Message from CEO

CHAPTER 1

MANAGEMENT BOARD REPORT

General information about the Company and its Group
Management Board
Supervisory Board
The Strategy of Profitable Growth in action
Business model
Selected financial data of the Echo Investment Group
The main figures disclosed in the annual financial statements of Echo Investment S.A. and its Group
Operating segments of Echo Investment Group
Ownership structure of Echo Investment S.A. and description of shares
Volume of the Company’s shares and bonds held by managing and supervising persons
Major events in 2020 and material agreements for the operation of the Company and its Group
Material post-balance sheet events
Residential segment – market outlook and Echo Investment business activities
Office segment – market outlook and Echo Investment business activities
Retail segment – market outlook and Echo Investment business activities
Our employees and diversity policy
How we manage risk
Portfolio of properties
Main investments in 2020 – acquisition of plots
Output markets and sources of supplies of materials, goods and services
Composition of the Group
Financial liabilities of the Company and its Group
Off-balance sheet liabilities
Information on dividend policy and dividend
Assessment of financial resources management and investment plan feasibility
Factors and one-off events influencing the financial result in 2020 and in Q4 2020
External and internal factors significant for the development of Echo Investment S.A. and its group
Remuneration of the Management Board and Supervisory Board
Seasonal or cyclical nature of operations
Significant court, arbitration or public administration proceedings
Information on borrowings granted in 2020, including to related entities
Agreements concluded with an entity authorised to audit financial statements
Other disclosures required by law
The impact of the COVID-19 pandemic on the operations of Echo Investment Group

CHAPTER 2

STATEMENT ON THE APPLICATION OF CORPORATE GOVERNANCE PRINCIPLES

The Articles of Association of the Company and the most important corporate governance documents
Systems of internal control and risk management
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
Composition and changes in the management board
Description of principles regulating the appointment and dismissal of managerial staff and their rights
Composition of the Supervisory Board and its changes
Company’s supervisory board – rules of operation
Composition of the Audit Committee and its changes
The responsibilities of the Audit Committee
Investment Committee
Echo Investment S.A. shareholding structure and shareholders’ rights

CHAPTER 3

STATEMENT OF THE MANAGEMENT BOARD

Contact

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.

The strategic directions

Taking into account the new reality in which we operate, social trends, and changing client preferences, 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 significantly increase the 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 office sector, as well as remain active in the retail sector focusing on destination projects 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 offer: last year, we have started the construction and sale of apartments in seven projects which added almost 1,300 apartments to the offer. After finalizing the purchase of the majority stake in Archicom, only in 2021 our group will start construction of 7,000 apartments.

DEAR SHAREHOLDERS, PARTNERS AND CLIENTS,

apartments for sale and rent. The acquisition is in line with our strategic goal of becoming a nationwide leader in the residential sector.

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. During 2021 we will complete another 460 apartments and start a construction of more than 3 thous. additional units. Ultimately, by 2025, it will offer 10 thousand. apartments in the six largest Polish cities - in Warsaw, Kraków, Łódź, Wrocław, Gdańsk and Poznań.

Offices

Last year, Echo Investment’s office department focused on completing the construction of office 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.# Management Board Report on operations of Echo Investment S.A. and its Group in 2020

Already in the first quarter of 2021, we sold Villa Offices in Warsaw and we are conducting advanced talks about the sale of other buildings. Our office projects continue to win the trust of financial institutions due to their high quality and the central locations in the different 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 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. 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.

The retail sector

The retail sector was hit the hardest during the pandemic, mainly due to three lock-downs and continually 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

Management Board Report on operations of Echo Investment S.A. and its Group in 2020

Echo Investment Group’s core activity consists in the construction, lease and sale of office 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 office 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 Warsaw Stock Exchange on the regulated market, sector – WIG – Real Estate. The parent entity is Lisala Sp. z o.o., and the ultimate parent of the group is WING IHC Zrt. The Company was established for an indefinite period of time.

General information about the Company and its Group


Kielce	1996 First listing of Echo Investment on the WSE.

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

Management Board Report on operations of Echo Investment S.A. and its Group in 2020

Supervisory Board

Professional CV’s of the Board Members are presented in the Corporate Governance section on page 119.

Margaret Dezse - Independent Supervisory Board Member, Chair of the Audit Committee
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

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 approval of the Supervisory Board. The strategic directions confirmed in 2020 place particular emphasis on the Group’s development 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: office, 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 office 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 different 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 office, retail, entertainment 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. Towarowa 22 in Warsaw, Wita Stwosza in Kraków, Opieńskiego in Poznań, KEN in Warsaw, Kapelanka in Kraków and Widzewska in Łódź;
Signing preliminary agreement for a plot in Służewiec Przemysłowy, Warsaw (Empark);
Search for other large areas for multifunctional purposes.

Management Board Report on operations of Echo Investment S.A. and its Group in 2020

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 office 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 office 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 office and retail assets in 2016 to another company – EPP and sale of all of its shares in 2016-2018;
Sales of finished office 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 completion;
Conducting the sales process of residential projects in such a way that 80% of units are sold at the time of completion;
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.# Management Board Report on operations of Echo Investment S.A. and its Group in 2020

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

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 oered 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.

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 oce 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.).

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
Revenue	1 212 854	880 133
Operating proﬁt	338 167	450 153
Gross proﬁt	176 612	398 188
Proﬁt attributable to shareholders of the parent company	122 093	299 532
Cash ﬂows from operating activities	(70 736)	(82 396)
Cash ﬂows from investment activities	(752 895)	(132 358)
Cash ﬂows from ﬁnancing activities	658 433	267 517
Net cash ﬂow	(165 198)	52 763
Total assets	5 630 796	4 810 429
Equity attributable to equity holders of the parent	1 684 685	1 562 365
Long-term liabilities	1 939 376	1 970 451
Short-term liabilities	2 006 861	1 277 735
Number of shares	412 690 582	412 690 582
Proﬁt (loss) per one ordinary share	0,30	0,73
Book value per one share	4,08	3,62

The main ﬁgures disclosed in the annual ﬁnancial statements of Echo Investment S.A. and its Group

	2018	2019	2020
ASSETS AND LIABILITIES – PLN MLN
Total assets	3 892	4 810	5 631
Total liabilities	2 765	3 281	3 946

ASSETS’ STRUCTURE

	Echo Investment S.A.	Echo Investment Group
Non-current assets	23%	72%
Current assets	49%	28%
Assets held for sale	28%	0%

ASSETS’ VALUE

	PLN 3 281 thous.	PLN 5 631 thous.
2020	5 631	3 281
2019	4 810	3 281
2018	3 892	2 935

NON-CURRENT ASSETS’ STRUCTURE

	PLN 2 368 thous.	PLN 3 281 thous.
Interests in subsidiaries, joint-ventures and associates	40%	22%
Interests in joint-ventures and associates	1%	20%
Long-term financial assets	32%	9%
Investment properties	28%	40%
Investment properties under construction	6%	28%
Borrowings granted	12%	11%
Other	32%	35%

CURRENT ASSETS’ STRUCTURE

	PLN 912 thous.	PLN 2 765 thous.
Inventory	35%	58%
Trade and other receivables	20%	29%
Borrowings granted	1%	7%
Short-term financial assets	32%	35%
Receivables due to other taxes	5%	20%
Cash and other cash equivalents	4%	1%
Other	6%	4%

EQUITY AND LIABILITIES

	PLN 1 596 thous.	PLN 5 631 thous.
Equity	22%	50%
Long-term liabilities	58%	28%
Short-term liabilities	20%	22%
Liabilities related to assets held for sale	0%	0%

	PLN 2 765 thous.	PLN 912 thous.
Equity	35%	20%
Long-term liabilities	20%	1%
Short-term liabilities	1%	32%
Liabilities related to assets held for sale	40%	46%

PROFIT AND LOSS ACCOUNT

REVENUE

	2018	2019	2020
(PLN MN)
Echo Investment S.A.	713	880	1 213
Echo Investment Group	305	404	338

OPERATING PROFIT

	2018	2019	2020
(PLN MN)
Echo Investment S.A.	68	42	78
Echo Investment Group	300	450	338

GROSS PROFIT

	2018	2019	2020
(PLN MN)
Echo Investment S.A.	305	424	177
Echo Investment Group	300	398	177

NET PROFIT

	2018	2019	2020
(PLN MN)
Echo Investment S.A.	330	430	122
Echo Investment Group	313	300	305

NET PROFIT PER SHARE

	2018	2019	2020
(PLN)
Echo Investment S.A.	0,74	0,73	0,30
Echo Investment Group	0,73	0,73	0,14

CASH FLOW

OPERATING CASH FLOW

	2018	2019	2020
(MLN PLN)
Echo Investment S.A.	-286	-41	-71
Echo Investment Group	203	142	-70

CASH FLOW ON INVESTING ACTIVITY

	2018	2019	2020
(MLN PLN)
Echo Investment S.A.	-132	-753	-753
Echo Investment Group	-39	-82	-132

CASH FLOW ON FINANCING ACTIVITY

	2018	2019	2020
(MLN PLN)
Echo Investment S.A.	142	282	658
Echo Investment Group	6	138	268

ASSIGNMENT OF ASSETS AND LIABILITIES TO SEGMENTS AS AT 31 DECEMBER 2020 (PLN MLN)

	Oce	Retail	Residential	Non-allocated	Resi4Rent	Total
Total value of assets as at 31.12.2020	2 946	976	1 179	329	203	5 631
Total value of liabilities as at 31.12.2020	1 195	409	535	1 798	9	3 946

ASSIGNMENT OF ASSETS TO SEGMENTS

	31.12.2020	31.12.2019
Residential	1 179 869	1 065 493
Oce	2 943 537	2 027 505
Retail	975 625	954 277
Resi4Rent	202 765	326 788
Non-allocated	329 000	436 366
Total	5 630 796	4 810 429

ASSIGNMENT OF LIABILITIES TO SEGMENTS

	31.12.2020	31.12.2019
Residential	534 817	435 065
Oce	1 195 128	724 347
Retail	409 463	373 026
Resi4Rent	8 674	210 265
Non-allocated	1 798 155	1 505 484
Total	3 946 237	3 248 186

ALLOCATION OF COST OF SALES TO SEGMENTS

	01.01.2020 – 31.12.2020	01.01.2019 - 31.12.2019
Residential	(564 165)	(401 728)
Oce	(82 565)	(57 459)
Retail	(21 923)	(54 245)
Resi4Rent	(273 049)	(91 168)
Non-allocated	(27 321)	(72 530)
Total	(969 023)	(677 130)

GROSS SEGMENT CONTRIBUTION INCLUDING FX GAIN/LOSS As at 31.12.2020

	Residential	Oce	Retail	Resi4Rent	Non- -allocated
Gross proﬁt (loss) on sales	243 831	164 531	34 007	33 730	13 949
Proﬁt (loss) on investment property	228 985	-	216 426	12 717	-
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)	-
Foreign exchange gains/(losses)	(83 904)	(3 820)	(45 685)	(24 085)	-
Total gross proﬁt on segments	358 170	160 711	185 428	(20 147)	46 882
Segments’ share in gross proﬁt	100%	45%	52%	-6%	13%

ALLOCATION OF REVENUE TO SEGMENTS

	01.01.2020 - 31.12.2020	01.01.2019 - 31.12.2019
Residential	728 694	555 521
Oce	116 573	76 558
Retail	55 653	72 511
Resi4Rent	286 998	97 894
Non-allocated	24 936	77 649
Total	1 212 854	880 133

ALLOCATION OF REVENUE, COST OF SALES AND GROSS PROFIT TO SEGMENTS FOR 2020

	Residential	Oce	Retail	Resi4Rent	Non-allocated	Total
Total revenue	728 694	116 573	55 653	286 998	24 936	1 212 854
Cost of sales	(564 165)	(82 565)	(21 923)	(273 049)	(27 321)	(969 023)
Total revenue	164 529	34 007	33 730	13 950	(2 385)	243 831

ALLOCATION OF GROSS PROFIT (LOSS) TO SEGMENTS

	01.01.2020 - 31.12.2020	01.01.2019 - 31.12.2019
Residential	164 529	153 793
Oce	34 007	19 099
Retail	33 730	18 266
Resi4Rent	13 950	6 726
Non-allocated	(2 385)	5 119
Total	243 831	203 003

Description of shares

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.

Shareholding structure

The major shareholder of Echo Investment S.A. is Lisala Sp. z o.o., controlled by Hungarian Wing IHC Zrt. 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

Shareholder	Number of shares	Share in the capital and votes at GMS
Lisala Sp. z o.o. (Wing IHC Zrt and Griffin Real Estate partners)	272,375,784	66%
Nationale-Nederlanden OFE	55,833,698	13.53%
Aviva Otwarty Fundusz Emerytalny Aviva Santander	27,350,695	13.53%
Nicklas Lindberg – CEO	538,676	0.13%
Maciej Drozd – Vice-President, CFO	221,765	0.05%
Péter Kocsis – Member of the Supervisory Board	44,000	0.01%
Other	56,325,964	6.63%

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 supervisory functions, the shareholders and bondholders of the Company are Nicklas Lindberg, President of the Management Board, Maciej Drozd Vice-president, CFO and Péter Kocsis, member of the Supervisory Board. Péter Kocsis has informed the Company on the purchase of 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. To the best of the Company’s knowledge, none of the other members of the Management Board or the Supervisory Board is a shareholder or a bondholder of the Company directly or indirectly as at the 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 transactions for shares or bonds in the Company.

