an extended package
of solutions, adjusted to the new reality, which will
guarantee users a higher level of safety - Echo Pure
Oce. After a careful analysis of tenants’ needs, the
developer focused on providing clean and healthy air.
As part of the new Echo Pure Oce standard, ven-
tilation ducts in oce spaces have been equipped
with well-established RCI ActivePure technology,
often used in hospitals. Echo Investment is the first
developer in Poland and Europe to introduce this
solution to oce projects on such a large scale. RCI
ActivePure technology has already been installed in
the West 4 Business Hub project in Wrocław, and it
will next be installed in the React building in Łódź
and the MidPoint71 building in Wrocław.
By establishing cooperation with ActivTek, Echo In-
vestment has invested in a system which allows to
provide users the highest quality of indoor air both
during and after the pandemic. It was focused on
devices which are connected to ventilation systems
in buildings, because it is through these channels
that pathogenic microorganisms can be transmitted.
Detail information on
the loans made are
described in 9.6 and
9.10 sections on pages
26 and 28.
. Echo Investment’s performance
in the flexible oces sector
(CitySpace)
CitySpace, a flexible oce space operator owned by
Echo Investment, has had a good year. The company
has continued its expansion and increased its man-
aged space by 4.2 thousand sqm and 600 worksta-
tions. This includes the expansion of the CitySpace
Tryton oces in Gdańsk, CitySpace Beethovena in
Warsaw, CitySpace Nobilis in Wrocław and CityS-
pace O3 in Kraków.
The pandemic has increased the attractiveness of
flexible oces for tenants and potential tenants. The
unpredictability about the situation makes compa-
nies value greater flexibility and short-term lease
commitments. As a result, in late 2020. CitySpace
provided clients with an app to manage space and
book space without a contract.
40
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
Retail segment – market outlook and
Echo Investment business activities
. Retail real estate market
in Poland
The retail sector was hit the hardest during the pan-
demic, mainly due to three lock-downs and contin-
ually protracted restrictions. Despite this, in 2020,
nearly 260,000 sqm of lease space in shopping
centers was commissioned, which is a result similar
to 2019. In 2021, the consulting company Colliers ex-
pects another 200-250 thousand. sqm.
In 2020, 21 new retail facilities were opened and the
four existing ones were expanded. Thus, the total
supply of space of shopping centers in Poland in-
creased to 12.2 million sqm, most of which located in
the Warsaw agglomeration (1.7 million sqm), Upper
Silesia and Zagłębie area (1.2 million sqm). A slight
increase in the vacancy rate in shopping centers was
observed.
According to Colliers, one of the most important
trends in the urban development are multi-functional
projects, such as Elektrownia Powiśle and Warsaw
Brewery in Warsaw or Monopolis in Łódź. Other pro-
jects of this type are under construction, including
the Norblin Factory in Warsaw, Fuzja in Łódź or the
Young City in Gdańsk.
Last year was also marked by the dynamic devel-
opment of e-commerce, which will also continue in
2021. Retail chains showed great flexibility, devel-
oped new models of sales, multi-channel communi-
cation. They also increased investments in new tech-
nologies and the development of various forms of
delivery. These activities resulted in the noticeable
increase of online sales platforms - it is estimated
that Poles’ spending on online purchases increased
by 31.4% in 2020 and exceeded EUR 15.3 billion.
Colliers experts believe that in the coming years,
retail companies will more often decide to optimize
the sales channels, focusing on warehouse space
and developing e-commerce services. They indicate,
however, that retail chains will continue to develop
sales and omnichannel communication, with station-
ary stores as an important channel.
Despite the pandemic, about 15 retail chains decided
to enter the Polish market last year, including Urban
Outfitters, Ulla Popken or Primark. The brands de-
buting last year in Warsaw also include those from
the premium sector, ie. Patek Philipe, Giorgio Armani
Beauty and Carl Hansen & Son (furniture industry). In
2020, new concepts were also introduced to the mar-
ket by the chains that are already present in Poland,
such as Falconeria (Calzedonia), Modivo (CCC) and
Fitanu.com (Martes Sport). On the other hand, other
chains such as Salamander, Promod, Camaieu and
Sportisimo have announced their exit from Poland.
Perspectives of each
market sectors in
comming 12 months:
– Very optimistic
– Optimistic
– Neutral
– Pesimistic
– Very pesimistic
41
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
Galeria Młociny, Warsaw
. Echo Investment’s performance
in the retail sector
The most important event of 2020 for the entire re-
tail market, as well as for Echo Investment, was the
opening of the first Primark store in Poland in War-
saw’s Galeria Młociny. This was one of the most ex-
pected debuts on the Polish market, which has been
attracting crowds of customers since mid-August.
Bringing the brand to Poland is one of the greatest
successes of Echo Investment’s leasing department.
The Warsaw Primark store occupies nearly 3.7 thou-
sand sqm of retail space on two floors of Galeria Mło-
ciny, which is owned by Echo Investment in 30%. The
remaining 70% is controlled by the EPP company.
Shopping centers have been the most pandemic-hit
real estate sector for the past year. The epidemio-
logical restrictions limit operations of most tenants
of shopping centers during the most critical periods.
The most limiting restrictions, which caused 75-80%
of tenants to close, were in eect from mid-March
to early May, November 7 to 29, then December 28,
2020 to January 31, 2021. Due to growing number of
infections, shopping centres are being closed down
again in Poland.
It has been a challenge for Echo Investment’s leasing
and management departments to reach an agree-
ment with tenants on principles for returning shop-
ping centers to normal operation. Despite dicult
negotiations and many controversies on the market,
after the first lockdown Echo Investment focused on
reaching an agreement with the tenants in Libero in
Katowice and Galeria Młociny in Warsaw promptly
and taking action as soon as possible to restore the
operation of both projects to pre-pandemic levels.
Importantly, in the first days of shopping centers’
operation, the recorded turnover was higher than
expected based on the experience of other coun-
tries. The conversion ratio, or the number of visitors
to the number of transactions made, was also his-
torically high. This demonstrated the responsibility
of customers who come to stores to make specific
purchases.
Managers of both shopping centres and their tenants
are aware of the unpredictability of the situation.
Both parties assume to return to negotiating long-
term annexes in the middle of the year, when the
situation regarding the end of the epidemic should
be more predictable. Then it will be easier to assess
the situation of individual tenants, their restructuring
and development plans. It is worth noting that some
categories of tenants have grown stronger over the
last year, including food chains and interior design
stores
In both projects marketing activities to strengthen
brand awareness are implementing. Marketing ac-
tivities in the first stage (until about the middle of
42
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
Opening of the rst Primark store in Poland in Warsaw’s Galeria Młociny was one of the most important
events for the retail market in 2020.
the year) will focus only on increasing the turnover
value, while only in the later stage they will focus on
activities that support the footfall.
The commercialization of Warsaw Brewery was
also completed in 2020. Thanks to the agreements
signed, the flagship Warsaw project of Echo Invest-
ment will be joined by, among others, the operator
of the food court in the historic cellars, restaurants,
confectioneries, cafés, bakeries or unique service
outlets. The retail and service part of Warsaw Brew-
ery is fully leased. Tenants have been finishing their
premises and, with the support of Echo Investment,
preparing to open their businesses.
43
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
Our employees and diversity policy
. Our people
The driving force of Echo Investment are its employ-
ees, their diverse experience, competences, received
education, work methods and individual approach-
es to performed tasks. The stability of the team,
systematic improvement of competences, current
updates of market know-how and good employ-
ment conditions limit the risks which the company
is exposed to. The Management Board is aware of
the importance of diversity in the selection of em-
ployees, including those holding key management
positions. In its personnel decisions the Management
Board strives to take into account the elements of
diversity including: professional experience, function
competences, leadership competences, as well as
dierence of opinion, background, gender, qualifi-
cations or age.
As at 31 December 2020 Echo Investment employed
455 people on regular employment contracts. Num-
ber of our employees increased by 2% compared to
31 December 2019. The average seniority currently
amounts to ca. 7 years. In 2020, we employed 49
people, and 36 people finished working in the Group.
Since we have a lot of employees with diverse expe-
rience and aspirations, we always start searching for
people for new positions internally. Consequently as
many as 36 of our employees were promoted and
received greater responsibility in 2020.
Echo Investment enjoys the long average seniority,
a balance between the number of long-term, expe-
rienced employees and the number of short-term
employees, as well as the diversity of related qual-
ifications, the gender balance and the top level of
qualifications. The group employs eight people with
disability certificates.
As part of soft skills development, at the beginning
of 2020 we continued a series of trainings on com-
munication and cooperation within and between
teams. They were based, among others, on the In-
sights Discovery model, which indicates the individ-
ual style of each employee.
We also introduced a training program for the sales
department with two development paths. One dedi-
cated to Managers and the other to Sales Represent-
atives. The program of interactive workshops was
created on the basis of business needs and included
practical exercises based on real situations and chal-
lenges in working with the team and the client. In
2020 internal trainings online were also carried out.
Our employees shared knowledge on such topics as
changes in construction law, construction site safe-
ty, and new systems and procedures. Additionally,
we conducted a webinar and workshops on mental
strength and resilience to equip managers with the
tools to strengthen this resilience in their teams. As
every year, we also participated in the Top Wom-
an in Real Estate competition, thus promoting the
achievements of women working for Echo Invest-
ment on the real estate market.
Echo’s HR strategy is flexible with business needs.
We enabled employees across the organization to
build career paths and develop competencies by
promoting internal transfers and supporting relo
-
cation to new teams and projects in the residential
segment, which is growing rapidly. In this way, we
ensured the development of competencies that are
needed in the organization: flexibility, openness to
change, a broad business perspective, as well as
broadening of experience and deepening of neces-
sary specialist competencies.
Since March 2020, we have been working hard to
keep our employees safe and support them while
ensuring maximum eciency and business conti-
nuity. Throughout the pandemic, we have provided
hygiene products at all our locations, adopted our
work organization to the need of distance, and made
changes to our oce space. We have continuously
conducted the information and education campaign
for employees, promoted safe behaviours, conduct-
ed trainings for managers and provided extensive
support in dealing with the infection, contacts with
public institutions, introduced regulations and re-
strictions, quarantine and isolation rules. As part of
our support for employees and to ensure the highest
safety standards, since the beginning of the pan-
demic we have provided and organized testing for
all employees who have had contact with people
infected with SARS-COV-2 , regardless of their po-
sition in the organization, and during the fall we also
provided regular weekly screening tests for teams
attending to external clients.
36
e number of employees promoted in 2020
49
e number of people newly employed
in2020
EMPLOYEES OF ECHO INVESTMENT GROUP
SPLIT BY GENDER
50% 50 %
44
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
. Diversity policy
We operate on one of the most demanding job mar-
kets in Poland, which is why we manage the organ-
ization focusing on using diversity, openness and
including our employees in building the value of the
company. Our employees constantly share their skills
and knowledge in order to achieve the best results,
no matter what they do and where they do it. We
build a culture of cooperation because it gives us
strength and allows us to achieve success. We de-
velop an open, inviting work culture, respecting the
contribution of all employees. We believe that in our
organization everyone shares their unique way of
looking at the world, their talents and experience,
their own approach and passion.
Conducting complex projects throughout Poland
requires a team with diverse experience, knowledge
and skills. That is why we hire people from dierent
backgrounds, regardless of their race, gender, age,
social status, religion, sexual orientation, political
views, disabilities or marital status. We care about
increasing the participation of women in positions
aecting the direction of our organization’s devel-
opment. Our employees include people of several
nationalities, also in senior positions. We strive for
greater diversity and openness of the organization
but we make the final decisions about employing
a given person based on their skills because our
priority is to hire and retain the best. The rules for
appointing the Company’s governing bodies are reg-
ulated by the Statute and the Code of Commercial
Companies.
At the very beginning of the pandemic, the crisis
management team was set up with the participation
of CEO and the security procedure was prepared.
The key business divisions prepared the business
continuity plan, where risks were minimized through
the preparation of crisis communication, ensuring
employee replacement and developing local pro-
cedures of operation.
7 years
e average seniority in the Echo Investment Group
455
e number of people employed by Echo Investment
as at 31 December 2020 on regular employment
contracts
– years or younger
– 30-50 years
– 50 years or older
EMPLOYEES OF ECHO INVESTMENT GROUP SPLIT BY AGE
69%
17%
14%
45
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
Remuneration policy
Echo Investment builds its remuneration pol
-
icy based on the principles of the Code of
Conduct:
− § 1.1 All companies from the Echo Invest-
ment group are responsible for develop-
ing and operating economically justified
and socially responsible business.
− § 2.2 Echo Investment makes every eort
in order to ensure that the conditions of
employment are fair and meet all the re-
quirements of the national law and rele-
vant conventions of the International La-
bour Organisation.
− § 2.6 We do not allow any cases of dis-
crimination. We provide everyone with
equal rights and opportunities regardless
of race, colour, gender, nationality, reli-
gion, ethnicity or other characteristics.
. Report on remuneration policy
SALARIES OF EMPLOYEES
In view of the current global situation related to
COVID-19 in 2020, the Company took a rational ap-
proach to salary and benefits, taking care to ensure
business continuity and to retain sta at a level that
ensures eective operations in the market. The Com-
pany did not benefit from anti-crisis shield solutions
for working hours or remuneration and did not re-
duce salaries of employees.
The remuneration system of Echo Investment is
based on transparent principles. The salary of each
employee results from their role in the organiza-
tion and assessment of their individual results. Each
employee is informed about their assessment and
comparing their remuneration to market standards
(so-called compa ratio). This ensures transparency
of the assessment criteria which are the basis for the
remuneration system in a diversified organisation.
46
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
DETERMINING THE AMOUNT
OF REMUNERATION
Assumed role within the organization and its evalua-
tion is the basis for fair remuneration in the company.
Positions with greater responsibility are remunerat-
ed better. Salaries are determined individually for
each employee within fixed salary brackets. Salary
brackets are specified in the remuneration scale (80-
120% of the median salary on the market). Salaries
of employees vary depending on the responsibilities
of the positions they hold, performance at work and
competences used at work, but they do not depend
on gender, age, nationality or seniority of a person
employed. In addition to the remuneration policy,
the ‘Remuneration Regulations of Echo Investment
Employees’ of 16 January 2013, as amended, ‘Bo-
nus Rules at the Echo Investment Capital Group for
Employees of Support Departments’ of 26 May 2011
and ‘Bonus System of Development Departments in
the Echo Investment Capital Group’ of 1 June 2017
are the main documents regulating the remuneration
policy in Echo Investment.
Remuneration in Echo Investment consists of a fixed
part and a bonus. The purpose of the bonus part is
to promote eciency of the company. Each employ-
ee, including a support functions, has a chance to
receive a bonus. In 2020, bonuses directly related
to sales were paid unchanged, while other bonuses
and awards were tied to the organization’s overall
annual performance.
In 2020, we operated according to previously devel-
oped standards: we kept updated our professional
position’s matrix and current valuation of new and
changed positions, as well as its cohesion with mar-
ket standards in real estate industry. We build em-
ployee development paths in the context of current
business needs, enabling employees to develop in
new roles and increase responsibility through inno-
vative actions in response to changing market condi-
tions. Such a solution ensures high motivation, talent
retention and long-term growth of the organization.
Additionally, we focused on providing key benefits
during the pandemic, i.e. extensive support within
medical packages and the COVID-19 prevention.
The actions taken in 2020 demonstrate the Man-
agement Board’s high commitment to ensuring a
cost-eective and motivating remuneration policy in
the Company, which is particularly important during
the current situation . In 2021, we intend to continue
to work on supporting employee development and
building an optimal work environment through fo-
cusing on innovative use of acquired skills at work, a
commitment to developing leadership skills of man-
agers, and building modern and eective goal-set-
ting and management tools through ongoing feed-
back.
Assumptions of Echo Investment’s remuneration
policy:
− striving to provide competitive i.e. similar rates of
remuneration for employees of Echo Investment
compared to oers in other companies,
− striving to provide a competitive level of costs,
−
related to the remuneration budget at Echo In-
vestment compared to other companies,
−
rewarding employees of Echo Investment in a way
that takes into account the value of the position
held (measured by the valuation result), its sig-
nificance and impact, skills and competences of
the employee,
− work results.
REMUNERATION OF MEMBERS
OF THE MANAGEMENT BOARD
Members of the Management Board re-
ceive remuneration and bonuses in ac-
cordance with the remuneration model
described in the ‘Work Rules of the Man-
agement Board’ adopted by the Super-
visory Board in a resolution of 21 March
2013. The bonus system is based on an
agreement in accordance with the MBO
methodology (Management by Objec-
tives) and it is related to the company’s
results. Each Member of the Management
Board may receive an annual bonus ex-
pressed in a multiple of monthly basic
salary, depending on the key business
objectives which he/she has an influence
on in the scope of their responsibility. At
47
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
the same time, all Members of the Man-
agement Board have common goals, the
execution of which below the expected
level will result in a reduction of the bo-
nus. The amount of remuneration and bo-
nuses of Management Board Members is
confirmed by a resolution of the Super-
visory Board every time.
In connection with the outbreak of the
pandemic, in 2020, in addition to the spe-
cific objectives set individually for each
Member of the Management Board, the
common objectives of the Management
Board were to maintain the continuity
and stability of the company’s opera
-
tions - in particular, to maintain uninter-
rupted work on construction sites and in
residential sales oces - and to ensure
the safety of employees and associates.
At the same time, when the pandemic
broke out, the Management Board took
measures to respond to the business and
financial risks associated with the uncer-
tain market situation, including decisions
to partially defer the payment of bonuses
for 2019 and to temporarily reduce the
remuneration of executives.
In 2020 and as at the date of publication
of the report, there were no agreements
concluded between the Company and
executives, providing for compensation
in case of their resignation or dismissal
from their position without an important
reason, or if their dismissal occurs due to
a merger of Echo Investment S.A. or due
to an acquisition.
48
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
How we manage risk
Significant risk factors and threats to the operations
of Echo Investment S.A. and its Group
Significant risk factors and threats to the operations of Echo In-
vestment S.A. and its Group Risk management is an integral part
of operating the Strategy of Profitable Growth and it ensures
achievement of the assumed strategic goals of the Echo Invest
-
ment group. The risk management procedures applied include
the identification of risks, their assessment, management and
monitoring. The management of Echo Investment S.A, in coop-
eration with the Supervisory Board and the Audit Committee, is
responsible for the overall risk management. The Management
Board, in cooperation with the Internal Audit Department, over-
sees risk management by creating, implementing and analyzing
control systems, employees responsible for internal audit as well
as directors and managers of individual departments.
STRATEGIC AND BUSINESS RISKS
RISK Method of risk management and competitive advantages of Echo Investment
Risks related to strategic goals and assump-
tions
• Risk of not achieving strategic goals;
• Change of strategic assumptions and goals;
• Non-uniform, unrealistic assumptions and
strategic goals.
• Experienced management focused on achieving goals. Incentive
systems based on cascading of strategic goals to operational goals;
• Periodical verification of key strategic goals for validity and their
ongoing monitoring through developed procedures at project,
portfolio and Group levels;
• Monitoring of the markets in which the company operates based
on industry reports and its own research and analysis, in particular
covering the average level of apartment sales prices and rental rates
and transaction prices on commercial markets.
Risk related to land bank
• Strong competition;
• High price expectations;
• Limited supply of well-prepared real estate.
• Own land purchase department;
• Close cooperation with renowned brokers and agents;
• A significant financial potential enabling acquisition of large,
multifunctional plots, which attract less competition;
• Maintaining a land bank that ensures operations for app. 3-5 years.
49
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
STRATEGIC AND BUSINESS RISKS
RISK Method of risk management and competitive advantages of Echo Investment
Risk of not achieving assumed level of residen-
tial sales
• Strong competition on local markets;
• The oer of apartments not matched to
demand.
• Constant, thorough analysis of local residential markets from the
stage before the purchase of a given plot until the end of the sale
process;
• Constant analysis of the latest trends in the housing market based on
industry reports and own analyses of customer preferences;
• Ability to flexibly respond to changing customer preferences even
during construction (own design department);
• Conducting sales of apartments based on own sales teams;
• Project implementation in stages;
• Many years of experience from several local residential markets.
Risk of not securing assumed level of oce
and retail space lease
• Strong competition on local retail markets;
• Limited expansion of retailers;
• Limited demand for oce space from
potential tenants;
• A poorly structured oce or retail oer;
• Increasing tenant expectations in respect to
fit-out standard and incentives.
• Constant analysis of market trends and quick response to changes;
• Constant cooperation and maintaining contacts with retail and oce
tenants or potential tenants (including in particular retail chains or
the BPO/SSC sector);
• Many years of experience in the implementation and rental of
commercial projects on several local markets in Poland;
• Own large leasing teams;
• Cooperation with all significant brokers and rental agents;
• CitySpace company in the Group which provides serviced oces
and is a tenant in some buildings completed by Echo Investment,
and introduces smaller companies, start-ups or companies from
the shared services sector that are just starting their operations in
Poland to the buildings;
• Furthermore, the serviced oces allow the Company to be more
flexible when providing the tenant with the target oce space (the
option of temporary placement of the tenant in CitySpace oces).
Risks related to sales of oce
and retail projects
• Strong competition on the market of finished
& operating commercial projects;
• High requirements of potential investors
regarding the product and the seller;
• Limited demand for commercial properties.
• Own sales team (consisting of industry, legal, tax and financial
specialists);
• Extensive market experience;
• Extensive contacts on global real estate markets;
• High quality projects that meet all the criteria required by
international institutions investing in real estate assets;
• Flexible and innovative approach to contracts with potential buyers;
• Good reputation of the company, allowing for the early introduction
of projects into the sales phase and securing sales through
preliminary agreements, contracts for the right to submit the first
oer (‘right of first oer’, ROFO), or provisions of cooperation
agreements for joint venture projects;
• Financial resources making it possible to maintain rented and
revenue-generating assets on the balance sheet of the Echo
Investment group in dicult market conditions.
50
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
STRATEGIC AND BUSINESS RISKS
RISK Method of risk management and competitive advantages of Echo Investment
Risks related to cooperation with contractors
and subcontractors
• Risk of the contractor’s bankruptcy;
• Risk of delays in the work;
• Risk of improper quality of the work provided;
• Risk of increased prices of materials and
workmanship;
• Risk of claims and legal disputes with
subcontractors.
• Stable financial situation that makes Echo Investment an attractive
and desirable client on the market;
• Cooperation with a selected group of renowned contractors
subcontractors and suppliers;
• Examination of the financial condition and technical capabilities of
the contractor or supplier before the final selection of the oer and
signing of the contract;
• Legal protection applied in concluded contracts for contractor
services;
• Permanent supervision over construction projects by project
managers and directors of Echo Investment construction as well as
inspectors or specialist external companies;
• Echo Investment’s many years of experience and low employee
turnover (average seniority of c.a. 7 years);
• Own team responsible for cost estimates and constant monitoring of
prices and supply of materials and services on the market;
• Packaging of orders making it possible to reduce oer prices using
the so-called eect of the scale.
Risk of changes in estimates regarding devel-
opment projects
• The scale and long time horizon of develop-
ment projects and the related volatility of
material prices and workmanship;
• The cyclical nature of the real estate market
and macroeconomic conditions aecting both
the revenue and cost side of budget assump-
tions;
• Limited project repeatability.
• Internal teams of specialists for all key stages of the development
process, enabling the achievement of an internal synergy eect;
• Own department responsible for estimating development costs and
monitoring the situation on the construction market on an ongoing
basis;
• Regular process of reviewing project budgets including risk analysis;
• Designing based on functioning precise implementation standards
for apartments and oces, allowing maximization of economies
of scale and limiting the risks associated with low repeatability of
implemented projects;
• Mass orders, combined for several investments to ensure access to
materials and equipment used massively on multiple investments;
• Concluding flat-rate contracts with a fixed price guarantee.
Risk of accidents at work and other hazards
• Threats to the safety of Echo employees, sub-
contractors’ employees and bystanders;
• Insucient level of knowledge and compe-
tence of subcontractors in the field of HSE.
• Own team of specialists in the field of HSE, carrying out, among oth-
ers periodic inspections, audits and trainings in the field of HSE;
• Applying high HS standards in accordance with ISO 45001 (H&S)
and ISO 14001 (environment) confirmed by periodic external audits;
• Obligation of contractors to comply with the provisions and stand-
ards of Echo in the field of HSE.
51
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
FINANCIAL RISKS
RISK Method of risk management and competitive advantages of Echo Investment
The risk of changes in interest rates • Use of hedging instruments (fixed rates, for some loans – IRS) for
selected liabilities.
Currency risk • Natural hedging – contracting loans to finance projects in EUR,
which is also the main currency for rental and sale of retail real
estate in Poland, financing of housing and construction activities in
Polish zlotys, which are the main currency of concluded construction
contracts and sale of apartments;
• Establishing a EUR-denominated bond issue program in order to
better adjust the currency structure of liabilities to the currency
structure of assets and to carry out the first issues;
• Selective use of derivatives (forward, currency options).
The risk of loss of liquidity by the Company or
its Group
• Lack of access to external financing;
• Disturbance of balance between receivables
and liabilities.
• Constant monitoring of forecast and actual short- and long-term
cash flows;
• Keeping cash in order to ensure proper liquidity management;
• Keeping free credit limits on current accounts;
• Fixed income from the sale of apartments;
• Financing the implementation of projects with special-purpose
credits;
• Implementation of the most capital-intensive projects in partnership
or cooperation with companies outside Echo Investment group;
• Constant monitoring of receivables and liabilities;
• Diversification of business into residential, oce and retail segments
that might go through dierent phases of the business cycle at
dierent times;
• Conducting liquidity stress tests based on various market change
scenarios.
LEGAL AND REGULATORY RISKS
RISK Method of risk management and competitive advantages of Echo Investment
The risk related to administrative procedures
• The risk of legal changes;
• Risk related to interpretations of local and
country-level regulations;
• Risk of delays of authorities and prolonged
administrative process;
• Risk of delays in administrative processes due
to poor project preparation;
• Risk of delays in administrative processes due
to the participation of third parties.
• Constant monitoring of legal changes in planning and administrative
procedures;
• Experience in obtaining permits from major cities in Poland;
• Hiring experienced specialists in the field of planning and
administrative procedures;
• Detailed legal and administrative analysis before purchasing the plot;
• Precise project preparation in cooperation with experienced external
architectural and urban planning studios;
• Conducting informational and promotional activities regarding
planned projects in order to obtain public acceptance;
• Running many projects at the same time spreading the risk.
52
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
LEGAL AND REGULATORY RISKS
The risk of introduction of new legal
regulations or changes to current regulations
• Risk of not complying with new regulations in
a timely manner;
• Change in interpretation of current regulations;
• Public nature of the Company and the
associated increased legal restrictions;
• Increased expenditure related to legal
compliance.
• Constant monitoring of legislative work regarding the real estate:
construction and related industries aecting the Group’s operations;
• Continuous analysis of the potential impact of new solutions on the
company’s operations at the level of the Management Board;
• Participation in a social dialogue on ongoing legislative work through
advisory, business and industry organizations;
• Support of external law firms when specialized knowledge is needed;
• Employment of capital markets specialist within the legal team;
• Periodic legal compliance assessment audits;
• Monitoring of legal solutions applied in developed countries
(primarily the European Union and the USA).
Complicated and variable tax system
• Risk of not complying with new tax regulations
& changes in tax regulations;
• Not consistent interpretative practice of tax
authorities and case-law;
• Increased tax burden and cost of ensuring tax
compliance.
• Internal tax control – own tax team;
• Constant monitoring of the tax conditions of the Capital Group’s
operations;
• Constant cooperation with renowned legal and tax advisors.
MACROECONOMIC RISKS
RISK Method of risk management and competitive advantages of Echo Investment
The risk of adverse changes in the real estate
market
• Cyclical nature of the real estate market;
• Risk of withholding external financing.
