Ronson Development SE

Management Board Report on the Activity of the Company and the Group for the financial year 2020

Management Board

Boaz Haim, President of the Management Board Yaron Shama, Vice-President of the Management Board, Chief Financial Officer Andrzej Gutowski, Vice-President of the Management Board, Sales and Marketing Director Alon Haver, Member of the Management Board

Supervisory Board

Amos Luzon, Chairman of the Supervisory Board Ofer Kadouri Alon Kadouri Przemysław Kowalczyk Piotr Palenik Shmuel Rofe

Registered office

Al. Komisji Edukacji Narodowej 57, 02-797 Warsaw Poland

Auditors

PricewaterhouseCoopers Polska spółka z ograniczoną odpowiedzialnością Audyt sp. k. ul. Polna 11 00-633 Warsaw Warsaw Poland

To our shareholders

The year 2020 was an outstanding year of for Ronson Development SE ('Ronson' or 'the Company'), mostly because that despite the crises of a global pandemic (which influenced the world in general, and Poland in particular) the company not only survived it, but even achieved new records.

Thanks to significant land purchases over the last couple of years and securing number of land purchases during this year, the current land bank of the Company is over 3,800 thousand units (from them more than over 2,300 thousands units are in future stages of ongoing projects) which will serve the financial needs for the next coming years.

This will allow a potential growth for the business without the need to further purchases. Nevertheless, we are consistently searching and negotiating new plots for purchase and develop, mainly (but not only) in Warsaw, Wroclaw and in Poznan.

The year 2020 brought lots of challenges to the management of Ronson, part of them are still being handled on an ongoing basis. One of the most significant challenges the Company faced was dealing with the COVID -19 pandemic and it effect on the Polish economic as well as the effect on the real estate market.

The Company overcome these challenges in an impressive way, the Company managed not only to fulfil its yearly goals, but to set up new records in the company's history and emerged with outstanding results comparing to previews years.

In terms of Sales result, in 2020 the Company managed to achieve a new record of 918 units, resulting from its strong position and successful projects maintained in all four cities in which it is operating. Warsaw remained the most significant city for the Company but Wroclaw, Poznan and Szczecin were developed as well. The Company is actively pursuing to increase its land bank in these cities as well.

Highlights for the Company results during 2020 include:

Commencement of new projects/stages commencement of 660 units (in 5 projects);
Completion Completion of over 590 units in 4 projects/ stages of projects ;
Sales we sold 918 units, which is a new record in RONSON'S history, and showed an increase of approximately 20% year to year;
Delivery we delivered 966 units to our clients;
During October 2020 the Company completed the issue of Series V bonds, in the amount of 100 million zlotys, which is another record for RONSON. An important part of this achievement is the large and influential investors who decided to invest in RONSON for the first time.
For the first time in the history of RONSON it is ranked in the honourable fourth place of the National Ranking of Housing Developers ranking;

The Company is maintaining its policy for a low Net debt to equity ratio. At the end of 2020, this percentage was only 23.5%. The Company will continue focusing on its liquidity and improvement of its financial position.

Year 2020 was a conclusive evidence for the strength of the residential Polish market comparing to other real estate sectors. The residential market holds great promise as for the demand for residential units even in time of Pandemic and economic uncertainty.

Overlooking the year 2021, the Company will retain its focus on the same cities in which it is active, with a natural increase in the volume of products introduce to the Warsaw market with new stages of Ursus Centralny, Miasto Moje, Nova Królikarnia and opening the new projects of Falenty and Renaissance in Mokotow district. In Wrocław a new stage of Viva Jagodno, in Szczecin new stages Nowe Warzymice and our new project of Grunwaldzka in Poznan.

We believe that the Company at its current market position can benefit from excellent market conditions and enjoys the following advantages:

a strong capital structure allowing the Company to start and finance new projects;
the ability to secure transactions not only in the ordinary course of business but also taking advantage of opportunities the market offers;
a pipeline of projects in attractive locations;
the ability to increase and decrease the size and timing of specific projects based on perceived market demand;
a highly professional staff;
a well-known brand in Warsaw and an emerging brand in other Polish cities.
The company ability to adopt relatively fast and in efficient way to new challenging market conditions.

As we mentioned before, one of the main goals of the Company is to secure its position as a significant developer in the residential real-estate market. We believe that the advantages mentioned above should give the Company the opportunity to expand the scale of its operations and sales, and ultimately to rank amongst the largest residential development companies in Poland.