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)
Péter Kocsis Supervisory Board Member	–

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, effective 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 Shareholders 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 Stefan Kawalec, the Ordinary General Meeting of the Shareholders appointed 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: Margaret 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 implementation of investment plans based on the approved annual budget. The Investment Committee consisted 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 offer 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 offer 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 Investment’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 office functions. The total area of the acquired plots amounts to 190,000 sqm. The net price amounted to EUR 41.6 million.

4,000 The number of apartments that could potentially be built on the plots in Łódź, Kraków and Poznań to be acquired from Tesco

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 complex. Remaining fit-out works in historic buildings, the last plantings and the arrangement of public spaces are to be completed in 2021. The Villa Offices building obtained an occupancy permit on April 15, 2020 and WeWork clients, as well as Accenture already work on its premises. The Malthouse Offices 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, office, 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.

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 1 billion, 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.# Management Board Report on operations of Echo Investment S.A. and its Group in 2020

7.3 Securing a construction loan for the MidPoint71 office building

On July 22, 2020 Echo Investment secured a loan for the construction of the MidPoint71 office 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 office 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 office 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 company’s eighth office 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 office complex on ul. Na Ostatnim Groszu was also completed.

7.4 The issue of PLN 100 million of bonds for an institutional investor

Echo Investment issued four-year coupon bonds worth PLN 100 million covered by the PKO Parasolowy - FIO Investment Fund. The bearer bonds mature on August 5, 2024. The interest rate is calculated based on the variable six-month WIBOR (Warsaw Interest 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.

7.5 The Ordinary General Meeting of Shareholders

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 financial year 2019, amounting to PLN 21,412,312.65, was allocated for distribution 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 21, 2019 as a dividend advance;
the dividend corresponds to the amount of the dividend advance payment, therefore it was decided that the company would not pay additional funds from the profit for the financial year 2019.

In subsequent resolutions, the shareholders discharged all members of the management and supervisory 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 appointed 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 changes introduced include empowering the supervisory board to adopt annual budgets and business plans for the company and its subsidiaries. The shareholders also adopted a remuneration policy for members of the management and supervisory boards.

7.6 Establishment of a bond issuance program for the issuance denominated in EUR and the first issuance

The Management Board of Echo Investment on September 3, 2020 concluded an issue agreement with Bank Pekao S.A., establishing a program for the issuance 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 offered 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 Papierów Wartościowych S.A. and it will be introduced to trading in an alternative trading system operated by Warsaw Stock Exchange (Giełda 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 Management Board.

7.7 Construction loan for office buildings in Fuzja project in Łódź

Echo Investment has gained a loan for the construction of three office buildings included in the multifunctional 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 office 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 building 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 environmentally 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 Offices and the Malthouse Offices in the Warsaw Brewery complex.

Construction works on Fuzja office buildings in Łódź, where Fujitsu will locate its headquarter.

Material post-balance sheet events

8.1 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 approximately 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 Office of Competition and Consumer Protection. The transaction will exclude the development business carried out outside the Wrocław agglomeration and two development projects in Kraków, as well as the architectural design studio - these assets will remain 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 Archicom 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 transaction, 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 Polish nationwide leader in the residential sector. Archicom has been operating mainly on the Lower Silesian market and has been listed on the Stock Exchange since 2016. The company has grown out of a family-owned architectual design office and has 160 completed projects to its credit, including the revitalized 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 residential market.

8.2 Sale of Villa Offices building

Echo Investment Group has concluded final sale agreement of Villa Offices 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 handed 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 concluded a building quality guarantee agreement and a rental guarantee agreement. The second one provides 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 Offices 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 Offices 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 Offices in the Warsaw Brewery Complex in Warsaw.

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 acquired 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 the issue of bonds, the Company redeemed 1,475 own bonds with a nominal value of PLN 10,000 each (ISIN code PLECHPS00225).

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 considering 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 offer in the primary market at the end of December last year.

Compared to other sectors of the economy, the residential segment is getting through the difficult situation perfectly. The good condition of the real estate development at the beginning of 2020 allowed development companies to make rational decisions and quickly adapt their operating mechanisms to the new conditions. Compared to the end of 2019, none of the analysed markets recorded a decrease in prices of apartments remaining on offer. On an annual basis, prices increased the least in Poznań (3%) and the most in Kraków (12%).

	2017	2018	2019	2020
– Apartments sold	67.5	64.8	65.4	53
– Apartments launched for sale	48.3	65.7	64	48.5
– Apartments on offer		50.7	50.3	48

Source: JLL

APARTMENTS SOLD, LAUNCHED FOR SALE AND OFFER VOLUME (THOUS.)

Perspectives of each market sectors in coming 12 months:
– Very optimistic
– Optimistic
– Neutral
– Pessimistic
– Very pessimistic

	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)

Price [PLN]	2016 1Q	2016 2Q	2016 3Q	2016 4Q	2017 1Q	2017 2Q	2017 3Q	2017 4Q	2018 1Q	2018 2Q	2018 3Q	2018 4Q	2019 1Q	2019 2Q	2019 3Q	2019 4Q	2020 1Q	2020 2Q	2020 3Q	2020 4Q

At the end of 2020, the offer of developers in the analyzed cities was approximately equal to the annual sales. The exception was Warsaw, where due to a clear slowdown in new supply, the offer 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 portfolios 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 approximately 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.

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 handovers – 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 IŁ 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	IŁQ 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	IŁQ 2020
Ogrody Graua Wrocław, ul. Gdańska 4	000	57	II Q 2020
Total	73 900	1 767

The pandemic has had a transformative effect 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 projects under construction to these new conditions and to buyers’ changed expectations. These include 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 arrangement of the apartments, Echo Investment’s architects also provided greater options for easily adapting the space for home office 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 companies in Poland, it increased the number of apartments sold. Its first project was made in Kielce at Manifestu Lipcowego Street, and the most recognizable 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% share 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 strategic 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 office which Archicom 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 office with 160 completed investments, including the revitalized Browary Wrocławskie 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 common strategy and in one capital group. The combination 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

Management Board Report on operations of Echo Investment S.A. and its Group in 2020

Resi4Rent Warszawa Browary – the first Resi4Rent project opened in Warsaw

Echo Investment’s Group achievements on the market of apartments for rent and its outlook

Resi4Rent’s 2020 offering 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. Paradoxically, the pandemic situation has supported the rental rate of Resi4Rent apartments. Some people planning 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 offering 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 responsible for the preparation and construction of Resi4Rent projects. Currently, Resi4Rent has over 1,800 apartments on offer in Wrocław, Łódź and Warsaw. In the first quarter of 2021, the platform expanded by another 372 apartments in the R4R Warszawa Taśmowa project, which just entered the lease offer. The company currently has five projects under construction, in which about 1,200 units will be built. Ultimately, by 2025 it will offer 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 information on contract, operation of apartment and additional services for tenants.

Management Board Report on operations of Echo Investment S.A. and its Group in 2020

Office segment – market outlook and Echo Investment business activities

Warsaw

Due to the global pandemic, the year 2020 was characterized 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 offices - in various models. In many cases, however, working from home has worked well, raising many questions about the future of work and the need for office space. Last year, 314 thousand sqm of office space in Warsaw 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 office space. However, a significant increase in the number of such offers 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, according to CBRE, most landlords maintain transaction rents, but showing more flexibility and offering additional incentives. If developers keep up the pace of ongoing office 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, uncertainty connected with the pandemic and its impact on tenants’ decisions. On the other hand, it is noted that an increasing number of projects is temporarily taken out of use to be thoroughly modernized - mainly in Służewiec and the city center. A positive sign for the market is the gradual unblocking of tenants’ decisions to extend their leases or relocate. Among such entities are international corporations, which consider moving their support functions here (nearsharing).

Regional markets

The demand for office 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 sectors. Last year, 36 new buildings totalling 393.3 thousand sqm were delivered to the regional markets. The vacancy 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. JLL’s analysts estimate that last year the demand for office 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 office buildings under 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 offers. 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 offers, ranging from less than 100 sqm to even 11 thousand sqm, both small companies and big corporations can take advantage of such offers.

Perspectives of each market sectors in coming 12 months:

– Very optimistic
– Optimistic
– Neutral
– Pessimistic
– Very pessimistic

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 office sector

Last year, Echo Investment’s office department was focused on completing office 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 level 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 S
ynektik, SyzyGy Warsaw and Kan (Moje Miejsce, Warsaw), 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 Offices see 10.2 section on page 30.

ECHO INVESTMENT OFFICE BUILDINGS STARTED TO BE CONSTRUCTED IN 2020

Project	Usable area	Planned completion
Fuzja C i D Łódź, ul. Tymienieckiego	19,900	2022

ECHO INVESTMENT OFFICE BUILDINGS COMPLETED IN 2020

Project	Usable area	Completion
Villa Offices (Brewery K) Warsaw, ul. Grzybowska	16,700	II Q 2020
Malthouse Offices (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

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 office buildings must have an extended package of solutions, adjusted to the new reality, which will guarantee users a higher level of safety - Echo Pure Office. After a careful analysis of tenants’ needs, the developer focused on providing clean and healthy air. As part of the new Echo Pure Office standard, ventilation ducts in office 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 office 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 Investment 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 oces sector (CitySpace)

CitySpace, a ﬂexible oce 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 oces in Gdańsk, CitySpace Beethovena in Warsaw, CitySpace Nobilis in Wrocław and CityS- pace O3 in Kraków. The pandemic has increased the attractiveness of ﬂexible oces 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 eect 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 dicult 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 dierence 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.# Management Board Report on operations of Echo Investment S.A. and its Group in 2020

Employees of Echo Investment Group

They were based, among others, on the Insights Discovery model, which indicates the individual style of each employee. We also introduced a training program for the sales department with two development paths. One dedicated to Managers and the other to Sales Representatives. The program of interactive workshops was created on the basis of business needs and included practical exercises based on real situations and challenges 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 safety, 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 Woman in Real Estate competition, thus promoting the achievements of women working for Echo Investment 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 relocation 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 necessary specialist competencies. Since March 2020, we have been working hard to keep our employees safe and support them while ensuring maximum efficiency and business continuity. 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 office space. We have continuously conducted the information and education campaign for employees, promoted safe behaviors, conducted trainings for managers and provided extensive support in dealing with the infection, contacts with public institutions, introduced regulations and restrictions, quarantine and isolation rules. As part of our support for employees and to ensure the highest safety standards, since the beginning of the pandemic we have provided and organized testing for all employees who have had contact with people infected with SARS-COV-2, regardless of their position in the organization, and during the fall we also provided regular weekly screening tests for teams attending to external clients.

36 The number of employees promoted in 2020
49 The number of people newly employed in 2020

EMPLOYEES OF ECHO INVESTMENT GROUP SPLIT BY GENDER

Category	Percentage
Gender	50%
Gender	50%

EMPLOYEES OF ECHO INVESTMENT GROUP SPLIT BY AGE

Age Range	Percentage
30 years or younger	17%
30-50 years	69%
50 years or older	14%

7 years The average seniority in the Echo Investment Group

455 The number of people employed by Echo Investment as at 31 December 2020 on regular employment contracts

Diversity policy

We operate on one of the most demanding job markets in Poland, which is why we manage the organization 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 develop 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 different 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 affecting the direction of our organization’s development. 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 regulated 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 procedures of operation.

Report on remuneration policy

Echo Investment builds its remuneration policy based on the principles of the Code of Conduct:

§ 1.1 All companies from the Echo Investment group are responsible for developing and operating economically justified and socially responsible business.
§ 2.2 Echo Investment makes every effort in order to ensure that the conditions of employment are fair and meet all the requirements of the national law and relevant conventions of the International Labour Organisation.
§ 2.6 We do not allow any cases of discrimination. We provide everyone with equal rights and opportunities regardless of race, colour, gender, nationality, religion, ethnicity or other characteristics.

SALARIES OF EMPLOYEES

In view of the current global situation related to COVID-19 in 2020, the Company took a rational approach to salary and benefits, taking care to ensure business continuity and to retain staff at a level that ensures effective operations in the market. The Company did not benefit from anti-crisis shield solutions for working hours or remuneration and did not reduce 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 organization 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.

DETERMINING THE AMOUNT OF REMUNERATION

Assumed role within the organization and its evaluation is the basis for fair remuneration in the company. Positions with greater responsibility are remunerated 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, ‘Bonus 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 efficiency of the company. Each employee, 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 developed standards: we kept updated our professional position’s matrix and current valuation of new and changed positions, as well as its cohesion with market standards in real estate industry. We build employee development paths in the context of current business needs, enabling employees to develop in new roles and increase responsibility through innovative actions in response to changing market conditions. 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 Management Board’s high commitment to ensuring a cost-effective 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 focusing on innovative use of acquired skills at work, a commitment to developing leadership skills of managers, and building modern and effective goal-setting and management tools through ongoing feedback.

Assumptions of Echo Investment’s remuneration policy:

striving to provide competitive i.e.# Management Board Report on operations of Echo Investment S.A. and its Group in 2020

similar rates of remuneration for employees of Echo Investment compared to offers in other companies,
– striving to provide a competitive level of costs,
– related to the remuneration budget at Echo Investment 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 significance and impact, skills and competences of the employee,
– work results.

REMUNERATION OF MEMBERS OF THE MANAGEMENT BOARD

Members of the Management Board receive remuneration and bonuses in accordance with the remuneration 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 Objectives) 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 objectives 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 Supervisory 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 maintain uninterrupted work on construction sites and in residential sales offices - 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 uncertain 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.