• Early leasing of the commercial projects and its fast sale after com-
pletion;
• A financial potential that makes it possible to keep completed retail
properties on your own balance sheet if they cannot be sold;
• Sales of around 80% of flats in a given project at the construction
stage, which provides information about the demand on the market
early and allows us to respond appropriately to less advanced pro-
jects (accelerate, delay, change the size and quality of apartments);
• Constant maintenance of a high level of cash and available credit
limits;
• Implementation of residential projects from payments made by
clients, without external financing;
• Adjusting the pace and schedule of project implementation to mar-
ket conditions;
• Projects are carried out in stages.
The risk of adverse changes in business
climate indicators
• Poorer economic growth;
• Increase of unemployment;
• Decrease of consumption;
• Increase of inflation.
• Designing projects tailored to financial capabilities and the demand
on local markets;
• Flexible response to changes in demand by e.g. changing the size or
quality of apartments under construction, delay or slowdown of the
construction pace;
• Constant analysis of the behaviour and needs of consumers and
clients.
53
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
RISKS ASSOCIATED WITH THE DEVELOPMENT OF THE SARSCOV2
CORONAVIRUS EPIDEMIC
RISK Method of risk management and competitive advantages of Echo Investment
Risk of limitations of conducting business
activities of the Group due to taking extra
precautions
• Establishing the emergency management team, in line with the
previously implemented crisis management procedure;
• Strengthening IT systems and constant analysis on systems
eectiveness allowing for re-mote business operation;
• Speeding up planned processes of changing traditional
documentation workflow to electronic workflow;
• Implementation of a system of remote meetings with clients and
contractors, as well as internal meetings;
• Daily monitoring of the progress of work at construction sites,
analyzing risks and ways to prevent or reduce them;
• Constant analysis of the probable development of the situation and
possibilities of securing against expected risks;
• Extraordinary precautions taken to support the safety of employees
and subcontractors’ employees.
Risk of economic downturn due
to the epidemic
• Risk of delays at construction sites due to
limitations in the operations of construction
companies or problems with the supply of
materials;
• Risk of deterioration of financing conditions
of project or significant reduction of financing
possibilities;
• Risk of decrease in demand for apartments,
among others, due to limitations in granting
mortgage loans;
• Risk of delays in investment decisions by funds
buying finished oce buildings and shopping
centres as well as decreases in achievable
transaction prices;
• Risk of reducing the profitability of projects.
• Strengthened monitoring of the progress at all construction sites,
increased scope of risk analysis and possibilities of preventing or
reducing risks;
• Diversification of supplies: ongoing cooperation with around 350
subcontractors and suppliers;
• Constant maintaining high liquidity, e.g. due to high level of cash and
current credit lines;
• Possibility to respond flexibly to market conditions in terms of
launching new projects or changing functions of buildings that may
be developed on purchased plots of land;
• Preparation to take advantage of the possible weaker economic
conditions to seek opportunities in the land market or take over
smaller companies;
• Holding a significant land bank to maintain high development
activity over the next 3-5 years;
• Renegotiation of supply and construction costs as a consequence of
a drop in procurement on the market;
• Possibility of keeping finished oce buildings and shopping centres
and possibility of profit from current rental income.
IT RISKS
RISK Method of risk management and competitive advantages of Echo Investment
Cybersecurity
• Risk related to unauthorized access to data
from inside and outside the organization that
may result in leakage of confidential data.
• Functioning internal IT security standards;
• Requirement of IT solution providers to meet ECHO security stand-
ards;
• A functioning security system that includes continuous monitoring
and detection of threats to IT systems and infrastructure;
• Conducting periodic internal information campaigns in the field of
cybersecurity and cyclical testing in the field of IT infrastructure and
application security.
Systems stability
• Risk for maintaining the stability of company
networks and systems in the condition of the
need for massive remote work.
• Using reputable suppliers and contractors of software in the field of
modern technologies;
• Conducting regular network and system endurance tests, which was
positively verified in 2020 during remote work of a large part of the
team.
54
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
RISK RELATED TO M&A TRANSACTION
RISK Method of risk management and competitive advantages of Echo Investment
Risks related to the transaction
• Legal;
• Economic;
• Pricing risk;
• Tax;
• Regulatory.
• Conducting a detailed legal, financial, commercial, tax and technical
due diligence process with the support of internal and external
reputable field specialists;
• Acquisition in line with a long-term strategic development plan;
• Cooperation with reputable advisors and law firms;
• Experience of the management sta in mergers and acquisitions;
• The acquired entity operates in the industry from the core business
of Echo Investment;
• The acquired entity is listed on the Warsaw Stock Exchange, which
improves its transparency and helps to determine the appropriate
valuation.
Risk related to business combination (long-
term)
• The risk of failure to achieve the appropriate
eectiveness of the merger;
• The risk of not achieving added value;
• Risk of consolidation and financial reporting.
• Appropriate strategy for selecting an acquisition target;
• Experience of the management sta in mergers and acquisitions;
• Correct integration is an element of the bonus system for key board
members and senior management;
• Development of plans to connect the businesses and mutual synergy
of both organizations;
• Cooperation with reputable consultants in the field of management
and optimization.
55
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
Portfolio of properties
. Residential
RESIDENTIAL PROJECTS UNDER CONSTRUCTION
Project / address
Sales area
[sqm]
Number of
units
Sales level
[% of units]
Targeted
revenues
[PLN mln]
Targeted
budget
[PLN mln]
Expenditure
incurred
[%] Start
Targeted
completion
KRAKÓW
Osiedle Krk I
ul. Zapolskiej
9 800 218 70% 97,1 66,4 58% IQ 2020 IV Q 2021
Osiedle Krk II
ul. Zapolskiej
9 800 218 52% 97,1 66,6 40% III Q 2020 II Q 2022
Bonarka Living I
ul. Puszkarska
8 000 143 47% 68,4 48,3 38% III Q 2020 IV Q 2021
ŁÓDŹ
Fuzja I
ul. Tymienieckiego
14 300 282 73% 105,6 80,9 91% II Q 2019 IV Q 2020
Fuzja II
ul. Tymienieckiego
12 400 240 11% 92,3 69,4 16% IV Q 2020 II Q 2022
Osiedle Jarzębinowe VII
ul. Okopowa
6 100 105 98% 36,7 28,4 96% II Q 2019 IV Q 2020
Osiedle Jarzębinowe VIII
ul. Okopowa
6 100 101 67% 39,3 29,0 40% II Q 2020 IV Q 2021
POZNAŃ
Apartamenty Esencja
ul. Grabary
12 400 260 91% 116,4 87,3 94% IQ 2019 IV Q 2020
Nasze Jeżyce I
ul. Szczepanowskiego
7 500 142 91% 57,8 44,7 75% III Q 2019 II Q 2021
Nasze Jeżyce II
ul. Szczepanowskiego
8 200 162 78% 64,2 48,9 54% III Q 2019 II Q 2021
Osiedle Enter Ia
ul. Naramowice
6 400 118 77% 41,6 30,6 70% IQ 2020 IV Q 2021
WARSAW
Malthouse Apartments
(Warsaw Brewery E)
ul. Grzybowska
5 700 81 80% 113,4 72,2 97% IV Q 2018 IV Q 2020
Stacja Wola I
ul. Ordona
20 000 387 88% 204,3 141,6 61% IV Q 2019 III Q 2021
Denitions:
Sales level – the item exclusively concerns pre-
liminary contracts
An estimated budget includes the value of land,
cost of design, construction and external supervi-
sion. It does not include the cost of supply main-
tenance, interest costs or activated nancial costs,
marketing and total personnel costs related to the
project. e Company estimates additional costs
to equal on average 6% of the targeted budget.
56
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
RESIDENTIAL PROJECTS UNDER PREPARATION
Project / address
Sales area
[sqm]
Number
of units
Targeted
revenues
[PLN mln]
Targeted
budget
[PLN mln]
Expenditure
incurred [%]
Targeted
start
Targeted
completion
KRAKÓW
ZAM I
ul. Rydlówka
6 300 115 62,0 44,5 30% IQ 2021 II Q 2022
Bonarka Living II c
ul. Puszkarska
9 700 179 84,2 58,9 19% III Q 2021 IV Q 2022
Bonarka Living II d
ul. Puszkarska
8 200 151 71,4 50,1 18% IV Q 2021 IQ 2023
ZAM II
ul. Rydlówka
5 400 98 59,4 42,7 23% IQ 2022 II Q 2023
Kapelanka I
ul. Kapelanka
14 600 262 146,7 108,0 22% III Q 2024 II Q 2026
Kapelanka II
ul. Kapelanka
10 300 178 108,4 79,8 21% III Q 2025 IQ 2027
Kapelanka III
ul. Kapelanka
7 900 146 84,0 63,5 20% II Q 2026 IV Q 2027
Kapelanka IV
ul. Kapelanka
16 000 296 175,3 120,0 22% IV Q 2026 II Q 2028
Kapelanka V
ul. Kapelanka
8 600 128 96,6 66,8 21% III Q 2027 Ikw 2029
ŁÓDŹ
Wodna 17
ul. Wodna
12 700 234 84,3 62,6 12% II Q 2021 IQ 2023
Widzewska I
ul. Widzewska
9 000 170 53,2 41,2 6% III Q 2021 IQ 2023
Fuzja III
ul. Tymienieckiego
9 100 152 67,8 50,1 11% IQ 2022 IV Q 2023
Widzewska II
ul. Widzewska
8 800 166 53,2 41,0 6% II Q 2022 IV Q 2023
Widzewska III
ul. Widzewska
8 500 156 52,3 38,9 6% II Q 2023 III Q 2024
Widzewska IV
ul. Widzewska
9 000 168 56,2 41,4 6% IV Q 2023 II Q 2025
Widzewska V
ul. Widzewska
9 000 168 57,4 41,0 6% III Q 2024 IQ 2026
Widzewska VI
ul. Widzewska
8 800 166 57,7 39,9 6% IQ 2025 IV Q 2026
RESIDENTIAL PROJECTS UNDER CONSTRUCTION
Project / address
Sales area
[sqm]
Number of
units
Sales level
[% of units]
Targeted
revenues
[PLN mln]
Targeted
budget
[PLN mln]
Expenditure
incurred
[%] Start
Targeted
completion
Stacja Wola II
ul. Ordona
13 700 249 44% 138,4 95,3 38% III Q 2020 II Q 2022
WROCŁAW
Stacja 3.0
Wrocław, ul. Mińska
12 100 242 75% 89,3 68,9 93% III Q 2019 IV Q 2020
Total 152 500 2 948 1 361,9 978,5
57
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
RESIDENTIAL PROJECTS UNDER PREPARATION
Project / address
Sales area
[sqm]
Number
of units
Targeted
revenues
[PLN mln]
Targeted
budget
[PLN mln]
Expenditure
incurred [%]
Targeted
start
Targeted
completion
Widzewska VII
ul. Widzewska
5 900 111 39,5 29,8 6% II Q 2022 IV Q 2023
Widzewska VIII
ul. Widzewska
7 200 135 49,5 35,7 6% IQ 2023 III Q 2024
Widzewska IX
ul. Widzewska
10 400 190 73,4 52,4 6% III Q 2023 II Q 2025
Widzewska X
ul. Widzewska
10 400 190 75,3 52,4 6% III Q 2024 IQ 2026
Widzewska XI
ul. Widzewska
7 200 135 53,3 35,4 6% II Q 2025 IQ 2027
Widzewska XII
ul. Widzewska
8 600 162 65,4 42,4 6% IQ 2026 III Q 2027
Widzewska XIII
ul. Widzewska
3 900 58 30,6 21,4 5% IV Q 2026 II Q 2028
POZNAŃ
Osiedle Enter Ib
ul. Naramowice
6 000 104 37,8 28,3 24% IQ 2021 IV Q 2021
Osiedle Enter II
ul. Sielawy
9 400 153 60,6 43,2 15% IQ 2021 IV Q 2022
Osiedle Enter III
ul. Sielawy
9 600 159 62,2 45,1 14% IQ 2021 IV Q 2022
Apartamenty Esencja II
ul. Grabary
6 500 130 63,3 48,9 18% III Q 2021 III Q 2023
Opieńskiego I
ul. Opieńskiego
12 600 205 90,0 70,3 9% III Q 2022 II Q 2024
Opieńskiego II
ul. Opieńskiego
8 900 183 63,8 49,5 9% II Q 2023 IQ 2025
Opieńskiego III
ul. Opieńskiego
8 100 167 58,4 44,9 9% IQ 2024 IV Q 2025
Opieńskiego IV
ul. Opieńskiego
7 800 149 58,4 43,5 9% IQ 2025 III Q 2026
Opieńskiego V
ul. Opieńskiego
5 700 106 43,5 31,7 9% IV Q 2025 III Q 2027
Opieńskiego VI
ul. Opieńskiego
11 100 215 87,3 62,1 9% III Q 2026 II Q 2028
WARSAW
Stacja Wola III
ul. Ordona
14 900 270 147,8 102,9 27% III Q 2021 II Q 2023
Kabaty
al. KEN
17 300 299 213,7 154,3 27% IV Q 2021 III Q 2023
Total 333 400 6 054 2 743,7 1 984,5
58
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
. Residential projects for rental
platform Resi4Rent
RESIDENTIAL PROJECTS OF RENTAL PLATFORM RESI4RENT IN OPERATION
Project / address
Residential area
[sqm]
Number
of units
Targeted annual
rental revenues
[PLN mln]
Targeted budget
[PLN mln] Completion
R4R Wrocław Rychtalska
Wrocław, ul. Zakładowa
11 400 302 8,4 76,8 III Q 2019
R4R Łódź Wodna
Łódź, ul. Wodna
7 800 219 4,9 52,4 IV Q 2019
R4R Wrocław Kępa Mieszczańska
Wrocław, ul. Dmowskiego
9 300 269 6,8 76,3 II Q 2020
R4R Warszawa Browary
Warsaw, ul. Grzybowska
19 000 450 16,6 187,6 III Q 2020
R4R Warszawa Woronicza
Warsaw, ul. Suwak
7 900 229 6,2 60,7 IV Q 2020
Total 55 400 1 469 42,9 453,8
RESIDENTIAL PROJECTS OF RENTAL PLATFORM RESI4RENT UNDER CONSTRUCTION
Project / address
Residential area
[sqm]
Number
of units
Targeted annual
rental revenues
[PLN mln]
Targeted budget
[PLN mln] Start
Targeted
completion
R4R Warszawa Taśmowa
Warsaw, ul. Taśmowa
13 000 372 11,1 112,1 IQ 2019 IQ 2021
R4R Poznań Szczepanowskiego
Poznań, ul. Szczepanowskiego
5 000 160 3,8 42,2 III Q 2019 III Q 2021
R4R Gdańsk Kołobrzeska
Gdańsk, ul. Kołobrzeska
10 200 301 8,8 88,7 III Q 2019 II Q 2021
R4R Warszawa Żwirki
Warsaw, ul. Żwirki iWigury
5 200 161 5,0 52,3 III Q 2020 III Q 2022
R4R Kraków Puszkarska
Kraków, ul. Puszkarska
5 000 149 3,5 36,4 III Q 2020 II Q 2022
Total 38 400 1 143 32,2 331,7
Denitions:
An estimated budget of Resi4Rent projects
includes the value of land, cost of design,
construction and external supervision, devel-
opment services and nancial costs. It does not
include the cost of the platform operation, such
as marketing.
59
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
RESIDENTIAL PROJECTS OF RENTAL PLATFORM RESI4RENT IN PREPARATION
Project / address
Residential
area
[sqm]
Number
of units
Targeted annual
rental revenues
[PLN mln]
Targeted budget
[PLN mln]
Targeted
start
Targeted
completion
R4R Warszawa Wilanowska
Warsaw, al. Wilanowska
12 400 407 11,8 128,5 IQ 2021 IQ 2023
R4R Kraków 3-Maja
Kraków, ul. 3- Maja
12 100 387 9,8 105,4 II Q 2021 III Q 2022
R4R Kraków Jana Pawła
Kraków, al. Jana Pawła II
9 400 296 7,2 75,8 II Q 2021 IQ 2023
R4R Wrocław Jaworska
Wrocław, ul. Jaworska
13 700 391 11,0 111,8 III Q 2021 III Q 2023
R4R Pohoskiego Warszawa
Warsaw, ul. Pohoskiego
8 600 304 8,3 89,6 IV Q 2021 III Q 2023
R4R Nowomiejska, Gdańsk*
Gdańsk, ul. Nowomiejska
10 300 295 8,7 98,9 I Q 2022 I Q 2024
R4R Kilińskiego, Łódź*
Łódź, ul. Kilińskiego
10 000 291 7,2 77,8 I Q 2022 I Q 2024
R4R Na Ostatnim Groszu, Wrocław*
Wrocław, ul. Na Ostatnim Groszu
10 000 296 7,3 78,2 IV Q 2021 III Q 2023
Total 86 500 2 667 59,5 766,0
* Sale of land plots from Echo Investment to Resi4Rent is pending.
60
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
. Oce
OFFICE BUILDING IN OPERATION
Project / address
GLA
[sqm]
Leasing
[%]
NOI
[EUR mln]
Targeted
budget
[PLN mln]
Expend-
iture
incurred
[%]
Recognized
fair value
gain
[PLN mln] Completion Comments
Moje Miejsce I
Warsaw, ul. Beethovena
19 000 91% 3,4 159,2 99% 35,0 II Q 2019 ROFO agreement with
Globalworth Poland
Moje Miejsce II
Warsaw, ul. Beethovena
17 200 16% 3,1 145,7 78% 17,8 IV Q 2020 ROFO agreement with
Globalworth Poland
Face2Face I
Katowice, ul. Grundmanna
20 500 91% 3,7 153,2 96% 56,1 IQ 2020
Face2Face II
Katowice, ul. Grundmanna
26 400 92% 4,7 204,9 93% 61,1 IV Q 2020
West 4 Business Hub I
Wrocław, ul. Na Ostatnim
Groszu
15 600 45% 2,7 115,3 82% 29,7 III Q 2020
Malthouse Oces
(Warsaw Brewery GH)
Warsaw, ul. Grzybowska
29 000 63% 7,2 332,1 85% 278,6 III Q 2020
Villa Oces
(Warsaw Brewery K)
Warsaw, ul. Grzybowska
16 700 66% 4,1 177,8 88% 175,9 II Q 2020 Building sold in Q1 2021
Total 144 400 28,9 1 288,2 654,2
OFFICE BUILDINGS UNDER CONSTRUCTION
Project / address GLA [sqm] Leasing [%]
NOI
[EUR mln]
Targeted
budget
[PLN mln]
Expenditure
incurred [%]
Recognized
fair value
gain
[PLN mln] Start
Targeted
completion
React I
Łódź, ul. Piłsudskiego
15 100 23% 2,6 109,1 52% 18,8 II Q 2019 I Q 2022
Fuzja C iD
Łódź, ul. Tymienieckiego
19 900 82% 3,5 148,9 18% 19,0 III Q 2020 IQ 2022
Midpoint71
Wrocław, ul. Powstańców
Śląskich
36 200 23% 6,6 292,8 35% 82,3 IV Q 2019 IV Q 2021
Total 71 200 12,7 550,8 120,1
Denitions:
GLA – gross leasable area
NOI – net operating income with the assump-
tion of full rental and the average market
rent rates
ROFO – (right of rst oer)
Due to 25% of capital participation in the pro-
ject, ROFO partner is entitled to 25% of prot
after sale of project.
Completion – date of commissioning permit.
Signicant part of t-out works to be done after
this date.
An estimated budget includes the value of
land, cost of design, construction and external
supervision. It does not include the personnel
costs related to the project, cost of marketing,
leasing and nancing, which are estimated
by the Company to equal on average 7% the
targeted budget. In addition, it does not include
costs reducing sales revenue (price), such as
master lease, prot share and costs of projects
sale. Fair value includes currency dierences on
investment loans
e recognised fair value gain is reduced by
the prot share obligation and the provision to
secure rent-free periods (master lease).
61
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
OFFICE BUILDINGS IN PREPARATION
Project / address GLA [sqm]
NOI
[EUR mln]
Targeted
budget
[PLN mln]
Expenditure
incurred
[%] Targeted start
Targeted
completion
Piotra Skargi
Katowice, ul. P. Skargi / Sokolska
26 600 4,6 186,4 7% III Q 2022 II Q 2024
Brain Park I
Kraków, ul. Fabryczna / Al. Pokoju
29 400 5,4 261,0 22% IQ 2021 III Q 2022
Brain Park II
Kraków, ul. Fabryczna / Al. Pokoju
12 800 2,4 118,5 21% IV Q 2021 II Q 2023
Wita Stwosza I
Kraków, ul. Wita Stwosza
23 900 4,2 210,6 18% IV Q 2021 III Q 2023
Wita Stwosza II
Kraków, ul. Wita Stwosza
31 000 5,5 274,2 18% III Q 2022 IV Q 2024
React II
Łódź, ul. Kilińskiego / al. Piłsudskiego
25 900 4,4 186,0 8% III Q 2022 IQ 2024
Fuzja I, J
Łódź, ul. Tymienieckiego
10 200 1,7 81,2 8% IQ 2022 IV Q 2024
Swobodna
Wrocław, ul. Swobodna
46 100 8,5 374,0 12% II Q 2022 III Q 2024
West 4 Business Hub II
Wrocław, ul. Na Ostatnim Groszu
23 300 4,0 174,4 13% II Q 2021 IQ 2023
West 4 Business Hub III
Wrocław, ul. Na Ostatnim Groszu
33 100 5,7 237,4 12% II Q 2022 II Q 2024
Kapelanka
Kraków, ul. Kapelanka
21 300 3,6 167,8 17% III Q 2022 II Q 2024
Total 283 600 50,0 2 271,5
62
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
. Retail
RETAIL PROJECTS IN OPERATION
Project / address
GLA
[sqm]
Leasing
[%]
NOI
[EUR mln]
Targeted
budget
[PLN mln]
Expend-
iture
incurred
[%]
Recognized
fair value
gain
[PLN mln] Completion Comments
Libero
Katowice, ul. Kościuszki
44 900 100% 9,3 390,4 100% 188,3 IV Q 2018 ROFO agreement
with EPP
Galeria Młociny
Warsaw, ul. Zgrupowania
AK „Kampinos”
84 300 97% 21,1 1 286,7 97% 16,2 II Q 2019 30% JV with
EPP holding 70%
Total 129 200 30,4 1 677,1 204,5
Denitions:
GLA – gross leaseable area
NOI – net operating income with the assump-
tion of full rental and the average market
rent rates
ROFO – right of rst oer
Due to 25% of capital participation in the pro-
ject, ROFO partner is entitled to 25% of prot
after sale of project.
Completion – date of commissioning permit.
Signicant part of t-out works to be done after
this date.
An estimated budget includes the value of
land, cost of design, construction and external
supervision. It does not include the personnel
costs related to the project, cost of marketing,
leasing and nancing, which are estimated
by the Company to equal on average 7% the
targeted budget. In addition, it does not include
costs reducing sales revenue (price), such as
master lease, prot share and costs of projects
sale. Fair value includes currency dierences on
investment loans
e recognised fair value gain is reduced by
the prot share obligation and the provision to
secure rent-free periods (master lease).
63
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
. Land bank
EARLY STAGE PROJECTS
Project / address Plot area [sqm]
Potential of leasing/
sales area [sqm] Comments
Warsaw, ul. Towarowa 64 900 230 000 Plot for residential, service and oce
functions. Project owned by Echo In-
vesment in 30% and by EPP in 70%.
Poznań, ul. Janickiego 32 900 78 500 Plot for residential function, acquired
in Q1 2021
Warsaw, al. KEN 29 700 32 000 Plot for retail, services and
entertainment functions
Łódź, ul. Tymienieckiego 19 200 21 600 Plot for oce and services
Poznań, ul. Hetmańska 65 300 80 000 Plot for residential and oce functions
Total 212 000 442 100
INVESTMENT PROPERTIES
Project / address Plot area [sqm] Comments
Poznań, Naramowice 77 500 67,600 sqm sold in Q1 2021
Warsaw, ul. Antoniewska 14 100 Preliminary sale agreement
Zabrze, Miarki 8 100
Warsaw, ul. Konstruktorska 7 200 Plot for educational function
Radom, Beliny 6 300 Preliminary sale agreement
Total 106 900
64
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
Main investments in 2020
– acquisition of plots
In 2020 Echo Investment group has acquired land
properties for 275,000 sqm of residential and service
space. The total value of this transactions amounted
to PLN 217 million. In addition, plots for 100,000 sqm
of residential space has been secured by preliminary
agreements. In Q1 2021 the Group acquired invest-
ment plot in Poznań on ul. Janickiego, where 78,500
sqm. of residential space can be built.
792 pln
Average land price in
1 sqm of leasable or
sellable space possible
to build on plots
acquired in2020.
PROPERTIES ACQUIRED BY ECHO INVESTMENT GROUP IN 2020
Date
of transaction Address Legal form Area Capacity
1 Q 2020 Kraków, ul. Puszkarska ownership 25,800 sqm. 29,900 sqm. of residential and
service space
2 Q 2020 Warsaw,
ul. Żwirki iWigury
perpetual
usufruct
6,000 sqm. 5,100 sqm. of residential space,
property sold to Resi4Rent
4 Q 2020 Kraków, ul. Kapelanka ownership 56,000 sqm. 78,600 sqm. of residential, oce
and service space
4 Q 2020 Poznań, ul. Opieńskiego ownership
and perpetual
usufruct
44,200 sqm. 54,100 sqm. of residential and
service space
4 Q 2020 Łódź, ul. Widzewska ownership 88,000 sqm. 106,700 sqm. of residential and
service space
The potential of purchased real properties is esti-
mated based on planning documents and guidelines
valid at the date of purchase. Ultimately, the use of
each property is determined at a later stage of pro-
ject preparation, taking into account current plan-
ning documents, arrangements, market potential
and finally accepted project concept.
Details of preliminary
purchase agreements
signed with Tesco Gro-
up are presented in item
6.3 on page 24.
PROPERTIES ACQUIRED BY RESI4RENT IN 2020
Date
of transaction Address Legal form Area Capacity
2 Q 2020 Warsaw,
ul. Żwirki iWigury
perpetual
usufruct
6,000 sqm. 5,100 sqm.
2 Q 2020 Warsaw, ul. Pohoskiego ownership 2,100 sqm. 13,700 sqm.
3 Q 2020 Kraków, al. Jana Pawła II ownership 3,400 sqm. 9,400 sqm.
4 Q 2020 Wrocław, ul. Jaworska ownership 4,300 sqm. 12,900 sqm.
65
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
Output markets and sources
of supplies of materials,
goods and services
Output markets
All projects implemented in 2020 by
Echo Investment and companies from the
Group were located in Poland. In accord-
ance with its strategy, Echo Investment
is withdrawing from projects outside the
country.
Contracting parties
The main contracting parties of Echo
Investment S.A. and companies from its
Capital Group are the entities which the
Company and the Group cooperate with
on the implementation of development
projects (contractors and suppliers). The
share of contracting parties is measured
by the value of transactions (purchases or
orders) to the revenue of the Group.