I am very proud of RONSON's achievements in 2020, and even more I am proud of RONSON's employees, their dedication and motivation for doing their job is a main factor to RONSON's success. We would like to use this opportunity to thank each and every one on RONSON's team, with their hard work dedication and loyalty, help the Company to achieve its goals.

In addition, we want to thank all of our stakeholders, bondholders and banks for their continued support and confidence in the Company's ability to carry out its corporate vision.

Sincerely,

Boaz Haim

President of the Management Board

Page

Letter from the President of the Management Board

Management Board Report on the Activity of the Company and the Group for the financial year 2020

	Introduction 2
	Overview of the Activity of the Company and the Group 2
	Business highlights during the year ended 31 December 2020 6
A.	Results breakdown by project 6
B.	Units sold during the period 9
C.	Commencements of new projects 11
D.	Agreements significant for the business activity of the Group 11
	Overview of results 13
	Selected financial data 16
	Overview of selected details from the Consolidated Statement of Financial Position 17
	Overview of cash flow results 19
	Overview of the results during the three months ended 31 December 2020 21
	Outlook for 2021 22
A.	Completed projects 22
B.	Current projects under construction and/or on sale 22
C.	Projects for which construction work is planned to be commenced during 2021 25
D.	Value of the preliminary sales agreements signed with clients for which revenue has not been recognized in the Consolidated Statement of Comprehensive Income 26
	Main risks and other factors important for the development of the Company and the Group 27
	Remuneration Policy Report 29
A.	Introduction 29
B.	Remuneration Policy 29
C.	Remuneration of the Management Board 29
D.	Remuneration of the Supervisory Board 32
	Assessment of the Group's finance management 33
	Information on loans, bonds, sureties and guarantees 35
	Additional information to the report 37
	Additional data for the Company 40
	Corporate governance statement 41
	Statement of the Management Board regarding financial statements and the Management Board Report 577

Management Board Report

Introduction

Ronson Development SE ('the Company') is a European Company with its statutory seat in Warsaw, Poland. The registered office is located at al. Komisji Edukacji Narodowej 57. The Company was incorporated in the Netherlands on 18 June 2007 as Ronson Europe N.V. with statutory seat in Rotterdam. During 2018, the Company changed its name and was transformed into a European Company (SE) and, effectively as of 31 October 2018, transferred its registered office of the Company from the Netherlands to Poland.

The shares of the Company are traded on the Warsaw Stock Exchange since 5 November 2007. According to publicly available information, as at 31 December 2020 66.7% of the outstanding shares are controlled indirectly by Amos Luzon Development and Energy Group Ltd. ('A. Luzon Group') and 0.91% of the shares are held by the Company. The remaining 33.03% of the outstanding shares are held by other investors including Nationale Nederlanden Otwarty Fundusz Emerytalny and Metlife Otwarty Fundusz Emerytalny. The number of shares held by the investors is equal to the number of votes, as there are no privileged shares issued by the Company. It shall be noted that as at 31 December 2020, the Company held 1,489,235 own shares (0.91%) and, in accordance with art. 364 § 2 of the Code of Commercial Companies, it does not exercise voting rights from own shares. For an overview of shares outstanding and major shareholders of the Company reference is made to page 45.

On 9 March 2021, the market price was PLN 2.17 per share giving the Company a market capitalization of PLN 355.9 million.

Overview of the Activity of the Company and the Group

The Company (together with its subsidiaries, 'the Group') is active in the development and sale of residential units, primarily apartments, in residential real-estate projects to individual customers in Poland. The Company has been operating through its subsidiaries on the following markets in Poland: Warsaw, Wrocław, Poznań and Szczecin.

As at 31 December 2020, the Group has 651 units available for sale in 14 locations, of which 567 units are available for sale in ongoing projects and the remaining 84 units are in completed projects. The ongoing projects comprise a total of 1,457 units, with an aggregate floor space of 85,623 m² . The construction of 1,124 units with a total area of 67,826 m² is expected to be completed during 2021.

During the year ended 31 December 2020, the Group realized sales of 918 units with the total value of PLN 444.7 million, which compares to sales of 761 units with the total value PLN 331.2 million during the year ended 31 December 2019.

The Group has a pipeline of 13 projects / stages of projects in different stages of preparation, representing approximately 3,810 units with an aggregate floor space of approximately 251,000 m² for future development in Warsaw, Poznań, Wrocław and Szczecin. During 2021, the Group is considering commencement of 8 stages of the currently running projects and 3 new projects comprising in total 1,162 units with a total area of 70,700 m² .