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

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 Investment group. The risk management procedures applied include the identification of risks, their assessment, management and monitoring. The management of Echo Investment S.A, in cooperation 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, oversees 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 # 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 '

INTERNAL TEAMS OF SPECIALISTS FOR ALL KEY STAGES OF THE DEVELOPMENT PROCESS, ENABLING THE ACHIEVEMENT OF AN INTERNAL SYNERGY EFFECT;

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 OFFICES, 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;
Insufficient level of knowledge and competence of subcontractors in the field of HSE.
Own team of specialists in the field of HSE, carrying out, among others 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 standards 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	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, office and retail segments that might go through different phases of the business cycle at different 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 # 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 eectiveness 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	800	218	70%	97,1	66,4	58%	IQ 2020	IV Q 2021
Osiedle Krk II ul. Zapolskiej	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	6 100	105	98%	36,7	28,4	96%	II Q 2019	IV Q 2020
Osiedle Jarzębinowe VIII	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%	IQ 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 Ia ul. Naramowice	6 400	118	77%	41,6	30,6	70%	IQ 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

Deﬁnitions: 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%	IQ 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	IQ 2023
ZAM II ul. Rydlówka	5 400	98	59,4	42,7	23%	IQ 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	IQ 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	Ikw 2029
ŁÓDŹ
Wodna 17 ul. Wodna	12 700	234	84,3	62,6	12%	II Q 2021	IQ 2023
Widzewska I ul. Widzewska	9 000	170	53,2	41,2	6%	III Q 2021	IQ 2023
Fuzja III ul. Tymienieckiego	9 100	152	67,8	50,1	11%	IQ 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	IQ 2026
Widzewska VI ul. Widzewska	8 800	166	57,7	39,9	6%	IQ 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%	IQ 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	IQ 2026
Widzewska XI ul. Widzewska	7 200	135	53,3	35,4	6%	II Q 2025	IQ 2027
Widzewska XII ul. Widzewska	8 600	162	65,4	42,4	6%	IQ 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 Ib ul. Naramowice	6 000	104	37,8	28,3	24%	IQ 2021	IV Q 2021
Osiedle Enter II ul. Sielawy	9 400	153	60,6	43,2	15%	IQ 2021	IV Q 2022
Osiedle Enter III ul. Sielawy	9 600	159	62,2	45,1	14%	IQ 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	IQ 2025
Opieńskiego III ul. Opieńskiego	8 100	167	58,4	44,9	9%	IQ 2024	IV Q 2025
Opieńskiego IV ul. Opieńskiego	7 800	149	58,4	43,5	9%	IQ 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	11 400	302	8,4	76,8	III Q 2019
R4R Łódź Wodna	7 800	219	4,9	52,4	IV Q 2019
R4R Wrocław Kępa Mieszczańska	9 300	269	6,8	76,3	II Q 2020
R4R Warszawa Browary	19 000	450	16,6	187,6	III Q 2020
R4R Warszawa Woronicza	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	13 000	372	11,1	112,1	IQ 2019	IQ 2021
R4R Poznań Szczepanowskiego	5 000	160	3,8	42,2	III Q 2019	III Q 2021
R4R Gdańsk Kołobrzeska	10 200	301	8,8	88,7	III Q 2019	II Q 2021
R4R Warszawa Żwirki	5 200	161	5,0	52,3	III Q 2020	III Q 2022
R4R Kraków Puszkarska	5 000	149	3,5	36,4	III Q 2020	II Q 2022
Total	38 400	1 143	32,2	331,7

Deﬁnitions: 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.# 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	400	407	11,8	128,5	I Q 2021	I Q 2023
R4R Kraków 3-Maja	12 100	387	9,8	105,4	II Q 2021	III Q 2022
R4R Kraków Jana Pawła	9 400	296	7,2	75,8	II Q 2021	I Q 2023
R4R Wrocław Jaworska	13 700	391	11,0	111,8	III Q 2021	III Q 2023
R4R Pohoskiego	8 600	304	8,3	89,6	IV Q 2021	III Q 2023
R4R Nowomiejska, Gdańsk*	10 300	295	8,7	98,9	I Q 2022	I Q 2024
R4R Kilińskiego, Łódź*	10 000	291	7,2	77,8	I Q 2022	I Q 2024
R4R Na Ostatnim Groszu, Wrocław*	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.

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	19 000	91%	3,4	159,2	99%	35,0	II Q 2019	ROFO agreement with Globalworth Poland
Moje Miejsce II	17 200	16%	3,1	145,7	78%	17,8	IV Q 2020	ROFO agreement with Globalworth Poland
Face2Face I	20 500	91%	3,7	153,2	96%	56,1	I Q 2020
Face2Face II	26 400	92%	4,7	204,9	93%	61,1	IV Q 2020
West 4 Business Hub I	15 600	45%	2,7	115,3	82%	29,7	III Q 2020
Malthouse Oces (Warsaw Brewery GH)	29 000	63%	7,2	332,1	85%	278,6	III Q 2020
Villa Oces (Warsaw Brewery K)	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	15 100	23%	2,6	109,1	52%	18,8	II Q 2019	I Q 2022
Fuzja C i D	19 900	82%	3,5	148,9	18%	19,0	III Q 2020	I Q 2022
Midpoint71	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

Denitions:
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 oer) Due to 25% of capital participation in the pro- ject, ROFO partner is entitled to 25% of prot after sale of project.
Completion – date of commissioning permit. Signicant 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, prot share and costs of projects sale.
Fair value includes currency dierences on investment loans.
The recognised fair value gain is reduced by the prot share obligation and the provision to secure rent-free periods (master lease).

OFFICE BUILDINGS IN PREPARATION

Project / address	GLA [sqm]	NOI [EUR mln]	Targeted budget [PLN mln]	Expenditure incurred [%]	Targeted start	Targeted completion
Piotra Skargi	26 600	4,6	186,4	7%	III Q 2022	II Q 2024
Brain Park I	29 400	5,4	261,0	22%	I Q 2021	III Q 2022
Brain Park II	12 800	2,4	118,5	21%	IV Q 2021	II Q 2023
Wita Stwosza I	23 900	4,2	210,6	18%	IV Q 2021	III Q 2023
Wita Stwosza II	31 000	5,5	274,2	18%	III Q 2022	IV Q 2024
React II	25 900	4,4	186,0	8%	III Q 2022	I Q 2024
Fuzja I, J	10 200	1,7	81,2	8%	I Q 2022	IV Q 2024
Swobodna	46 100	8,5	374,0	12%	II Q 2022	III Q 2024
West 4 Business Hub II	23 300	4,0	174,4	13%	II Q 2021	I Q 2023
West 4 Business Hub III	33 100	5,7	237,4	12%	II Q 2022	II Q 2024
Kapelanka	21 300	3,6	167,8	17%	III Q 2022	II Q 2024
Total	283 600	50,0	2 271,5

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	44 900	100%	9,3	390,4	100%	188,3	IV Q 2018	ROFO agreement with EPP
Galeria Młociny	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

Denitions:
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 oer
Due to 25% of capital participation in the pro- ject, ROFO partner is entitled to 25% of prot after sale of project.
Completion – date of commissioning permit. Signicant 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, prot share and costs of projects sale.
Fair value includes currency dierences on investment loans.
The recognised fair value gain is reduced by the prot share obligation and the provision to secure rent-free periods (master lease).

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 oce 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 oce and services
Poznań, ul. Hetmańska	65 300	80 000	Plot for residential and oce 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

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 in 2020.

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 i Wigury	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, oce 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 i Wigury	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.

Output markets and sources of supplies of materials, goods and services

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.## Management Board Report on operations of Echo Investment S.A. and its Group in 2020