MAJOR CONTRACTORS OF ECHO INVESTMENT
GROUP IN 2020
Business partner
Turnover
[PLN ‘000]
Topaz Jewel Sp. zo.o. 159,1
Pearl Jewel Sp. zo.o. 70,2
M&J Bud Invest Sp. zo.o.. pl sp. K. 62,0
Porr S.A. 53,2
Przedsiębiorstwo Instalacyjne Unimax Sp. zo.o. 45,3
Eiage Polska Serwis Sp. zo.o. 44,8
Krakbau S.A. 41,0
Polimex Infrastruktura Sp. zo.o. 41,0
Wework Poland Sp. zo.o. 34,2
M&J Bud Sp. zo.o. Invest EU Sp.K. 31,7
GPRE Management Sp. zo.o. 30,1
RE-Bau Sp. zo.o. 28,4
Mota-Engil Central Europe S.A. 25,8
ZBB Firma Budowlana Sp. zo.o. Sp.K. 22,7
GEO-Kat Sp. zo.o. 22,3
Tetris Poland Sp. zo.o. 22,3
Alsal Sp. zo.o. Sp.K. 19,2
Modzelewski & Rodek Sp. zo.o. 18,8
Prof Fair Jarosław Poraj 18,7
Keller Polska Sp. zo.o. 18,7
MG Building Sp. zo.o. Sp.K. 18,7
Fabet-Konstrukcje Sp. zo.o. 18,4
66
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
MAJOR CUSTOMERS OF ECHO INVESTMENT GROUP,
INCLUDING SERVICE RECIPIENTS IN 2020
Client
Turnover
[PLN ‘000]
R4R Warszawa Browary Sp. zo.o. 74,4
Honeywell Services Poland Sp. zo.o. 25,2
R4R Wrocław Kępa Sp. zo.o. 17,5
EPP Development 6 Sp. zo.o. 17,2
Sent To Sp. zo.o. Sp.K. 17,0
Okam 2024 Sp. zo.o. 15,7
R4R Poland Sp. zo.o. 14,2
Allen & Overy A.Pędzich Sp.K. 9,4
R4R RE Sp. zo.o. 9,0
Lux Europa III SARL 8,2
Swanage Sp. zo.o. 7,9
R4R RE Wave 3 Sp. zo.o. 7,5
Common Investment S.A. 6,2
Topaz Jewel Sp. zo.o. 5,8
R4R Łódź Wodna Sp. zo.o. 5,4
Accenture Services Sp. zo.o. 5,4
EPP Oce-03 Business Campus Sp. zo.o. 5,2
Zielona Skarpa Sp. zo.o. 5,0
Clients
The clients of Echo Investment or the
Group companies are the entities which
the project management services are
provided for and the entities which the
Company or Group companies sell real
estate to (usually completed oce or re-
tail projects). Clients (usually individual)
who buy apartments are a separate group
of contracting parties.
67
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
Composition of the Group
Echo Investment S.A. plays the most important
role in the structure of the Group, which it su
-
pervises, co-executes and provides financial re-
sources for the implementation of development
projects. The vast majority of companies being
part of the Group were established or purchased
in order to execute specific investment tasks,
including those resulting from the construc
-
tion process of a specific development project.
.. Composition of the Group
As at 31 December 2020 the Capital Group included
141 subsidiaries consolidated according to the full
method and 23 jointly controlled companies con-
solidated according to the equity method.
SUBSIDIARIES
No Subsidiary
Registered
oce
% of
capital held Parent entity
1 53 - Grupa Echo Sp. zo.o. SKA Kielce 100% Echo Investment S.A.
2 Avatar - Projekt Echo - 119 Sp. zo.o. SKA Kielce 100% Echo Investment S.A.
3 Babka Tower - Projekt Echo - 93 Sp. zo.o. Sp.K. Kielce 100% Perth Sp. zo.o.
4 Bełchatów - Grupa Echo Sp. zo.o. SKA Kielce 100% Echo Investment S.A.
5 City Space - GP Sp. zo.o. Warsaw 100% Echo Investment S.A.
6 Supersam City Space - GP Sp. zo.o. Sp.K. Warsaw 100% City Space Management Sp. zo.o.
7 Rondo 1 City Space - GP Sp. zo.o. Sp.K. Warsaw 100% City Space Management Sp. zo.o.
8 Plac Unii City Space - GP Sp. zo.o. Sp.K. Warsaw 100% City Space Management Sp. zo.o.
9 City Space Management Sp. zo.o. Warsaw 100% Echo Investment S.A.
10 Cornwall Investments Sp. zo.o. Warsaw 100% Echo Investment S.A.
11 React - City Space - GP Sp. zo.o. Sp.K. Warsaw 100% City Space Management Sp. zo.o.
12 Dagnall Sp. zo.o. Warsaw 100% Echo Investment S.A.
13 Dellia Investments - Projekt Echo - 115 sp. zo.o. Sp.K. Kielce 100% Pudsey Sp zo.o.
14 Doxent Investments Sp. zo.o. Warsaw 100% Echo Investment S.A.
15 Duże Naramowice - Projekt Echo - 111 Sp. zo.o. SKA Kielce 100% Echo Investment S.A.
16 Echo - Advisory Services Sp. zo.o. Kielce 100% Echo Investment S.A.
17 Echo - Arena Sp. zo.o. Kielce 100% Echo Investment S.A.
18 Echo - Aurus Sp. zo.o. Kielce 100% Echo Investment S.A.
19 Echo - Babka Tower Sp. zo.o. Kielce 100% Echo Investment S.A.
20 Echo - Babka Tower Sp. zo.o. Sp.K. Kielce 100% Gleann Sp. zo.o.
21 Echo - Browary Warszawskie Sp. zo.o. Kielce 100% Echo Investment S.A.
22 Echo - Browary Warszawskie Sp. zo.o. Sp.K. Kielce 100% Echo Investment S.A.
23 Echo - Galaxy Sp. zo.o. Kielce 100% Echo Investment S.A.
24 Echo - Galaxy Sp. zo.o. SKA Kielce 100% Echo Investment S.A.
25 Echo - Nowy Mokotów Sp. zo.o. Kielce 100% Echo Investment S.A.
26 Echo - Nowy Mokotów Sp. zo.o. Sp.K. Kielce 100% Echo Investment S.A.
68
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
SUBSIDIARIES
No Subsidiary
Registered
oce
% of
capital held Parent entity
27 Echo - Opolska Business Park Sp. zo.o. Kielce 100% Echo Investment S.A.
28 Echo - Opolska Business Park Sp. zo.o. Sp.K. Warsaw 100% Perth Sp. zo.o.
29 Echo - Property Poznań 1 Sp. zo.o. Kielce 100% Echo Investment S.A.
30 Echo - SPV 7 Sp. zo.o. Kielce 100% Echo Investment S.A.
31 Tryton - City Space GP Sp. zo.o. Sp.K. Warsaw 100% City Space Management Sp. zo.o.
32 Echo Investment ACC - Grupa Echo Sp. zo.o. Sp.K. Kielce 100% Echo Investment S.A.
33 Echo Investment Project 1 S.R.L. Brasov 100% Echo - Aurus Sp. zo.o.
34 Echo Investment Project Management S.R.L. Brasov 100% Echo Investment S.A.
35 Elektrownia RE Sp. zo.o. Kielce 100% Echo Investment S.A.
36 Fianar Investments Sp. zo.o. Warsaw 100% Echo Investment S.A.
37 Galeria Libero - Projekt Echo 120 Sp. zo.o. Sp.K. Kielce 100% Fianar Investments Sp. zo.o.
38 Galeria Nova - Grupa Echo Sp. zo.o. SKA Kielce 100% Echo Investment S.A.
39 Galeria Tarnów - Grupa Echo Sp. zo.o. SKA Kielce 100% Echo Investment S.A.
40 Gleann Sp. zo.o. Warsaw 100% Echo Investment S.A.
41 Gosford Investments Sp. zo.o. Warsaw 100% Echo Investment S.A.
42 GRO Nieruchomości Sp. zo.o. Kraków 100% Echo Investment S.A.
43 Grupa Echo Sp. zo.o. Kielce 100% Echo Investment S.A.
44 Kasztanowa Aleja - Grupa Echo Sp. zo.o. Sp.K. Kielce 100% Echo Investment S.A.
45 Kielce - Grupa Echo Sp. zo.o. SKA Kielce 100% Echo Investment S.A.
46 Klimt House - Grupa Echo Sp. zo.o. Sp.K. Kielce 100% Echo Investment S.A.
47 Malta Oce Park - Grupa Echo Sp. zo.o. SKA Kielce 100% Echo Investment S.A.
48 Metropolis - Projekt Echo 121 Sp. zo.o. SKA Kielce 100% Echo Investment S.A.
49 Oxygen - Grupa Echo Sp. zo.o. SKA Kielce 100% Echo Investment S.A.
50 Park Postępu - Grupa Echo Sp. zo.o. SKA Kielce 100% Echo Investment S.A.
51 Park Rozwoju III - Projekt Echo - 112 Sp. zo.o. Sp.K. Kielce 100% Perth Sp. zo.o.
52 Perth Sp. zo.o. Warsaw 100% Echo Investment S.A.
53 PHS - Projekt CS Sp. zo.o. Sp.K. Warsaw 100% Perth Sp. zo.o.
54 Pod Klonami - Grupa Echo Sp. zo.o. Sp.K. Kielce 100% Echo Investment S.A.
55 Potton Sp. zo.o. Warsaw 100% Echo Investment S.A.
56 PPR - Grupa EchoSp. zo.o. SKA Kielce 100% Echo Investment S.A.
57 Princess Investment Sp. zo.o. Kielce 100% Echo Investment S.A.
58 Projekt 1 - Grupa Echo Sp. zo.o. SKA Kielce 100% Echo Investment S.A.
59 Projekt 12 - Grupa Echo Sp. zo.o. SKA Kielce 100% Echo Investment S.A.
60 Projekt 13 - Grupa Echo Sp. zo.o. SKA Kielce 100% Echo Investment S.A.
61 Projekt 132 - City Space - GP Sp. zo.o. Sp.K. Warsaw 100% City Space Management Sp. zo.o.
62 Projekt 133 - City Space - GP Sp. zo.o. Sp.K. Warsaw 100% City Space Management Sp. zo.o.
63 Nobilis - City Space GP Sp. zo.o. Sp.K. Warsaw 100% City Space Management Sp. zo.o.
64 Projekt 14 - Grupa Echo Sp. zo.o. SKA Kielce 100% Echo Investment S.A.
65 React - Dagnall Sp. zo.o. SKA Kielce 100% Potton Sp zo.o.
66 Projekt 16 - Grupa Echo Sp. zo.o. SKA Kielce 100% Echo Investment S.A.
67 Projekt 17 - Grupa Echo Sp. zo.o. SKA Kielce 100% Echo Investment S.A.
68 Cinema Asset Manager - Grupa Echo sp. zo.o. SKA Kielce 100% Echo Investment S.A.
69 Face2Face - Stranraer Sp. zo.o. SKA Kielce 100% Echo Investment S.A.
70 Projekt 21 - Grupa Echo Sp. zo.o. SKA Kielce 100% Echo Investment S.A.
71 Midpoint71 - Cornwall Investments Sp. zo.o. SKA Kielce 100% Echo Investment S.A.
72 Projekt 5 - Grupa Echo Sp. zo.o. SKA Szczecin 100% Echo Investment S.A.
73 Projekt Beethovena - Projekt Echo - 122 Sp. zo.o. SKA Kielce 100% Echo Investment S.A.
74 Projekt CS Sp. zo.o. Kielce 100% Echo Investment S.A.
75 Projekt Echo - 104 Sp. zo.o. Kielce 100% Echo Investment S.A.
76 Projekt Echo - 108 Sp. zo.o. Kielce 100% Echo Investment S.A.
77 Projekt Echo - 111 Sp. zo.o. Kielce 100% Echo Investment S.A.
78 Projekt Echo - 112 Sp. zo.o. Kielce 100% Echo Investment S.A.
79 Projekt Echo - 113 Sp. zo.o. Kielce 100% Echo Investment S.A.
80 Projekt Echo - 115 Sp. zo.o. Kielce 100% Echo Investment S.A.
69
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
SUBSIDIARIES
No Subsidiary
Registered
oce
% of
capital held Parent entity
81 Projekt Echo - 116 Sp. zo.o. Kielce 100% Echo Investment S.A.
82 Projekt Echo - 119 Sp. zo.o. Kielce 100% Echo Investment S.A.
83 Projekt Echo - 120 Sp. zo.o. Kielce 100% Echo Investment S.A.
84 Projekt Echo - 121 Sp. zo.o. Kielce 100% Echo Investment S.A.
85 Projekt Echo - 122 Sp. zo.o. Kielce 100% Echo Investment S.A.
86 Projekt Echo - 123 Sp. zo.o. Kielce 100% Galeria Nova - Grupa Echo Sp. zo.o. SKA
87 Projekt Echo - 127 Sp. zo.o. Kielce 100% Echo Investment S.A.
88 Projekt Echo - 128 Sp. zo.o. Kielce 100% Echo Investment S.A.
89 Projekt Echo - 129 Sp. zo.o. Kielce 100% Selmer Investments Sp. zo.o. Sp.K.
90 Projekt Echo - 130 Sp. zo.o. Kielce 100% Echo Investment S.A.
91 Projekt Echo - 131 Sp. zo.o. Kielce 100% Echo Investment S.A.
92 Projekt Echo - 135 Sp. zo.o. Kielce 100% Echo Investment S.A.
93 Projekt Echo - 135 Sp. zo.o. Sp.K. Kielce 100% Perth Sp. zo.o.
94 Projekt Echo - 136 Sp. zo.o. Kielce 100% Echo Investment S.A.
95 Projekt Echo - 136 Sp. zo.o. Sp.K. Kielce 100% Echo Investment S.A.
96 Projekt Echo - 137 Sp. zo.o. Kielce 100% Echo Investment S.A.
97 Projekt 139 - Grupa Echo Sp. zo.o. Sp.K. Kielce 100% Perth Sp. zo.o.
98 Projekt 140 - Grupa Echo Sp. zo.o. Sp.K. Kielce 100% Echo Investment S.A.
99 Aquarius - City Space - GP Sp. zo.o. Sp.K. Warsaw 100% City Space Management Sp. zo.o.
100 142 - City Space - GP Sp. zo.o. Sp.K. Warsaw 100% City Space Management Sp. zo.o.
101 Beethovena - City Space - GP Sp. zo.o. Sp.K. Warsaw 100% City Space Management Sp. zo.o.
102 Projekt 144 - Grupa Echo Sp. zo.o. Sp.K. Kielce 100% Echo - Arena Sp. zo.o.
103 Projekt 145 - City Space - GP Sp. zo.o. Sp.K. Warsaw 100% City Space Management Sp. zo.o.
104 Projekt 146 - City Space - GP Sp. zo.o. Sp.K. Warsaw 100% City Space Management Sp. zo.o.
105 Projekt 147 - Grupa Echo Sp. zo.o. Sp.K. Kielce 100% Echo Investment S.A.
106 Projekt 148 - Grupa Echo Sp. zo.o. Sp.K. Kielce 100% Echo Investment S.A.
107 Projekt Echo - 93 Sp. zo.o. Kielce 100% Echo Investment S.A.
108 Projekt Echo - 99 Sp. zo.o. Kielce 100% Echo Investment S.A.
109 Projekt K-6 - Grupa Echo Sp. zo.o. SKA Kielce 100% Echo Investment S.A.
110 Projekt Naramowice - Grupa Echo Sp. zo.o. SKA Kielce 100% Echo Investment S.A.
111 Projekt Saska Sp. zo.o. Kielce 95% Echo Investment S.A.
112 Pudsey Sp. zo.o. Warsaw 100% Echo Investment S.A.
113 Pure Systems Sp. zo.o. Kraków 100% Echo Investment S.A.
114 Q22 - Projekt Echo - 128 Sp. zo.o. Sp.K. Kielce 100% Potton Sp zo.o.
115 Sagittarius - Projekt Echo - 113 Sp. zo.o. Sp.K. Kielce 100% Doxent Investments Sp. zo.o.
116 Seaford Sp. zo.o. Warsaw 100% Echo Investment S.A.
117 Selmer Investments Sp. zo.o. Warsaw 100% Echo Investment S.A.
118 Selmer Investments Sp. zo.o. Sp.K. Warsaw 100% Echo Investment S.A.
119 Senja 2 Sp. zo.o. Warsaw 100% Echo - Browary Warszawskie Sp. zo.o. Sp.K.
120 Shanklin Sp. zo.o. Warsaw 100% Echo Investment S.A.
121 Stranraer Sp. zo.o. Warsaw 100% Echo Investment S.A.
122 Strood Sp. zo.o. Warsaw 100% Echo Investment S.A.
123 Swanage Sp. zo.o. Warsaw 100% Echo Investment S.A.
124 Symetris - Projekt Echo - 131 Sp. zo.o. Sp.K. Warsaw 100% Gosford Investments Sp. zo.o.
125 Taśmowa - Projekt Echo - 116 Sp. zo.o. SKA Kielce 100% Echo Investment S.A.
126 ZAM - Projekt Echo - 127 Sp. zo.o. Sp.K. Warsaw 100% Perth Sp. zo.o.
127 Villea Investments Sp. zo.o. Warsaw 100% Echo Investment S.A.
128 Bowen Sp. zo.o. Warsaw 100% Echo - Browary Warszawskie Sp. zo.o. Sp.K.
129 RPGZ IX Sp. zo.o. Kraków 100% Echo Investment S.A.
130 Projekt 150 – Shanklin Sp. zo.o. Sp.K. Kielce 100% Echo Investment S.A.
131 Projekt 151 - Projekt 13 - Grupa Echo Sp. zo.oSKA Sp.K. Kielce 100% Echo Investment S.A.
132 Projekt 152 - Projekt 14 - Grupa Echo Sp. zo.oSKA Sp.K. Kielce 100% Echo Investment S.A.
133 Projekt 153 - Projekt 21 - Grupa Echo Sp. zo.oSKA Sp.K. Kielce 100% Echo Investment S.A.
134 Projekt 154 - Projekt K-6 - Grupa Echo Sp. zo.oSKA Sp.K. Kielce 100% Echo Investment S.A.
70
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
SUBSIDIARIES
No Subsidiary
Registered
oce
% of
capital held Parent entity
135 Projekt Echo - 139 Sp. zo.o. Kielce 100% Echo Investment S.A.
136 Projekt Echo - 140 Sp. zo.o. Kielce 100% Echo Investment S.A.
137 Projekt Echo - 141 Sp. zo.o. Kielce 100% Echo Investment S.A.
138 Projekt Echo - 142 Sp. zo.o. Kielce 100% Echo Investment S.A.
139 Projekt Echo - 143 Sp. zo.o. Kielce 100% Echo Investment S.A.
140 Projekt Echo - 144 Sp. zo.o. Kielce 100% Echo Investment S.A.
141 Projekt Echo - 145 Sp. zo.o. Kielce 100% Echo Investment S.A.
JOINT VENTURES
No Subsidiary
Registered
oce
% of
capital held Parent entity
GALERIA MŁOCINY
1 Rosehill Investments Sp. zo.o. Warsaw 30% Echo Investment S.A.
2 Berea Sp. zo.o. Warsaw 30% Rosehill Investments Sp. zo.o.
TOWAROWA 22
3 Projekt Echo - 138 Sp. zo.o. Sp.K. Warsaw 45,26% Strood Sp. zo.o.
4 Projekt Echo - 138 Sp. zo.o. Warsaw 30% Echo Investment S.A.
RESI4RENT
5 R4R Poland Sp. zo.o. Warsaw 30% Echo Investment S.A.
6 R4R Łódź Wodna Sp. zo.o. Warsaw 30% R4R Poland Sp. zo.o.
7 R4R Wrocław Kępa Sp. zo.o. Warsaw 30% R4R Poland Sp. zo.o.
8 R4R Wrocław Rychtalska Sp. zo.o. Warsaw 30% R4R Poland Sp. zo.o.
9 R4R Warszawa Browary Sp. zo.o. Warsaw 30% R4R Poland Sp. zo.o.
10 R4R Leasing Sp. zo.o. Warsaw 30% R4R Poland Sp. zo.o.
11 R4R Poznań Szczepanowskiego Sp. zo.o. Warsaw 30% R4R Poland Sp. zo.o.
12 R4R Warszawa Taśmowa Sp. zo.o. Warsaw 30% R4R Poland Sp. zo.o.
13 R4R Warszawa Woronicza Sp. zo.o. Warsaw 30% R4R Poland Sp. zo.o.
14 R4R Gdańsk Kołobrzeska Sp. zo.o. Warsaw 30% R4R Poland Sp. zo.o.
15 R4R RE Sp. zo.o. Warsaw 30% R4R Poland Sp. zo.o.
16 R4R Kraków 3 Maja Sp. zo.o. Warsaw 30% R4R Poland Sp. zo.o.
17 R4R Warszawa Wilanowska Sp. zo.o. Warsaw 30% R4R Poland Sp. zo.o.
18 R4R RE Wave 3 Sp. zo.o. Warsaw 30% R4R Poland Sp. zo.o.
19 R4R Kraków Puszkarska Sp. zo.o. Warsaw 30% R4R Poland Sp. zo.o.
20 Pimech Invest Sp.zo.o. Warsaw 30% R4R Poland Sp. zo.o.
21 M2 Hotel Sp. zo.o. Warsaw 30% R4R Poland Sp. zo.o.
22 R4R RE Wave 4 Sp. zo.o. Warsaw 30% R4R Poland Sp. zo.o.
23 R4R Kraków JPII Sp. zo.o. Warsaw 30% R4R Poland Sp. zo.o.
71
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
. Changes in the structure of the group in 2020
INCREASE OF THE GROUP PLN
Entity Action Date Share capital
Projekt Echo – 141 Sp. zo.o. Registration by the District Court in Kielce 27.01.2020 5 000
Projekt Echo – 142 Sp. zo.o. Registration by the District Court in Kielce 28.01.2020 5 000
Projekt Echo – 143 Sp. zo.o. Registration by the District Court in Kielce 24.01.2020 5 000
Projekt Echo – 144 Sp. zo.o. Registration by the District Court in Kielce 28.01.2020 5 000
Projekt Echo – 145 Sp. zo.o. Registration by the District Court in Kielce 23.01.2020 5 000
DECREASE OF THE GROUP PLN
Entity Action Date Share capital
Projekt - Pamiątkowo Sp. zo.o. Sale of shares by Echo – SPV 7 Sp. z o.o. to Common
Investment S.A
5.05.2020 50 000
Projekt Echo 132 Sp. zo.o. Sale of shares by Echo Investment S.A. to Common Invest-
ment S.A.
5.05.2020 3 910 000
Forum 60 Fundusz Inwestycyjny
Zamknięty
Liquidation 1.06.2020 20 000
Projekt 18 – Grupa Echo Sp. zo.o. S.K.A. Sale of shares by Echo Investment S.A. and Grupa Echo Sp.
z o.o. to Palena Sp. z o.o. and Student Depot Group B.V.
3.11.2020 50 000
OTHER CHANGES
Entity Action Date
Projekt Echo – 120 Sp. zo.o. Registration of the capital increase by Echo Investment S.A. 28.01.2020
Projekt Echo – 115 Sp. zo.o. Registration of the capital increase by Echo Investment S.A. 28.01.2020
Projekt Echo – 113 Sp. zo.o. Registration of the capital increase by Echo Investment S.A. 25.02.2020
Projekt Echo – 131 Sp. zo.o. Registration of the capital increase by Echo Investment S.A. 28.02.2020
Echo – Opolska Business Sp. zo.o. Registration of the capital increase by Echo Investment S.A. 9.03.2020
Projekt Echo – 122 Sp. zo.o. Registration of the capital increase by Echo Investment S.A. 13.03.2020
Echo - Browary Warszawskie
Sp. zo.o. Sp.K.
Registration of the contribution reduction made by the limited partner of
Echo Investment S.A.
20.11.2020
72
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
Financial liabilities of the
Company and its Group
. Bonds
COMPANY’S LIABILITIES DUE TO BONDS ISSUED AS AT 31 DECEMBER 2020
Bonds for institutional investors [‘000 PLN]
Series ISIN code Bank / brokerage house Nominal value Maturity Interest rate
1/2017 PLECHPS00225 mBank S.A. 155000 31.03.2021 WIBOR 6M + margin 2,9%
2/2017 PLECHPS00258 mBank S.A. 139950 30.11.2021 WIBOR 6M + margin 2,9%
1/2018 PLECHPS00282 mBank S.A. 46600 25.04.2022 WIBOR 6M + margin 2,9%
1/2019 PLECHPS00308 mBank S.A. 96510 11.04.2023 WIBOR 6M + margin 4,25%
1/2020 PLO017000012 mBank S.A. 150000 31.05.2024 WIBOR 6M + margin 4,50%
1P/2020 PLO017000020 PKO TFI Parasolowy and Michael / Ström Dom
Maklerski S.A. as an agent
100000 5.08.2024 WIBOR 6M + margin 4,50%
Total 688060
Bonds for individual investors [‘000 PLN]
E-series PLECHPS00217 DM PKO BP S.A. 100000 6.07.2021 WIBOR 6M + margin 2,9%
F-series PLECHPS00233 DM PKO BP S.A. 125000 11.10.2022 WIBOR 6M + margin 2,9%
G-series PLECHPS00241 DM PKO BP S.A. 75000 27.10.2022 WIBOR 6M + margin 2,9%
H-series PLECHPS00266 DM PKO BP S.A. 50000 22.05.2022 WIBOR 6M + margin 2,8%
I-series PLECHPS00274 Consortium: DM PKO Banku Polskiego S.A.,
Noble Securities S.A. and
Centralny Dom Maklerski Pekao S.A
50000 8.11.2023 WIBOR 6M + margin 3,4%
J and J2-series PLECHPS00290 J-series: consortium Noble Securities
S.A., Michael / Ström Dom Maklerski
S.A., Dom Maklerski Banku Ochrony
Środowiska S.A
33832 21.09.2023 WIBOR 6M + margin 3,4%
J2-series: DM PKO Banku Polskiego S.A.
Total 433832
Total PLN-denominated bonds 1 121 892
Bonds for institutional investors EUR-denominated [‘000 EUR]
1E/2020 PLECHPS00316 Bank Pekao S.A. 40 000 23.10.2024 fixed interest rate 4,5%
2P/2020* PLO017000038 Michael/Ström DM 12 800 31.10.2021 fixed interest rate 6%
Total EUR-denominated bonds 52 800
* Issue beyond the bond issue program in EUR of September 3, 2020.
73
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
Value of the bonds corresponds to undiscounted
cash flows without interests. Change of business and
economic conditions had no significant eect on the
financial obligations’ fair value.
Issuance of bonds denominated in EUR
The Management Board of Echo Investment on Sep-
tember 3, 2020 concluded an issue agreement with
Bank Pekao S.A., establishing a program for the issu-
ance of unsecured ordinary bearer bonds up to the
total amount of the issued and outstanding bonds of
EUR 100 million. Bonds issued pursuant to the Issu-
ance Program will be oered for purchase without
the need to draw up a prospectus or information
memorandum. On the issuance date the Bonds will
be registered in the depository maintained by Kra-
jowy Depozyt Papierów Wartościowych S.A. and it
Private bond issue
On October 28, 2020, Echo Investment has also is-
sued short-term bonds for a private investor in a
Bonds issued by Echo Investment S.A. are not se-
cured. With an exception of 2P/2020-series, they are
all quoted in Alternative Exchange System (ASO)
Catalyst: bonds for individual investors on GPW ASO
Catalyst platform and for institutional investors – on
BondSpot ASO Catalyst.
will be introduced to trading in an alternative trading
system operated by Warsaw Stock Exchange (Gieł-
da Papierów Wartościowych w Warszawie S.A.).
Bonds will be issued as unsecured ordinary bearer
bonds denominated in EUR and bearing interest at
a fixed or variable interest rate, with a maturity not
exceeding 5 years. The final parameters of the bonds
will be determined through talks with investors and
will be subject to approval of the Company’s Man-
agement Board.
total value of EUR 12,8 million (the euro-bonds issu-
ance program described above).
BONDS REDEEMED BY THE COMPANY IN 2020
Series Date
Nominal
value
[‘000 PLN]
Bonds for institutional investors – series 1/2016 18.11.2020 100 000
Bonds for institutional investors – series 2/2017 1.06.2020 10 050
Bonds for institutional investors – series 1/2018 1.06.2020 93 400
Bonds for institutional investors – series 1/2019 1.06.2020 3 490
Total 206 940
BONDS ISSUED BY THE COMPANY IN 2020 IN PLN
Series Date
Nominal
value
[‘000 PLN]
Bonds for institutional investors – series 1/2020 2.06.2020 150 000
Bonds for institutional investors – series 1P/2020 5.08.2020 100 000
Total 250 000
BONDS ISSUED BY THE COMPANY IN 2020 IN EUR
Series Date
Nominal
value
[‘000 PLN]
Bonds for institutional investors – series 1E/2020 23.10.2020 40 000
Bonds for institutional investors – series 2P/2020* 28.10.2020 12 800
Total 52 800
Information on the
bond issued in Q1
2021 you can nd
in the item 10.3 on
page 31.