Management Board Report

Overview of the Activity of the Company and the Group

During year ended 31 December 2020, the Company and the Group did not discontinue any of its activities. The Group does not depend on any of its customers because the sales are dispersed amongst a large, varied and changing group of buyers of residential and commercial units. The majority of the Group's customers are natural persons mainly polish residents. For information about the preliminary sales agreements that were signed during the year 2020 and 2019 with a breakdown per city, see Business highlights during the year ended 31 December 2020 – B. Units sold during the period.

The Company's group structure and information on the Company's organizational structure

The table below presents the structure of the Company's group and the Company's interest in the share capital:

		Year of	Share of ownership & voting
	Entity name	incorporation	rights at the end of
	Share of ownership & voting rights at the end of		31 December 2020	31 December 2019
a.	held directly by the Company:
1	Ronson Development Management Sp. z o.o.	1999	100%	100%
2	Ronson Development 2000 Sp. z o.o. (2)	2000	-	100%
3	Ronson Development Warsaw Sp. z o.o.	2000	100%	100%
4	Ronson Development Investment Sp. z o.o.	2011	100%	100%
5	Ronson Development Metropol Sp. z o.o.	2011	100%	100%
6	Ronson Development Properties Sp. z o.o. (2)	2002	-	100%
7	Apartments Projekt Sp. z o.o. (2)	2003	-	100%
8	Ronson Development Enterprise Sp. z o.o. (2)	2004	-	100%
9	Ronson Development Company Sp. z o.o. (2)	2005	-	100%
10	Ronson Development Creations Sp. z o.o.	2005	100%	100%
11	Ronson Development Buildings Sp. z o.o. (2)	2005	-	100%
12	Ronson Development Structure Sp. z o.o. (2)	2005	-	100%
13	Ronson Development Poznań Sp. z o.o. (2)	2005	-	100%
14	E.E.E. Development Sp. z o.o. (2)	2005	-	100%
15	Ronson Development Innovation Sp. z o.o. (2)	2006	-	100%
16	Ronson Development Wrocław Sp. z o.o. (2)	2006	-	100%
17	Ronson Development Capital Sp. z o.o. (2)	2006	-	100%
18	Ronson Development Sp. z o.o.	2006	100%	100%
19	Ronson Development Construction Sp. z o.o.	2006	100%	100%
20	City 2015 Sp. z o.o.	2006	100%	100%
21	Ronson Development Village Sp. z o.o. (1)	2007	100%	100%
22	Ronson Development Conception Sp. z o.o. (2)	2007	-	100%
23	Ronson Development Architecture Sp. z o.o. (2)	2007	-	100%
24	Ronson Development Skyline Sp. z o.o.	2007	100%	100%
25	Continental Development Sp. z o.o. (2)	2007	-	100%
26	Ronson Development Universal Sp. z o.o. (1)	2007	100%	100%
27	Ronson Development Retreat Sp. z o.o. (2)	2007	-	100%
28	Ronson Development South Sp. z o.o.	2007	100%	100%
29	Ronson Development Partner 5 Sp. z o.o.	2007	100%	100%
30	Ronson Development Partner 4 Sp. z o.o.	2007	100%	100%
31	Ronson Development North Sp. z o.o.	2007	100%	100%
32	Ronson Development Providence Sp. z o.o.	2007	100%	100%
33	Ronson Development Finco Sp. z o.o.	2009	100%	100%
34	Ronson Development Partner 2 Sp. z o.o.	2009	100%	100%
35	Ronson Development Skyline 2010 Sp. z o.o. w likwidacji (2)	2010	-	100%
36	Ronson Development Partner 3 Sp. z o.o.	2012	100%	100%
	37 ACG 23 Sp. z o.o. / Ronson Development Studzienna Sp. z o.o. (9)	2019	100%	-

Overview of the Activity of the Company and the Group

The Company's group structure and information on the Company's organizational structure

		Year of		Share of ownership & voting
	Entity name	incorporation		rights at the end of
			31 December	31 December
	Share of ownership & voting rights at the end of		2020	2019
b.	held indirectly by the Company :
38	Nova Królikarnia B.V. (Company with the registered office in the Netherlands)	2016	100%	100%
39	AGRT Sp. z o.o.	2007	100%	100%