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. zo.o.	159,1
Pearl Jewel Sp. zo.o.	70,2
M&J Bud Invest Sp. zo.o.. pl sp. K.	62,0
Porr S.A.	53,2
Przedsiębiorstwo Instalacyjne Unimax Sp. zo.o.	45,3
Eiage Polska Serwis Sp. zo.o.	44,8
Krakbau S.A.	41,0
Polimex Infrastruktura Sp. zo.o.	41,0
Wework Poland Sp. zo.o.	34,2
M&J Bud Sp. zo.o. Invest EU Sp.K.	31,7
GPRE Management Sp. zo.o.	30,1
RE-Bau Sp. zo.o.	28,4
Mota-Engil Central Europe S.A.	25,8
ZBB Firma Budowlana Sp. zo.o. Sp.K.	22,7
GEO-Kat Sp. zo.o.	22,3
Tetris Poland Sp. zo.o.	22,3
Alsal Sp. zo.o. Sp.K.	19,2
Modzelewski & Rodek Sp. zo.o.	18,8
Prof Fair Jarosław Poraj	18,7
Keller Polska Sp. zo.o.	18,7
MG Building Sp. zo.o. Sp.K.	18,7
Fabet-Konstrukcje Sp. zo.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. zo.o.	74,4
Honeywell Services Poland Sp. zo.o.	25,2
R4R Wrocław Kępa Sp. zo.o.	17,5
EPP Development 6 Sp. zo.o.	17,2
Sent To Sp. zo.o. Sp.K.	17,0
Okam 2024 Sp. zo.o.	15,7
R4R Poland Sp. zo.o.	14,2
Allen & Overy A.Pędzich Sp.K.	9,4
R4R RE Sp. zo.o.	9,0
Lux Europa III SARL	8,2
Swanage Sp. zo.o.	7,9
R4R RE Wave 3 Sp. zo.o.	7,5
Common Investment S.A.	6,2
Topaz Jewel Sp. zo.o.	5,8
R4R Łódź Wodna Sp. zo.o.	5,4
Accenture Services Sp. zo.o.	5,4
EPP Oce-03 Business Campus Sp. zo.o.	5,2
Zielona Skarpa Sp. zo.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 oce 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 oce	% of capital held	Parent entity
1	53 - Grupa Echo Sp. zo.o. SKA	Kielce	100%	Echo Investment S.A.
2	Avatar - Projekt Echo - 119 Sp. zo.o. SKA	Kielce	100%	Echo Investment S.A.
3	Babka Tower - Projekt Echo - 93 Sp. zo.o. Sp.K.	Kielce	100%	Perth Sp. zo.o.
4	Bełchatów - Grupa Echo Sp. zo.o. SKA	Kielce	100%	Echo Investment S.A.
5	City Space - GP Sp. zo.o.	Warsaw	100%	Echo Investment S.A.
6	Supersam City Space - GP Sp. zo.o. Sp.K.	Warsaw	100%	City Space Management Sp. zo.o.
7	Rondo 1 City Space - GP Sp. zo.o. Sp.K.	Warsaw	100%	City Space Management Sp. zo.o.
8	Plac Unii City Space - GP Sp. zo.o. Sp.K.	Warsaw	100%	City Space Management Sp. zo.o.
9	City Space Management Sp. zo.o.	Warsaw	100%	Echo Investment S.A.
10	Cornwall Investments Sp. zo.o.	Warsaw	100%	Echo Investment S.A.
11	React - City Space - GP Sp. zo.o. Sp.K.	Warsaw	100%	City Space Management Sp. zo.o.
12	Dagnall Sp. zo.o.	Warsaw	100%	Echo Investment S.A.
13	Dellia Investments - Projekt Echo - 115 sp. zo.o. Sp.K.	Kielce	100%	Pudsey Sp zo.o.
14	Doxent Investments Sp. zo.o.	Warsaw	100%	Echo Investment S.A.
15	Duże Naramowice - Projekt Echo - 111 Sp. zo.o. SKA	Kielce	100%	Echo Investment S.A.
16	Echo - Advisory Services Sp. zo.o.	Kielce	100%	Echo Investment S.A.
17	Echo - Arena Sp. zo.o.	Kielce	100%	Echo Investment S.A.
18	Echo - Aurus Sp. zo.o.	Kielce	100%	Echo Investment S.A.
19	Echo - Babka Tower Sp. zo.o.	Kielce	100%	Echo Investment S.A.
20	Echo - Babka Tower Sp. zo.o. Sp.K.	Kielce	100%	Gleann Sp. zo.o.
21	Echo - Browary Warszawskie Sp. zo.o.	Kielce	100%	Echo Investment S.A.
22	Echo - Browary Warszawskie Sp. zo.o. Sp.K.	Kielce	100%	Echo Investment S.A.
23	Echo - Galaxy Sp. zo.o.	Kielce	100%	Echo Investment S.A.
24	Echo - Galaxy Sp. zo.o. SKA	Kielce	100%	Echo Investment S.A.
25	Echo - Nowy Mokotów Sp. zo.o.	Kielce	100%	Echo Investment S.A.
26	Echo - Nowy Mokotów Sp. zo.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 oce	% of capital held	Parent entity
27	Echo - Opolska Business Park Sp. zo.o.	Kielce	100%	Echo Investment S.A.
28	Echo - Opolska Business Park Sp. zo.o. Sp.K.	Warsaw	100%	Perth Sp. zo.o.
29	Echo - Property Poznań 1 Sp. zo.o.	Kielce	100%	Echo Investment S.A.
30	Echo - SPV 7 Sp. zo.o.	Kielce	100%	Echo Investment S.A.
31	Tryton - City Space GP Sp. zo.o. Sp.K.	Warsaw	100%	City Space Management Sp. zo.o.
32	Echo Investment ACC - Grupa Echo Sp. zo.o. Sp.K.	Kielce	100%	Echo Investment S.A.
33	Echo Investment Project 1 S.R.L.	Brasov	100%	Echo - Aurus Sp. zo.o.
34	Echo Investment Project Management S.R.L.	Brasov	100%	Echo Investment S.A.
35	Elektrownia RE Sp. zo.o.	Kielce	100%	Echo Investment S.A.
36	Fianar Investments Sp. zo.o.	Warsaw	100%	Echo Investment S.A.
37	Galeria Libero - Projekt Echo 120 Sp. zo.o. Sp.K.	Kielce	100%	Fianar Investments Sp. zo.o.
38	Galeria Nova - Grupa Echo Sp. zo.o. SKA	Kielce	100%	Echo Investment S.A.
39	Galeria Tarnów - Grupa Echo Sp. zo.o. SKA	Kielce	100%	Echo Investment S.A.
40	Gleann Sp. zo.o.	Warsaw	100%	Echo Investment S.A.
41	Gosford Investments Sp. zo.o.	Warsaw	100%	Echo Investment S.A.
42	GRO Nieruchomości Sp. zo.o.	Kraków	100%	Echo Investment S.A.
43	Grupa Echo Sp. zo.o.	Kielce	100%	Echo Investment S.A.
44	Kasztanowa Aleja - Grupa Echo Sp. zo.o. Sp.K.	Kielce	100%	Echo Investment S.A.
45	Kielce - Grupa Echo Sp. zo.o. SKA	Kielce	100%	Echo Investment S.A.
46	Klimt House - Grupa Echo Sp. zo.o. Sp.K.	Kielce	100%	Echo Investment S.A.
47	Malta Oce Park - Grupa Echo Sp. zo.o. SKA	Kielce	100%	Echo Investment S.A.
48	Metropolis - Projekt Echo 121 Sp. zo.o. SKA	Kielce	100%	Echo Investment S.A.
49	Oxygen - Grupa Echo Sp. zo.o. SKA	Kielce	100%	Echo Investment S.A.
50	Park Postępu - Grupa Echo Sp. zo.o. SKA	Kielce	100%	Echo Investment S.A.
51	Park Rozwoju III - Projekt Echo - 112 Sp. zo.o. Sp.K.	Kielce	100%	Perth Sp. zo.o.
52	Perth Sp. zo.o.	Warsaw	100%	Echo Investment S.A.
53	PHS - Projekt CS Sp. zo.o. Sp.K.	Warsaw	100%	Perth Sp. zo.o.
54	Pod Klonami - Grupa Echo Sp. zo.o. Sp.K.	Kielce	100%	Echo Investment S.A.
55	Potton Sp. zo.o.	Warsaw	100%	Echo Investment S.A.
56	PPR - Grupa EchoSp. zo.o. SKA	Kielce	100%	Echo Investment S.A.
57	Princess Investment Sp. zo.o.	Kielce	100%	Echo Investment S.A.
58	Projekt 1 - Grupa Echo Sp. zo.o. SKA	Kielce	100%	Echo Investment S.A.
59	Projekt 12 - Grupa Echo Sp. zo.o. SKA	Kielce	100%	Echo Investment S.A.
60	Projekt 13 - Grupa Echo Sp. zo.o. SKA	Kielce	100%	Echo Investment S.A.
61	Projekt 132 - City Space - GP Sp. zo.o. Sp.K.	Warsaw	100%	City Space Management Sp. zo.o.
62	Projekt 133 - City Space - GP Sp. zo.o. Sp.K.	Warsaw	100%	City Space Management Sp. zo.o.
63	Nobilis - City Space GP Sp. zo.o. Sp.K.	Warsaw	100%	City Space Management Sp. zo.o.
64	Projekt 14 - Grupa Echo Sp. zo.o. SKA	Kielce	100%	Echo Investment S.A.
65	React - Dagnall Sp. zo.o. SKA	Kielce	100%	Potton Sp zo.o.
66	Projekt 16 - Grupa Echo Sp. zo.o. SKA	Kielce	100%	Echo Investment S.A.
67	Projekt 17 - Grupa Echo Sp. zo.o. SKA	Kielce	100%	Echo Investment S.A.
68	Cinema Asset Manager - Grupa Echo sp. zo.o. SKA	Kielce	100%	Echo Investment S.A.
69	Face2Face - Stranraer Sp. zo.o. SKA	Kielce	100%	Echo Investment S.A.
70	Projekt 21 - Grupa Echo Sp. zo.o. SKA	Kielce	100%	Echo Investment S.A.
71	Midpoint71 - Cornwall Investments Sp. zo.o. SKA	Kielce	100%	Echo Investment S.A.
72	Projekt 5 - Grupa Echo Sp. zo.o. SKA	Szczecin	100%	Echo Investment S.A.
73	Projekt Beethovena - Projekt Echo - 122 Sp. zo.o. SKA	Kielce	100%	Echo Investment S.A.
74	Projekt CS Sp. zo.o.	Kielce	100%	Echo Investment S.A.
75	Projekt Echo - 104 Sp. zo.o.	Kielce	100%	Echo Investment S.A.
76	Projekt Echo - 108 Sp. zo.o.	Kielce	100%	Echo Investment S.A.
77	Projekt Echo - 111 Sp. zo.o.	Kielce	100%	Echo Investment S.A.
78	Projekt Echo - 112 Sp. zo.o.	Kielce	100%	Echo Investment S.A.
79	Projekt Echo - 113 Sp. zo.o.	Kielce	100%	Echo Investment S.A.
80	Projekt Echo - 115 Sp. zo.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 oce	% of capital held	Parent entity
81	Projekt Echo - 116 Sp. zo.o.	Kielce	100%	Echo Investment S.A.
82	Projekt Echo - 119 Sp. zo.o.	Kielce	100%	Echo Investment S.A.
83	Projekt Echo - 120 Sp. zo.o.	Kielce	100%	Echo Investment S.A.
84	Projekt Echo - 121 Sp. zo.o.	Kielce	100%	Echo Investment S.A.
85	Projekt Echo - 122 Sp. zo.o.	Kielce	100%	Echo Investment S.A.
86	Projekt Echo - 123 Sp. zo.o.	Kielce	100%	Galeria Nova - Grupa Echo Sp. zo.o. SKA
87	Projekt Echo - 127 Sp. zo.o.	Kielce	100%	Echo Investment S.A.
88	Projekt Echo - 128 Sp. zo.o.	Kielce	100%	Echo Investment S.A.
89	Projekt Echo - 129 Sp. zo.o.	Kielce	100%	Selmer Investments Sp. zo.o. Sp.K.
90	Projekt Echo - 130 Sp. zo.o.	Kielce	100%	Echo Investment S.A.
91	Projekt Echo - 131 Sp. zo.o.	Kielce	100%	Echo Investment S.A.

SUBSIDIARIES

No	Subsidiary	Registered office	% of capital held	Parent entity
92	Projekt Echo - 135 Sp. zo.o.	Kielce	100%	Echo Investment S.A.
93	Projekt Echo - 135 Sp. zo.o. Sp.K.	Kielce	100%	Perth Sp. zo.o.
94	Projekt Echo - 136 Sp. zo.o.	Kielce	100%	Echo Investment S.A.
95	Projekt Echo - 136 Sp. zo.o. Sp.K.	Kielce	100%	Echo Investment S.A.
96	Projekt Echo - 137 Sp. zo.o.	Kielce	100%	Echo Investment S.A.
97	Projekt 139 - Grupa Echo Sp. zo.o. Sp.K.	Kielce	100%	Perth Sp. zo.o.
98	Projekt 140 - Grupa Echo Sp. zo.o. Sp.K.	Kielce	100%	Echo Investment S.A.
99	Aquarius - City Space - GP Sp. zo.o. Sp.K.	Warsaw	100%	City Space Management Sp. zo.o.
100	142 - City Space - GP Sp. zo.o. Sp.K.	Warsaw	100%	City Space Management Sp. zo.o.
101	Beethovena - City Space - GP Sp. zo.o. Sp.K.	Warsaw	100%	City Space Management Sp. zo.o.
102	Projekt 144 - Grupa Echo Sp. zo.o. Sp.K.	Kielce	100%	Echo - Arena Sp. zo.o.
103	Projekt 145 - City Space - GP Sp. zo.o. Sp.K.	Warsaw	100%	City Space Management Sp. zo.o.
104	Projekt 146 - City Space - GP Sp. zo.o. Sp.K.	Warsaw	100%	City Space Management Sp. zo.o.
105	Projekt 147 - Grupa Echo Sp. zo.o. Sp.K.	Kielce	100%	Echo Investment S.A.
106	Projekt 148 - Grupa Echo Sp. zo.o. Sp.K.	Kielce	100%	Echo Investment S.A.
107	Projekt Echo - 93 Sp. zo.o.	Kielce	100%	Echo Investment S.A.
108	Projekt Echo - 99 Sp. zo.o.	Kielce	100%	Echo Investment S.A.
109	Projekt K-6 - Grupa Echo Sp. zo.o. SKA	Kielce	100%	Echo Investment S.A.
110	Projekt Naramowice - Grupa Echo Sp. zo.o. SKA	Kielce	100%	Echo Investment S.A.
111	Projekt Saska Sp. zo.o.	Kielce	95%	Echo Investment S.A.
112	Pudsey Sp. zo.o.	Warsaw	100%	Echo Investment S.A.
113	Pure Systems Sp. zo.o.	Kraków	100%	Echo Investment S.A.
114	Q22 - Projekt Echo - 128 Sp. zo.o. Sp.K.	Kielce	100%	Potton Sp zo.o.
115	Sagittarius - Projekt Echo - 113 Sp. zo.o. Sp.K.	Kielce	100%	Doxent Investments Sp. zo.o.
116	Seaford Sp. zo.o.	Warsaw	100%	Echo Investment S.A.
117	Selmer Investments Sp. zo.o.	Warsaw	100%	Echo Investment S.A.
118	Selmer Investments Sp. zo.o. Sp.K.	Warsaw	100%	Echo Investment S.A.
119	Senja 2 Sp. zo.o.	Warsaw	100%	Echo - Browary Warszawskie Sp. zo.o. Sp.K.
120	Shanklin Sp. zo.o.	Warsaw	100%	Echo Investment S.A.
121	Stranraer Sp. zo.o.	Warsaw	100%	Echo Investment S.A.
122	Strood Sp. zo.o.	Warsaw	100%	Echo Investment S.A.
123	Swanage Sp. zo.o.	Warsaw	100%	Echo Investment S.A.
124	Symetris - Projekt Echo - 131 Sp. zo.o. Sp.K.	Warsaw	100%	Gosford Investments Sp. zo.o.
125	Taśmowa - Projekt Echo - 116 Sp. zo.o. SKA	Kielce	100%	Echo Investment S.A.
126	ZAM - Projekt Echo - 127 Sp. zo.o. Sp.K.	Warsaw	100%	Perth Sp. zo.o.
127	Villea Investments Sp. zo.o.	Warsaw	100%	Echo Investment S.A.
128	Bowen Sp. zo.o.	Warsaw	100%	Echo - Browary Warszawskie Sp. zo.o. Sp.K.
129	RPGZ IX Sp. zo.o.	Kraków	100%	Echo Investment S.A.
130	Projekt 150 – Shanklin Sp. zo.o. Sp.K.	Kielce	100%	Echo Investment S.A.
131	Projekt 151 - Projekt 13 - Grupa Echo Sp. zo.oSKA Sp.K.	Kielce	100%	Echo Investment S.A.
132	Projekt 152 - Projekt 14 - Grupa Echo Sp. zo.oSKA Sp.K.	Kielce	100%	Echo Investment S.A.
133	Projekt 153 - Projekt 21 - Grupa Echo Sp. zo.oSKA Sp.K.	Kielce	100%	Echo Investment S.A.
134	Projekt 154 - Projekt K-6 - Grupa Echo Sp. zo.oSKA Sp.K.	Kielce	100%	Echo Investment S.A.
135	Projekt Echo - 139 Sp. zo.o.	Kielce	100%	Echo Investment S.A.
136	Projekt Echo - 140 Sp. zo.o.	Kielce	100%	Echo Investment S.A.
137	Projekt Echo - 141 Sp. zo.o.	Kielce	100%	Echo Investment S.A.
138	Projekt Echo - 142 Sp. zo.o.	Kielce	100%	Echo Investment S.A.
139	Projekt Echo - 143 Sp. zo.o.	Kielce	100%	Echo Investment S.A.
140	Projekt Echo - 144 Sp. zo.o.	Kielce	100%	Echo Investment S.A.
141	Projekt Echo - 145 Sp. zo.o.	Kielce	100%	Echo Investment S.A.