*Issue out of the issuance program with Bank Pekao S.A.
74
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
. Credit facilities
Investment loans are secured by standard securities
such as mortgages, registered and financial pledge
agreements, powers of powers of attorney to bank ac-
counts, subordination agreements, statements on sub-
mission to enforcement proceedings, agreements to
secure the transfer of claims and rights and claims of
a borrower under selected agreements, guarantees on
overrun of cost / own contribution, interest coverage.
INVESTMENT LOANS OF ECHO INVESTMENT GROUP AS AT 31 DECEMBER 2020 ‘000
Investment project Borrower Bank
Contractual
amount of loan
Outstanding
loan amount Interest rate
Repayment
deadline
Libero, Katowice Galeria Libero - Projekt
Echo 120 Sp. z. o.o. Sp.K.
Santander Bank Polska S.A. /
BNP Paribas Bank Polska S.A.
67 566 EUR 66 553 EUR Margin
+ EURIBOR 3M
22.11.2024
Galeria Młociny,
Warsaw*
Berea Sp. zo.o. Santander Bank Polska S.A. /
PKO BP S.A. /
Bank Gospodarstwa Krajowego
56 100 EUR 55 594 EUR Margin
+ EURIBOR 3M
30.04.2025
Moje Miejsce IiII,
Warsaw
Projekt Beethovena -
Projekt Echo - 122 Sp.
zo.o. SKA
PKO BP S.A. 50 280 EUR 41 763 EUR Margin
+ EURIBOR 3M
30.09.2023
16 000 PLN 1 171 PLN Margin
+ WIBOR 1M
31.03.2021
Villa Oces and
Malthouse Oces
(Warsaw Brewery
K, GH),
Warsaw
Dellia Investments - Pro-
jekt Echo - 115 Sp. zo.o.
Sp.K.
Bank Pekao S.A. 87 386 EUR 60 477 EUR Margin
+ EURIBOR 3M
31.12.2027
17 000 PLN 0 PLN Margin
+ WIBOR 1M
31.12.2022
West 4 Business
Hub I, Wrocław
Projekt 17 - Grupa Echo
Sp. zo.o. SKA
Bank Millennium S.A. 20 630 EUR 13 283 EUR Margin
+ EURIBOR 3M
30.06.2023
4 000 PLN 0 PLN Margin
+ WIBOR 1M
30.06.2021
Face2Face IiII,
Katowice
Face2Face - Stranraer
Sp. zo.o. SKA
Bank Pekao S.A. 64 997 EUR 50 576 EUR Margin
+ EURIBOR 3M
31.12.2023
18 000 PLN 0 PLN Margin
+ WIBOR 1M
31.12.2021
React I, Łódź React - Dagnall Sp. zo.o.
SKA
BNP Paribas Bank Polska S.A. 19 200 EUR 0 EUR Margin
+ EURIBOR 3M
01.12.2022
4 000 PLN 0 PLN Margin
+ WIBOR 1M
01.12.2022
Midpoint71,
Wrocław
Midpoint71 - Cornwall
Investments Sp. zo.o.
SKA
PKO BP S.A. 54 400 EUR 0 EUR Margin
+ EURIBOR 3M
30.06.2026
7 000 PLN 0 PLN Margin
+ WIBOR 1M
30.06.2023
Fuzja CD iJ, Łódź Projekt Echo 130
Sp. zo.o.
Bank Pekao S.A. 33 600 EUR 0 EUR Margin
+ EURIBOR 3M
30.01.2026
10 000 PLN 0 PLN Margin
+ WIBOR 1M
31.01.2024
Projekt Echo 129 Projekt Echo 129
Sp. zo.o.
Bank Pekao S.A. 50 000 EUR 44 800 EUR Margin
+ EURIBOR 3M
30.09.2021
Resi4Rent*
- 1st tranche
R4R Łódź Wodna Sp.
zo.o./ R4R Wrocław
Rychtalska Sp. zo.o./
R4R Warszawa Browary
Sp. zo.o./ R4R Wrocław
Kępa Sp. zo.o.
consortium with Bank Pekao
S.A. as a leading agent
77 600 PLN 77 816 EUR Margin
+ WIBOR 1M
oraz 3M
30.06.2026
Resi4Rent*
- 2nd tranche
R4R Poznań Szcze-
panowskiego Sp. zo.o./
R4R Warszawa Taśmowa
Sp. zo.o./ R4R Warsza-
wa Woronicza Sp. zo.o./
R4R Gdańsk Kołobrzes-
ka Sp. zo.o.
Santander S.A. / Helaba AG ** 59 490 PLN 32 945 PLN Margin
+ WIBOR 1M
27.06.2027
Total 504 159 EUR 410 862 EUR
213 090 PLN 34 116 PLN
* Echo Investment owns 30% of shares in SPV - borrowers. and presents 30% of credit value.
** After fulfilment of certain conditions the construction loan will be converted into investment loan with its amount of EUR 69 million.
75
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
. Credit facilities
CREDIT FACILITIES OF ECHO INVESTMENT S.A. AS AT 31 DECEMBER 2020
‘000 PLN
Bank
Contractual amount
of loan
Outstanding loan
amount Interest rate Repayment deadline
PKO BP S.A.* 75 000 63 458 WIBOR 1M + margin 31.10.2022
Alior Bank S.A. 35 000 35 000 WIBOR 3M + margin 14.04.2021
Santander Bank Polska S.A.** 100 000 39 523 WIBOR 1M + margin 30.11.2022
Total 210 000 137 981
* The available loan amount as on 31 December 2020 is decreased by the guarantees issued and amounts to PLN 1,9 million PLN.
** Under the credit limit of PLN 100 million, the Company has been granted a sublimit for current loan up to PLN 75 million and a sublimit
up to PLN 25 million for guarantees. As at 31 December 2020, the whole guarantee limit is available.
Credit facilities are secured with standard instruments such as authorisation to the
bank account or statement on submission to enforcement proceedings.
The loan value corresponds to undiscounted cash flows.
76
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
O-balance sheet liabilities
. Surety agreements
FINANCIAL SURETY AGREEMENTS ISSUED BY ECHO INVESTMENT GROUP
AS AT 31 DECEMBER 2020 PLN ‘000
Issuer Entity receiving surety Beneciary Value Validity Description
Echo Investment S.A. Echo – Browary
Warszawskie Sp.
zo.o. Sp.K. oraz Dellia
Investments – Projekt
Echo – 115 Sp. zo.o.
Sp.K.
HPO AEP Sp. zo.o.
Sp.J.
11 537 Until the date of
issuance of the occu-
pancy permit for the
projects but no later
than 7.12.2031.
Surety for liabilities of Echo – Browary
Warszawskie Sp. z o.o. Sp.K. and Dellia
Investments – Projekt Echo – 115 Sp.
z o.o. Sp.K. as a collateral of liabilities
resulting from the lease agree-ment of
7.12.2016. Mutual surety issued in EUR.
Echo Investment S.A. Projekt Echo 130 Sp.
zo.o.
PKO BP S.A. 23 074 until 31.01.2024 Surety for the repayment of the loan in
connection with the disbursement of
the construc-tion loan up to the limit
of EUR 5 million without completion of
transferring a part of the property to
the Company.
Total 34 611
NONFINANCIAL SURETY AGREEMENTS ISSUED BY ECHO INVESTMENT GROUP
AS AT 31 DECEMBER 2020 PLN ‘000
Issuer Entity receiving surety Beneciary Value Validity Description
Echo – SPV 7 Sp.
zo.o. / Echo – Aurus
Sp. zo.o.
Sagittarius-Projek
Echo – 113 Sp.zo.o.
Sp.k.
Warburg – HiH Invest
Real Estate GmbH
32 539 until 21.01.2022 Surety for liabilities of Sagittarius - Pro-
jekt Echo - 113 Sp. z o.o. Sp.K. resulting
from sale agreement.
Echo – SPV 7 Sp.
zo.o. / Echo – Aurus
Sp. zo.o.
Sagittarius – Projek
Echo – 113 Sp. zo.o.
Sp.K.
Warburg – HiH Invest
Real Estate GmbH
152 000 until 31.10.2028 Surety for liabilities of Sagittarius - Pro-
jekt Echo - 113 Sp. z o.o. Sp.K. resulting
from quality guarantee agreement and
agreement on fit-out works.
Total 184 539
77
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
CHANGES IN SURETY AGREEMENTS ISSUED BY ECHO INVESTMENT GROUP IN 2020
PLN ‘000
Change Issuer Beneciary
Date of
change Value Due
Expiry Echo-Aurus Sp. zo.o. PKO Leasing S.A. 6.12.2020 312 Surety for liabilities of Supersam -
City Space - GP Sp. z o.o resulting
from leasing agreement of 6.12.2017.
Issue Projekt Echo 130 Sp.
zo.o.
PKO BP S.A. 17.11.2020 23 074 Surety for the repayment of the loan
in connection with the disbursement
of the construction loan up to the
limit of EUR 5 million without comple-
tion of transferring a part of the prop-
erty to the Company.
78
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
GUARANTEES ISSUED BY ECHO INVESTMENT GROUP AS AT 31 DECEMBER 2020 PLN ‘000
Guarantor Issuer Beneciary
Value
[PLN ‘000] Validity Description
Echo Investment S.A. Projekt 104 Sp. zo.o. Skua Sp. zo.o. 27 689 until 31.07.2021 Security of the proper performance
of the final sale contract and the mas-
ter lease contract for the Aquarius
Business House II oce building in
Wrocław. Issued in EUR.
Echo Investment S.A. Echo - Opolska Business
Park Sp. zo.o. Sp.K.
issued for Ventry Invest-
ments Sp. z o.o. Sp. k.
(currently entitled EPP
Oce O3 Business Cam-
pus Sp. z o.o.)
42 108 until 21.12.2026 Construction guarantee related to
the sale of the O3 Business Cam-
pus I oce building in Kraków. The
construction guarantee is secured by
a corporate guarantee issued by Echo
Investment S.A. The guarantee issued
in EUR.
Echo Investment S.A. ZAM - Projekt Echo - 127
Sp. zo.o. Sp.K.
issued for Emfold
Investments Sp. z o.o.
(currently entitled Tryton
Business Park Sp. z o.o.)
43 925 until 21.12.2026 Construction guarantee related to the
sale of the Tryton oce building in
Gdańsk. The construction guarantee
is secured by a corporate guarantee
issued by Echo Investment S.A. Guar-
antee issued in EUR.
Echo Investment S.A. Symetris - Projekt Echo -
131 Sp. zo.o. Sp.K.
issued for Flaxton
Investments Sp. z o.o.
(currently entitled EPP
Oce – Symetris Busi-
ness Park Sp. z o.o.)
18 789 until 21.12.2026 Construction guarantee related to the
sale of the Symetris I oce building
in Łódź. The construction guarantee
is secured by a corporate guarantee
issued by Echo Investment S.A. Guar-
antee issued in EUR.
Echo Investment S.A. Projekt Echo 135 Sp.
zo.o. Sp.K.
A4 Business Park Sp.
zo.o.
25 382 until 26.04.2027 Construction guarantee related to the
sale of the A4 Business Park III oce
building in Katowice. The guarantee
is secured by a corporate guarantee
issued by Echo Investment S.A. Guar-
antee issued in EUR.
Echo Investment S.A. Echo - Opolska Business
Park Sp. zo.o. Sp.K.
EPP Oce O3 Business
Campus Sp. zo.o
40 148 until 21.12.2027 Construction guarantee related to
the sale of the O3 Business Cam-
pus II oce building in Kraków. The
guarantee is secured by a corporate
guarantee issued by Echo Investment
S.A. Guarantee issued in EUR.
Echo Investment S.A. direct guarantee of
Echo Investment S.A.
Nobilis - Projekt Echo -
117 Sp. zo.o. Sp.K.
40 000 until 31.10.2026 Quality guarantee for construction
work related to the Nobilis oce
building in Wrocław.
Echo Investment S.A. Grupa Echo Sp. zo.o. IB 14 FIZAN 82 495 until 24.05.2024 Security for the proper performance
of the obligations arising from the
contract for the sale of the West Link
oce building in Wrocław. Issued in
EUR. After 24.05.2021 the maximum
amount of the liability will be reduced
by 80 percent.
Echo Investment S.A. Midpoint71-Cornwall In-
vestments Sp. zo.o. SKA
(previously: Projekt 22
– Grupa Echo Sp. zo.o.
S.K.A.)
A19 Sp. zo.o. 27 689 until 4.07.2038 Guarantee for the obligations of Mid-
point71-Cornwall Investments Sp. z
o.o. SKA (Midpoint71 project) arising
from the good neighborly agreement
concluded on 4.07.2018. Issued in
EUR.
Echo Investment S.A. Symetris - Projekt Echo -
131 Sp. zo.o. Sp.K.
issued for Flaxton
Investments Sp. z o.o.
(currently entitled EPP
Oce – Symetris Busi-
ness Park Sp. z o.o.)
17 618 until 31.08.2023 Construction guarantee related to the
sale of the oce building Symetris II
in Łódź. Issued in EUR. The maxi-
mum amount of the liability will be
successively reduced as the amount
of the liability that is secured by the
guarantee decreases.
. Guarantee agreements
79
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
GUARANTEES ISSUED BY ECHO INVESTMENT GROUP AS AT 31 DECEMBER 2020 PLN ‘000
Guarantor Issuer Beneciary
Value
[PLN ‘000] Validity Description
Echo Investment S.A. R4R Łódź Wodna Sp.
zo.o. R4R Wrocław
Kępa Sp. zo.o. R4R
Wrocławskie Rychtalska
Sp. zo.o. R4R Warszawa
Browary Sp. zo.o.
Bank Pekao S.A. 14 147 until 30.09.2021 Guarantee securing exceeding the
costs of performing Resi4REnt pro-
jects: Łódź Wodna, Wrocław Rychtal-
ska, Warsaw Brewery, Wrocław Kępa.
Echo Investment S.A. Rosehill Investments Sp.
zo.o.
IB 6 FIZAN / GPF 3
FIZAN
105 783 until 31.03.2023 Security for the proper perfor-
mance of the obligations of Rosehill
Investments Sp. z o.o. resulting from
the program contract concluded on
31.08.2017. Issued in EUR.
Echo Investment S.A. Projekt Beethovena –
Projekt Echo – 122 Sp.
zo.o. SKA
PKO BP S.A. 36 000 until 30.06.2023 Security for exceeding the costs of
performing the Moje Miejsce oce
project in Warsaw.
PKO BP S.A. Echo Investment S.A. LUX Europa III S.a.r.l. 6 450 until 7.05.2021 Security for the liabilities of Dellia
Investments - Projekt Echo - 115 Sp.
z o.o. Sp.K. arising from the contract
of quality guarantee concluded on
27.03.2019.
Echo Investment S.A. Dellia Investments - Pro-
jekt Echo - 115 Sp. zo.o.
Sp.K.
LUX Europa III S.a.r.l. 101 249 until 31.12.2024 Security for the proper performance
of Dellia Investments - Projekt Echo
- 115 Sp. z o.o. Sp.K. arising from the
sale contract of the Gatehouse Oc-
es building being part of the Warsaw
Brewery complex. Issued in EUR.
Echo Investment S.A. Dellia Investments - Pro-
jekt Echo - 115 Sp. zo.o.
Sp.K.
LUX Europa III S.a.r.l. 163 550 until 30.06.2030 Security for the proper performance
of Dellia Investments - Projekt Echo
- 115 Sp. z o.o. Sp.K. liabilities, arising
from the sale agreement of the Gate-
house Oce building in the Warsaw
Brewery complex. Issued in PLN.
Echo Investment S.A. Dellia Investments - Pro-
jekt Echo - 115 Sp. zo.o.
Sp.K.
LUX Europa III S.a.r.l. 50 763 until 3.03.2027 Security for the proper performance
of the liabilities of Dellia Investments
- Projekt Echo - 115 Sp. z o.o. Sp.K.
arising from the sale contract of the
Gatehouse Oces building being
part of the Warsaw Brewery complex.
Issued in EUR.
Echo Investment S.A. Dellia Investments - Pro-
jekt Echo - 115 Sp. zo.o.
Sp.K.
Bank Pekao S.A. 73 738 until the date of
conversion of the
construction loan
into an invest-
ment loan
Guarantee securing the costs exceed
of the oce project in the Warsaw
Brewery complex in Warsaw. Issued
in EUR.
Echo Investment S.A. Projekt 17 - Grupa Echo
Sp. zo.o. SKA
Bank Millennium S.A. 8 045 until the date of
conversion of the
construction loan
into an invest-
ment loan
Guarantee of exceeding the costs of
performing the West 4 Business Hub
oce project in Wrocław.
Echo Investment S.A. Projekt 17 - Grupa Echo
Sp. zo.o. SKA
Bank Millennium S.A. 4 938 until the date of
conversion of the
construction loan
into an invest-
ment loan
Guarantee securing rent proceeds
during the performance of the West
4 Business Hub oce project in
Wrocław. Issued in EUR.
Echo Investment S.A. Projekt 20 - Grupa Echo
Sp. zo.o. SKA
Bank Pekao S.A. 70 000 until 29.12.2023 Guarantee securing cost overrun,
covering interests on minimal level
and securing own contribution on
Face2Face oce project in Katowice.
Issued in PLN.
80
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
GUARANTEES ISSUED BY ECHO INVESTMENT GROUP AS AT 31 DECEMBER 2020 PLN ‘000
Guarantor Issuer Beneciary
Value
[PLN ‘000] Validity Description
Echo Investment S.A. Echo - Opolska Business
Park Sp. zo.o. Sp.K.
EPP Development 6 Sp.
zo.o.
37 226 until 9.08.2028 Construction guarantee related to
the sale of the O3 Business Cam-
pus III oce building in Kraków. The
guarantee is secured by a corporate
guarantee issued by Echo Investment
S.A. Guarantee issued in EUR.
PKO BP S.A. (commis-
sioned by Echo Invest-
ment S.A.)
Galeria Libero - Projekt
Echo - 120 Sp. zo.o.
Sp.K.
Tax Administration Oce
Directorin Kielce
873 until 10.02.2021 Lottery guarantee for Galeria Libero -
Projekt Echo - 120 Sp. z o.o. Sp.K.
Echo Investment S.A. Projekt 12 - Grupa Echo
Sp. zo.o. SKA
Tesco (Polska) Sp. zo.o. na. until 30.06.2025 Echo Investment S.A. corporate guar-
antee securing performance of obli-
gations of Project 12 - Grupa Echo Sp.
z o.o. SKA regarding priority to lease
space in the new shopping center,
resulting from the preliminary sales
contract of real estate concluded on
30.07.2019. Due to business and legal
arrangements the warranty has no
upper limit potential liability.
Echo - SPV 7 Sp. zo.o. R4R Poznań Szcze-
panowskiego Sp. zo.o.
R4R Warszawa Taśmowa
Sp. zo.o. R4R Warszawa
Woronicza Sp. zo.o. R4R
Gdańsk Kołobrzeska Sp.
zo.o.
Santander Bank Polska
S.A.,
24 500 until the date of
conversion of the
construction loan
into an invest-
ment loan
Security of the borrowers liabilities
arising from the cost overrun not
included in the budget specified in
credit agreement.
Echo Investment S.A Midpoint71 – Cornwall
Investments Sp. zo.o.
SKA
PKO BP S.A. 39 000 until 31.12.2026 Guarantee securing cost overrun and
maintanance of unleased area on
Midpoint71 oce project in Wroclaw.
Issued in PLN.
Echo Investment S.A Midpoint71 – Cornwall
Investments Sp. zo.o.
SKA
PKO BP S.A. 20 051 until 31.12.2029 Guarantee securing debt service
cover ratio and covering rent-free
periods in lease agreements on
Midpoint71 oce project in Wroclaw.
Issued in EUR.
Towarzystwo Ubezpiec-
zeń Euler Hermes S.A.
(commissioned by Echo
Investment S.A.)
Gosford Investment Sp.
zo.o.
Womak Delta Sp. zo.o. 29 14.07.2021 Rent guarantee - apartment sales
oce in Wrocław
Echo Investment S.A Projekt Echo - 130 Sp.
zo.o.
Bank Pekao S.A. 28 609 until 31.01.2024 Guarantee securing cost overrun of
the construction of Fuzja CDJ com-
plex oce project. Issued in PLN.
Echo Investment S.A Cinema Asset Manager
– Grupa Echo Sp. zo.o.
SKA
Pearl Jewel sp. zo.o. na. earlier of the
dates: handover
of the space
in accordance
with the future
lease agreement
or 8 years from
the date of the
futures lease
agreement con-
clusion
Corporate guarantee of Echo Invest-
ment S.A. securing performance of
obligations of Cinema Asset Manager
- Grupa Echo Sp. z o.o. SKA concern-
ing provision of substitute premises
and premises under the future lease
agreement in a new oce building,
resulting from the property sales
agreement signed on 1.12.2020. Due
to business and legal arrangements,
the guarantee has no upper limit of
potential liability.
Total 1 150 794
81
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
82
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
CHANGES IN GUARANTEE AGREEMENTS ISSUED BY ECHO INVESTMENT GROUP IN 2020
PLN ‘000
Change Guarantor Beneciary
Date of
change Value Due
Expiry Santander Bank Pol-
ska S.A.
City of Katowice 16.01.2020 758 Warranty and quality guarantee for the liabil-
ities of Galeria Libero - Projekt Echo 120 Sp. z
o.o. Sp.K. resulting from the contract concluded
on 16.06.2016 regarding the road agreement.
Expiry PKO BP SA LUX Europa III S.a.r.l. 25.03.2020 6 450 Security for the liabilities of Dellia Investments
- Projekt Echo - 115 Sp. z o.o. Sp.K. arising from
the contract of quality guarantee concluded on
27.03.2019.
Expiry Echo Investment S.A. issued for Ventry
Investments
Sp. z o.o. Sp. k. (cur-
rently entitled
EPP Oce O3 Busi-
ness Campus
Sp. z o.o.)
21.05.2020 912 Rental guarantee related to the sale of the O3
Business Campus I oce building in Kraków.
The construction guarantee is secured by a
corporate guarantee issued by Echo Invest-
ment S.A. The guarantee issued in EUR. The
maximum amount of the liability will be succes-
sively reduced as the amount of the liability
that is secured by the guarantee decreases.
Expiry Echo Investment S.A. issued for Flaxton
Investments
Sp. z o.o. (currently
entitled EPP
Oce – Symetris
Business Park
Sp. z o.o.)
21.05.2020 157 Rental guarantee related to the sale of the
Symetris I oce building in Łódź. The guar-
antee is secured by a corporate guarantee
issued by Echo Investment S.A. Partially issued
in EUR. The maximum amount of the liability
will be successively reduced as the amount of
the liability that is secured by the guarantee
decreases.
Expiry Echo Investment S.A. Horta Sp. zo.o. 2.07.2020 22634 Security of the proper performance of the final
sale contract of the Aquarius Business House I
oce building in Wrocław. Issued in EUR.
Expiry Towarzystwo Ubez-
pieczeń Euler Hermes
S.A. (commissioned
by Echo Investment
S.A.)
PDG MA-SKI Auto
Parksystemy Sp. zo.o.
4.08.2020 1386 Security of the payment for producing and
delivery of parklift installation in Reset II project
in Warsaw.
Expiry Echo Investment S.A. Santander Bank Pols-
ka S.A., PKO BP S.A.,
Bank Gospodarst-
wa Krajowego and
mBank S.A.
30.10.2020 42 918 Security for exceeding the costs of the Galeria
Młociny project in Warsaw and the obligations
of Berea Sp. z o.o. arising from the loan agree-
ment concluded on 17.10.2017. Issued in EUR.
Expiry Towarzystwo Ubez-
pieczeń Euler Hermes
S.A. (commissioned
by Echo Investment
S.A.)
PDG MA-SKI Auto
Parksystemy Sp. zo.o.
19.11.2020 375 Security of the payment for producing and de-
livery of parklift installation in Fuzja B project
in Łódź.
Expiry Echo Investment S.A. R4R Warszawa Bro-
wary Sp. zo.o.
16.12.2020 39 224 Guarantee for advance payments paid by R4R
companies in accordance with the preliminary
contracts for the sale of real estate Warsaw
Brewery E in Warsaw.
Expiry Santander Bank Pol-
ska S.A.
PDG MA-SKI Auto
Parksystemy Sp. zo.o.
20.12.2020 470 Security of the payment for producing and
delivery of parklift installation in Apartamenty
Esencja project in Poznań.
Expiry Echo Investment S.A. BNP Paribas Bank
Polska S.A.
31.12.2020 10 499 Security for exceeding the costs of performing
the React oce project in Łódź.
Issue Echo Investment S.A. Topaz Jewel Sp. z o.o. 28.02.2020 6 828 Echo Investment S.A. corporate guarantee
securing performance of obligations of Cinema
Asset Manager – Grupa Echo Sp. z o.o. SKA of
deposit payment for Topaz Jewel Sp. z o.o. in
relation to purchase agreement of Tesco prop-
erty in Kraków (Kapelanka str.).
83
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
CHANGES IN GUARANTEE AGREEMENTS ISSUED BY ECHO INVESTMENT GROUP IN 2020
PLN ‘000
Change Guarantor Beneciary
Date of
change Value Due
Issue PKO BP S.A.(com-
missioned by Echo
Investment S.A.)
Warburg-HiH Invest
Real Estate GmbH
20.05.2020 1 047 Security of the liabilities of Sagittarius-Projek
Echo - 113 Sp.z o.o. Sp.k. arising from the rental
guarantee contract. The maximum amount of
the liability will be successively reduced as the
amount of the liability that is secured by the
guarantee decreases.
Issue PKO BP S.A.(com-
missioned by Echo
Investment S.A.)
LUX Europa III S.a.r.l. 20.05.2020 6 450 Security for the liabilities of Dellia Investments
- Projekt Echo - 115 Sp. z o.o. Sp.K. arising from
the contract of quality guarantee concluded on
27.03.2019.
Issue Towarzystwo Ubez-
pieczeń Euler Hermes
S.A. (commissioned
by Echo Investment
S.A.and from its limit)
PDG MA-SKI Auto
Parksystemy Sp. zo.o.
08.06.2020 363 Security of payment due to parklifts produc-
tion and delivery to Fuzja B project in Łódź.
Issue Echo – Aurus Sp.
zo.o.
Nobilis – Projekt Echo
117 Sp. zo.o. Sp.K.
14.07.2020 818 Guarantee securing the liabilities of Nobilis
- City Space GP Sp. z o.o. Sp.K. arising from
the lease agreement concluded on 28.02.2017.
Issued in EUR.
Issue Echo Investment S.A Nobilis - Business
House sp. zo.o.
14.07.2020 590 The guarantee securing the liabilities of Nobilis
- City Space GP Sp. z o.o. Sp.K. resulting from
the amendment to the lease agreement. Issued
in EUR.
Issue Echo Investment S.A PKO BP S.A. 22.07.2020 39 000 Guarantee securing cost overrun and main-
tanance of unleased area on Midpoint71 oce
project in Wroclaw. Issued in PLN.
Issue Echo Investment S.A PKO BP S.A. 22.07.2020 19 669 Guarantee securing debt service cover ratio
and covering rent-free periods in lease agree-
ments on Midpoint71 oce project in Wroclaw.
Issued in EUR.
Issue Santander Bank Pol-
ska S.A.
PDG MA-SKI Auto
Parksystemy Sp. zo.o.
17.09.2020 461 Security of the payment for producing and
delivery of parklift installation in Apartamenty
Esencja project in Poznań.
Issue Towarzystwo Ubez-
pieczeń Euler Hermes
S.A.(commissioned
by Echo Investment
S.A.)
WOMAK DELTA sp.
zo.o.
14.07.2020 29 Rent guarantee - apartment sales oce in
Wrocław
Issue Echo Investment S.A. Pekao S.A. 17.11.2020 28 609 Guarantee securing cost overrun of the con-
struction of Fuzja CDJ complex oce project.
Issued in PLN.