40	Ronson Development Partner 4 Sp. z o.o. – Panoramika Sp.k.	2007	100%	100%
41	Ronson Development Sp z o.o. - Estate Sp.k.	2007	100%	100%
42	Ronson Development Sp. z o.o. - Home Sp.k.	2007	100%	100%
43	Ronson Development Sp z o.o. - Horizon Sp.k.	2007	100%	100%
44	Ronson Development Partner 3 Sp. z o.o. - Sakura Sp.k.	2007	100%	100%
45	Destiny Sp. z o.o. (6)	2007	-	100%
46	Ronson Development Millenium Sp. z o.o. (6)	2007	-	100%
47	Ronson Development Partner 3 sp. z o.o. – Viva Jagodno sp. k.	2009	100%	100%
48	Ronson Development Sp. z o.o. - Apartments 2011 Sp.k.	2009	100%	100%
49	Ronson Development Sp. z o.o. - Idea Sp.k.	2009	100%	100%
50	Ronson Development Partner 2 Sp. z o.o. – Destiny 2011 Sp.k.	2009	100%	100%
51	Ronson Development Partner 2 Sp. z o.o. - Enterprise 2011 Sp.k.	2009	100%	100%
52	Ronson Development Partner 2 Sp. z o.o. - Retreat 2011 Sp.k.	2009	100%	100%
53	Ronson Development Partner 5 Sp. z o.o - Vitalia Sp.k.	2009	100%	100%
54	Ronson Development Sp. z o.o. - 2011 Sp.k.	2009	100%	100%
55	Ronson Development Sp. z o.o. - Gemini 2 Sp.k.	2009	100%	100%
56	Ronson Development Sp. z o.o. - Verdis Sp.k.	2009	100%	100%
57	Ronson Espresso Sp. z o.o.	2006	100%	100%
58	Ronson Development Apartments 2010 Sp. z o.o. (6)	2010	-	100%
59	RD 2010 Sp. z o.o. (6)	2010	-	100%
60	Retreat Sp. z o.o.	2010	100%	100%
61	Enterprise 2010 Sp. z o.o.(6)	2010	-	100%
62	Wrocław 2010 Sp. z o.o. (6)	2010	-	100%
63	E.E.E. Development 2010 Sp. z o.o. (6)	2010	-	100%
64	Ronson Development Nautica 2010 Sp. z o.o.	2010	100%	100%
65	Gemini 2010 Sp. z o.o. (6)	2010	-	100%
66	Ronson Development Sp. z o.o. - Naturalis Sp.k.	2011	100%	100%
67	Ronson Development Sp. z o.o. - Impressio Sp.k.	2011	100%	100%
68	Ronson Development Partner 3 Sp. z o.o.- Nowe Warzymice Sp. k	2011	100%	100%
69	Ronson Development Sp. z o.o. - Providence 2011 Sp.k.	2011	100%	100%
70	Ronson Development Partner 2 Sp. z o.o. - Capital 2011 Sp. k.	2011	100%	100%
71	Ronson Development Partner 5 Sp. z o.o. - Miasto Marina Sp.k.	2011	100%	100%
72	Ronson Development Partner 5 Sp. z o.o. - City 1 Sp.k.	2012	100%	100%
73	Ronson Development Partner 2 Sp. z o.o. - Miasto Moje Sp. k.	2012	100%	100%
74	Ronson Development sp. z o.o. – Ursus Centralny Sp. k.	2012	100%	100%
75	Ronson Development Sp. z o.o. - City 4 Sp.k.	2016	100%	100%
76
	Ronson Development Partner 2 Sp. z o.o. – Grunwald Sp.k. 77 Ronson Development Sp. z o.o. Grunwaldzka" Sp.k. (previously: as Ronson Development Sp. z o.o. - Projekt 2 Sp.k.)	2016 2016	100% 100%	100% 100%

78	Ronson Development Sp. z o.o. - Projekt 3 Sp.k.	2016	100%	100%
79	Ronson Development Sp. z o.o. - Projekt 4 Sp.k.	2017	100%	100%
80	Ronson Development Sp. z o.o. - Projekt 5 Sp.k.	2017	100%	100%
81	Ronson Development Sp. z o.o. - Projekt 6 Sp.k.	2017	100%	100%
82	Ronson Development Sp. z o.o. - Projekt 7 Sp.k.	2017	100%	100%
83	Ronson Development Sp. z o.o. - Projekt 8 Sp.k.	2017	100%	100%
84	Ursus 2017 Sp. z o.o. (4)	2017	-	100%
85	Projekt City Sp. z o.o. (5)	2017	-	100%
86	Bolzanus Limited (Company with the registered office in Cyprus)	2013	100%	100%
87	Park Development Properties Sp. z o.o. - Town Sp.k.	2007	100%	100%
88	Tras Sp. z o.o. (7)	2015	-	100%
89	Pod Skocznią Project Sp. z o.o. (7)	2015	-	100%
90	District 20 Sp. z o.o. (7)	2015	-	100%
91	Arkadia Development Sp. z o.o. (7)	2015	-	100%
92	Królikarnia 2015 Sp. z o.o. (7)	2015	-	100%
93	Tras 2016 Sp. z o.o.	2011	100%	100%
94	Pod Skocznia Projekt 2016 Sp. z o.o. (3)	2011	-	100%