JOINT VENTURES

No	Subsidiary	Registered office	% of capital held	Parent entity
GALERIA MŁOCINY
1	Rosehill Investments Sp. zo.o.	Warsaw	30%	Echo Investment S.A.
2	Berea Sp. zo.o.	Warsaw	30%	Rosehill Investments Sp. zo.o.
TOWAROWA 22
3	Projekt Echo - 138 Sp. zo.o. Sp.K.	Warsaw	45,26%	Strood Sp. zo.o.
4	Projekt Echo - 138 Sp. zo.o.	Warsaw	30%	Echo Investment S.A.
RESI4RENT
5	R4R Poland Sp. zo.o.	Warsaw	30%	Echo Investment S.A.
6	R4R Łódź Wodna Sp. zo.o.	Warsaw	30%	R4R Poland Sp. zo.o.
7	R4R Wrocław Kępa Sp. zo.o.	Warsaw	30%	R4R Poland Sp. zo.o.
8	R4R Wrocław Rychtalska Sp. zo.o.	Warsaw	30%	R4R Poland Sp. zo.o.
9	R4R Warszawa Browary Sp. zo.o.	Warsaw	30%	R4R Poland Sp. zo.o.
10	R4R Leasing Sp. zo.o.	Warsaw	30%	R4R Poland Sp. zo.o.
11	R4R Poznań Szczepanowskiego Sp. zo.o.	Warsaw	30%	R4R Poland Sp. zo.o.
12	R4R Warszawa Taśmowa Sp. zo.o.	Warsaw	30%	R4R Poland Sp. zo.o.
13	R4R Warszawa Woronicza Sp. zo.o.	Warsaw	30%	R4R Poland Sp. zo.o.
14	R4R Gdańsk Kołobrzeska Sp. zo.o.	Warsaw	30%	R4R Poland Sp. zo.o.
15	R4R RE Sp. zo.o.	Warsaw	30%	R4R Poland Sp. zo.o.
16	R4R Kraków 3 Maja Sp. zo.o.	Warsaw	30%	R4R Poland Sp. zo.o.
17	R4R Warszawa Wilanowska Sp. zo.o.	Warsaw	30%	R4R Poland Sp. zo.o.
18	R4R RE Wave 3 Sp. zo.o.	Warsaw	30%	R4R Poland Sp. zo.o.
19	R4R Kraków Puszkarska Sp. zo.o.	Warsaw	30%	R4R Poland Sp. zo.o.
20	Pimech Invest Sp.zo.o.	Warsaw	30%	R4R Poland Sp. zo.o.
21	M2 Hotel Sp. zo.o.	Warsaw	30%	R4R Poland Sp. zo.o.
22	R4R RE Wave 4 Sp. zo.o.	Warsaw	30%	R4R Poland Sp. zo.o.
23	R4R Kraków JPII Sp. zo.o.	Warsaw	30%	R4R Poland Sp. zo.o.

. Changes in the structure of the group in 2020

INCREASE OF THE GROUP

Entity	Action	Date	Share capital (PLN)
Projekt Echo – 141 Sp. zo.o.	Registration by the District Court in Kielce	27.01.2020	5 000
Projekt Echo – 142 Sp. zo.o.	Registration by the District Court in Kielce	28.01.2020	5 000
Projekt Echo – 143 Sp. zo.o.	Registration by the District Court in Kielce	24.01.2020	5 000
Projekt Echo – 144 Sp. zo.o.	Registration by the District Court in Kielce	28.01.2020	5 000
Projekt Echo – 145 Sp. zo.o.	Registration by the District Court in Kielce	23.01.2020	5 000

DECREASE OF THE GROUP

Entity	Action	Date	Share capital (PLN)
Projekt - Pamiątkowo Sp. zo.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. zo.o.	Sale of shares by Echo Investment S.A. to Common Investment S.A.	5.05.2020	3 910 000
Forum 60 Fundusz Inwestycyjny Zamknięty	Liquidation	1.06.2020	20 000
Projekt 18 – Grupa Echo Sp. zo.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. zo.o.	Registration of the capital increase by Echo Investment S.A.	28.01.2020
Projekt Echo – 115 Sp. zo.o.	Registration of the capital increase by Echo Investment S.A.	28.01.2020
Projekt Echo – 113 Sp. zo.o.	Registration of the capital increase by Echo Investment S.A.	25.02.2020
Projekt Echo – 131 Sp. zo.o.	Registration of the capital increase by Echo Investment S.A.	28.02.2020
Echo – Opolska Business Sp. zo.o.	Registration of the capital increase by Echo Investment S.A.	9.03.2020
Projekt Echo – 122 Sp. zo.o.	Registration of the capital increase by Echo Investment S.A.	13.03.2020
Echo - Browary Warszawskie Sp. zo.o. Sp.K.	Registration of the contribution reduction made by the limited partner of Echo Investment S.A.	20.11.2020

 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.	155 000	31.03.2021	WIBOR 6M + margin 2,9%
2/2017	PLECHPS00258	mBank S.A.	139 950	30.11.2021	WIBOR 6M + margin 2,9%
1/2018	PLECHPS00282	mBank S.A.	46 600	25.04.2022	WIBOR 6M + margin 2,9%
1/2019	PLECHPS00308	mBank S.A.	96 510	11.04.2023	WIBOR 6M + margin 4,25%
1/2020	PLO017000012	mBank S.A.	150 000	31.05.2024	WIBOR 6M + margin 4,50%
1P/2020	PLO017000020	PKO TFI Parasolowy and Michael / Ström Dom Maklerski S.A. as an agent	100 000	5.08.2024	WIBOR 6M + margin 4,50%
Total			688 060

Bonds for individual investors [‘000 PLN]

Series	ISIN code	Bank / brokerage house	Nominal value	Maturity	Interest rate
E-series	PLECHPS00217	DM PKO BP S.A.	100 000	6.07.2021	WIBOR 6M + margin 2,9%
F-series	PLECHPS00233	DM PKO BP S.A.	125 000	11.10.2022	WIBOR 6M + margin 2,9%
G-series	PLECHPS00241	DM PKO BP S.A.	75 000	27.10.2022	WIBOR 6M + margin 2,9%
H-series	PLECHPS00266	DM PKO BP S.A.	50 000	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	50 000	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 J2-series: DM PKO Banku Polskiego S.A.	33 832	21.09.2023	WIBOR 6M + margin 3,4%
Total			433 832

Total PLN-denominated bonds | | | 1 121 892 | | |

Bonds for institutional investors EUR-denominated [‘000 EUR]

Series	ISIN code	Bank / brokerage house	Nominal value	Maturity	Interest rate
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.

Value of the bonds corresponds to undiscounted cash flows without interests. Change of business and economic conditions had no significant effect on the financial obligations’ fair value.# Management Board Report on operations of Echo Investment S.A. and its Group in 2020

7.1. Bonds

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 oered 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 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.

Private bond issue

On October 28, 2020, Echo Investment has also is-sued short-term bonds for a private investor in a total value of EUR 12,8 million (the euro-bonds issu-ance program described above).

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.

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

*Issue out of the issuance program with Bank Pekao S.A.

Information on the bond issued in Q1 2021 you can nd in the item 10.3 on page 31.

7.2. Credit facilities

Investment loans are secured by standard securities such as mortgages, registered and ﬁnancial pledge agreements, 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 PLN]

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. zo.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 IiII, Warsaw	Projekt Beethovena - Projekt Echo - 122 Sp. zo.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 Oces and Malthouse Oces (Warsaw Brewery K, GH), Warsaw	Dellia Investments - Pro-jekt Echo - 115 Sp. zo.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. zo.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 IiII, Katowice	Face2Face - Stranraer Sp. zo.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. zo.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. zo.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 iJ, Łódź	Projekt Echo 130 Sp. zo.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. zo.o.	Bank Pekao S.A.	50 000 EUR	44 800 EUR	Margin + EURIBOR 3M	30.09.2021
Resi4Rent* - 1st tranche	R4R Łódź Wodna Sp. zo.o./ R4R Wrocław Rychtalska Sp. zo.o./ R4R Warszawa Browary Sp. zo.o./ R4R Wrocław Kępa Sp. zo.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. zo.o./ R4R Warszawa Taśmowa Sp. zo.o./ R4R Warsza-wa Woronicza Sp. zo.o./ R4R Gdańsk Kołobrzes-ka Sp. zo.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.

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.

7.3. O-balance sheet liabilities

7.3.1. Surety agreements

FINANCIAL SURETY AGREEMENTS ISSUED BY ECHO INVESTMENT GROUP AS AT 31 DECEMBER 2020 [PLN ‘000]

Issuer	Entity receiving surety	Beneciary	Value	Validity	Description
Echo Investment S.A.	Echo – Browary Warszawskie Sp. zo.o. Sp.K. oraz Dellia Investments – Projekt Echo – 115 Sp. zo.o. Sp.K.	HPO AEP Sp. zo.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. zo.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

NON-FINANCIAL SURETY AGREEMENTS ISSUED BY ECHO INVESTMENT GROUP AS AT 31 DECEMBER 2020 [PLN ‘000]

Issuer	Entity receiving surety	Beneciary	Value	Validity	Description
Echo – SPV 7 Sp. zo.o. / Echo – Aurus Sp. zo.o.	Sagittarius-Projek Echo – 113 Sp.zo.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. zo.o. / Echo – Aurus Sp. zo.o.	Sagittarius – Projek Echo – 113 Sp. zo.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

CHANGES IN SURETY AGREEMENTS ISSUED BY ECHO INVESTMENT GROUP IN 2020 [PLN ‘000]

Change	Issuer	Beneciary	Date of change	Value	Due	Expiry	Description
	Echo-Aurus Sp. zo.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. zo.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.

GUARANTEES ISSUED BY ECHO INVESTMENT GROUP AS AT 31 DECEMBER 2020 [PLN ‘000]

Guarantor	Issuer	Beneciary	Value [PLN ‘000]	Validity	Description
Echo Investment S.A.	Projekt 104 Sp. zo.o. Skua Sp. zo.o.	Skua Sp. zo.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 oce building in Wrocław. Issued in EUR.
Echo Investment S.A.	Echo - Opolska Business Park Sp. zo.o. Sp.K.	issued for Ventry Invest-ments Sp. z o.o. Sp. k.

‘PLN ‘000’

Guarantor	Issuer	Beneficiary	Value [PLN ‘000]	Validity	Description
Echo Investment S.A.	EPP Oce O3 Business Cam- pus Sp. z o.o.	108	until 21.12.2026	Construction guarantee related to the sale of the O3 Business Cam- pus I oce 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. zo.o. Sp.K.	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 oce 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. zo.o. Sp.K.	Flaxton Investments Sp. z o.o. (currently entitled EPP Oce – Symetris Busi- ness Park Sp. z o.o.)	18 789	until 21.12.2026	Construction guarantee related to the sale of the Symetris I oce 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. zo.o. Sp.K.	A4 Business Park Sp. zo.o.	25 382	until 26.04.2027	Construction guarantee related to the sale of the A4 Business Park III oce building in Katowice. The guarantee is secured by a corporate guarantee issued by Echo Investment S.A. Guar- antee issued in EUR.
Echo - Opolska Business Park Sp. zo.o. Sp.K.	EPP Oce O3 Business Campus Sp. zo.o	40 148	until 21.12.2027	Construction guarantee related to the sale of the O3 Business Cam- pus II oce 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.	Nobilis - Projekt Echo - 117 Sp. zo.o. Sp.K.	40 000	until 31.10.2026	Quality guarantee for construction work related to the Nobilis oce building in Wrocław.
Grupa Echo Sp. zo.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 oce 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. zo.o. SKA (previously: Projekt 22 – Grupa Echo Sp. zo.o. S.K.A.)	A19 Sp. zo.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. zo.o. Sp.K.	Flaxton Investments Sp. z o.o. (currently entitled EPP Oce – Symetris Busi- ness Park Sp. z o.o.)	17 618	until 31.08.2023	Construction guarantee related to the sale of the oce 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	Beneficiary	Value [PLN ‘000]	Validity	Description
Echo Investment S.A.	R4R Łódź Wodna Sp. zo.o. R4R Wrocław Kępa Sp. zo.o. R4R Wrocławskie Rychtalska Sp. zo.o. R4R Warszawa Browary Sp. zo.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. zo.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. zo.o. SKA	PKO BP S.A.	36 000	until 30.06.2023	Security for exceeding the costs of performing the Moje Miejsce oce project in Warsaw.
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. zo.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 Oc- es building being part of the Warsaw Brewery complex. Issued in EUR.
Echo Investment S.A.	Dellia Investments - Pro- jekt Echo - 115 Sp. zo.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 Oce building in the Warsaw Brewery complex. Issued in PLN.
Echo Investment S.A.	Dellia Investments - Pro- jekt Echo - 115 Sp. zo.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 Oces building being part of the Warsaw Brewery complex. Issued in EUR.
Echo Investment S.A.	Dellia Investments - Pro- jekt Echo - 115 Sp. zo.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 oce project in the Warsaw Brewery complex in Warsaw. Issued in EUR.
Echo Investment S.A.	Projekt 17 - Grupa Echo Sp. zo.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 oce project in Wrocław.
Echo Investment S.A.	Projekt 17 - Grupa Echo Sp. zo.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 oce project in Wrocław. Issued in EUR.
Echo Investment S.A.	Projekt 20 - Grupa Echo Sp. zo.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 oce 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	Beneficiary	Value [PLN ‘000]	Validity	Description
Echo Investment S.A.	Echo - Opolska Business Park Sp. zo.o. Sp.K.	EPP Development 6 Sp. zo.o.	37 226	until 9.08.2028	Construction guarantee related to the sale of the O3 Business Cam- pus III oce 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. zo.o. Sp.K.	Tax Administration Oce 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. zo.o. SKA	Tesco (Polska) Sp. zo.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. zo.o.	R4R Poznań Szcze- panowskiego Sp. zo.o. R4R Warszawa Taśmowa Sp. zo.o. R4R Warszawa Woronicza Sp. zo.o. R4R Gdańsk Kołobrzeska Sp. zo.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. zo.o. SKA	PKO BP S.A.	39 000	until 31.12.2026	Guarantee securing cost overrun and maintanance of unleased area on Midpoint71 oce project in Wroclaw. Issued in PLN.
Echo Investment S.A	Midpoint71 – Cornwall Investments Sp. zo.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 oce project in Wroclaw. Issued in EUR.
Towarzystwo Ubezpiec- zeń Euler Hermes S.A. (commissioned by Echo Investment S.A.)	Gosford Investment Sp. zo.o. Womak Delta Sp. zo.o.	29	14.07.2021	Rent guarantee - apartment sales oce in Wrocław
Echo Investment S.A.	Projekt Echo - 130 Sp. zo.o.	Bank Pekao S.A.	28 609	until 31.01.2024	Guarantee securing cost overrun of the construction of Fuzja CDJ com- plex oce project. Issued in PLN.
Echo Investment S.A.	Cinema Asset Manager – Grupa Echo Sp. zo.o. SKA	Pearl Jewel sp. zo.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 oce 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.# 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	Beneficiary	Date of change	Value	Expiry
Warranty and quality guarantee for the liabilities 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.	Santander Bank Polska S.A.	City of Katowice	16.01.2020	758	Expiry
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.	PKO BP SA	LUX Europa III S.a.r.l.	25.03.2020	6 450	Expiry
Rental guarantee related to the sale of the O3 Business Campus I office building in Kraków. The construction guarantee is secured by a corporate guarantee issued by Echo Investment S.A. The guarantee 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.	Echo Investment S.A. issued for Ventry Investments Sp. z o.o. Sp. k. (currently entitled EPP Office O3 Business Campus Sp. z o.o.)		21.05.2020	912	Expiry
Rental guarantee related to the sale of the Symetris I office building in Łódź. The guarantee 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.	Echo Investment S.A. issued for Flaxton Investments Sp. z o.o. (currently entitled EPP Office – Symetris Business Park Sp. z o.o.)		21.05.2020	157	Expiry
Security of the proper performance of the final sale contract of the Aquarius Business House I office building in Wrocław. Issued in EUR.	Echo Investment S.A.	Horta Sp. zo.o.	2.07.2020	22634	Expiry
Security of the payment for producing and delivery of parklift installation in Reset II project in Warsaw.	Towarzystwo Ubezpieczeń Euler Hermes S.A. (commissioned by Echo Investment S.A.)	PDG MA-SKI Auto Parksystemy Sp. zo.o.	4.08.2020	1386	Expiry
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 agreement concluded on 17.10.2017. Issued in EUR.	Echo Investment S.A. Santander Bank Polska S.A., PKO BP S.A., Bank Gospodarstwa Krajowego and mBank S.A.		30.10.2020	42 918	Expiry
Security of the payment for producing and delivery of parklift installation in Fuzja B project in Łódź.	Towarzystwo Ubezpieczeń Euler Hermes S.A. (commissioned by Echo Investment S.A.)	PDG MA-SKI Auto Parksystemy Sp. zo.o.	19.11.2020	375	Expiry
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.	Echo Investment S.A.	R4R Warszawa Browary Sp. zo.o.	16.12.2020	39 224	Expiry
Security of the payment for producing and delivery of parklift installation in Apartamenty Esencja project in Poznań.	Santander Bank Polska S.A.	PDG MA-SKI Auto Parksystemy Sp. zo.o.	20.12.2020	470	Expiry
Security for exceeding the costs of performing the React office project in Łódź.	Echo Investment S.A.	BNP Paribas Bank Polska S.A.	31.12.2020	10 499	Issue
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 property in Kraków (Kapelanka str.).	Echo Investment S.A.	Topaz Jewel Sp. z o.o.	28.02.2020	6 828