Issue Echo Investment S.A. Pearl Jewel sp. zo.o. 1.12.2020 na. Corporate guarantee of Echo Investment S.A.
securing performance of obligations of Cinema
Asset Manager - Grupa Echo Sp. z o.o. SKA
concerning provision of substitute premises
and premises under the future lease agreement
in a new oce building, resulting from the
property sales agreement signed on 1.12.2020.
Due to business and legal arrangements, the
guarantee has no upper limit of potential
liability.
Extension PKO BP S.A. LUX Europa III S.a.r.l. 30.06.2020 24 Security of the liabilities of Dellia Investments
- Projekt Echo - 115 Sp. z o.o. Sp.K. arising from
the rental guarantee contract. The maximum
amount of the liability will be successively
reduced as the amount of the liability that is
secured by the guarantee decreases.
Extension Echo Investment S.A. issued for Echo Opol-
ska Business Park Sp.
z o.o. Sp. k. (currently
entitled EPP Develop-
ment 6 Sp. z o.o.)
30.06.2020 1 099 Security for the liabilities of Projekt 132 - City
Space - GP Sp.z o.o. Sp.K. arising from the
lease agreement concluded on 4.06.2019.
Issued in EUR.
84
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
CHANGES IN GUARANTEE AGREEMENTS ISSUED BY ECHO INVESTMENT GROUP IN 2020
PLN ‘000
Change Guarantor Beneciary
Date of
change Value Due
Extension PKO BP S.A IREEF – Stryków
Propco Sp. zo.o.
31.07.2020 542 Guarantee for the obligations of Echo Invest-
ment S.A. resulting from the lease contract
concluded on 24.10.2016. Issued in EUR.
Extension and value
reducing
Rosehill Investments
Sp. zo.o.
IB 6 FIZAN / GPF 3
FIZAN
20.10.2020 103 766 Security for the proper performance of the
obligations of Rosehill Investments Sp. z o.o.
resulting from the program contract concluded
on 31.08.2017. Issued in EUR.
85
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
Information on dividend
policy and dividend
. The dividend policy
. Advanced dividend from the 2019 profit
On 26 April, 2017 the Management Board of Echo Investment
adopted a resolution on the Company’s dividend policy. The
adopted dividend policy states that from the profit in 2018 and
subsequent years the Management Board will be recommend-
ing the payment of the dividend up to amount of 70% of the
consolidated net profit of the Capital Group attributable to
shareholders of the parent company. When recommending the
dividend payment the Management Board will take into con-
sideration the current and expected condition of the Company
and the Capital Group as well as their development strategy,
in particular:
− safe and the most eective management of debt and liquid-
ity in the Group;
− investment plans resulting from the development strategy,
purchase of land in particular.
Assumptions of the dividend policy were based on predictions
concerning future profits from the Group’s property develop-
ment operations.
The Management Board of Echo Investment adopted on 11 Sep-
tember 2019 a resolution on conditional payment of the ad-
vance payment for the dividend for the accounting year 2019
to its shareholders. The total amount of the advance dividend
amounts to PLN 206.3 million, i.e. PLN 0.5 per share. It did not
exceed half of the Company’s profit generated after the end of
the previous financial year, as published in the financial report
dated 30 June 2019, increased by a reserve capital created in
order to pay dividend or an advance payment towards the divi-
dend and reduced by uncovered losses and value of own shares.
The advance dividend was paid on 21 October 2019 to those
shareholders who held shares on 14 October 2019, i.e. 7 days
before the payment date.
e dividend policy states
that the Management Board
recommends the payment of the
dividend up to amount of 70%
of the consolidated net prot
annually.
0,50 pln
Amount of advanced dividend paid from 2019 prot.
The OGM also decided to allocate the profits for 2019 as follows:
−
the net profit generated by the company in the financial year
2019, amounting to PLN 21,412,312.65, was allocated for dis-
tribution among all shareholders;
−
the profit intended for distribution was increased by the
sum of PLN 184,932,978.35 from the Dividend Fund (PLN
206,345,291 in total) and was allocated for distribution
among all shareholders;
− the sum of PLN 206,345,291 was included in the dividend,
paid on October 21st 2019, as a dividend advance;
− the dividend corresponds to the amount of the dividend ad-
vance payment, therefore it was decided that the company
would not pay additional funds from the profit for the finan-
cial year 2019.
86
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
Assessment of financial
resources management and
investment plan feasibility
. For Echo Investment S.A.
Financial resources management of the parent entity and the Group in
2020 was mainly focused on securing financial liquidity under uncertainty
caused by the pandemic, as well as securing financing for ongoing projects,
on maintaining safe liquidity ratios and planned financing structure. Ac-
cording to the Management Board, financial situation of the parent entity
and the Group at the end of 2020 reflects their stable financial condition,
which is confirmed by the ratios presented below.
PROFITABILITY RATIO
The increase of the operating profit margin and the
net profit margin is caused mainly by lower general
and administrative expenses and an increase of other
operating income. The ROA and ROE rates increased
due to faster growth of net profit compared to assets
and equity value.
Operating profit margin
(operating profit/revenue)
Net balance sheet profit margin
(net profit/revenue)
Return on assets ROA
(net profit/total assets)
Return on equity ROE
(net profit/equity)
PROFITABILITY RATIOS
31.12.2020 31.12.2019
Operating profit margin ratio 44% 26%
Net balance profit margin ratio 18% 7%
Return on assets (ROA) 2% 1%
Return on equity (ROE) 4% 2%
87
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
TURNOVER
Turnover depends on the specifics of the business.
Due to the fact that inventory includes acquired
ownership rights, construction expenditures and
costs relating to development projects for sale, this
cycle will always be long compared to other indus-
tries, such as production of fast moving consumer
goods. The ratios will be aected by lower revenues
from sales (lower revenues from project execution
services from related entities). In addition, the receiv-
ables turnover ratio will be aected by an increase
in loans granted to related companies. Trade receiv-
ables have not changed significantly.
Growth of trade liabilities, apart from decrease of
revenues influenced the liabilities turnover ratio.
LIQUIDITY RATIO
Liquidity ratios remain at similar levels to the previ-
ous year. The indicators are at safe levels. The slight
decrease in ratios was caused by the increase in
short-term liabilities, which was almost completely
oset by the simultaneous increase in the value of
cash.
Inventory turnover in days
( inventory *360/revenues)
Current receivables turnover in days
(short-term receivables *360/revenues)
Current liabilities cycle in days
(current trade liabilities*360/revenues)
TURNOVER RATIO
31.12.2020 31.12.2019
Inventory turnover in days 217 244
Current receivables turnover in days 415 754
Current trade liabilities turnover in days 29 61
Current ratio
(current assets / current liabilities)
Quick ratio
(current assets - inventories / current liabilities)
Cash ratio
(cash / short-term liabilities)
LIQUIDITY RATIO
31.12.2020 31.12.2019
Current ratio 0,87 1,94
Quick ratio 0,68 1,57
Cash ratio 0,14 0,43
88
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
DEBT RATIOS
Debt ratios remain safe, which proves the Company’s
good standing.
Equity to assets ratio
(equity / total assets)
The decrease of this ratio results from a slower in-
crease of equity value (generated profit) in relation
to the increase of assets value (loans granted to
subsidiaries).
Equity to fixed assets ratio
(equity / fixed assets including assets held for sale)
The slight increase of the ratio results from the par-
allel increase in the value of fixed assets and equity.
General debt ratio
(total liabilities / total assets)
The increase of the ratio results from a faster increase
of liabilities value (increased value of loans and re-
ceived advances for apartments) than the increase
in total assets value (loans granted to subsidiaries).
Equity debt ratio
(total liabilities / equity)
The increase of the ratio results from a faster increase
of total liabilities value than the increase of equity.
DEBT RATIOS
31.12.2020 31.12.2019
Equity coverage ratio 40% 43%
Fixed asset coverage ratio 56% 69%
Total debt ratio 60% 57%
Debt to equity ratio 149% 132%
89
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
. For Echo Investment Group
PROFITABILITY RATIOS
The decrease of the operating and balance sheet
profit margin results from a faster increase of reve-
nues (more apartments delivered) than the increase
in operating profit (lower value of the fair value
gains) and net profit (profit / loss from joint-ven-
tures). The decline of the ROA rate results from a
large increase of the assets value (investment prop-
erties under construction and inventories - new pur-
chases, investment expenditure on projects).
TURNOVER RATIO
Turnover depends on the specifics of the business.
Due to the fact that inventory includes acquired
ownership rights, construction expenditures and
costs relating to development projects for sale, this
cycle will always be long compared to other indus-
tries, such as production of fast moving consumer
goods. The ratios will be aected by lower revenues
from sales (lower revenues from project execution
services from related entities). In addition, the receiv-
ables turnover ratio will be aected by an increase
in loans granted to related companies. Trade receiv-
ables have not changed significantly.
Operating profit margin
(operating profit/revenue)
Net balance sheet profit margin
(net profit/revenue)
Return on assets ROA
(net profit/total assets)
Return on equity ROE
(net profit/equity)
Inventory turnover in days
(inventory *360/revenues)
The increase of the ratio results from the greater
dynamics of the inventories growth in relation to
revenues.
Current receivables turnover in days
(short-term receivables *360/revenues)
The decrease of this ratio results from a decrease
of receivables with an increase in revenues. This is
caused by i.e. large number of flats handed over.
Current liabilities cycle in days
(current trade liabilities*360/revenues)
The decrease of the ratio results from higher dynam-
ics of revenues than liabilities.
PROFITABILITY RATIOS
31.12.2020 31.12.2019
Operating profit margin ratio 28% 51%
Net balance profit margin ratio 10% 34%
Return on assets (ROA) 2% 6%
Return on equity (ROE) 7% 19%
TURNOVER RATIOS
31.12.2020 31.12.2019
Inventory turnover in days 275 430
Current receivables turnover in days 63 84
Current trade liabilities turnover in days 92 133
90
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
LIQUIDITY RATIO
31.12.2020 31.12.2019
Current ratio 0,81 1,58
Quick ratio 0,34 0,69
Cash ratio 0,21 0,46
LIQUIDITY RATIO
The liquidity ratios, despite a slight decrease, re-
mains at the exemplary levels, which proves the sta-
ble situation of the Group. The decrease of ratios
results from faster growth of liabilities. This is caused
by three factors: a new approach to leasing and its
valuation in accordance with standards, increased
advance payments for apartments and an increase
of financial liabilities.
DEBT RATIOS
Equity to assets ratio
(equity / total assets)
The ratio remains at a safe level, and its slight de-
crease is caused by faster growth rate of assets in
relation to equity.
Equity to fixed assets ratio
(equity / fixed assets)
The decrease of this ratio results from higher dy-
namics of the increase in the value of fixed assets
(new purchases, real estate appraisals, investment
expenditures) in relation to the dynamics of the in-
crease of equity (dividend payment).
Current ratio
(current assets / current liabilities)
Quick ratio
(current assets - inventories / current liabilities)
Cash ratio
(cash / short-term liabilities)
Debt ratio
(total liabilities / total assets)
The increase of this ratio results from a faster in-
crease in liabilities, which was influenced by the val-
uation of lease liabilities and an increase of financial
debt.
Equity debt ratio
(total liabilities / equity)
The increase of this ratio results from the increase in
debt with a lower increase in equity (caused, among
others, by the payment of dividends).
DEBT RATIOS
31.12.2020 31.12.2019
Equity coverage ratio 30% 32%
Fixed asset coverage ratio 42% 53%
Total debt ratio 69% 62%
Debt to equity ratio 232% 190%
91
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
Revenue resulting from hand overs of 1,505 housing units.
Sale of R4R Łódź Wodna, R4R Wrocław Kępa Mieszczańska and
R4R Warszawa Browary Warszawskie projects to Resi4Rent.
Valuation of joint-venture projects: Galeria Młociny in Warsaw,
Towarowa 22 in Warsaw and Resi4Rent.
Costs of sales and overheads.
Valuation of liabilities related to of bonds and loans in accord-
ance with amortised cost principle.
Profit on investment property amounting to PLN 241 million.
Factors and one-o events
influencing the financial result
in 2020 and in Q4 2020
RESIDENTIAL PROJECTS SHARES IN THE
TOTAL NUMBER OF FINAL CONTRACTS
UNITS
PROFIT ON INVESTMENT PROPERTY
BY ASSETS MLN PLN
– Warsaw, Moje Miejsce
– Warsaw, Reset II
– Poznań, Apartamenty Esencja
– Łódź, Fuzja I
– Wrocław, Stacja 3.0
– Poznań, Osiedle Jaśminowe IV
– Łódź, Osiedle Jarzębinowe VII
– Warsaw, Widoki Mokotów
– Other
16%
16%
5%
7%
8%
10%
13%
19%
6%
Cash and loans valuation on resulting from of currency exchange
fluctuations.
Measurement and settlement of FX hedging instruments.
Interest on deposits and borrowings granted.
Factors which influenced the Group’s financial results in 2020:
1,505
UNITS
– Malthouse Oces (Warsaw Brewery GH), Warsaw
– Face2Face II, Katowice
– MidPoint71, Wrocław
– Villa Oces (Warsaw Brewery K), Warszawa
– Libero, Katowice
– West4 Business Hub I, Wrocław
– Fuzja CD, Łódź
– Other
43
53,2
31,8
41
29,4
20
19
6
PLN 241 MN
92
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
Revenue resulting from hand overs of 792 housing units.
Valuation of joint-venture projects: Galeria Młociny in Warsaw,
Towarowa 22 in Warsaw and Resi4Rent.
Costs of sales and overheads.
Valuation of liabilities related to of bonds and loans in accord-
ance with amortised cost principle.
Profit on investment property amounting to PLN 22 million.
− Face2Face II, Katowice – PLN 10.5 million;
−
Malthouse Oces (Warsaw Brewery GH), Warsaw – PLN 10.2
million;
− Libero, Katowice – PLN 10 million;
− MidPoint71, Wrocław – PLN 8.5 million;
− West4 Business Hub I, Wrocław – PLN 6.1 million;
− Fuzja CD, Łódź – PLN 5 million;
− Moje Miejsce I, Warsaw – PLN 4,3 million and;
− Others PLN 4.5 million.
In Q4 2020 the value of profit on investment property was de-
creased due to the need of accounting settlement of rent re-
ductions in the Libero shopping center and completed oce
buildings by c.a. PLN 31.7 million.
RESIDENTIAL PROJECTS SHARES IN THE
TOTAL NUMBER OF FINAL CONTRACTS
UNITS
– Poznań, Apartamenty Esencja
– Łódź, Fuzja I
– Wrocław, Stacja 3.0
– Łódź, Osiedle Jarzębinowe VII
– Warsaw, Reset II
– Warsaw, Malthouse Apartments (Warsaw
Brewery E)
– Warsaw, Moje Miejsce
– Other
20%
14%
24%
7%
12%
12%
8%
3%
Cash and loans valuation on resulting from of currency exchange
fluctuations.
Measurement and settlement of FX hedging instruments.
Interest on deposits and borrowings granted.
Factors which influenced the Group’s financial results in Q4 2020
792
UNITS
93
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
EXTERNAL FACTORS:
Positive:
−
continued interests of entities purchasing com-
mercial real estate,
− good pace of development and expansion plans
of Polish and foreign companies (with particular
emphasis on the shared services sector) and the
resulting demand for oce space, including flex-
space,
− the ratio of oce space per 1,000 inhabitants is
lower compared to Western Europe,
−
fast pace of recovering from losses in the retail
sector, including shopping centers, after tempo-
rary limitations of operations due to the pandemic,
− structural housing deficit and stabile apartments
value,
−
stabile economic situation of Poland, compared
to other countries,
− good condition of the Polish financial sector.
Negative:
−
unclear zoning status of many properties resulting
from e.g. the lack of precise zoning plans in many
cities and administrative districts, long-lasting
court and administrative procedures,
− volatility of foreign exchange rates (EUR),
− uncertainty about the level of interest rates,
−
uncertainty about the key assumptions of the
fiscal policy (amendments to tax laws) and the
monetary policy in Poland,
− uncertainty about the development of epidemic
in Poland and worldwide as well as its further in-
fluence on global economy.
INTERNAL FACTORS:
Positive:
− a clearly defined development strategy,
− the Group’s established position on the develop-
ment market and its high credibility confirmed
by its presence on Warsaw Stock Exchange, the
Developer’s Certificate, the membership in sector
and business organisations,
− purchase of controlling stake of residential devel-
oper Archicom,
−
cooperation with banks with stable financial
standing in the area of lending, placement of sur-
pluses and cooperation on the derivative transac-
tions market, foreign exchange transactions and
interest rates,
−
good cooperation with stable and reputable part-
ners, tenants, contractors, suppliers and real es-
tate buyers,
−
organizational structure, with separate depart-
ments corresponding to operating segments that
are responsible for generating profits from the op-
erations of their segment and conduct projects as
a whole i.e. from purchasing a plot to rental or sale,
−
regulated legal sphere (no material court proceed-
ings),
− experienced sta,
−
a large land bank for investment project devel-
opment,
−
adaptation of the constructed projects to the new
pandemic conditions.
Negative:
− the specificity of the business activity expressed
in significant dependence on complicated and
lengthy administrative procedures (including ob-
taining building or occupancy permits, waiting for
amendments to local zoning plans, etc.),
−
strong demand for working capital, particularly
related to the large number of projects imple-
mented.
External and internal factors
significant for the development of
Echo Investment S.A. and its group
94
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
REMUNERATION OF MEMBERS OF THE MANAGEMENT BOARD
PLN
2020 2019
From Echo Investment S.A.
Basic
remuneration
From subsidiaries,
joint-ventures and
associates
Other benets
Total
From Echo Investment S.A.
Basic
remuneration
From subsidiaries,
joint-ventures and
associates
Other benets
Total
Bonus
Bonus
Nicklas Lindberg 1 003 933 2 145 339 596 006 3 745 278 1 076 227 20 861 365 2 192 026 843 250 24 972 867
Maciej Drozd 421 672 336 000 1 224 713 35 218 2 017 603 753 413 359 100 721 999 1 080 1 835 592
Artur Langner 204 000 228 000 972 000 4 504 1 408 504 233 973 167 400 850 800 4 002 1 256 175
Marcin Materny 207 000 180 000 814 032 9 552 1 210 584 240 000 125 280 702 842 8 676 1 076 798
Rafał Mazurczak 207 000 177 120 808 992 10 052 1 203 164 200 000 180 000 814 032 8 676 1 202 708
Waldemar Olbryk 627 000 537 350 - 66 466 1 230 816 702 000 386 100 - 6 704 1 094 804
Małgorzata Turek
(appointed on
7.03.2019)
204 000 114 538 739 076 4 404 1 062 018 217 857 - 467 500 3 702 689 059
Total 2 874 605 1 573 008 6 704 152 726 202 3 423 469 22 079 245 5 749 199 876 090
Total for the year 11 877 967 32 128 003
Remuneration of the Management
Board and Supervisory Board
Remuneration of members of the
Management Board
Members of the Management Board receive remu-
neration and bonuses in accordance with the remu-
neration model described in the ‘Work Rules of the
Management Board’ adopted by the Supervisory
Board in a resolution of 21 March 2013. The bonus
system is based on an agreement in accordance
with the MBO methodology (Management by Ob-
jectives) and it is related to the company’s results.
Each Member of the Management Board may receive
an annual bonus expressed in a multiple of monthly
basic salary, depending on the key business objec-
tives which he/she has an influence on in the scope
of their responsibility. At the same time, all Members
of the Management Board have common goals, the
execution of which below the expected level will
result in a reduction of the bonus. The amount of
remuneration and bonuses of Management Board
Members is confirmed by a resolution of the Super-
visory Board every time.
In connection with the outbreak of the pandemic,
in 2020, in addition to the specific objectives set
individually for each Member of the Management
Board, the common objectives of the Management
Board were to maintain the continuity and stability
of the company’s operations - in particular, to main-
tain uninterrupted work on construction sites and in
residential sales oces - and to ensure the safety of
employees and associates. At the same time, when
the pandemic broke out, the Management Board
took measures to respond to the business and fi-
nancial risks associated with the uncertain market
situation, including decisions to partially defer the
payment of bonuses for 2019 and to temporarily re-
duce the remuneration of executives.
In 2020 and as at the date of publication of the re-
port, there were no agreements concluded between
the Company and executives, providing for compen-
sation in case of their resignation or dismissal from
their position without an important reason, or if their
dismissal occurs due to a merger of Echo Investment
S.A. or due to an acquisition.
95
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
REMUNERATION OF MEMBERS OF THE SUPERVISORY BOARD
PLN
2020 2019
From
Echo Investment
S.A.
From subsidiaries,
joint-ventures
and associates
Other
benets
From
Echo Investment
S.A.
From subsidiaries,
joint-ventures
and associates
Noah M. Steinberg
(appointed on 9.01.2020)
137 086 - - - -
Karim Khairallah
(resigned on 13.12.2019)
- - - - -
Tibor Veres
(appointed on 9.01.2020)
75 194 - - - -
Laurent Luccioni
(resigned on 13.12.2019)
- - - - -
Mark E. Abramson
(resigned on 13.08.2020)
126 290 - - 180 000 -
Margaret Dezse
(appointed on 13.08.2020)
54 194 - - - -
Maciej Dyjas 60 000 - - 60 000 -
Sławomir Jędrzejczyk
(appointed on 13.08.2020)
54 194 - - - -
Stefan Kawalec
(dismissed on 13.08.2020)
126 290 - 1 800 180 000 -
Péter Kocsis
(appointed on 9.01.2020)
53 710 - - - -
Bence Sass
(appointed on 9.01.2020)
53 710 - - - -
Nebil Senman 60 000 - 825 60 000 -
Sebastian Zilles
(resigned on 13.12.2019)
- - - - -
Total 800 668 2 625 480 000
Total for the year 803 293 480 000
Remuneration of the Supervisory Board
The remuneration of the Supervisory Board is de-
termined in the form of resolutions of the General
Meeting of the Company’s Shareholders. The reso-
lution which is currently in force is resolution no. 23
of the General Meeting of Shareholders of 25 April
2018, which determines the amount of remuneration
for Supervisory Board members as follows:
− monthly remuneration of the Chairman of the Su-
pervisory Board – PLN 10,000 gross,
−
monthly remuneration of the Deputy Chairman
of − the Supervisory Board – PLN 7,000 gross,
− monthly remuneration of a Member of the Super-
visory Board – PLN 5,000 gross,
−
additional monthly remuneration for the chair-
men of the Supervisory Board committees – PLN
10,000 gross.
Members of the Supervisory Board shall also be
entitled to reimbursement of costs incurred in con-
nection with the exercise of the function, in particu-
lar – travel costs to the place of Supervisory Board
meetings and back, costs of individual supervision as
well as costs of accommodation and meals.
96
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
The Group’s activity covers several segments of the real estate market.
Accounting revenues from sale of housing developments depends on the
commissioned residential buildings and revenue on these operations is gen-
erated in every quarter but it varies in terms of stability. Historically majority
of apartments was handed over by the Group in the second half of the
year, in particular in the fourth quarter. Revenue and results from general
investment contractor services, sales of commercial investments and trade
in property may be irregular. The Management Board cannot exclude other
one-o events which may influence results generated in a given period.
Seasonal or cyclical
nature of operations
Significant court, arbitration or
public administration proceedings
From 1 January to 31 December 2020, there were no proceedings pending
before court, a competent arbitration authority or a public administration
authority concerning liabilities or claims of Echo Investment S.A. or its subsid-
iary, the value of which constitutes at least 10% of the equity of the Company.
97
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
BASIC DATA ON MAJOR BORROWINGS WITHOUT INTERESTS AND REVALUATION WRITE
OFFS AS AT 31 DECEMBER 2020 PLN ‘000
Lender Borrower
Amount
[mln PLN] Interest Maturity
Projekt Echo - 129 Sp. zo.o. Echo Investment S.A. 192,8 EURIBOR 3M + margin 30.09.2021
Echo Investment S.A. Projekt 12 - Grupa Echo Sp. zo.o. SKA 122,7 WIBOR 3M + margin 30.09.2021
Echo Investment S.A. Echo - SPV 7 Sp. zo.o. 109,0 WIBOR 3M + margin 31.12.2021
Swanage Sp. zo.o. Dellia Investments - Projekt Echo - 115 Sp. zo.o. Sp.K. 101,9 WIBOR 3M + margin 28.12.2021
Echo - SPV 7 Sp. zo.o. Cinema Asset Manager - Grupa Echo Sp. zo.o. SKA 76,9 WIBOR 3M + margin 30.06.2021
Echo Investment S.A. Fianar Investments Sp. zo.o. 71,4 WIBOR 3M + margin 31.12.2021
Echo Investment S.A. Villea Investments Sp. zo.o. 68,4 WIBOR 3M + margin 31.03.2021
Echo Investment S.A. R4R Poland Sp. zo.o. 61,5 margin 31.03.2029
Projekt Naramowice – Grupa Echo
Sp. zo.o. SKA
React - Dagnall Sp. zo.o. SKA 59,6 WIBOR 3M + margin 30.09.2021
Echo - Aurus Sp. zo.o. Face2Face - Stranraer Sp. zo.o.SKA 51,1 WIBOR 3M + margin 30.06.2021
Echo - SPV 7 Sp. zo.o. Face2Face - Stranraer Sp. zo.o.SKA 50,8 WIBOR 3M + margin 30.06.2021
Echo Investment S.A. Pudsey Sp. zo.o. 49,4 EURIBOR 3M + margin 31.03.2021
Echo Investment S.A. Galeria Libero - Projekt Echo - 120 Sp. zo.o. Sp.K 49,0 WIBOR 3M + margin 10.10.2026
Echo Investment S.A. Galeria Libero - Projekt Echo - 120 Sp. zo.o. Sp.K. 48,5 WIBOR 3M + margin 10.10.2026
Echo - SPV 7 Sp. zo.o. Projekt 139 - Grupa Echo Sp. zo.o. Sp.K. 47,7 WIBOR 3M + margin 31.03.2021
Echo Investment S.A. RPGZ IX Sp. zo.o. 47,5 WIBOR 3M + margin 31.12.2021
Echo Investment S.A. Gosford Investments Sp. zo.o. 46,4 WIBOR 3M + margin 30.09.2021
Echo Investment S.A. Projekt 144 - Grupa Echo Sp. zo.o. Sp.K. 43,8 WIBOR 3M + margin 31.03.2021
Echo Investment S.A. Senja 2 Sp. zo.o. 43,1 WIBOR 3M + margin 31.03.2021
Echo Investment S.A. Echo - Aurus Sp. zo.o. 42,0 WIBOR 3M + margin 31.12.2021
Information on borrowings granted in
2020, including to related entities
98
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
Agreements concluded with an entity
authorised to audit financial statements
The Supervisory Board of Echo Invest-
ment S.A., upon the recommendation
of the Audit Committee, has selected
Deloitte Audyt Sp. z o.o. Sp.K. based in
Warsaw, al. Jana Pawła II, registered as
number 73 in the list of expert auditors to
audit separate financial reports of Echo
Investment and consolidated financial
reports of the Echo Investment Capi
-
tal Group for the years 2020-2021. The
agreement was concluded by the Man-
agement Board, based on the Supervi-
sory Board’s authorisation.
The Management Board of Echo Invest-
ment S.A. informs that the selection of
the auditing company conducting the
audit of the annual financial statements
was made in accordance with the regu-
lations, including the selection and pro-
cedure for the selection of the auditing
company, based on the resolution of the
Supervisory Board of 14 November 2019.
The auditing company and the members
of the team conducting the audit met the
conditions for preparing an unbiased and
independent report on the audit of the
annual financial statements in accord-
ance with the applicable regulations,
professional standards and professional
ethics.
Echo Investment S.A. complies with the
existing regulations related to rotation of
the auditing company and the key stat-
utory auditor, as well as prevailing man-
date periods. Echo Investment S.A. has
a policy with respect to the selection of
the auditing company and a policy with
respect to providing services to the issuer
by the auditing company, any entity relat-
ed to the auditing company or a member
of its network of additional non-auditing
services, including services which are
conditionally excluded from the ban on
such services by the auditing company.