Overview of the Activity of the Company and the Group

The Company's group structure and information on the Company's organizational structure

		Year of	Share of ownership & voting
Entity name		incorporation	rights at the end of
			31 December	31 December
	Share of ownership & voting rights at the end of		2020	2019
b.	held indirectly by the Company :
95	District 20 – 2016 Sp. z o.o. (3)	2011	-	100%
96	Arkadia Development 2016 Sp. z o.o. (3)	2011	-	100%
97	Królikarnia 2016 Sp. z o.o. (3)	2011	-	100%
98	Kroli Development Sp. z o.o. (3)	2012	-	100%
99	Park Development Properties Sp. z o.o.	2011	100%	100%
100	Jasminova 2016 Sp. z o.o.	2016	100%	100%
101	Town 2016 Sp. z o.o.	2016	100%	100%
102	E.E.E. Development 2016 Sp. z o.o. (7)	2016	-	100%
103	Enterprise 2016 Sp. z o.o.	2016	100%	100%
104	Wrocław 2016 Sp. z o.o.	2016	100%	100%
105	Darwen Sp. z o.o.	2017	100%	100%
106	Truro Sp. z o.o.	2017	100%	100%
107	Tregaron Sp. z o.o.	2017	100%	100%
108	Totton Sp. z o.o.	2017	100%	100%
109	Tring Sp. z o.o.	2017	100%	100%
110	Thame Sp. z o.o.	2017	100%	100%
111	Troon Sp. z o.o.	2017	100%	100%
112	Tywyn Sp. z o.o. (8)	2018	100%	-
c.	other which are not subject to consolidation:
113	Coralchief sp. z o.o.	2018	50%	50%
114	Coralchief sp. z o.o. - Projekt 1 sp. k.	2016	n/a	n/a
115	Ronson IS sp. z o.o.	2009	50%	50%
116	Ronson IS sp. z o.o. sp. k.	2012	n/a	n/a

(1) The Company has the power to govern the financial and operating policies of this entity and to obtain benefits from its activities, whereas Kancelaria Radcy Prawnego Jarosław Zubrzycki holds the legal title to the shares of this entity

(2) In connection with the merger, registered in the National Court Register on 4 May 2020, the company was taken over by the Ronson Development South sp. z o.o. and by law from 4 May 2020 Ronson Development South sp. z o.o. took over all the rights and obligations of the company

(3) In connection with the merger, registered in the National Court Register on 7 May 2020, the company was taken over by the Tras 2016 sp. z o.o. and by law from 7 May 2020 Tras 2016 sp. z o.o. took over all the rights and obligations of the company

(4) In connection with the merger, registered in the National Court Register on 1 April 2020, the company was taken over by the Destiny sp. z o.o. and by law from 1 April 2020 Destiny sp. z o.o. took over all the rights and obligations of the company

(5) In connection with the merger, registered in the National Court Register on 1 April 2020, the company was taken over by the RD 2010 sp. z o.o. and by law from 1 April 2020 RD 2010 sp. z o.o. took over all the rights and obligations of the company

(6) In connection with the merger, registered in the National Court Register on 1 July 2020, the company was taken over by the Ronson Development South sp. z o.o. and by law from 1 July 2020 Ronson Development South sp. z o.o. took over all the rights and obligations of the company

(7) In connection with the merger, registered in the National Court Register on 1 July 2020, the company was taken over by the Tras 2016 sp. z o.o. and by law from 1 July 2020 Tras 2016 sp. z o.o. took over all the rights and obligations of the company.

(8) Acquired during execution of third call option agreement on 9 April 2020.

(9) Entity acquired on 18 December 2020. Change of the name into Ronson Development Studzienna Sp. z o.o. was registered in KRS on 8 March 2021.