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	Beneficiary	Date of change	Value	Issue
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.	PKO BP S.A.(commissioned by Echo Investment S.A.)	Warburg-HiH Invest Real Estate GmbH	20.05.2020	1 047	Issue
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.	PKO BP S.A.(commissioned by Echo Investment S.A.)	LUX Europa III S.a.r.l.	20.05.2020	6 450	Issue
Security of payment due to parklifts production and delivery to Fuzja B project in Łódź.	Towarzystwo Ubezpieczeń Euler Hermes S.A. (commissioned by Echo Investment S.A.and from its limit)	PDG MA-SKI Auto Parksystemy Sp. zo.o.	08.06.2020	363	Issue
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.	Echo – Aurus Sp. zo.o.	Nobilis – Projekt Echo 117 Sp. zo.o. Sp.K.	14.07.2020	818	Issue
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.	Echo Investment S.A	Nobilis - Business House sp. zo.o.	14.07.2020	590	Issue
Guarantee securing cost overrun and maintenance of unleased area on Midpoint71 office project in Wroclaw. Issued in PLN.	Echo Investment S.A	PKO BP S.A.	22.07.2020	39 000	Issue
Guarantee securing debt service cover ratio and covering rent-free periods in lease agreements on Midpoint71 office project in Wroclaw. Issued in EUR.	Echo Investment S.A	PKO BP S.A.	22.07.2020	19 669	Issue
Security of the payment for producing and delivery of parklift installation in Apartamenty Esencja project in Poznań.	Santander Bank Polska S.A.	PDG MA-SKI Auto Parksystemy Sp. zo.o.	17.09.2020	461	Issue
Rent guarantee - apartment sales office in Wrocław	Towarzystwo Ubezpieczeń Euler Hermes S.A.(commissioned by Echo Investment S.A.)	WOMAK DELTA sp. zo.o.	14.07.2020	29	Issue
Guarantee securing cost overrun of the construction of Fuzja CDJ complex office project. Issued in PLN.	Echo Investment S.A.	Pekao S.A.	17.11.2020	28 609	Issue
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 office 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.	Echo Investment S.A.	Pearl Jewel sp. zo.o.	1.12.2020	na.

CHANGES IN GUARANTEE AGREEMENTS ISSUED BY ECHO INVESTMENT GROUP IN 2020

PLN ‘000

Change	Guarantor	Beneficiary	Date of change	Value	Due	Extension
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.	PKO BP S.A.	LUX Europa III S.a.r.l.	30.06.2020	24		Extension
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.	Echo Investment S.A. issued for Echo Opolska Business Park Sp. z o.o. Sp. k. (currently entitled EPP Development 6 Sp. z o.o.)		30.06.2020	1 099		Extension

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	Beneficiary	Date of change	Value	Due	Extension
Guarantee for the obligations of Echo Investment S.A. resulting from the lease contract concluded on 24.10.2016. Issued in EUR.	PKO BP S.A	IREEF – Stryków Propco Sp. zo.o.	31.07.2020	542		Extension
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.	Rosehill Investments Sp. zo.o.	IB 6 FIZAN / GPF 3 FIZAN	20.10.2020	103 766		Extension and value reducing

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 recommending 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 consideration the current and expected condition of the Company and the Capital Group as well as their development strategy, in particular:

safe and the most effective management of debt and liquidity 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 development operations. The Management Board of Echo Investment adopted on 11 September 2019 a resolution on conditional payment of the advance 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 dividend 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.

The dividend policy states that the Management Board recommends the payment of the dividend up to amount of 70% of the consolidated net profit annually.

0,50 pln Amount of advanced dividend paid from 2019 profit.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 distribution 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 advance payment, therefore it was decided that the company would not pay additional funds from the profit for the financial year 2019.

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. According 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%

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 industries, such as production of fast moving consumer goods. The ratios will be affected by lower revenues from sales (lower revenues from project execution services from related entities). In addition, the receivables turnover ratio will be affected by an increase in loans granted to related companies. Trade receivables 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 previous 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 offset 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

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 increase 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 parallel 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 received 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%

For Echo Investment Group

PROFITABILITY RATIOS

The decrease of the operating and balance sheet profit margin results from a faster increase of revenues (more apartments delivered) than the increase in operating profit (lower value of the fair value gains) and net profit (profit / loss from joint-ventures). The decline of the ROA rate results from a large increase of the assets value (investment properties under construction and inventories - new purchases, investment expenditure on projects).

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)

TURNOVER RATIO

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 dynamics 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

LIQUIDITY RATIO

The liquidity ratios, despite a slight decrease, remains at the exemplary levels, which proves the stable 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.

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	0,81	1,58
Quick ratio	0,34	0,69
Cash ratio	0,21	0,46

DEBT RATIOS

Equity to assets ratio (equity / total assets)
The ratio remains at a safe level, and its slight decrease 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 dynamics of the increase in the value of fixed assets (new purchases, real estate appraisals, investment expenditures) in relation to the dynamics of the increase of equity (dividend payment).
Debt ratio (total liabilities / total assets)
The increase of this ratio results from a faster increase in liabilities, which was influenced by the valuation 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%

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 accordance with amortised cost principle.
Profit on investment property amounting to PLN 241 million.# Management Board Report on operations of Echo Investment S.A. and its Group in 2020

2.1 Factors and one-off events influencing the financial result in 2020 and in Q4 2020

RESIDENTIAL PROJECTS SHARES IN THE TOTAL NUMBER OF FINAL CONTRACTS (UNITS)

2020
- 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%
1,505 UNITS

Q4 2020
- 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%
792 UNITS

PROFIT ON INVESTMENT PROPERTY BY ASSETS (MLN PLN)

2020
- – Warsaw, Malthouse Offices (Warsaw Brewery GH), Warsaw
- – Face2Face II, Katowice
- – MidPoint71, Wrocław
- – Villa Offices (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
241 MN PLN

Details of profit on investment property in 2020:
- – Face2Face II, Katowice – PLN 10.5 million;
- – Malthouse Offices (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.
Q4 2020: In Q4 2020 the value of profit on investment property was decreased due to the need of accounting settlement of rent reductions in the Libero shopping center and completed office buildings by c.a. PLN 31.7 million.

Factors which influenced the Group’s financial results 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 accordance with amortised cost principle.
Proﬁt on investment property amounting to PLN 22 million.

Factors which influenced the Group’s financial results in Q4 2020:

Cash and loans valuation on resulting from of currency exchange fluctuations.
Measurement and settlement of FX hedging instruments.
Interest on deposits and borrowings granted.

EXTERNAL FACTORS:

Positive:
- – continued interests of entities purchasing commercial 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 office space, including flex-space,
- – the ratio of office 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 temporary limitations of operations due to the pandemic,
- – structural housing deficit and stable apartments value,
- – stable 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 influence on global economy.

INTERNAL FACTORS:

Positive:
- – a clearly defined development strategy,
– the Group’s established position on the development 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 developer Archicom,
– cooperation with banks with stable financial standing in the area of lending, placement of surpluses and cooperation on the derivative transactions market, foreign exchange transactions and interest rates,
- – good cooperation with stable and reputable partners, tenants, contractors, suppliers and real estate buyers,
– organizational structure, with separate departments corresponding to operating segments that are responsible for generating profits from the operations 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 proceedings),
- – experienced staff,
- – a large land bank for investment project development,
- – 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 obtaining 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 implemented.

2.2 External and internal factors significant for the development of Echo Investment S.A. and its group

2.3 REMUNERATION OF MEMBERS OF THE MANAGEMENT BOARD (PLN)

From Echo Investment S.A.						From subsidiaries, joint-ventures and associates						Other benefits						Total
	Bonus	Bonus					Bonus	Bonus
2020						2019
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	1 003 933	2 145 339	596 006	3 745 278				11 877 967	32 128 003
Maciej Drozd	421 672	336 000	1 224 713	35 218	2 017 603	753 413	359 100	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	3 423 469	22 079	245 574	987 609	-	5 749 199	-	-	-	-	-	-	11 877 967	32 128 003

Remuneration of members of the Management Board

2.4 REMUNERATION OF MEMBERS OF THE SUPERVISORY BOARD (PLN)

	From Echo Investment S.A.	From subsidiaries, joint-ventures and associates	Other benefits	From Echo Investment S.A.	From subsidiaries, joint-ventures and associates
	2020	2020	2020	2019	2019
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 determined in the form of resolutions of the General Meeting of the Company’s Shareholders. The resolution 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 Supervisory 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 Supervisory Board – PLN 5,000 gross,
additional monthly remuneration for the chairmen of the Supervisory Board committees – PLN 10,000 gross.

Members of the Supervisory Board shall also be entitled to reimbursement of costs incurred in connection with the exercise of the function, in particular – travel costs to the place of Supervisory Board meetings and back, costs of individual supervision as well as costs of accommodation and meals.

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 generated 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-off 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 subsidiary, the value of which constitutes at least 10% of the equity of the Company.

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. z o.o.	Echo Investment S.A.	192,8	EURIBOR 3M + margin	30.09.2021
Echo Investment S.A.	Projekt 12 - Grupa Echo Sp. z o.o. SKA	122,7	WIBOR 3M + margin	30.09.2021
Echo Investment S.A.	Echo - SPV 7 Sp. z o.o.	109,0	WIBOR 3M + margin	31.12.2021
Swanage Sp. z o.o.	Dellia Investments - Projekt Echo - 115 Sp. z o.o. Sp.K.	101,9	WIBOR 3M + margin	28.12.2021
Echo - SPV 7 Sp. z o.o.	Cinema Asset Manager - Grupa Echo Sp. z o.o. SKA	76,9	WIBOR 3M + margin	30.06.2021
Echo Investment S.A.	Fianar Investments Sp. z o.o.	71,4	WIBOR 3M + margin	31.12.2021
Echo Investment S.A.	Villea Investments Sp. z o.o.	68,4	WIBOR 3M + margin	31.03.2021
Echo Investment S.A.	R4R Poland Sp. z o.o.	61,5	margin	31.03.2029
Projekt Naramowice – Grupa Echo Sp. z o.o. SKA	React - Dagnall Sp. z o.o. SKA	59,6	WIBOR 3M + margin	30.09.2021
Echo - Aurus Sp. z o.o.	Face2Face - Stranraer Sp. z o.o.SKA	51,1	WIBOR 3M + margin	30.06.2021
Echo - SPV 7 Sp. z o.o.	Face2Face - Stranraer Sp. z o.o.SKA	50,8	WIBOR 3M + margin	30.06.2021
Echo Investment S.A.	Pudsey Sp. z o.o.	49,4	EURIBOR 3M + margin	31.03.2021
Echo Investment S.A.	Galeria Libero - Projekt Echo - 120 Sp. z o.o. Sp.K	49,0	WIBOR 3M + margin	10.10.2026
Echo Investment S.A.	Galeria Libero - Projekt Echo - 120 Sp. z o.o. Sp.K.	48,5	WIBOR 3M + margin	10.10.2026
Echo - SPV 7 Sp. z o.o.	Projekt 139 - Grupa Echo Sp. z o.o. Sp.K.	47,7	WIBOR 3M + margin	31.03.2021
Echo Investment S.A.	RPGZ IX Sp. z o.o.	47,5	WIBOR 3M + margin	31.12.2021
Echo Investment S.A.	Gosford Investments Sp. z o.o.	46,4	WIBOR 3M + margin	30.09.2021
Echo Investment S.A.	Projekt 144 - Grupa Echo Sp. z o.o. Sp.K.	43,8	WIBOR 3M + margin	31.03.2021
Echo Investment S.A.	Senja 2 Sp. z o.o.	43,1	WIBOR 3M + margin	31.03.2021
Echo Investment S.A.	Echo - Aurus Sp. z o.o.	42,0	WIBOR 3M + margin	31.12.2021

 Information on borrowings granted in 2020, including to related entities

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 Investment 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 Capital Group for the years 2020-2021. The agreement was concluded by the Management Board, based on the Supervisory Board’s authorisation.