The auditing company selection policy
and the non-auditing services purchase
policy were approved by resolutions of
the Audit Committee dated March 23,
2018 and are available on the Company’s
website under Investor relations / Strat-
egy and corporate governance.
THE NET REMUNERATION DUE TO THE AUDITOR ENTITLED TO AUDIT
FINANCIAL REPORTS OF THE COMPANY AND THE GROUP PLN
Due Contractual amount [PLN]
Review of the standalone and consolidated financial statements for H1 2020 135 000
Audit of the standalone financial statement for Q3 2020 98 000
Audit of the standalone and consolidated financial statements for 2020 278 000
Annual audit of subsidiaries 74 250
Total 585 250
99
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
.. Agreements between shareholders
The company does not have any information on contracts concluded in 2020 between
shareholders, that might be significant for its operations.
. Significant transactions concluded by the Company or its
subsidiaries with entities aliated on conditions other than
market ones
In 2020, no material transactions were concluded between Echo Investment S.A and
its subsidiaries, and related parties on terms other than market terms.
.. Influence of 2020 result achieved on the published
financial forecasts
Echo Investment S.A. did not publish any forecasts of financial results for 2020.
. Changes in the basic principles of management
In 2020, there were no material changes in the basic management principles of the
Company and the Group.
. Contracts which may result in changes in the ownership
structure of shares
The Company is not aware of any agreements potentially resulting in changes in the
proportion of shares held by existing shareholders.
Other disclosures required by law
100
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
Activities of Echo Investment S.A. capital group since
March 2020 has been exposed to a number of mac-
roeconomic and environmental risks associated with
the spread of SARS-CoV-2 coronavirus and COV-
ID-19. The restrictions introduced by the government
directly aected the course of business processes
and the organization of the Group’s work. On March
17, 2020, Echo Investment S.A. published a current
report on the potential impact of the pandemic on
the Company’s operations, listing potential areas of
impact and associated risks. The impact of a pan-
demic is analyzed on an ongoing basis to adapt the
strategy and method of operation to the changing
restrictions.
Securing the functioning of the company
The introduction of restrictions on the functioning of
the economy and society in mid-March 2020 result-
ed in the vast majority of companies and organiza-
tions — as far as possible — deciding to reduce their
operations or switch to remote working (home of-
fice) procedures. In the case of Echo Investment, the
situation was monitored on an ongoing basis by the
management sta and a crisis management center
appointed in accordance with internal procedures.
The company focused on the following activities:
1.
Securing the possibility for employees to work
remotely.
2.
Securing the continuity of the company’s basic
functions.
3. Securing the oces and construction sites with
additional personal protective equipment.
4.
Elaboration and implementation of emergency
procedures.
5.
Permanent, daily management teleconferences
for ongoing risk analysis and decisions.
6.
Elaboration and implementation of precaution-
ary procedures after the personnel returns to the
oces.
7. Accelerating the plan of digitization of business
processes — primarily accounting and contracts.
8.
The group also conducted a number of analyz-
es and studies to learn about the preferences of
customers, colleagues, university students (future
employees) regarding remote work and the im-
pact of the pandemic on the change in consumer
The impact of the COVID-19
pandemic on the operations
of Echo Investment Group
preferences and behavior, which allows for adjust-
ing the oer and marketing activities.
Continuity of work on construction sites
The most important task for the Management Board
was to ensure the continuity of work on all construc-
tion sites. The company has introduced additional
emergency procedures at the construction sites in
the event of an illness, and has equipped all the sites
with personal protective equipment, antibacterial
gels, masks and information materials. The Manage-
ment Board also conducted daily monitoring of the
number of employees on individual construction
sites, and in the event of a threat to continuity, it
was prepared to introduce additional employees to
the construction sites. The state of supplies of mate-
rials and the associated risks were monitored, a plan
was implemented to secure supplies by anticipatory
deliveries directly to the construction site, especially
as regards equipment and materials from abroad
whose transport to Poland could be threatened or
delayed due to the virus. As a result, all the construc-
tions have maintained undisturbed activity.
The company has established a business continuity
plan for all construction sites. Teams on construction
sites have been split so that two groups work in the
same location, and if one team becomes ill, construc-
tion continuity can be provided by a second team.
Emergency cover on smaller sites, where it is not
possible to split the team, is provided by teams from
other projects or, as a last resort, by hired external
teams. A strict sanitation regime is maintained on
construction sites - limiting meetings, briefings held
outside, social distancing, temperature testing, lim-
iting visits by outsiders (mail carriers, couriers) to a
separate area in the construction oce, disinfection
and using medical devices to filter the air in the most
exposed areas (e.g. meeting rooms).
The company has established a business continuity
plan for all construction sites. Teams on construction
sites have been split so that two groups work in the
same location, and if one team becomes ill, construc-
tion continuity can be provided by a second team.
Emergency cover on smaller sites, where it is not
possible to split the team, is provided by teams from
101
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
other projects or, as a last resort, by hired external
teams. A strict sanitation regime is maintained on
construction sites - limiting meetings, briefings held
outside, social distancing, temperature testing, lim-
iting visits by outsiders (mail carriers, couriers) to a
separate area in the construction oce, disinfection
and using medical devices to filter the air in the most
exposed areas (e.g. meeting rooms).
Due to the expected reduction in demand for con-
struction services in the future, the Management
Board has taken steps to reduce the costs of con-
struction services and materials. Negotiations and a
number of savings initiatives have been undertaken,
as a result of which costs on individual projects are
reduced by 5-10% compared to the initial budgets.
The eects of these procedures are already visible
when contracting subsequent construction works.
There is a noticeable increase in the number of con-
struction companies submitting tenders, which gives
the contracting authorities a better negotiating po-
sition.
Group’s financial liquidity security
The priority for securing the Group at the time of
the lockdown and in the face of a potential eco-
nomic slowdown was to secure financial liquidity.
The Management Board has undertaken a number of
activities to this end, such as, among others:
− involvement of operating teams in planning the
cash flow on a larger scale than before;
− reviewing the budgets of all departments and re-
ducing costs;
− reducing new hires;
− limiting employee benefits;
−
minimizing the number of days of outstanding
leave to employees;
− withholding of bonuses for employees in 2020;
−
exemption and deferment of payment of social
insurance (ZUS) contributions;
−
deferral of payment of fees for perpetual usufruct
of land, based on the so-called anti-crisis shields;
− ongoing and constant analysis of proceeds from
the sale of apartments;
− ongoing and constant analysis of the balance of
rent receivables in finished oce buildings and
other receivables;
−
analyzing the land bank and commencing the
process of selling real estate outside the main
area of the company’s strategy;
− halting or slowing down the construction of pro-
jects at an early stage of construction that do not
have secured tenants;
− introducing the requirement of pre-selling apart-
ments before the construction of a housing pro-
ject begins;
− reducing external costs, in particular for consul-
tancy and marketing services;
−
discussions with banks to suspend or reduce pro-
ject debt handling.
Retail sector
The most dicult time for the retail sector was the
periods of the so-called “hard lockdown” - (March-
April 2020, November 2020, January 2021, March
2021) when the operations of stores and restaurants
in shopping centers was limited (except for grocery
stores, drugstores, pharmacies, pet food stores and
services). In case of the Echo Investment Group, this
concerned the Libero shopping center in Katowice
and Galeria Młociny in Warsaw (in which the Group
holds a 30% stake). During the lockdown periods,
the operations of most tenants in both facilities were
very limited (only several percent of tenants were
operating in Libero). Maintaining the activities of the
remaining tenants required taking extra precautions,
providing security materials, and maintaining the fa-
cility’s service (security, cleaning, day-to-day opera-
tions). “Defrosting” the tenants’ operations from the
beginning of May involved the need to renegotiate
leases and reach an agreement with the tenants on
incurring losses incurred during the closing.
Following the spring lockdown, shopping center
owners, tenants and banks agreed on a compromise
that would optimally distribute costs between ten-
ants and lessors, with the long-term goal of restoring
shopping center turnover and footfall to pre-pan-
demic levels. Echo Investment immediately started
to implement this agreement and signed appropriate
annexes with tenants. Rapid actions brought very
good results, fast growth in turnover and gradual
return of customers.
In line with its strategy, Echo Investment aims to
reach an agreement with the tenants as soon as
possible after each lockdown and to return Libero
and Galeria Młociny to normal operations as soon
as possible. Despite dicult negotiating conditions,
both facilities were among the first to be fully oper-
ational on the market after the spring lockdown. As
a result of the pandemic, the list of tenants changed
slightly by single service outlets, whose owners de-
clared bankruptcy. Despite a number of restrictions
and safety measures, the pace of customer return to
both projects and turnover growth from June to Oc-
tober were faster than expected. The historically high
conversion rate (the ratio of visitors to transactions)
demonstrated the responsibility of customers who
come to the shopping centres for specific purchases.
With the second and third waves of the pandemic,
the government reimposed significant restrictions
on tenants of shopping centres. About 25% of all
tenants were operating in Libero. Echo Investment
is in constant contact with all tenants. Agreements
with tenants worked out after the first shopping
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Management Board Report on operations of Echo Investment S.A. and its Group in 2020
centres’s closing assumed the possibility of further
closings, but they only applied to 2020. Currently,
Echo Investment is focusing on signing short-term
1-2 month agreements, based on the current situa-
tion of tenants and their individual standings. Both
managers of both shopping centres and their ten-
ants are aware of the unpredictability of the situation
in the long term. Both parties assume to return to
negotiating long-term annexes in the middle of the
year, when the situation regarding the end of the
epidemic should be more predictable. Then it will be
easier to assess the situation of individual tenants,
their restructuring and development plans.
Both facilities are focused on marketing activities to
strengthen their brand awareness. Marketing actions
in the first stage (until about the middle of the year)
will focus only on increasing the turnover value, while
only in the later stage they will be focused on activ-
ities to support footfall. It is important that the vast
majority of tenants focus on maintaining existing
stores and innovative sales approaches.
In order to minimize operating costs of shopping
centres, steps have been taken to defer or cancel
some payments (e.g. perpetual usufruct or real es-
tate tax, principal and interest instalments on loans)
and to optimize operating costs.
Residential for sale and apartments for
rent sectors
Although regulations related to the pandemic did
not limit the operation of sales oces, notaries and
authorities, in practice, the sale of apartments was
almost completely stopped during the second half of
March. Clients returned to the analysis of the housing
market and submitting their inquiries in the second
week of April. Due to the already advanced work
related to the digitalization of sales processes, Echo
Investment’s salesmen were prepared for remote
customer service: they could present their oers at
online meetings and with the help of virtual reality
tools, negotiate contract provisions in the CRM sys-
tem or present the progress of construction work
through cameras. The introduction of the pandemic
state accelerated the implementation of further ele-
ments of on-line service: a system for signing binding
booking agreements or initial customer service using
artificial intelligence.
Taking into account new trends and customers’
needs, Echo Investment’s designers and vendors
have introduced new solutions and facilities to their
projects, which support sales. Depending on the
project, these include applications allowing for con-
tact-free entry into apartments (from the housing
estate gate, in front of the main door and the eleva-
tor), the services of architects (who help arrange an
apartment in such a way that oce space can be
made easily accessible), special marking and training
materials, washbasins or disinfectants in common
areas (e.g. at playgrounds). Balconies, terraces, log-
gias and gardens have also become more important
for customers.
Since June, the number of inquiries and meetings
with potential customers has remained at a level
similar to before the pandemic. However, custom-
ers are still more cautious when making purchasing
decisions. There is a noticeable increase in the num-
ber of transactions for investment purposes, with no
or little credit, which involves the desire to protect
the capital after a series of interest rate cuts. Ready
apartments and apartments with near commission-
ing dates are bought more willingly. Clients pay more
attention to security of transactions, which works
in favour of large and capital-stable entities such
as Echo Investment. The most sensitive group are
clients buying their first apartment, who depend on
obtaining a credit, with relatively low income and
low own contribution. Because of the uncertainty
about macroeconomic developments and, therefore,
about their personal financial situation, these clients
prefer suspending transactions. The housing sector
is also strongly aected by the tightening of banks’
lending policies. The initially tightened credit pol-
icy of banks was also of great importance for the
housing sector, but this turned out to be tempo-
rary. Despite the introduction of restrictions in the
economy, the sale of apartments in Echo Investment
and the number of inquiries since summer 2020 has
remained at a satisfactory level. Despite the increase
in the number of cases and the introduction of re-
strictions, the activity of customers is constant.
As a consequence of the economic downturn, great-
er caution and Echo Investment’s conservative poli-
cy, new projects were being started on the condition
of achieving certain level of pre-sale. On spring 2020
the company reduced its annual sales target to 1,400
apartments. Finally the company has sold (by pre-
liminary agreement) 1,570 apartments and handed
over to clients 1,505 units.
Restrictions related to the pandemic did not have
a significant impact on the operation of the Resi-
4Rent residential platform, in which Echo Investment
has a 30% stake. Although in the first weeks of the
restrictions introduced, the process of renting pro-
jects was almost completely stopped, very quickly
the interest of potential clients returned to normal.
In line with the Management Board expectation, Re-
si4Rent benefits from the pandemic situation, with
slight decrease of rent rates expectations. Due to
the increased uncertainty in the economy and high-
er requirements for taking out mortgage loans, a
signicant number of potential apartment buyers
postpone the purchase decision and take advantage
of institutional apartment rental.
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Management Board Report on operations of Echo Investment S.A. and its Group in 2020
Oce sector
The most important task in the oce sector was
maintaining negotiations on leasing space in pro-
jects built by the company and continuing the sales
processes of the finished buildings. The rental de-
partment is observing an elongation of decisions
on the part of tenants, which is connected to the
uncertainty about the future work system and the
impact of remote working on companies. However,
the potential tenants do not withdraw from negoti-
ations. In the sales processes, the Group adjusted its
expectations concerning yields on future sales trans-
actions and suspended the sale of some buildings.
In Q1 2021 the Group has sold Villa Oces building
in the Warsaw Brewery complex, what stabilised the
long-term cash-flow. Promising sale negotiations are
also underway regarding the Malthouse Oces and
Moje Miejsce oce buildings in Warsaw (signed let-
ters of intent). The group also returned to sale pro-
cess of the Face2Face oce buildings in Katowice
(signed letters of intent).
In order to meet the expectations of customers,
new standards have been introduced to prevent the
spread of the virus in oce buildings. From the be-
ginning of the epidemiological threat, the team of
Echo Investment experts has set the task of better
securing employees of organizations that have locat-
ed their oces in the buildings of Echo Investment.
A number of solutions responding to post-covid
needs have been compiled into the “healthy oce”
program. Special air purification systems, dedicated
application, tilt windows, the use of easy-to-clean
finishing materials are just some of the points of the
program. In addition to the solutions introduced at
the stage of implementation and planning of the in-
vestment, Echo Investment focused on securing the
already operating oce buildings. The “five for safe-
ty” program is a guarantee that these oce buildings
are ready to receive employees returning to the of-
fices. Echo Investment focused on key installations
of building security: ventilation and air conditioning.
Clean and healthy air for the new oce buildings of
Echo Investment will be provided to tenants using
the RCI ActivePure technology.
The impact of the coronavirus pandemic
on the operations and results of the Echo
Investment Group in the future
The occurrence of the third wave of the COVID-19
pandemic after the balance sheet date and possible
escalation of its course in the future may result in
the need to revise certain assumptions adopted in
the preparation of the financial statements, which
may lead to changes in accounting estimates in sub-
sequent reporting periods. The Management Board
of the Company and the Group analyzed the areas
related to the estimated values and areas in the fi-
nancial statements that are aected by the situation.
The results of this analysis indicate the following po-
tential impact areas.
It is possible that the continuation of the pandem-
ic will limit the expansion of companies in Poland,
which will result in a decrease in demand for oce
space. This may result in a lower pace of new build-
ings leasing and a decline in rental rates. This situa-
tion may lead to a slowdown of the construction of
buildings at an early stage of construction and a fair
value decrease of completed buildings. In the case
of buildings that are ready, due to their fair value
decrease, in an extreme situation, the covenants pro-
vided for in loan agreements may be broken cutting
the need to repay part of the loan faster. When it
comes to completed buildings, the pandemic may
also lead to lower investors’ interest in purchasing
such buildings and, as a consequence, to postponed
sale of them.
The Management Board of Echo Investment also in-
dicates that in the case of shopping centers: Libero
in Katowice and Galeria Młociny in Warsaw (in which
the Group holds a 30% stake), the development of
the pandemic and subsequent lockdowns may result
in bankruptcy of some tenants, which in practice
may mean termination of some lease agreements .
The consequence could be a reduction in the rent-
al ratios, future revenues and the fair value of both
projects. The consequence of such a situation may
be the breach of covenants provided for in the loan
agreements and the need to repay part of the loan
faster. Moreover, if further restrictions on the activ-
ities of shopping centers are introduced, rental in-
come may be lost, which may also lead to a reduc-
tion in value and violation of covenants.
At this stage, the Company is not able to reliably
estimate the impact of the above events on the
value of investment properties, as the situation is
changing. In the Management Board opinion, in the
moderate scale of the pandemic, the LTV covenants,
which are the ratio of bank financing to the market
value of real estate, are not endangered. Neverthe-
less, the Management Board would like to point out
that the pace of renting oces recorded before the
epidemic was faster.
The prolonged pandemic and possible new restric-
tions may slow down the sale of apartments or
discourage some potential clients from concluding
transactions. It could lead to a lower than planned
sale of apartments, which will translate into lower
revenues and shifting the realization of revenues and
profits from the sale of apartments to the following
years.
Due to the short observation horizon, the Manage-
ment Board is not able to accurately estimate the
impact of the COVID epidemic on the operations of
the Company and the Group in subsequent periods.
Currently, the oce buildings built by the Group are
provided with financing. Residential projects are
104
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
Nicklas Lindberg
President of the Board, CEO
Maciej Drozd
Vice-President of the Board, CFO
Artur Langner
Vice-President of the Board
Rafał Mazurczak
Member of the Board
Marcin Materny
Member of the Board
Waldemar Olbryk
Member of the Board
Małgorzata Turek
Member of the Board
The document is signed with qualified electronic signature
Kielce, March 30, 2021
mainly financed by prepayments from clients. At the
end of 2020, the Group had over PLN 320 million in
cash in its accounts. In Q1 2021, the Group sold the
Villa Oces building in Warsaw, the sales process-
es of further assets held for sale within the next 12
months from the balance sheet date are processing
as planned. In Q1 2021, the Company also placed
bonds with a total value of PLN 195 million. Taking
all above into consideration, the Management Board
does not currently identify a significant threat related
to the impact of the development of the coronavirus
epidemic on the Company’s liquidity or its ability to
continue operation, despite the expected need to
pay for a controlling stake in Archicom in the coming
weeks. The Management Board monitors the poten-
tial impact on an ongoing basis and takes all possible
steps to mitigate any negative eects for the Group.
| Corporate governance
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Management Board Report on operations of Echo Investment S.A. and its Group in 2020
CHAPTER 2
STATEMENT ON
THE APPLICATION
OF CORPORATE
GOVERNANCE
PRINCIPLES
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Management Board Report on operations of Echo Investment S.A. and its Group in 2020
The main document governing the issues of cor-
porate governance is the Articles of Association of
Echo Investment S.A. The binding Articles of Asso-
ciation of the Company is available on the website
en.echo.com.pl in the tab “Strategy and corporate
governance”.
Other issues of corporate governance are regulated
in the following documents:
− By-laws of the General Meeting of the Shareholders,
− By-laws of the Supervisory Board,
− By-laws of the Management Board,
− By-laws of the Audit Committee,
− Code of Conduct.
All the above documents are available on the website
en.echo.com.pl in the tab “Investor relations – Strat-
egy and corporate governance”.
Changes in the Company’s Articles of
Association during 2020.
In 2020, amendments were made to the Articles of
Association of Echo Investment S.A., based on the
resolutions of the Ordinary General Meeting of Share-
holders of August 13, 2020. The amendments mainly
concerned rights and obligations of the Supervi-
sory Board. Compared to the previous regulations,
the Supervisory Board received new competencies,
some of which result from legal requirements and
others from changes in the way the Company and
the Group are managed.
Pursuant to the amendments introduced in 2020, the
Supervisory Board is authorized or obliged to:
− establish the Supervisory Board bylaws and ap-
prove the Management Board bylaws;
− prepare reports on the remuneration of the Man-
agement Board members and of the Supervisory
Board members during the financial year, in line
with the remuneration policy adopted by the Gen-
eral Meeting.
As amended in 2020, the prior approval of the Su-
pervisory Board is required for:
−
concluding an agreement with a sub-issuer re-
ferred to in Article 433 para 3 of the Code of
Commercial Companies and Partnerships;
− incurring liabilities and disposing of rights as re-
gards issues included in the Company’s current
operations – if their value exceeds 20% of the
Company’s equity. In case of doubt as to wheth-
er a given matter is incorporated in the range of
current operations, the Supervisory Board shall be
entitled, at the request of the Management Board,
to make a relevant interpretation in this respect.
Such interpretation shall be binding for the Man-
agement Board,
− the adoption of the annual budget and business
plan for the Company and its subsidiaries pre-
pared by the Management Board;
−
the signing, a substantial change (in particular the
change on financial conditions or termination con-
ditions) or the termination of any agreement be-
tween the Company or its subsidiary, on the one
hand, and members of the Management Board,
the Supervisory Board or their related parties
(within the meaning of International Accounting
Standard 24 “Related Party Disclosures”), on the
other hand;
−
making changes in the accounting policy that
have a significant eect on the standalone or
consolidated financial statements of the Compa-
ny, except for changes required by the auditor of
the Company or its subsidiary or resulting from
changes in the law (Polish accounting principles
or International Financial Reporting Standards);
− exercising by the Company or a subsidiary, as a
shareholder or a partner of its subsidiary, of voting
rights at the general meeting or partners’ meet-
ing of the subsidiary with respect to the matters
referred to in § 16 para 2 items (a)-(c), (f) and (g)
of the Company’s Articles of Association; for the
purposes of this section, for the purposes of this
section, references to the Company and the mem-
bers of the Management Board referred to in the
sections above shall be interpreted as references
to the subsidiary and the members of the Man-
agement Board of the Subsidiary, respectively;
− payment of an advance dividend to shareholders
proposed in the Management Board resolution.
The Articles of Association of the
Company and the most important
corporate governance documents
| Corporate governance
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Management Board Report on operations of Echo Investment S.A. and its Group in 2020
Best Practices of WSE Listed Companies
In 2020 Echo Investment S.A. was subject to the cor-
porate governance principles contained in the docu-
ment ‘Best Practices of WSE Listed Companies 2016’
adopted by the resolution of the Council of WSE
on October 13, 2015. The principles came into force
on January 1, 2016 and they are still in eect. The
text of the set of the above principles is available on
the website of the Warsaw Stock Exchange at gpw.
pl/best-practice. Currently the Company applies all
recommended best practice principles except for
listed above.
‘IV.Z.2. If it is justied due to the shareholding
structure of the company, a company provides
a universally available broadcast of the general
meeting in real time.’
The company does not provide a universally available
broadcast of the general meeting in real time, but fol-
lowing completion of the general meeting, the com-
pany makes an audio-visual recording of the general
meeting available on its website.
‘V.Z.6 e company denes in its internal regu-
lations the criteria and circumstances in which a
conict of interest may arise in the company as
well as the rules of conduct in the event of a con-
ict of interest or the possibility of its occurrence.
e company’s internal regulations include ways
of preventing, identifying and resolving conicts
of interest as well as the rules of excluding a
member of the management board or supervisory
board from participation in considering a matter
covered or threatened by a conict of interest.’
In its Code of Conduct the Company has defined
the criteria and circumstances in which a conflict of
interest or possibility of its occurrence may arise. In
the event of a conflict of interest or the possibility
of its occurrence, the Management Board and the
Supervisory Board have determined the practice of
excluding a person whose conflict of interest may
be involved in decision making. The Company un-
dertakes to specify detailed methods of preventing,
identifying and resolving a conflict of interest as
well as the principle of excluding a member of the
management board or supervisory board from par-
ticipation in the consideration of a matter covered
or threatened by a conflict of interest in appropriate
procedures.
‘IV.Z.11. e members of the management board
and the supervisory board participate in the
general meeting in a composition providing for
substantive answers to questions asked during the
general meeting.’
Representatives of the Board are present at the Gen-
eral Meeting or are available to participants of the
General Meeting to answer questions. Although the
Management Board also invites members of the Su-
pervisory Board to be present at or available to the
Shareholders so that the Supervisory Board mem-
bers are present and may answer the Share-holders’
questions, no assurance may be given that the Super-
visory Board representatives will be present during
the general meeting. Notwithstanding the above, the
Company is of the opinion that the Company’s Man-
agement Board is the only corporate body author-
ised to respond to questions pursuant to Article 428
of the Commercial Companies Code, while members
of the Supervisory Board have no such power. If the
representatives of the Management Board are not
able to answer the Shareholder’s questions during
the General Meeting, the Company undertakes to re-
spond to the Shareholder’s questions in the shortest
possible time, subject to the restrictions set forth in
applicable binding laws.
Standards recommended by the WSE
for the compliance management system
on counteracting corruption and the
whistle-blower protection system
On October 8, 2018 the Warsaw Stock Exchange
published “Standards recommended for the com-
pliance management system on counteracting cor-
ruption and the whistle-blower protection system
in companies listed on markets organized by the
Warsaw Stock Exchange S.A.”. At present the doc-
ument is a non-binding recommendation for listed
companies. The recommendations include:
− development and application of the Anti-Corrup-
tion Code;
− sta training in the field of counteracting corrup-
tion;
−
introduction of anti-corruption clauses in con-
tracts;
−
development and application of the policy for
granting and accepting gifts;
−
development and application the policy for spon-
soring and donations;
− implementation of the procedure to facilitate re-
porting about irregularities by whistle-blowers;
−
establishment of the compliance management
function.
Echo Investment completed all of the above rec-
ommendations, except for the last one regarding
the establishment of the compliance management
function. In Echo Investment, compliance manage-
ment falls within duties of several employees of the
legal department, and among others, the Ethics
Committee.
The Ethics Committee is a advisory body of the
Management Board with responsibility for super-
vising the proper implementation of procedures
and the application of adopted codes, regulations
and other internal regulations, in particular the An-
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Management Board Report on operations of Echo Investment S.A. and its Group in 2020
ti-Corruption Code and procedures for concluding
and performing donation, sponsorship and similar
agreements. The Committee includes:
− a Management Board Member appointed by res-
olution of the Management Board or by decision
of the Management Board President;
− a Director or some other member (legal counsel
or advocate) of Echo’s legal department, appoint-
ed by the department’s director;
−
an employee of the Marketing Department ap-
pointed by resolution of the Management Board
or by decision of the Management Board Presi-
dent.
The current members of the Committee:
− Maciej Drozd, Vice-President for finance,
− Rafał Zboch, the Director of the legal department,
− Emil Górecki, communication manager.
Anti-Corruption Code
In 2018, the Management Board of Echo Investment
introduced the Anti-Corruption Code which states
who is considered a public person or his/her closest
person, on what basis Echo Investment’s employees
can contact public persons, and what precautions
are required when undertaking such issues with pub-
lic persons as donations and sponsorship, invitations,
covering accommodation costs, catering, informal
and private meetings, presents and occasional gifts,
agency agreements in contact with public adminis-
tration ocials or other contracts with public per-
sons.
Engagement of public persons
The Anti-Corruption Code also states the principles
of the engagement of public persons or their closest
persons. According to the Code, the engagement is
always carried out in the standard mode, in accord-
ance with recruitment procedures and on conditions
adopted in the company, but in addition, the risk as-
sessment of the engagement of a person performing
- now or in the past - a public function is a part of any
recruitment process . If the HR department recognis-
es a potential risk, HR employees inform the Ethics
Committee about this fact. The Ethics Committee,
after examining the case, makes recommendations
on continuing the recruitment process. Employees
of Echo Investment are also obliged to inform the
Committee if their closest person becomes a public
person.