A. Results breakdown by project

The following table specifies revenue, cost of sales, gross profit and gross margin during the year ended 31 December 2020 on a project by project basis:

	Information on the delivered units		Revenue (1)		Cost of sales (2)		Gross profit	Gross margi n
Project	Number of units	Area of units (m2)	PLN thousand s	%	PLN thousand s	%	PLN thousand s	%
City Link IV	288	14,267	149,448	37.2%	91,999	29.3%	57,449	38.4%
Grunwald2	236	12,002	80,916	20.2%	62,265	19.8%	18,651	23.0%
Miasto Marina(5)	125	5,361	46,485	11.6%	46,472	14.8%	12	0.0%
Panoramika IV	100	5,282	28,888	7.2%	28,639	9.1%	250	0.9%
Miasto Moje III	98	4,952	33,388	8.3%	27,546	8.8%	5,842	17.5%
Panoramika V	95	4,610	27,757	6.9%	27,034	8.6%	722	2.6%
Nova Królikarnia 2c	7	1,414	18,584	4.6%	16,856	5.4%	1,728	9.3%
Miasto Moje I	3	164	1,446	0.4%	1,127	0.4%	319	22.1%
Nova Królikarnia 2b	3	367	4,074	1.0%	3,676	1.2%	399	9.8%
Nova Królikarnia 1d	2	209	2,237	0.6%	1,845	0.6%	392	17.5%
Other	7	747	8,009	2.0%	6,240	2.0%	1,769	n.a.
Total / Average	964	49,376	401,233	100%	313,698	100%	87,535	21.8%
Impairment recognized	n.a.	n.a.	n.a.		1,325		(1,325)	n.a.
Results after write-down adjustment	964	49,376	401,233		315,023		86,210	21.5%
City Link I & II (3)	2	116	2,033		1,511		522	25.7%
Economic results(4)	966	49,492	403,266		316,534		86,732	21.5%

(1) Revenue is recognized when the performance obligations are satisfied and when the customer obtains control of the good, i.e. upon signing of the protocol of technical acceptance and the transfer of the key of the residential unit to the buyer and total payment obtained.

(2) Cost of sales allocated to the delivered units proportionally to the expected total value of the project.

(3) The project presented in the Consolidated Financial Statements under Investment in joint ventures; the Company's share is 50%.

(4) Under the assumption that the results from joint ventures are presented on a fully consolidated basis (100%).

(5) The final permit for use is subject to additional minor fit-out works appropriate to the apart-hotel functionality. During the year ended 31 December 2020 the Company completed such fit out works for all units.

Revenue from the sale of residential units is recognized when the performance obligations are satisfied and when the customer obtains control of the good, i.e. upon signing of the protocol of technical acceptance and the transfer of the key to the buyer of the residential unit and total payment obtained. Revenue from sales and services of residential projects recognized during the year ended 31 December 2020 amounted to PLN 401.2 million, whereas cost of sales before write-down adjustment amounted to PLN 313.7 million, which resulted in a gross profit before write-down adjustment amounting to PLN 87.5 million representing a gross margin of 21.8%. Total economical revenue, whereby results from joint ventures are presented on a fully consolidated basis, amounted to PLN 403.2 million, with cost of sales amounting to PLN 316.5 million, resulted in a gross profit of PLN 86.7 million and representing gross margin of 21.5%.

A. Results breakdown by project

Projects completed in 2020

The table below presents information on the projects that were completed (i.e. completing all construction works and receiving occupancy permit) during the year ended 31 December 2020:

		Number of	Units delivered in
Project name	Location	units	2020	Area of units (m2)
Grunwald2	Poznań	268	236	14,400
Nova Królikarnia 2c	Warsaw	18	7	3,600
Panoramika V	Szczecin	115	95	6,000
Miasto Moje III	Warsaw	196	98	10,170
Total		597	436	34,170

Grunwald2

The construction of the Grunwald2 project was completed in April 2020. The project was developed on a land strip located in Poznań at Świerzawska Street. The Grunwald2 project comprises 267 apartments and 1 commercial unit with an aggregate floor space 14,400 m² . During year 2020, the Company delivered 236 units and recognized sale revenue of PLN 80.9 million.

Nova Królikarnia 2c

The construction of the Nova Królikarnia 2c was completed in September 2020, respectively. The project was developed on a land strip located in the Mokotów district in Warsaw near Jaśminowa Street. The Nova Królikarnia 2c project comprises 18 apartments and an aggregate floor space of 3,600 m² . During year 2020 the Company delivered 7 units and recognized sale revenue of PLN 18.6 million.