The Management Board of Echo Investment S.A. informs that the selection of the auditing company conducting the audit of the annual financial statements was made in accordance with the regulations, including the selection and procedure 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 accordance 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 statutory auditor, as well as prevailing mandate 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 related 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 / Strategy 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

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 affiliated 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 macroeconomic and environmental risks associated with the spread of SARS-CoV-2 coronavirus and COVID-19. The restrictions introduced by the government directly affected 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 pandemic 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 resulted in the vast majority of companies and organizations — as far as possible — deciding to reduce their operations or switch to remote working (home office) procedures. In the case of Echo Investment, the situation was monitored on an ongoing basis by the management staff and a crisis management center appointed in accordance with internal procedures. The company focused on the following activities:

Securing the possibility for employees to work remotely.
Securing the continuity of the company’s basic functions.Securing the offices 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 precautionary procedures after the personnel returns to the offices. 7. Accelerating the plan of digitization of business processes — primarily accounting and contracts. 8. The group also conducted a number of analyses and studies to learn about the preferences of customers, colleagues, university students (future employees) regarding remote work and the impact 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 adjusting the offer 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 construction 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 Management 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 materials 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 constructions 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, construction 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, limiting visits by outsiders (mail carriers, couriers) to a separate area in the construction office, 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, construction 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, limiting visits by outsiders (mail carriers, couriers) to a separate area in the construction office, 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 construction services in the future, the Management Board has taken steps to reduce the costs of construction 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 effects of these procedures are already visible when contracting subsequent construction works. There is a noticeable increase in the number of construction companies submitting tenders, which gives the contracting authorities a better negotiating position.

Group’s financial liquidity security

The priority for securing the Group at the time of the lockdown and in the face of a potential economic 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 reducing 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 office 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 projects at an early stage of construction that do not have secured tenants;
- introducing the requirement of pre-selling apartments before the construction of a housing project begins;
- reducing external costs, in particular for consultancy and marketing services;
- discussions with banks to suspend or reduce project debt handling.

Retail sector

The most difficult 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 facility’s service (security, cleaning, day-to-day operations). “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 tenants and lessors, with the long-term goal of restoring shopping center turnover and footfall to pre-pandemic 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 difficult negotiating conditions, both facilities were among the first to be fully operational 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 declared bankruptcy. Despite a number of restrictions and safety measures, the pace of customer return to both projects and turnover growth from June to October 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 102 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 situation of tenants and their individual standings. Both managers of both shopping centres and their tenants 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 activities 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 estate 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 offices, notaries and authorities, in practice, the sale of apartments was almost completely stopped during the second half of March.# Management Board Report on operations of Echo Investment S.A. and its Group in 2020

Residential sector

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 offers at online meetings and with the help of virtual reality tools, negotiate contract provisions in the CRM system or present the progress of construction work through cameras. The introduction of the pandemic state accelerated the implementation of further elements 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 contactless entry into apartments (from the housing estate gate, in front of the main door and the elevator), the services of architects (who help arrange an apartment in such a way that office space can be made easily accessible), special marking and training materials, washbasins or disinfectants in common areas (e.g. at playgrounds). Balconies, terraces, loggias 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, customers are still more cautious when making purchasing decisions. There is a noticeable increase in the number 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 commissioning 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 affected by the tightening of banks’ lending policies. The initially tightened credit policy of banks was also of great importance for the housing sector, but this turned out to be temporary. 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 restrictions, the activity of customers is constant.

As a consequence of the economic downturn, greater caution and Echo Investment’s conservative policy, 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 preliminary 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 Resi4Rent residential platform, in which Echo Investment has a 30% stake. Although in the first weeks of the restrictions introduced, the process of renting projects was almost completely stopped, very quickly the interest of potential clients returned to normal. In line with the Management Board expectation, Resi4Rent benefits from the pandemic situation, with slight decrease of rent rates expectations. Due to the increased uncertainty in the economy and higher requirements for taking out mortgage loans, a significant number of potential apartment buyers postpone the purchase decision and take advantage of institutional apartment rental.

Office sector

The most important task in the office sector was maintaining negotiations on leasing space in projects built by the company and continuing the sales processes of the finished buildings. The rental department 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 negotiations.

In the sales processes, the Group adjusted its expectations concerning yields on future sales transactions and suspended the sale of some buildings. In Q1 2021 the Group has sold Villa Offices building in the Warsaw Brewery complex, what stabilised the long-term cash-flow. Promising sale negotiations are also underway regarding the Malthouse Offices and Moje Miejsce office buildings in Warsaw (signed letters of intent). The group also returned to sale process of the Face2Face office 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 office buildings. From the beginning of the epidemiological threat, the team of Echo Investment experts has set the task of better securing employees of organizations that have located their offices in the buildings of Echo Investment. A number of solutions responding to post-covid needs have been compiled into the “healthy office” 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 investment, Echo Investment focused on securing the already operating office buildings. The “five for safety” program is a guarantee that these office buildings are ready to receive employees returning to the offices. Echo Investment focused on key installations of building security: ventilation and air conditioning. Clean and healthy air for the new office 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 subsequent reporting periods. The Management Board of the Company and the Group analyzed the areas related to the estimated values and areas in the financial statements that are affected by the situation. The results of this analysis indicate the following potential impact areas.

It is possible that the continuation of the pandemic will limit the expansion of companies in Poland, which will result in a decrease in demand for office space. This may result in a lower pace of new buildings leasing and a decline in rental rates. This situation 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 provided 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 indicates 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 rental 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 activities of shopping centers are introduced, rental income may be lost, which may also lead to a reduction 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. Nevertheless, the Management Board would like to point out that the pace of renting offices recorded before the epidemic was faster.

The prolonged pandemic and possible new restrictions 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 Management 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 office buildings built by the Group are provided with financing. Residential projects are# Management Board Report on operations of Echo Investment S.A. and its Group in 2020

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 Oces 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 eects for the Group.

CHAPTER 2 STATEMENT ON THE APPLICATION OF CORPORATE GOVERNANCE PRINCIPLES

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 eect 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.

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 eect. 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 justied 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 denes in its internal regu- lations the criteria and circumstances in which a conict 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 conicts 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 conict 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.# Corporate governance

Management Board Report on operations of Echo Investment S.A. and its Group in 2020

The recommendations include: − development and application of the Anti-Corruption Code; − staff training in the field of counteracting corruption; − introduction of anti-corruption clauses in contracts; − development and application of the policy for granting and accepting gifts; − development and application the policy for sponsoring and donations; − implementation of the procedure to facilitate reporting about irregularities by whistleblowers; − establishment of the compliance management function. Echo Investment completed all of the above recommendations, except for the last one regarding the establishment of the compliance management function. In Echo Investment, compliance management 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 supervising the proper implementation of procedures and the application of adopted codes, regulations and other internal regulations, in particular the Anti-Corruption Code and procedures for concluding and performing donation, sponsorship and similar agreements. The Committee includes: − a Management Board Member appointed by resolution 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, appointed by the department’s director; − an employee of the Marketing Department appointed by resolution of the Management Board or by decision of the Management Board President. 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 public persons as donations and sponsorship, invitations, covering accommodation costs, catering, informal and private meetings, presents and occasional gifts, agency agreements in contact with public administration officials or other contracts with public persons.

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 accordance with recruitment procedures and on conditions adopted in the company, but in addition, the risk assessment 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 recognises 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 officials

As to contact with public administration officials, Echo Investment often engages intermediaries e.g. architects. In order to cooperate with a new entity - an intermediary whose task will be to obtain decisions, approvals and other official 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 officials;
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 officials.

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 administration officials. In case of suspected irregularities in cooperation with an intermediary, the Committee may also undertake explanatory actions. Also, any circumstances suggesting 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 transactions 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 business 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 verifying the reported circumstances and deciding on further cooperation with a given business partner. Echo expects that rules arising from generally applicable 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 contractual obligations, including at the minimum the following 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 department. 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 effectively, 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 Ethics 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 potential beneficiary, proceedings in case when a public person is connected with an applicant, and later performance monitoring of the granted support.

Code of Conduct

As part of risk management and in order to strengthen 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 administration and communities. The Code of Conduct organises 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 difficult situations such as a conflict of interest, a suspicion of irregularities, a corruption proposal or working with co-operators of bad reputation. As every year, in 2020, Echo Investment conducted 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 irregularity 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-existence. The system operates with the support of an external company Linia Etyki.

Other procedures and policies

Echo Investment has also introduced other procedures and specific policies concerning, inter alia, auditor selection policy, policy non-audit services, environmental policy or security policy. They streamline and automate the management process for specific areas of Echo Investment’s operations and facilitate 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”.# 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 effectiveness in the process of preparing financial statements and periodic reports published according to the Regulation of the Minister of Finance of February 19, 2009 on current and periodic information to be submitted by issuers of securities and conditions for considering as equivalent information required under the law of a non-member state (J.L. No. 33, item 259). The effectiveness 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 involved 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 independent 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 projects, costs and general administrative expenses and sale, and costs and expenditures related to the use of leasable area,
risk management, ensuring an effective internal control system and supporting the management of the whole Group.

To make this process optimal and effective, the Company has introduced the automation in the internal control process:

decision limits (approval of costs, expenditures, payments, selection of counterparties),
supervision over employee quotas by independent of people assigning quotas,
configuration of accounts (enabling manual postings on automatic accounts, transparent and easy process of transferring information for reporting),
automation of payments (generating a payment from the accounting system for electronic banking 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 staff,
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, indirectly, by the Company’s Management Board. In the Finance Department, this process involves mainly staff from the Accounting Division, assisted by employees from the Budgeting and Analysis Division and Financing Division, and the whole process is supervised by mid-level management staff of the Finance Department. Economic events in the course of the year are recorded by the Records Team of the Accounting Division. As part of internal control, the correctness of economic records is monitored by the Reporting Team from the Accounting Division, who have certificates of the Minister of Finance to provide services 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 involves employees from the Department of Budgeting and Analysis.

Valuations recognised in the statements are prepared 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 staff are independent accountants), management accounting and financial analyses (some of the staff are adequately trained in audit and internal control). They also monitor 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 reconciliation of settlements with banks is the responsibility of the Payments and Insurance Team. Thanks to a broad internal control system, which involves staff from individual teams, and supervision by managers from the Finance Department, any errors are adjusted on an ongoing basis in the Company’s accounting books according to the adopted accounting policy. Verification of financial data correctness is automated. Before presented to an independent auditor, the prepared 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 updated. The budgeting process is based on the Company’s existing formalised rules and is closely supervised by the Finance Director. The process involves the Company’s mid-level and senior management staff responsible for specific budget areas. Responsibility for the preparation and presentation rests with the Finance Branch, which is also responsible for monitoring the incurred expenditures and reporting on the performance of budgets. The budget of construction projects is the responsibility of Project Managers, who are assisted by the Business Controlling Department staff. The budget of costs and general administrative and sale expenses is the responsibility of the Budgeting and Analysis Division. This division is also responsible for preparing financial 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 Management 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 (International 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 presented 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 performance 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

Effective internal control (along with the existing reporting system) is the basic step in identifying risks and managing changes. In addition to the reporting system, effective 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 monitoring 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.

Risk Management Policy

As part of improving corporate governance standards, 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 Management Board of Echo Investment S.A.# Corporate governance

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 Company’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 shareholders 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 general 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

Composition and changes in the management board

In 2020 and as for the day of this report the company’s Management Board acted in the same composition: 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 resignation will be effective under the condition of finalizing the purchase of Archicom shares by the Echo Investment Group.

Nicklas Lindberg

President of the Board, CEO

Nicklas was appointed CEO of Echo Investment in 2016 and he is responsible for the strategy and development of the company. From 2016 Echo Investment has significantly grown its scale of operation and pipeline. The launched Strategy of Profitable Growth transformed Echo Investment into pure developer operating in seven major Polish cities, market leader in residential, office and retail real estate sectors. The Group started to design and build urban ‘destination’ projects, that combine all functions and are well-designed parts of the cities, where people can live, work and entertain. It has also introduced operation in flex office space (CitySpace) and rental apartments (Resi4Rent) segments. Until 2015 Nicklas Lindberg was employed by Skanska Group, where he held several top positions, such as president of Skanska Commercial Development Europe (CDE), head of Skanska Property Poland, CFO and CEO of Skanska Russia and a manager of residential development units in the Nordics. He graduated from the University of Lund in 2001.