Cooperation with intermediaries in contact with
administration ocials
As to contact with public administration ocials,
Echo Investment often engages intermediaries e.g.
architects. In order to cooperate with a new enti-
ty - an intermediary whose task will be to obtain
decisions, approvals and other ocial orders, Echo
Investment employees are obligated to apply the
following procedure:
1. The analysis of opinions on a given partner who
would be engaged in contact with administration
ocials;
2.
The question whether a potential intermediary
is connected with public persons or their closest
persons;
3. The collection from an intermediary a statement
of getting acquainted with the Code of Conduct
and the Anti-Corruption Code of Echo Investment;
4. The collection from an intermediary a statement
that that no part of the remuneration paid by Echo
will be used to pay the cost of any economic or
personal benefits for any public ocials.
A consent of the Ethics Committee is required to
conclude an agreement with a new entity that will
act as intermediary in contact with public adminis-
tration ocials he administration and oces. In case
of suspected irregularities in cooperation with an in-
termediary, the Committee may also undertake ex-
planatory actions. Also, any circumstances suggest-
ing an unethical or non-compliant with standards
behaviour of business partners should be reported
to the Ethics Committee.
Dealing with business partners
Employees of Echo Investment involved in transac-
tions with third parties must loyally represent the
Company’s interests, while business partners are
guaranteed fair treatment on terms that are based
exclusively on transparent considerations of a busi-
ness nature. All conflicts of interests on the part of
any Employees must be reported according to the
Code of Conduct. In addition, the Committee must
be notified of any attempt to obtain business for or
from Echo Group companies in any unethical manner.
Echo Employees shall pay attention to and inform
the Committee on any circumstances suggesting an
unethical or non-compliant with Echo’s standards
behaviour of an intermediary. The Committee shall
then immediately undertake actions aimed at veri-
fying the reported circumstances and deciding on
further cooperation with a given business partner.
Echo expects that rules arising from generally ap-
plicable anti-corruption laws will be complied with
also by all of Echo’s business partners. To this end,
the Legal Department makes sure that any Echo
contracts which it drafts or opines for Echo Group
companies contain anti-corruption clauses which are
appropriate for the nature of the particular contrac-
tual obligations, including at the minimum the fol-
lowing provisions, adjusted as needed to the object
of a given agreement.
Auditing
Compliance with the provisions of this Code, as well
as the performance of duties presented therein by
Echo employees and the Ethics Committee is subject
to periodic examination by the internal audit depart-
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Management Board Report on operations of Echo Investment S.A. and its Group in 2020
ment. The full content of the Anti-Corruption Code
is available on the website en.echo.com.pl in the tab
“Strategy and corporate governance”.
The procedure of concluding and
performing donation, sponsorship and
similar agreements
Echo Investment implemented the procedure of
concluding and performing donation, sponsoring
and similar agreements in order in order to ensure
that Echo’s funds in the area of social responsibility
in business are spent transparently and eectively,
and in compliance with applicable laws as well as
Echo’s internal policies and standards of ethics. This
Policy is binding upon all Echo group companies
and applies to all donation, sponsorship and similar
agreements, whereby these companies undertake to
provide resources, financial or in-kind, to any third
party in order to support charitable, social, cultural,
sport or business ventures, projects or events. The
procedure is under the strict supervision of the Eth-
ics Committee. It implemented a detailed path of
proceedings with applications and matters related to
charity, sponsorship, etc., in which a potential donor
is Echo Investment or a company from the group. It
includes a request for support, screening of a poten-
tial beneficiary, proceedings in case when a public
person is connected with an applicant, and later per-
formance monitoring of the granted support.
Code of Conduct
As part of risk management and in order to strength-
en its corporate culture, Echo Investment introduced
the Code of Conduct – a document which defines
the company’s values and ethical norms required in
its relations with employees, shareholders, local ad-
ministration and communities. The Code of Conducts
organizes issues such as relations among employees
and superiors or relations with business parties and
other interested parties. It also defines the code of
conduct in dicult situations such as a conflict of
interest, a suspicion of irregularities, a corruption
proposal or working with co-operators of bad repu-
tation. As every year, in 2020, Echo Investment con-
ducted a mandatory training for each employee in
ethics, mainly based on the Code of Conduct. The
training ended with an obligatory exam.
Whistleblowing policy
The company has implemented procedures of ir-
regularity reporting and their examination, which
promote ethics in everyday work and provides the
reporting persons with a sense of security. They
make it possible for employees to report unethical
or illegal activities observed, which infringe the law,
internal regulations or principles of social co-exist-
ence. The system operates with the support of an
external company Linia Etyki.
Other procedures and policies
Echo Investment has also introduced other proce-
dures and specific policies concerning, inter alia,
auditor selection policy, policy non-audit services,
environmental policy or security policy. They stream-
lines and automates the management process for
specific areas of Echo Investment’s operations and
facilitates performance monitoring. The content of
these procedures and policies is available on the
website en.echo.com.pl in the tab “Strategy and
corporate governance”.
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Management Board Report on operations of Echo Investment S.A. and its Group in 2020
Systems of internal control
and risk management
The Company’s Management Board is responsible
for the internal control system and its eectiveness
in the process of preparing financial statements and
periodic reports published according to the Regula-
tion of the Minister of Finance of February 19, 2009
on current and periodic information to be submitted
by issuers of securities and conditions for consider-
ing as equivalent information required under the law
of a non-member state (J.L. No. 33, item 259). The
eectiveness and correct operation of the internal
control system and of the risk management system
is ensured by:
− defined and transparent organisational structure,
−
skills, know-how and experience of people in-
volved in the internal control process,
− supervision by the management over the system
and regular evaluation of the Company’s business,
−
verification of financial statements by an inde-
pendent statutory auditor.
Mutual connections and interdependence of internal
control elements in several areas, such as:
− operating activity,
− financial activity,
−
reporting process (including the preparation of
financial statements),
− analysis of costs and expenditures related to pro-
jects, costs and general administrative expenses
and sale, and costs and expenditures related to
the use of leasable area,
−
risk management, ensuring an eective internal
control system and supporting the management
of the whole Group.
To make this process optimal and eective, the Com-
pany has introduced the automation in the internal
control process:
−
decision limits (approval of costs, expenditures,
payments, selection of counterparties),
− supervision over employee quotas by independ-
ent of people assigning quotas,
−
configuration of accounts (enabling manual post-
ings on automatic accounts, transparent and easy
process of transferring information for reporting),
− automation of payments (generating a payment
from the accounting system for electronic bank-
ing systems),
−
− integrated systems moneyFlow, contractFlow,
projectFlow, budgetFlow and businessPartner360
facilitating the circulation of invoices, approval of
expenditures and costs, posting, verification of
the legitimacy and analysis of financial flows in
the Group.
Main characteristics of the internal control
and of the risk management system
in relation to the process of financial
statements
Main characteristics of the internal control and of the
risk management system in relation to the process
of preparing separate and consolidated financial
statements:
− transparent organisational structure,
− qualified sta,
− direct supervision by the management,
− internal audit department,
− auditor verification of statements.
The people responsible for preparing financial
statements, as part of the Company’s financial and
management reporting, are a highly qualified team
of specialists of the Finance Department, which is
managed directly by the Finance Director and, in-di-
rectly, by the Company’s Management Board. In the
Finance Department, this process involves mainly
sta from the Accounting Division, assisted by em-
ployees from the Budgeting and Analysis Division
and Financing Division, and the whole process is
supervised by mid-level management sta of the
Finance Department.
Economic events in the course of the year are re-
corded by the Records Team of the Accounting Di-
vision. As part of internal control, the correctness
of economic records is monitored by the Reporting
Team from the Accounting Division, who have certif-
icates of the Minister of Finance to provide ser-vic-
es involving the keeping of accounting books (so
called independent accountants). After completing
all pre-defined processes of closing the books, the
Team prepares financial statements. The process of
monitoring the correctness of posting costs also in-
volves employees from the Department of Budget-
ing and Analysis.
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Management Board Report on operations of Echo Investment S.A. and its Group in 2020
Valuations recognised in the statements are pre-
pared and submitted to the Reporting Division by
the employees of the Department of Budgeting and
Analysis. This Department has knowledge in the area
of financial accounting (some of the sta are inde-
pendent accountants), management accounting and
financial analyses (some of the sta are adequately
trained in audit and internal control). They also mon-
itor the correct posting of these measurements. The
whole process of preparing statements is supervised
by managers from the Accounting Division and the
Department of Budgeting and Analysis. The recon-
ciliation of settlements with banks is the responsi-
bility of the Payments and Insurance Team. Thanks
to a broad internal control system, which involves
sta from individual teams, and supervision by man-
agers from the Finance Department, any errors are
adjust-ed on an ongoing basis in the Company’s ac-
counting books according to the adopted account-
ing policy. Verification of financial data correctness is
automated. Before presented to an independent au-
ditor, the pre-pared financial statements are checked
by the Company’s Finance Director. According to the
applicable laws, the Company reviews or audits its
financial statements using a renowned and highly
qualified independent statutory auditor.
Other use of internal control system and of
risk management system in the company,
taking account of significance of the
financial and accounting system
The controlling process in the Company, whose basic
and key element is the internal control, is based on a
system of budgets. On an annual basis, the Company
updates short-term, mid-term and long-term plans,
and prepares very detailed budgets for the following
year with regard to:
− construction projects,
− expenditures,
− general administrative and sales expenses.
Based on the budgets, cash flow forecasts, which are
necessary in the risk management process, are up-
dated. The budgeting process is based on the Com-
pany’s existing formalised rules and is closely super-
vised by the Finance Director. The process involves
the Company’s mid-level and senior management
sta responsible for specific budget areas. Respon-
sibility for the preparation and presentation rests
with the Finance Branch, which is also responsible
for monitoring the incurred expenditures and report-
ing on the performance of budgets. The budget of
construction projects is the responsibility of Project
Managers, who are assisted by the Business Con-
trolling Department sta. The budget of costs and
general administrative and sale expenses is the re-
sponsibility of the Budgeting and Analysis Division.
This division is also responsible for preparing finan-
cial and cash flow forecasts and for verifying them.
The budget prepared for the following year on an
annual basis is approved by the Company’s Manage-
ment Board and Supervisory Board. The Company’s
financial and accounting system is the source of data
for the whole reporting system of the Company, i.e.:
− for the process of preparing financial statements,
− periodic reports,
− management reporting system.
The whole reporting system uses the Company’s
financial and management accounting based on
the accounting policy adopted in the Company (In-
ter-national Financial Reporting Standards). Thanks
to this, management reporting is not detached from
the prepared financial statements and takes account
of the format and the level of detail of data present-
ed in these statements.
The process of preparing financial statements is
described in the section before. The periodic and
management reporting process is a continuation
of the budgeting process described before. Once
the accounting books have been closed, reports are
prepared on the actual performance compared to
budgets and forecasts. In relation to closed reporting
periods, the Group’s financial results are analysed in
detail and compared to the budget assumptions and
forecasts made in the month preceding the analysed
reporting period. The key element in this process
is the monitoring of the deviation of actual perfor-
mance from the plan, and explaining the reasons for
such a deviation. Monitoring deviations and learning
their reasons helps optimise the Group’s operations
and minimise potential risks.
Risk management
Eective internal control (along with the existing
re-porting system) is the basic step in identifying
risks and managing changes. In addition to the
reporting system, eective risk management also
involves a risk analysis. Therefore, the Company’s
key measure aimed at reducing its risk exposure is
the correct assessment of prospective investments
(Budgeting and Analysis Division) and the monitor-
ing of current investments (project managers). To
this end, investment models and decision-making
procedures are employed, whose observance is
closely monitored by the Company’s Management
Board. In addition, all requests and potential changes
in the budgets of investment projects are entered
by the Budgeting and Analysis Division into result
forecast models and a cash flow forecast so that an
issue can be examined globally, and to eliminate risks
related to projects, liquidity, foreign exchange rates,
etc. Global management and risk monitoring as well
as internal control in all areas that are important for
the organisation largely limits most risks to which
the Company is exposed.
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Management Board Report on operations of Echo Investment S.A. and its Group in 2020
Risk Management Policy
As part of improving corporate governance stand-
ards, the Echo Investment Group implemented a
Risk Management Policy. The policy describes the
objectives of risk management, its place within the
management system, and the responsibility and the
rights of people involved in the process. The Man-
agement Board of Echo Investment S.A. is responsi-
ble for the overall risk management, in cooperation
with the Supervisory Board and the Audit Commit-
tee. The main goal of the Risk Management Policy is
to provide sustainable and stable economic growth
of the Group and to promote a proactive approach
to reporting, estimating and managing risks related
to the Group’s operations. The Risk Management Pol-
icy formalises and presents in a structured manner
the approach to risk management in the Echo Invest-
ment Group expected by the Management Board.
Internal Audit
The Internal Audit Department that performs inde-
pendent assessment of risk management and inter-
nal control systems, has been functioning in Echo
Investment. Audit tasks engagements are carried out
based on annual audit plans, approved and adopted
by the Audit Committee. Ad-hoc audits recommend-
ed requested by the Audit Committee or the Man-
agement Board of the Company are also conducted.
The results of the internal audit work are reported
directly to the Audit Committee and the Company’s
Management Board. The internal audit department
has free and unrestricted access to the Management
Board and Audit Committee of the Supervisory
Board. The Internal Audit Director reports function-
ally to the Audit Committee and administratively to
vice-president, CFO who performs oversight role
over internal audit function in the Company. Audit
Department meets the criteria and principles of in-
dependence set out in the widely used international
standards for the professional practice of internal
auditing.
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Management Board Report on operations of Echo Investment S.A. and its Group in 2020
The rules for amending the Company’s Statute or Articles of Association are governed
by the Commercial Companies Code. Amendments to the Statute require a resolution
of the General Shareholders’ Meeting of Echo Investment S.A. and an entry into the
National Court Register (KRS). The Management Board reports the amendment to the
Statute to the respective register court within three months of the date of the resolution
of the General Meeting.
Together with the entry of an amendment to the Statute, the amendment to the Com-
pany’s corporate data reported to the register court is entered into the National Court
Register. The General Shareholders’ Meeting can authorise the Supervisory Board of
Echo Investment S.A. to specify a complete text of the amended Statute or to introduce
other editorial amendments, as specified by the resolution of the Meeting.
The procedure of the General Meeting of the Company, its powers and the rights of
share-holders as well as the manner of exercising them are governed by the Company’s
Statute and the Code of Commercial Companies. The Company’s Statute is available
in the Investor relations / Strategy and corporate governance tab on the Company’s
website en.echo.com.pl. The schedule of work related to the organization of the gen-
eral meetings of the Company, including the preparation of materials presented at the
general meeting, is planned so as to duly fulfil the obligations towards shareholders
and enable them to exercise their rights.
Rules for amending the
Company’s articles of association
The procedure of the general
meeting, a description of
shareholders’ rights and the
manner of exercising them
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Management Board Report on operations of Echo Investment S.A. and its Group in 2020
Composition and changes in
the management board
In 2020 and as for the day of this report the com-
pany’s Management Board acted in the same com-
position:
Nicklas Lindberg
– President of the Board,
Maciej Drozd
– Vice-President of the Board, CFO,
Artur Langner
– Vice-President of the Board,
Marcin Materny
– Member of the Board,
Rafał Mazurczak
– Member of the Board,
Waldemar Olbryk
– Member of the Board,
Małgorzata Turek
– Member of the Board.
Due to the conditional appointment of Waldemar
Olbryk for the CEO of Archicom S.A., on March 15,
2021 Waldemar Olbryk, resigned from his seat in the
Management Board of Echo Investment. The resig-
nation will be eective under the condition of final-
izing the purchase of Archicom shares by the Echo
Investment Group.
Nicklas was appointed CEO of
Echo Investment in 2016 and
he is responsible for the strat-
egy and development of the
company.
From 2016 Echo Investment
has significantly grown its
scale of operation and pipe-
line. The launched Strategy
of Profitable Growth trans
-
formed Echo Investment into
pure developer operating
in seven major Polish cities,
Nicklas Lindberg
President of the Board, CEO
market leader in residential,
oce and retail real estate
sectors. The Group started to
design and build urban ‘desti-
nation’ projects, that combine
all functions and are well-de-
signed parts of the cities,
where people can live, work
and entertain. It has also intro-
duced operation in flex oce
space (CitySpace) and rental
apartments (Resi4Rent) seg-
ments.
Until 2015 Nicklas Lindberg
was employed by Skanska
Group, where he held several
top positions, such as presi-
dent of Skanska Commercial
Development Europe (CDE),
head of Skanska Property Po-
land, CFO and CEO of Skan-
ska Russia and a manager of
residential development units
in the Nordics. He graduated
from the University of Lund in
2001.
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Management Board Report on operations of Echo Investment S.A. and its Group in 2020
Responsible for the construc-
tion department of the Group.
He is a graduate of the facul-
ty of civil engineering at the
Kielce University of Technol
-
ogy. After finishing his stud-
ies he started working in the
construction sector, where
Artur Langner
Vice-President of the Board
he gained experience in par-
ticipating in every stage of
project construction. Artur
started working for Echo In
-
vestment in 1998 as a project
manager. In June 2000 he was
appointed director of project
preparation and later director
of the technical division. In
June 2005 he became a man-
agement board member and
was made a vice-president of
the management board on
June 27th 2008.
Marcin Materny
Management Board Member
Responsible for the develop-
ment of the company’s shop-
ping and entertainment cen-
tres. He has been employed
by Echo Investment since
1997 and has since climbed
all the career ladders in the
company. He started as a
leasing specialist and was lat-
er in charge of a leasing team
responsible for ten shopping
centres completed in 1998–
2000. Following this, as the
leasing director, he coordinat-
ed (among others) the leasing
and marketing of Pasaż Grun-
waldzki in Wrocław. In 2007–
2010, Marcin was employed
by Capital Park, where he co-
ordinated the develop-ment
of retail and oce projects.
In 2014 he became the di
-
rector of Echo Investment’s
shopping centre department,
where he contributed to the
company’s strategy in this
field and was responsible for
its comprehensive develop-
ment. He was appointed to
the management board on
September 15th 2016.
Rafał Mazurczak
Management Board Member
Responsible for Echo Invest-
ment’s office department.
He started his career at Echo
In-vestment in 2000 as an of-
fice leasing manager. In 2007–
2013 he was the leasing direc-
tor of Echo Investment’s oce
department. Since 2013 he has
been the director of the oce
department. He co-devised
the development strategy of
this part of Echo Investment’s
business and was responsi-
ble for its implementation.
He was also responsible for
the construction, leasing and
marketing of one of the com-
pany’s flagship projects, the
Q22 sky-scraper in Warsaw,
along with Park Rozwoju and
O3 Business Park in Kraków,
A4 Business Park in Katowice,
the Tryton oce building in
Gdańsk as well as West Gate
and Nobilis in Wrocław. Rafał
was appointed to the man-
agement board on September
15th 2016.
Appointed as a vice-president
of Echo Investment’s board in
2015. Responsible for finance
and back oce operations.
He restructured the Echo In-
vestment group while intro-
ducing the Profitable Growth
Strategy. His task was, among
others a change in the mod-
el of operation and financing
of the Group, which was the
long-term owner of a portfo-
lio of commercial real estate
Maciej Drozd
Vice-President of the Board,
CFO
generating fixed income from
rent, and has become a clas-
sic developer focused on fast
capital turnover and generat-
ing high returns. As a result,
Echo Investment has been
paying dividends on a regular
basis since 2016. The compa-
ny is also one of the largest
bond issuers in the real estate
sector.
In 1995 he joined Eastbridge
Group, initially as the financial
director of the group’s oper-
ational companies. Between
July 2009 and June 2015 he
was also the CFO and man-
aging partner of Eastbridge
Group. He studied philoso
-
phy, mathematics and man-
agement at the University of
Warsaw and holds a master’s
degree in philosophy and a
master’s degree in manage
-
ment. Maciej also holds an
MBA degree from the Univer-
sity of Illinois.
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Management Board Report on operations of Echo Investment S.A. and its Group in 2020
Małgorzata Turek
Management Board Member
A specialist in the field of as-
set management as well as
real estate purchase and sale
transactions. She has over
twenty years of experience in
the real estate sector, working
for both investment and de-
velopment companies as well
as international law firms. In
2017, she became president
of the then newly formed
Globalworth Poland Real Es-
tate, where she was respon-
sible for the organisation and
development of a sustainable,
revenue-generating property
portfolio, as well as the estab-
lishment of all key functions of
the company. She also gained
valuable experience at Skans-
ka Property Poland, where in
2012–2017, as a board member
(and chief operating ocer),
she was responsible for the
company’s transactions and
operations. Previously, she
was employed by leading law
firm Linklaters, where she spe-
cialised in transactions on the
commercial real estate mar-
ket. Małgorzata is a graduate
of the faculty of law and ad-
ministration of the Jagiellon-
ian University in Kraków and
a member of the Polish Bar
Association.
Waldemar Olbryk
Management Board Member
Responsible for the devel-
opment of the company’s
operations in the residential
sector. He joined Echo Invest-
ment in August 2017. Prior to
this he was employed by the
Skanska group, in such posi-
tions as the director of busi-
ness development and team
manager responsible for new
business, including public pri-
vate partnerships and shared
services. Prior to 2008 he
was employed by Philips Po-
land, Apsys Poland and BP.
Waldemar graduated in inter-
national economic relations
at the University of Łódź and
also completed MBA studies
at the University of Łódź and
the University of Maryland. He
was appointed to the board of
Echo Investment on October
10th 2017.
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Management Board Report on operations of Echo Investment S.A. and its Group in 2020
Description of principles
regulating the appointment
and dismissal of managerial
sta and their rights
The Management Board of Echo Investment S.A. op-
erates based on the Commercial Companies Code
Act (J.L. of 2017, item 1577), the Company’s Stat-
ute, the Rules and Regulations of the Management
Board of Echo Investment S.A., and according to
the adopted “Code of Best Practice for WSE Listed
Companies”. The Management Board or its Mem-
bers are appointed, dismissed and suspended by the
Supervisory Board, which also appoints the Presi-
dent and the Vice-Presidents of the Management
Board. The term of oce of the Management Board
is three years, and Management Board members
are appointed for a joint term of oce, which does
not preclude the right to dismiss a member of the
Management Board earlier. Mandates of Members
of the Management Board expire on the day of the
GSM’s approval of the financial statements for the
last year of the Management Board’s term of oce.
The Management Board or its individual Members
may be dismissed by the Supervisory Board before
the expiry of their term of oce, especially follow-
ing a justified written motion of shareholders who
represent at least 1/3 of the share capital, or if the
Management Board’s fulfilment of duties for the last
closed financial year is not acknowledged by the Or-
dinary General Shareholders’ Meeting. The Manage-
ment Board may consist of one or more persons.
The Management Board represents the Company
before ocials, institutions, third parties, courts as
well as public authorities. An appointed Proxy may
act on behalf of the Company to the same eect.
Declarations of intention, commitments and sign-
ing contracts and other documents on behalf of the
Company must be made jointly by: the President
and the Vice-President of the Management Board;
or two Vice-Presidents of the Management Board;
or the President or the Vice-President together with
Member of the Management Board; or the President
or the Vice-President of the Management Board to-
gether with the Proxy. Management Board Members
may only fulfil their duties in person. The Manage-
ment Board runs all current aairs of the Company,
subject to restrictions specified by the Commercial
Companies Code and the Article of Association. The
purchase and sale of real property, perpetual usu-
fruct title or a share in real property or a share in
perpetual usufruct title by the Company lies within
the responsibilities of the Management Board, sub-
ject to § 16, section 2, letters b) of the Statute.
When exercising the rights of the General Meeting
in subsidiaries, the Company’s Management Board is
obliged to obtain a prior consent from the Compa-
ny’s Supervisory Board, even if the incurred liability
or the exercise of a right by a subsidiary exceeds the
limits specified in § 16, section 2, letters b) and c) of
the Statute. According to this, a consent from the Su-
pervisory Board is required for the Company to incur
liabilities exceeding 10% of its equity, and in case of
obligations within the scope of matters covered by
the Company’s day-to-day operations, the consent
of the Supervisory Board is required if the value of
the activity exceeds 20% of the Company’s equity.
When deciding on the Company’s issues, the Man-
agement Board is particularly obliged to act within
the limits of reasonable economic risks, following an
in-depth analysis and consideration of all available
information, studies and opinions which, in the opin-
ion of the Management Board, should be taken into
consideration in the Company’s interest. In addition,
the Management Board submits motions regarding
issues to be discussed by the General Meeting to the
Company’s Supervisory Board for approval.
Information on the produced opinions is announced
to the public by the Company immediately after such
information is received from the Company’s Supervi-
sory Board. When contacting the media, members of
the Management Board may only provide generally
available information about the Company. All state-
ments for the media regarding financial forecasts
and the strategy of the Company or of the Manage-
ment Board may only be made by the President or
the Vice-President of the Management Board. With
regard to other issues, all members of the Manage-
ment Board or other authorised persons are allowed
to contact the media.
The Management Board meets at least once a month,
the meetings are presided over by the President of
the Management Board and, in his/her absence, by
the Vice-President of the Management Board and, in
the absence of the President and the Vice-President
of the Management Board, the meetings are presid-
ed over by the longest-serving Management Board
member of Echo Investment S.A. The meetings of
the Management Board are held at the Company’s
oce, unless all members of the Management Board
agree to hold a meeting in a dierent location. A
meeting of the Management Board may be held, if
all members of the Management Board have been
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Management Board Report on operations of Echo Investment S.A. and its Group in 2020
informed about the meeting, and at least two mem-
bers of the Management Board are present. The
meetings of the Management Board are convened
by the President of the Management Board or by any
other member of the Management Board who sees
fit to do so. Every member of the Management Board
must be informed about the date and agenda of the
meeting at least 2 days prior to the planned meeting.
The notification may be delivered by phone, through
the Oce of the Company’s Management Board,
by e-mail, by fax or in writing. The meetings of the
Management Board may be held even when they
have not been formally convened, if all members of
the Management Board are present and no present
member objects to the meeting being held or to spe-
cific items on the agenda. The Management Board
may pass its resolutions in writing or using means of
telecommunication, subject that, in such a case, the
Management Board is presided over by the member
requesting the adoption of a given resolution. This
procedure is not allowed when at least one member
of the Company’s Management Board objects.
The Management Board makes decisions by way of
resolutions. Resolutions of the Management Board
are adopted by an absolute majority of votes. In the
event of a tied vote when adopting resolutions by
the Management Board, the President of the Man-
agement Board shall have the casting vote and, in
the absence of the President of the Management
Board, the Vice-President of the Management Board
shall have the casting vote. In the absence of the
President and the Vice-President of the Management
Board, the longest-serving member of the Compa-
ny’s Management Board shall have the casting vote.
When required, minutes are taken from the meetings
of the Management Board. Resolutions of the Man-
agement Board are recorded in the minutes in such
a way so that they form attachments to the minutes,
or are included in the text of the minutes. In addi-
tion, the minutes must include the date and place
of the meeting of the Management Board, names of
the present Management Board members and the
number of votes cast on individual resolutions. The
minutes must be signed by all Management Board
members attending the meeting. Any dissenting
opinions of the attendees must be enclosed to the
minutes. The minutes are kept at the Oce of the
Company’s Management Board.
The Management Board, when defining strategic
objectives and current tasks, considers the best in-
terest of the Company, its shareholders, partners,
customers, employees and creditors, and observed
the law. To ensure transparency and eectiveness
of the management system, the Management Board
followed the rule of professional conduct within the
limits of reasonable economic risk, taking account of
the wide range of the available information, analyses
and opinions.
The remunerations of the Management Board Mem-
bers were defined by the Supervisory Board, based
on the responsibilities and skills of individual Man-
agement Board Members, and taking account into
the Company’s financial results, and a reasonable
relation was maintained to remunerations of Man-
agement Boards in similar companies on Polish real
property market.
On August 13, 2020, the General Meeting of Share-
holders adopted the Remuneration Policy for mem-
bers of the Management Board and Supervisory
Board, which organizes the issue of remuneration of
persons sitting on the company’s governing bodies.