Panoramika V

The construction of the fifth stage of the Panoramika project was completed in August 2020. The fifth stage of the Panoramika project was developed on a part of land strip located in Szczecin at Panoramiczna Street and is a continuation of the Panoramika I - IV projects. The Panoramika V project comprises 115 apartments and an aggregate floor space of 6,000 m2. During year ended 31 December 2020, the company delivered 95 units and recognized sale revenue of PLN 27.8 million.

Miasto Moje III

The construction of the third stage of the Miasto Moje project was completed in November 2020. The project was developed on a land strip located in the Białołęka district in Warsaw at Marywilska Street. The Miasto Moje III comprises 196 apartments with an aggregate floor space of 10,170 m² . During year 2020, the Company delivered 98 units and recognized sale revenue of PLN 33.3 million.

A. Results breakdown by project

Projects completed

The table below presents information on the projects that were completed (i.e. completing all construction works and receiving occupancy permit) in previous years and the income that was recognised base on units delivered during the year 2020:

Project name	Location	Completion date	Total Project Units	Total Area of units (m2)	Total units sold until 31 December 2020	Total units delivered until 31 December 2019	Units delivered in 2020	Recognised income in year 2020 (PLN'000)	Units sold not delivered as at 31 December 2020	Units for sale as at 31 December 2020	Left to sale/ deliver after 31 December 2020
City link III	Warsaw	Nov-19	368	18,700	363	66	288	149,448	9	5	14
Miasto Marina	Wroclaw	Jun-19	151	6,200	148	21	125	46,485	2	3	5
Panoramika IV	Szczecin	Dec-19	111	5,800	110	9	100	28,888	1	1	2
Miasto Moje I	Warsaw	May-18	205	10,900	202	199	3	1,446	0	3	3
Nova Krolikarnia 2b	Warsaw	May-19	28	2,300	28	23	3	4,074	2	0	2
Nova Krolikarnia 1d	Warsaw	Mar-18	12	1,500	11	9	2	2,237	0	1	1
Others			30	2,764	7	n.a.	7	8,464	0	23	23
Total			905	48,164	869	327	528	241,042	14	36	50

Business highlights during the year ended 31 December 2020

B. Units sold during the period and units offered for sale

The table below presents information on the total number of units sold (i.e. total number of units for which the Group signed the preliminary sale agreements with the clients), during the year ended 31 December 2020:

			Units sold until 31	Units sold during the year ended 31	Units for sale as at 31 December
Project name	Project Status	Location	December 2019	December 2020	2020	Total

Ursus Centralny Ia(2)	Under construction	Warsaw	98	38	2	138
Ursus Centralny IIa(2)	Under Construction	Warsaw	-	194	57	251
Ursus Centralny Ib(2)	Under Construction	Warsaw	-	34	63	97
Miasto Moje I(2)	Completed	Warsaw	199	3	3	205
Miasto Moje III(1)	Completed	Warsaw	123	59	14	196
Miasto Moje IV(2)	Under Construction	Warsaw	33	85	58	176
Miasto Moje V(2)	Under Construction	Warsaw	-	51	119	170
(2) Miasto Marina	Completed	Wrocław	126	22	3	151
Panoramika IV(2)	Completed	Szczecin	94	16	1	111
Panoramika V(1)	Completed	Szczecin	53	46	16	115
Panoramika VI(2)	Under Construction	Szczecin	-	46	30	76
Grunwald2(1)	Completed	Poznań	195	58	15	268
Viva Jagodno I(2)	Under Construction	Wrocław	8	56	57	121
City Link IV(2)	Completed	Warsaw	350	13	5	368
Vitalia III(2)	Under Construction	Wrocław	32	37	12	81
Nowe Warzymice I(2)	Under Construction	Szczecin	-	29	25	54
(2) Nowe Warzymice II	Under Construction	Szczecin	-	-	66	66
Nova Królikarnia 1d(2)	Completed	Warsaw	10	1	1	12
Nova Królikarnia 2b(2)	Completed	Warsaw	27	1	-	28
Nova Królikarnia 2c(1)	Completed	Warsaw	5	10	3	18
Nova Królikarnia 3a(2)	Under Construction	Warsaw	-	22	9	31
Nova Królikarnia 3b(2)	Under Construction	Warsaw	14	7	2	23
Nova Królikarnia 3c(2)	Under Construction	Warsaw	-	17	6	23
Other (old) projects	Completed		3	4	23	30
Total excluding JV			1,367	849	590	2,806
Wilanów Tulip(3)	Under Construction	Warsaw	20	69	61	150
Total including JV			1,387	918	651	2,956

(1) For information on the completed projects see "Business highlights during the year ended 31 December 2020 – A. Results breakdown by project".