Artur Langner

Vice-President of the Board

Responsible for the construction department of the Group. He is a graduate of the faculty of civil engineering at the Kielce University of Technology. After finishing his studies he started working in the construction sector, where he gained experience in participating in every stage of project construction. Artur started working for Echo Investment 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 management board member and was made a vice-president of the management board on June 27th 2008.

Marcin Materny

Management Board Member

Responsible for the development of the company’s shopping and entertainment centres. 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 later in charge of a leasing team responsible for ten shopping centres completed in 1998–2000. Following this, as the leasing director, he coordinated (among others) the leasing and marketing of Pasaż Grunwaldzki in Wrocław. In 2007–2010, Marcin was employed by Capital Park, where he coordinated the development of retail and office projects. In 2014 he became the director of Echo Investment’s shopping centre department, where he contributed to the company’s strategy in this field and was responsible for its comprehensive development. He was appointed to the management board on September 15th 2016.

Rafał Mazurczak

Management Board Member

Responsible for Echo Investment’s office department. He started his career at Echo Investment in 2000 as an office leasing manager. In 2007–2013 he was the leasing director of Echo Investment’s office department. Since 2013 he has been the director of the office department. He co-devised the development strategy of this part of Echo Investment’s business and was responsible for its implementation. He was also responsible for the construction, leasing and marketing of one of the company’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 office building in Gdańsk as well as West Gate and Nobilis in Wrocław. Rafał was appointed to the management board on September 15th 2016.

Maciej Drozd

Vice-President of the Board, CFO

Appointed as a vice-president of Echo Investment’s board in 2015. Responsible for finance and back office operations. He restructured the Echo Investment group while introducing the Profitable Growth Strategy. His task was, among others a change in the model of operation and financing of the Group, which was the long-term owner of a portfolio of commercial real estate generating fixed income from rent, and has become a classic developer focused on fast capital turnover and generating high returns. As a result, Echo Investment has been paying dividends on a regular basis since 2016. The company 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 operational companies. Between July 2009 and June 2015 he was also the CFO and managing partner of Eastbridge Group. He studied philosophy, mathematics and management at the University of Warsaw and holds a master’s degree in philosophy and a master’s degree in management. Maciej also holds an MBA degree from the University of Illinois.

Małgorzata Turek

Management Board Member

A specialist in the field of asset 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 development companies as well as international law firms. In 2017, she became president of the then newly formed Globalworth Poland Real Estate, where she was responsible for the organisation and development of a sustainable, revenue-generating property portfolio, as well as the establishment of all key functions of the company. She also gained valuable experience at Skanska Property Poland, where in 2012–2017, as a board member (and chief operating officer), she was responsible for the company’s transactions and operations. Previously, she was employed by leading law firm Linklaters, where she specialised in transactions on the commercial real estate market.# Corporate governance 117

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 staﬀ and their rights

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.

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 oce of the Management Board is three years, and Management Board members are appointed for a joint term of oce, 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 oce. The Management Board or its individual Members may be dismissed by the Supervisory Board before the expiry of their term of oce, 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 ocials, institutions, third parties, courts as well as public authorities. An appointed Proxy may act on behalf of the Company to the same eect. 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 aairs 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 oce, unless all members of the Management Board agree to hold a meeting in a dierent location. A meeting of the Management Board may be held, if all members of the Management Board have been 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 Oce 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 Oce 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 eectiveness 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.

Corporate governance 118

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 eective.

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 oce. 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

Chairman of the Supervisory Board

Noah Steinberg is WING Group’s Chairman & Chief Ex- ecutive Ocer, 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- pany’s investment and devel- opment businesses covering all market segments - oce, 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.

Corporate governance	120
Management Board Report on operations of Echo Investment S.A. and its Group in 2020

Tibor Veres

Vice-Chairman of the Supervisory Board

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 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

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 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 dierent 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.

Maciej Dyjas

Member of the Board

Maciej is a shareholder of Grin 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- 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- 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.

Corporate governance	121
Management Board Report on operations of Echo Investment S.A. and its Group in 2020

Sławomir Jędrzejczyk

Independent Member of the Supervisory Board

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 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. 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).

Nebil Senman

Supervisory Board Member
Audit Committee Member

Managing Partner at Grin 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- 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 dierent managerial po- sitions. He is a graduate of universities in Berlin (TU Ber- 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).

Peter Kocsis

Member of the Supervisory Board

He is WING’s Deputy Chief Ex- ecutive Ocer 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 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.

Bence Sass

Member of the Supervisory Board

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 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. 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.

Corporate governance	122
Management Board Report on operations of Echo Investment S.A.

The Supervisory Board of Echo Investment S.A. operates based on the Commercial Companies Code Act (J.L. of 2017, item 1577), the Company’s Statute, 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 Companies”.

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 office, which does not preclude an earlier dismissal of every member of the Supervisory Board. At least two Members of the Supervisory Board should fulfil criteria of independency of the Company and entities materially related to the Company. 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 number 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 appoints the Chairman of the Supervisory Board from among its members and the Vice-Chairman in a secret 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 involved in competitive business or participate in a competitive company as a partner in a civil law partnership, a partnership or as a member in a body of a capital company, or participate in another competitive legal person as a member of its bodies. This prohibition also includes participation in a competitive 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 Shareholders’ Meeting. A Supervisory Board member may resign his/her post before the expiry of the term of office for which he/she was appointed by submitting a statement to the Chairman of the Supervisory Board. If the Chairman of the Supervisory Board resigns his/her post, the statement is submitted to the Vice-Chairman. A Member of the Supervisory Board should not resign during the term of office, if such a resignation could prevent the Supervisory Board from operating, and especially if it could prevent 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 financial year in which the Supervisory Board member held his/her post (final year of the member’s term of office). The mandate also expires upon death or dismissal of a Supervisory Board member.

If, as a result of expiry of mandates of Supervisory Board members, the Supervisory Board is composed of fewer than 5 members, the Supervisory Board is unable to pass legally binding resolutions, and the Chairman 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 Supervisory Board may only provide generally available information about the Company. Any statements for the media regarding the Company or the Supervisory 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 Companies Code and other acts. The Supervisory Board adopts resolutions or gives opinions on issues within its scope of responsibilities, according to the Company’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 Report 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,
express opinions on motions submitted by the Management Board directed to the General Meeting, and
express opinion and pass resolutions on other issues 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 Article 433 § 3 of the Commercial Companies Code,
approve the contracting of liabilities and disposing 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 disposing of the rights that go beyond the current business 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 relevant 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 office or in a location indicated by the Chairman or the Vice-Chairman. The meetings of the Supervisory 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 convened 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 Supervisory 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 Supervisory 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 Supervisory 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 decisions related to the exercise of supervisory and control 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 Supervisory 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 content 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 Management Board as well as the dismissal and suspension of these individuals. In such a case, for the resolutions to be valid, the Supervisory Board members must be notified in advance about the draft resolutions.

Resolutions of the Supervisory Board are adopted by an absolute majority of votes. In case of a tied vote when adopting resolutions by the Supervisory 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 attachments 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 Supervisory Board, names of the present Supervisory Board members and the number of votes cast on individual 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.# Corporate governance 124

Management Board Report on operations of Echo Investment S.A. and its Group in 2020

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 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 oce 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 125

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.

Corporate governance 126

Management Board Report on operations of Echo Investment S.A. and its Group in 2020

 The responsibilities ofthe Audit Committee

The responsibilities of the Audit Committee include in particular:

monitoring:
- the ﬁnancial reporting process;
- the eciency of the internal control systems and risk management systems as well as internal au- dits, including with respect to ﬁnancial reporting;
- the execution of ﬁnancial review proceedings, in- cluding speciﬁcally the audits performed by the auditing ﬁrm;
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;
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;
assessment of the independence of the certiﬁed auditor and consenting to that auditor conducting any non-audit permitted services in favour of the Company;
development of the policy of the selection of an auditing ﬁrm for the conduct of an audit
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;
determining the procedure for the selection of an auditing ﬁrm by the Company;
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;
presentation of recommendations with the ob- jective of ensuring the accuracy of the ﬁnancial reporting process in the Company;
assessment of the work of the certiﬁed auditor and the auditing ﬁrm;
supervising the manner in which the Company’s Management Board performs duties related to preparation of tax documentation of transactions with related entities;
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;
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;
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:

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;
demand from the Company to submit the work schedules of internal auditors and certiﬁed audi- tors or auditing ﬁrms,
examining annual and semi-annual reports of the Company in due time;
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 127

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 128

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 129

Management Board Report on operations of Echo Investment S.A. and its Group in 2020

 Echo Investment S.A. shareholding structure and shareholders’ rights

SHAREHOLDERS OF ECHO INVESTMENT S.A. HOLDING MORE THAN 5% OF THE SHARE CAPITAL AS AT 31 DECEMBER 2020 – Lisala Sp. z o.o.# 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 office
Q22 building
al. Jana Pawła II 22
00-133 Warsaw

Design and execution: Damian Chomątowski | be.net/chomatowski

AI assistant

Echo Investment S.A. — Management Reports 2020

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Message from CEO

CHAPTER 1

MANAGEMENT BOARD REPORT

CHAPTER 2

STATEMENT ON THE APPLICATION OF CORPORATE GOVERNANCE PRINCIPLES

CHAPTER 3

STATEMENT OF THE MANAGEMENT BOARD

Message from CEO

The strategic directions

Residential sector

Resi4Rent

Offices

The retail sector

Financial position

CHAPTER 1 MANAGEMENT BOARD REPORT

Management Board Report on operations of Echo Investment S.A. and its Group in 2020

General information about the Company and its Group

Management Board Report on operations of Echo Investment S.A. and its Group in 2020

Management Board

Management Board Report on operations of Echo Investment S.A. and its Group in 2020

Supervisory Board

Management Board Report on operations of Echo Investment S.A. and its Group in 2020

The Strategy of Profitable Growth in action

EFFECTS OF THE STRATEGY OF PROFITABLE GROWTH IMPLEMENTATION

LEADERSHIP

LARGE DESTINATION PROJECTS

Management Board Report on operations of Echo Investment S.A. and its Group in 2020

DEVELOPMENT ACTIVITY

FOCUS ON POLAND

STRATEGIC COOPERATION WITH RELIABLE PARTNERS

Business model

Selected financial data of the Echo Investment Group

CONSOLIDATED FINANCIAL DATA OF THE ECHO INVESTMENT GROUP

The main ﬁgures disclosed in the annual ﬁnancial statements of Echo Investment S.A. and its Group

ASSETS’ STRUCTURE

ASSETS’ VALUE

NON-CURRENT ASSETS’ STRUCTURE

CURRENT ASSETS’ STRUCTURE

EQUITY AND LIABILITIES

PROFIT AND LOSS ACCOUNT

REVENUE

OPERATING PROFIT

GROSS PROFIT

NET PROFIT

NET PROFIT PER SHARE

CASH FLOW

OPERATING CASH FLOW

CASH FLOW ON INVESTING ACTIVITY

CASH FLOW ON FINANCING ACTIVITY

ASSIGNMENT OF ASSETS AND LIABILITIES TO SEGMENTS AS AT 31 DECEMBER 2020 (PLN MLN)

ASSIGNMENT OF ASSETS TO SEGMENTS

ASSIGNMENT OF LIABILITIES TO SEGMENTS

ALLOCATION OF COST OF SALES TO SEGMENTS

GROSS SEGMENT CONTRIBUTION INCLUDING FX GAIN/LOSS As at 31.12.2020

ALLOCATION OF REVENUE TO SEGMENTS

ALLOCATION OF REVENUE, COST OF SALES AND GROSS PROFIT TO SEGMENTS FOR 2020

ALLOCATION OF GROSS PROFIT (LOSS) TO SEGMENTS

Description of shares

Shareholding structure

SHAREHOLDERS OF ECHO INVESTMENT S.A. HOLDING MORE THAN 5% OF THE SHARE CAPITAL AS AT 31 DECEMBER 2020

Volume of the Company’s shares and bonds held by managing and supervising persons

VOLUME OF SHARES OF ECHO INVESTMENT S.A. HELD BY MEMBERS OF THE MANAGEMENT BOARD AND THE SUPERVISORY BOARD AS AT 31 DECEMBER 2020

VOLUME OF BONDS OF ECHO INVESTMENT S.A. HELD BY MEMBERS OF THE MANAGEMENT BOARD AND THE SUPERVISORY BOARD AS AT 31 DECEMBER 2020

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

Wing’s announcement of a tender for an additional 10.04% stake in Echo Investment

Purchase of three plots with first generation shopping centres in Kraków, Poznań and Łódź

Warsaw Brewery complex in Warsaw

Construction works completion in the Warsaw Brewery complex

The issue of PLN 150 million of bonds and the purchase of bonds for redemption

7.3 Securing a construction loan for the MidPoint71 office building

7.4 The issue of PLN 100 million of bonds for an institutional investor

7.5 The Ordinary General Meeting of Shareholders

7.6 Establishment of a bond issuance program for the issuance denominated in EUR and the first issuance

7.7 Construction loan for office buildings in Fuzja project in Łódź

Material post-balance sheet events

Echo Investment S.A. Management Reports 2020