The principles of remuneration in 2020 are in line
with the policy.
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Management Board Report on operations of Echo Investment S.A. and its Group in 2020
Composition of the Supervisory
Board and its changes
SUPERVISORY BOARD
AS AT JANUARY 1st 2020
Mark E. Abramson
– Independent Member of the Board,
Maciej Dyjas
– Member of the Board,
Stefan Kawalec
– Independent Member of the Board,
Nebil Senman
– Member of the Board.
SUPERVISORY BOARD
AS AT DECEMBER 31, 2020
Noah M. Steinberg
– Chairman of the Board,
Tibor Veres
– Vice- Chairman of the Board,
Margaret Dezse
– Independent Member of the Board,
Maciej Dyjas
– Member of the Board,
Sławomir Jędrzejczyk
– Independent Member of the Board,
Peter Kocsis
– Member of the Board,
Bence Sass
– Member of the Board,
Nebil Senman
– Member of the Board.
On December 13, 2019 Karim Khairallah, Laurent Luc-
cioni and Sebastian A. Zilles submitted resignations
from membership in the Company’s Supervisory
Board conditional upon the acquisition by WING IHC
Zrt of all the shares in the share capital of Lisala sp. z
o.o.. Condition included in the resignation letters was
fulfilled as of December 13, 2019 and the resignations
have been eective.
On January 9, 2020, the Extraordinary General Meet-
ing of Shareholders of Echo Investment S.A. resolved
to appoint: Noah Steinberg, Tibor Veres, Peter Koc-
sis and Bence Sass as a member of the Company’s
Supervisory Board during the term of oce. The
Extraordinary General Meeting of Shareholders of
Echo Investment S.A. decided to entrust the function
of the Chairman of the Supervisory Board to Noah
Steinberg and the function of Vice Chairman of the
Supervisory Board to Tibor Veres.
Due to Mark Abramson resignation from his seat
in the Supervisory Board and dismission of Ste
-
fan Kawalec, the Ordinary General Meeting of the
Shareholders appointed Margaret Dezse and Sła-
womir Jędrzejczyk as independent members of the
supervisory board on August 13th 2020. The new
members of the Supervisory Board also became
members of the Audit Committee: Margaret Dezse
as chair and Sławomir Jędrzejczyk as vice-chairman.
Noah Steinberg is WING
Group’s Chairman & Chief Ex-
ecutive Ocer, and also one
of its owners. An American
citizen, he has worked in Hun-
gary since 1990. In his current
position since 1999, he was
responsible for establishing
WING and oversees the com-
Noah M. Steinberg
Chairman of the Supervisory
Board
pany’s investment and devel-
opment businesses covering
all market segments - oce,
industrial and logistics, retail,
hotel and residential - and its
real estate services portfolio.
He is also the chairman of
Royal Institution of Chartered
Surveyors (RICS) in Hungary.
Graduated from Princeton
University (Woodrow Wilson
School of Public and Inter-
national Affairs, Princeton
University – BA) and the Dip-
lomatic Academy of Vienna
– MA). Speaks English, Hun
-
garian, French, German and
Spanish.
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Management Board Report on operations of Echo Investment S.A. and its Group in 2020
He founded together with his
father, György Veres the legal
predecessor of today’s Wal-
lis Group. At present, he is
the main owner of the Wallis
Group, as well as the Chairman
of its Board of Directors, while
he is also a member of the
Board of Directors at Grabo-
plast and the Wing Group.
Wing Group is the most sig-
nificant enterprise connected
to the Wallis Group, both in
terms of asset value, as well as
Tibor Veres
Vice-Chairman of the Super-
visory Board
the level of business complex-
ity. In 2016, he acquired the
Praktiker home improvement
chain, which had possessed
a considerable real estate
portfolio, so the Wallis Group
broadened its spectrum with
a new significant element.
Three of the companies es
-
tablished by Mr. Tibor Veres
are present at the Hungarian
stock exchange as issuers of
bonds and shares. In addition
to the WING Group, Alteo En-
ergy Services Plc. is involved
in renewable energy produc-
tion, and AutoWallis Plc. in-
corporates the automotive
members of the Wallis Group,
a corporation which has been
justly famous for decades.
Tibor Veres earned his eco-
nomics MA at the Moscow
State Institute of International
Relations in 1986.
Margaret Dezse
Independent Member of the
Supervisory Board
Maciej Dyjas
Member of the Supervisory
Board
Margaret is a former partner
of Ernst & Young (EY) and
PwC and has spent a total of
35 years employed by the Big
4 accounting firms. In that pe-
riod, for 20 years she was a
partner in the fields of trans-
actions advisory and corpo-
rate finance, initially with PwC
and for the final ten years with
EY.
As a chartered accountant,
Margaret started out as an au-
ditor, in her home country of
Maciej is a shareholder of
Grin Real Estate – a leading
company on the commercial
property market in Central
and Eastern Europe. He is
also a Managing Partner at the
Cornerstone Partners private
equity fund which invests in
healthcare and pharmaceuti-
cals, retail, industry, manufac-
turing, and infrastructure sec-
Canada. After moving to Hun-
gary in 1989, her career quick-
ly evolved from audit into the
fields of privatisation and
corporate finance. In the last
30 years, she has advised on
hundreds of transactions and
assisted clients from a variety
of industries on strategic and
investment decision making.
In addition to leading the cor-
porate finance and transac-
tions advisory teams in Hun-
gary, she has held dierent
tors. He gained management
experience in the Wandel &
Goltermann Hewlett Packard
Systems consulting company
and he continued as a Man-
aging Partner and Chairman
at Eastbridge Group and
key companies controlled by
the fund, including NFI Em-
pik Media & Fashion. In 2014
Eastbridge Group held as-
regional leadership roles in
the CEE region, including es-
tablishing a corporate finance
department in Ukraine. She is
presently serving as a member
of the board of directors and
chairman of the audit commit-
tee of Masterplast Nyrt and is
an executive committee mem-
ber of Kometa Zrt. She is also
a supervisory board member
of United Way Hungary and of
the supervisory board of so-
cial impact oriented venture
capital fund Impact Ventures.
sets worth more than USD
3 bln in the retail, consumer
goods and real estate sec
-
tors. He studied business,
management, IT, psychology
of management and commu-
nication at universities in War-
saw, Stuttgart, Frankfurt and
Southampton in Great Britain.
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Management Board Report on operations of Echo Investment S.A. and its Group in 2020
Sławomir has over 20 years
of experience working for
Warsaw Stock Exchange list-
ed companies. In 2008–2017,
he was vice-chairman of the
management board and CFO
of PKN Orlen S.A., as well as
vice-chairman of the supervi-
sory board of Unipetrol a.s., a
member of the management
board of Orlen Lietuva, and a
member of the board of direc-
tors of Orlen Upstream Can-
ada. His main responsibilities
Managing Partner at Grin
Real Estate. For nine years Ne
-
bil Senman held leading po-
sitions as a Senior Vice-Presi-
dent and a Supervisory Board
Member of Oaktree’s German
and Polish real estate funds
and he was responsible for
operations worth several bil-
He is WING’s Deputy Chief Ex-
ecutive Ocer responsible for
strategy, risk and controlling
and has been with Wing since
2006. In his current position
since 2009, he is responsible
for risk analysis and tradition-
al controlling of a portfolio of
some 35 property SPVs with
assets worth €800 million and
with annual rental income of
€50 million. Board member at
He is a senior real estate pro-
fessional with 18 years of ex-
perience in real estate invest-
ment. He holds a bachelor
degree (BA) from the Buda-
pest Business School and a
master’s degree (MBA) from
the Budapest University of
Sławomir Jędrzejczyk
Independent Member of the
Supervisory Board
Nebil Senman
Supervisory Board Member
Audit Committee Member
Péter Kocsis
Member of the Supervisory
Board
Bence Sass
Member of the Supervisory
Board
have included implementing
strategy geared towards in
-
creasing value, building cap-
ital market relations, provid-
ing financing, and increasing
cash flows through operating
excellence, divestments and
projects aimed at improving
working capital levels. He
has also been responsible for
planning and reporting, busi-
ness controlling, accounting,
supply chain manage ment,
investor relations, M&A and IT.
lion euro. Before joining Oak-
tree he spent eight years deal-
ing with the real estate and
corporate consulting at Ernst
& Young Real Estate (former
Arthur Andersen), where he
held dierent managerial po-
sitions. He is a graduate of
universities in Berlin (TU Ber-
and also responsible for con-
trolling of three real estate
service provider subsidiaries
with total annual turnover of
€70 million. Generates strat-
egy and business plan for the
development portfolio worth
€500 million. Chief Risk Of-
ficer at two real estate fund
management companies of
Wing.
Technology and Economics. In
his current role, he is heading
the international expansion
activities at WING Group. He
is also responsible for busi-
ness development and trans-
actions within the company.
Before his current workplace,
Sławomir has previously held
the position of CEO of Emitel.
He has also been employed
by Telekomunikacja Polska,
ORFE, Impexmetal and Price
Waterhouse. He graduated
from the London Business
School (senior executive pro-
gramme) and the Łódź Uni-
versity of Technology’s facul-
ty of electronics, and is also a
member of the Association of
Chartered Certified Account-
ants (ACCA).
lin, EBS), Paris (ESCP Europe)
and London (LSE) and holds
an MBA and a degree in civil
engineering. He also holds a
post-graduate diploma in real
estate management (EBS).
Nebil is a member of the Roy-
al Institution of Chartered Sur-
veyors (MRICS).
Alumnus of Corvinus Uni-
versity Budapest with MA
and subsequently earned
post-graduate degrees from
the University of Birmingham
(MIS) and from Georgetown
University (MSFS). Speaks
Hungarian, English and Ger
-
man.
he was part of the leading
real estate financing team of
UniCredit Bank. He is a mem-
ber of the Royal Institution of
Chartered Surveyors (RICS).
He speaks Hungarian, English
and German.
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Management Board Report on operations of Echo Investment S.A. and its Group in 2020
Company’s supervisory
board – rules of operation
The Supervisory Board of Echo Investment S.A. op-
erates based on the Commercial Companies Code
Act (J.L. of 2017, item 1577), the Company’s Stat-
ute, the Rules and Regulations of the Supervisory
Board of Echo Investment S.A. and according to the
adopted “Code of Best Practice for WSE Listed Com-
panies”. The Supervisory Board is composed of at
least 5 members who are appointed (and dismissed)
by the General Meeting for a period of three years;
members of the Supervisory Board are appointed
for a joint term of oce, which does not preclude an
earlier dismissal of every member of the Superviso-
ry Board. At least two Members of the Supervisory
Board should fulfil criteria of independency of the
Company and entities materially related to the Com-
pany. The independent Member of the Supervisory
Board makes a written statement to the Company
and to the Chairman of the Supervisory Board or
the Deputy-Chairman of the Supervisory Board on
fulfilment of the independency criteria. Supervisory
Board Members may be re-appointed. A resolution
of the General Meeting each time specifies the num-
ber and the members of the Supervisory Board. If
the General Meeting does not specify the function
of a given member of the Supervisory Board when
appoint such a member, the Supervisory Board ap-
points the Chairman of the Supervisory Board from
among its members and the Vice-Chairman in a se-
cret ballot.
Members of the Supervisory Board fulfil their duties
only in person. Members of the Supervisory Board
delegated to constant and individual supervision
may not, without the Company’s consent, be in
-
volved in competitive business or participate in a
competitive company as a partner in a civil law part-
ner-ship, a partnership or as a member in a body of
a capital company, or participate in another com-
petitive legal person as a member of its bodies. This
prohibition also includes participation in a compet-
itive capital company in which a Supervisory Board
member holds at least 10% of interests or shares, or
has the right to appoint at least one management
board member. Members of the Supervisory Board
may be dismissed at any time by the General Share-
holders’ Meeting. A Supervisory Board member may
resign his/her post before the expiry of the term of
oce for which he/she was appointed by submit-
ting a statement to the Chairman of the Supervisory
Board. If the Chairman of the Supervisory Board re-
signs his/ her post, the statement is submitted to the
Vice-Chairman. A Member of the Supervisory Board
should not resign during the term of oce, if such
a resignation could prevent the Supervisory Board
from operating, and especially if it could pre vent the
adoption of an important resolution. The mandate of
a Supervisory Board member expires, at the latest,
on the day of the General Meeting which approves
the Company’s financial statements for the last full fi-
nancial year in which the Supervisory Board member
held his/her post (final year of the member’s term of
oce). The mandate also expires up-on death or dis
-
missal of a Supervisory Board member. If, as a result
of expiry of mandates of Supervisory Board mem-
bers, the Supervisory Board is composed of fewer
than 5 members, the Supervisory Board is unable
to pass legally binding resolutions, and the Chair-
man of the Supervisory Board, or, in the absence
of the Chairman, the Vice-Chairman, requests the
Company’s Management Board to promptly convene
an Extraordinary General Meeting and to include the
appointment of Supervisory Board members in the
agenda of the General Meeting. A member of the
Supervisory Board should be primarily concerned
about the Company’s interest.
When contacting the media, members of the Super-
visory Board may only provide generally available
information about the Company. Any statements for
the media regarding the Company or the Superviso-
ry Board may only be made by the Chairman of the
Supervisory Board or a person appointed by him/
her.
The responsibilities of the Supervisory Board include
supervision over the Company’s business and other
actions, as stipulated by the Commercial Compa-
nies Code and other acts. The Supervisory Board
adopts resolutions or gives opinions on issues within
its scope of responsibilities, according to the Com-
pany’s Statute and under the procedure stipulated
by the provisions of the Statute or other laws. In
particular, the Supervisory Board is authorised to:
− examine the Company’s financial statements for
the last financial year,
−
examine the Company’s Management Re-port and
suggestions of the Management Board regarding
the distribution of profit and the coverage of loss,
− submit a written report on the above actions to
the General Meeting,
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Management Board Report on operations of Echo Investment S.A. and its Group in 2020
−
express opinions on motions submitted by the
Management Board directed to the General Meet-
ing, and
− express opinion and pass resolutions on other is-
sues submitted by the Company’s Management
Board,
−
appoint, dismiss and suspend the Company’s
Management Board or its individual members,
−
appoint or change of an auditor Company to audit
the Company’s financial statement with whom the
Management Board concludes an agreement,
− approve the Management Board’s conclusion of
the agreement with a sub-issuer referred to in Ar-
ticle 433 § 3 of the Commercial Companies Code,
− approve the contracting of liabilities and dispos-
ing of the rights to the extent within the current
business of the Company – if their value exceeds
20 % of the Company’s equity,
− approve the contracting of liabilities and dispos-
ing of the rights that go beyond the current busi-
ness of the Company – if their value exceeds 10%
of the Company’s equity,
−
assessment of the criteria of independency of
each Supervisory Board Member.
If it is uncertain whether a given issue has been
included in the current business of the Company,
the Supervisory Board is entitled to make a rele
-
vant interpretation in this respect, at the request of
the Management Board. The interpretation shall be
binding for the Management Board. Issues related
to trade in real estate are within the scope of the
Company’s current business. The meetings of the
Supervisory Board are held as necessary but at least
three times per financial year. The meetings of the
Supervisory Board are convened by the Chairman
or the Vice-Chairman and are held in the Company’s
oce or in a location indicated by the Chair-man
or the Vice-Chairman. The meetings of the Supervi-
sory Board are convened upon the initiative of the
Chairman of the Board or at a written request of the
Management Board or a member of the Supervisory
Board. The meetings of the Supervisory Board con-
vened at the request of the Management Board or
a member of the Supervisory Board must be held
within two weeks from the date of submitting the
request, but no earlier than on the third day after
receiving such request by the Chairman of the Su-
pervisory Board. The meetings are presided over
by the Chairman and, in his/her absence, by the
Vice-Chairman of the Supervisory Board. If neither
the Chairman nor the Vice-Chairman of the Super-
visory Board is present at the meeting, the meeting
is presided over by the Board member appointed by
the present attendees. The Supervisory Board may
hold a meeting without being formally convened,
if all of its members are present, and no member
objects to the meeting being held and to including
specific items in the agenda. The meetings of the Su-
pervisory Board may be attended by other persons
invited by the Chairman of the Supervisory Board,
including Members of the Management Board with
the right to advise.
The members of the Supervisory Board make deci-
sions related to the exercise of supervisory and con-
trol rights by way of resolutions. All Members of the
Supervisory Board must be invited to the meeting
and at least 50% of the Members must be present
at the meeting or otherwise the resolutions of the
Supervisory Board are null and void. The Supervisory
Board may pass resolutions in writing. The Super-
visory Board resolutions may be passed in writing
under the condition of signing the resolution by each
Supervisory Board Member under the same copy
of the resolution draft or on separate copies, and
informing all Supervisory Board Members about
the con-tent of the draft resolution by sending it
via post, including post courier, fax or e-mail on the
address indicated by the Supervisory Board Member.
Such a way may not involve the appointment of the
Chairman and the Vice-Chairman of the Supervisory
Board, the appointment of a Member of the Manage-
ment Board as well as the dismissal and suspension
of these individuals. In such a case, for the resolu-
tions to be valid, the Supervisory Board members
must be notified in advance about the draft reso-
lutions. Resolutions of the Supervisory Board are
adopted by an absolute majority of votes. In case of
a tied vote when adopting resolutions by the Super-
visory Board, the Chairman of the Supervisory Board
shall have the casting vote.
The meetings of the Supervisory Board are minuted.
Resolutions of the Supervisory Board are recorded in
the minutes in such a way so that they form attach-
ments to the minutes, or are included in the text of
the minutes. In addition, the minutes must include
the date and place of the meeting of the Superviso-
ry Board, names of the present Supervisory Board
members and the number of votes cast on individ-
ual resolutions. The minutes must be signed by all
Supervisory Board members attending the meeting.
Any dissenting opinions of the attendees must been
closed to the minutes.
To fulfil their duties, the Supervisory Board has the
right to control the full scale of the Company’s op-
erations, in particular:
− request the Management Board to provide doc-
uments and other materials on the Company’s
operations,
− verify the Company’s files and documentation,
− demand explanations and reports from the Man-
agement Board and from the employees,
− revise the status of the company’s assets.
The Supervisory Board has the right to submit mo-
tions to the General Meeting regarding all issues
within its scope of tasks and responsibilities. The
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Management Board Report on operations of Echo Investment S.A. and its Group in 2020
Supervisory Board fulfils its duties by acting joint-
ly; it may, however, delegate individual members
to independent and specific supervisory functions
by way of a resolution. The Supervisory Board may
appoint committees for specific matters, including
Audit Committee, adopting its rules and appointing
the Chairman of the Audit Commit-tee. The secre-
tarial services to the Supervisory Board are provided
by the oce of Company’s the Management Board.
The secretarial services include: preparing invitations
to the meetings of the Supervisory Board and send-
ing them to the members of the Supervisory Board
according to these rules and regulations, organising
the premises where the meeting of the Superviso-
ry Board is to be held, preparing minutes from the
meeting, providing services during the meeting and
archiving the Supervisory Board’s documentation.
| Corporate governance
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Management Board Report on operations of Echo Investment S.A. and its Group in 2020
Composition of the Audit
Committee and its changes
AUDIT COMMITTEE
AS AT JANUARY 1, 2020.:
Stefan Kawalec
– Chairman,
Mark E. Abramson
– Vice-Chariman,
Nebil Senman
– Member of the Audit Committee.
AUDIT COMMITTEE
AS AT DECEMBER 31, 2020.:
Margaret Dezse
– Chair,
Sławomir Jędrzejczyk
– Vice-Chariman,
Nebil Senman
– Member of the Audit Committee.
Throughout 2020 and as at the date of publication
of the report, independent members of the Super-
visory Board constitute the majority of the Audit
Committee.
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Management Board Report on operations of Echo Investment S.A. and its Group in 2020
The responsibilities ofthe
Audit Committee
The responsibilities of the Audit Committee include
in particular:
1. monitoring:
a. the financial reporting process;
b. the eciency of the internal control systems and
risk management systems as well as internal au-
dits, including with respect to financial reporting;
c. the execution of financial review proceedings, in-
cluding specifically the audits performed by the
auditing firm;
2. inspecting and monitoring the independence of
the certified auditor and the auditing firm, spe-
cifically in the event that the audit firm renders
any non-audit services to the Company, including
with regard to any change of the certified audi-
tor or the auditing firm and the level of received
remuneration;
3.
informing the Supervisory Board about the results
of the audit and providing explanations as to how
the audit contributed to the accuracy of financing
reporting in the Company, and what was the role
of the Audit Committee in the audit procedure;
4. assessment of the independence of the certified
auditor and consenting to that auditor conducting
any non-audit permitted services in favour of the
Company;
5. development of the policy of the selection of an
auditing firm for the conduct of an audit
6.
development of the policy applicable with respect
to any non-audit permitted services rendered by
the auditing firm which conducts the audit and by
any entities related to that auditing firm and by
any member of the auditing firm’s group;
7. determining the procedure for the selection of an
auditing firm by the Company;
8.
providing the Supervisory Board with recommen-
dations concerning the appointment of certified
auditors or auditing firms in accordance with the
policies referred to in sections 3.5 and 3.6 of By-
laws of the Audit Committee;
9.
presentation of recommendations with the ob-
jective of ensuring the accuracy of the financial
reporting process in the Company;
10.
assessment of the work of the certified auditor
and the auditing firm;
11. supervising the manner in which the Company’s
Management Board performs duties related to
preparation of tax documentation of transactions
with related entities;
12.
preparation of the opinions within the scope of
the Audit Committee’s competence, on the in-
itiative of the Supervisory Board or on its own
initiative;
13.
informing the Supervisory Board in due time
about the Audit Committee’s method of utilising
its entitlements and about significant events re-
garding its operations, in particular providing any
and all information about the results of the Audit
Committee’s work;
14.
participation in Supervisory Board meetings, Man-
agement Board meetings and General Meetings
of the Company in order to provide a detailed
account of the Audit Committee’s operations.
The Audit Committee may demand that the key
certified auditor discuss with an audit committee,
management board or any other managing body,
supervisory board or other supervisory or controlling
body in a public interest entity or a key certified au-
ditor may demand discussing with the Audit Com-
mittee, management board or any other managing
body, supervisory board or other supervisory or
controlling body in a public interest entity of any
issues discovered in the course of the audit which
were mentioned in the additional report referred to
in Article 11 of the Regulation No. 537/2014.
The Audit Committee, without the intermediation of
the Supervisory Board, is entitled to:
1. demand the Company to provide specific infor-
mation, explanations and documents necessary
for the performance of the duties referred to in
sections 3.1 – 3.15 of By-laws of the Audit Com-
mittee, including with regard to bookkeeping,
finance, internal and external audit, in particular
members of the Audit Committee are entitled to
examine any and all books and documents and to
obtain information and clarifications from mem-
bers of the Management Board, directors and
employees of the Company in the scope that is
necessary for the appropriate performance of du-
ties by the Audit Committee;
2.
demand from the Company to submit the work
schedules of internal auditors and certified audi-
tors or auditing firms,
3. examining annual and semi-annual reports of the
Company in due time;
4.
putting forward recommendations and assess-
ments to the Supervisory Board within the scope
of the Audit Committee’s responsibilities, the
President of the Management Board shall be in-
| Corporate governance
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Management Board Report on operations of Echo Investment S.A. and its Group in 2020
formed about the recommendations and assess-
ments put forward to the Supervisory Board
While fulfilling its responsibilities the Audit Commit-
tee can acquire help or information from an expert
or experts chosen by the Audit Committee for a fee
agreed by both the expert and the Audit Commit-
tee, which needs to be approved by the President of
the Supervisory Board. On obtaining the aforemen-
tioned approval of the President of the Supervisory
Board, the Audit Committee Chairman shall inform
the Management Board about the agreed fee and
other actions required in order to employ the ex-
pert or experts. The Audit Committee will select the
expert in consideration of the financial position of
the Company.
In terms of meeting the conditions of independence
of members of the Audit Committee, the provisions
referred to in Article 129 par. 3 of the Act of May 11,
2017 on statutory auditors, audit firms and public
supervision, as well as independence criteria of su-
pervisory board members in line with Best Practices
of GPW Listed Companies 2016 (principle II.Z.4. sec-
tion II: Management Board and Supervisory Board)
are applied accordingly.
| Corporate governance
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Management Board Report on operations of Echo Investment S.A. and its Group in 2020
Investment Committee
On September 2, 2020 the Supervisory Board ap-
pointed the Investment Committee that will be re-
sponsible for the ongoing evaluation of the activities
in the field of purchasing and selling assets, financ-
ing plans, the asset sales strategy development and
the implementation of investment plans based on
the approved annual budget. In 2020 there was no
changes in the composition of the Investment Com-
mittee.
INVESTMENT COMMITTEE
AS AT DECEMBER 31, 2020.:
Noah M. Steinberg
– Chairman,
Maciej Dyjas,
Péter Kocsis,
Bence Sass,
Nebil Senman.
| Corporate governance
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Management Board Report on operations of Echo Investment S.A. and its Group in 2020
Echo Investment S.A.
shareholding structure and
shareholders’ rights
The share capital of Echo Investment S.A. is divided
into 412,690,582 ordinary bearer shares of A, B, C, D,
E and F series. None of the shares has limited rights.
The Company’s share capital, i.e. the nominal value
of all the shares, amounts to PLN 20,635, and it was
paid in cash. The nominal value of one share is PLN
0.05. The number of shares equals the number of
votes at the General Meeting of Shareholders. The
securities issued by Echo Investment S.A. do not
provide their owners with any special controlling
powers. Echo Investment S.A. does not have any
information on limitations in exercising the voting
right or transferring ownership rights by owners of
its securities.
The shareholding structure information as it was
on December 31, 2020 and as on the balance sheet
day is based on notifications from shareholders and
information on the OFE (Opened Pension Funds)
portfolios composition as at December 31, 2020.
SHAREHOLDERS OF ECHO INVESTMENT S.A. HOLDING MORE THAN
5% OF THE SHARE CAPITAL AS AT 31 DECEMBER 2020
– Lisala Sp. z o.o. (Wing IHC Zrt and Grin Real
Estate partners)
– Nationale-Nederlanden OFE
– Aviva Otwarty Fundusz Emerytalny Aviva Santander
– Nicklas Lindberg – CEO
– Maciej Drozd – Vice-President, CFO
– Péter Kocsis – Member of the Supervisory Board
– Other
Number of shares:
272 375 784 –
55 833 698 –
27 350 695 –
538 676 –
221 765 –
44 000 –
56 325 964 –
66%
6.63%
13.53%
13.53%
0.13%
0.05%
0.01%
STATEMENT OF THE
MANAGEMENT BOARD
CHAPTER 3
| Statement
131
Management Board Report on operations of Echo Investment S.A. and its Group in 2020
Kielce, 30 March, 2021
The Management Board of Echo Investment S.A. declares that, to the best of its
knowledge, the Management Board Report on operations of Echo Investment S.A.
and its Group for 2020 and comparative data have been presented in compliance
with the applicable accounting principles, and that they reflect in a true, reliable and
transparent manner the economic and financial situation of Echo Investment S.A.
and its financial result. The management report of Echo Investment S.A. presents a
true view of development, accomplishments and situation of Echo Investment S.A.,
including a description of fundamental risks and threats.
The Management Board of Echo Investment S.A. declares that the entity authorised
to audit financial statements, auditing the annual financial statements for 2020, was
selected in accordance with the laws. This entity and the statutory auditors conducting
the audit fulfilled the conditions required to express an unbiased and independent
opinion on the audited annual financial statements, pursuant to the applicable laws
and professional standards.
Nicklas Lindberg
President of the Board, CEO
Maciej Drozd
Vice-President of the Board, CFO
Artur Langner
Vice-President of the Board
Rafał Mazurczak
Member of the Board
Marcin Materny
Member of the Board
Waldemar Olbryk
Member of the Board
Małgorzata Turek
Member of the Board
The document is signed with qualified electronic signature
CONTACT
Echo Investment S.A.
Warsaw oce
Q22 building
al. Jana Pawła II 22
00-133 Warsaw
Design and execution: Damian Chomątowski | be.net/chomatowski