(2) For information on current projects under construction, see "Outlook for the year 2021 – B. Current projects under construction and/or on sale".

(3) The project presented in the Consolidated Financial Statements under investment in joint ventures; the Company's share is 50%.

B. Units sold during the period

The table below presents further information on the units sold (i.e. total number of units for which the Group signed the preliminary sale agreements with the clients), including net saleable area (in m² ) of the units sold and net value (excluding VAT) of the preliminary sales agreements (including also parking places and storages) executed by the Group, during the year ended 31 December 2020:

			Sold During the year ended 31 December 2020
Project name	Project Status	Location	Number of units	Net saleable area (m2)	Value of the preliminary sales agreements (in PLN thousands)
Ursus Centralny Ia(2)	Under construction	Warsaw	38	2,440	18,632
Ursus Centralny IIa(2)	Under Construction	Warsaw	194	10,202	78,726
Ursus Centralny Ib(2)	Under Construction	Warsaw	34	1,885	14,763
Miasto Moje I(2)	Completed	Warsaw	3	163	1,133
Miasto Moje III(1)	Completed	Warsaw	59	3,693	24,929
Miasto Moje IV(2)	Under Construction	Warsaw	85	3,946	29,011
Miasto Moje V(2)	Under Construction	Warsaw	51	2,104	15,531
Miasto Marina(2)	Completed	Wrocław	22	1,165	9,791
Panoramika IV(2)	Completed	Szczecin	16	1,164	6,792
Panoramika V(1)	Completed	Szczecin	46	2,588	15,825
Panoramika VI(2)	Under Construction	Szczecin	46	2,028	13,280
Grunwald2(1)	Completed	Poznań	58	3,538	26,156
Viva Jagodno I(2)	Under Construction	Wrocław	56	3,005	21,139
City Link IV(2)	Completed	Warsaw	13	1,398	16,290
Vitalia III(2)	Under Construction	Wrocław	37	2,982	20,725
Nowe Warzymice I(2)	Under Construction	Szczecin	29	1,458	9,119
Nova Królikarnia 3c(2)	Under Construction	Warsaw	17	1,645	20,017
Nova Królikarnia 1d(2)	Completed	Warsaw	1	74	876
Nova Królikarnia 2b(2)	Completed	Warsaw	1	55	652
Nova Królikarnia 2c(1)	Completed	Warsaw	10	2,008	24,962
Nova Królikarnia 3a(2)	Under Construction	Warsaw	22	2,179	26,010
Nova Królikarnia 3b(2)	Under Construction	Warsaw	7	764	9,024
Other (old) projects	Completed		4	360	3,129
Total excluding JV			849	50,845	406,513
Wilanów Tulip(3)	Under Construction	Warsaw	69	4,338	38,205
Total including JV			918	55,184	444,718

(1) For information on the completed projects see "Business highlights during the year ended 31 December 2020 – A. Results breakdown by project".

(2) For information on current projects under construction, see "Outlook for the year 2021 – B. Current projects under construction and/or on sale".

(3) The project presented in the Consolidated Financial Statements under investment in joint ventures; the Company's share is 50%.

The table below presents further information on the value of the preliminary sales agreements (with a breakdown per city, exclusive of VAT) executed by the Group:

Location	Value of the preliminary sales agreements sold during the year ended		Increase/(decreased)
In thousands of Polish Zlotys (PLN)	31 December 2020	31 December 2019	In PLN	%
Warsaw	318,761	206,718	112,043	54%
Wrocław	51,655	43,572	8,083	19%
Szczecin	45,017	25,034	19,983	80%
Poznań	26,156	50,999	(24,843)	-49%
Other (old) projects	3,129	4,847	(1,718)	n.a.
Total	444,718	331,170	113,548	34%

C. Commencements of new projects

The table below presents information on the projects for which the construction and/or sales process commenced during the year ended 31 December 2020:

Project name	Location	Number of units	Area of units (m2 )
Ursus Centralny IIa	Warsaw	251	13,500
Ursus Centralny Ib	Warsaw	97	5,700
Miasto Moje V	Warsaw	170	8,500
Nowe Warzymice II	Szczecin	66	3,500
Panoramika VI	Szczecin	76	3,600
Total		660	34,800

D. Agreements significant for the business activity of the Group

Exercise of the third call option agreement – Nova Królikarnia

On 9 April 2020, the Company (via its subsidiary) exercised the last call option, based on call option agreements concluded on 10 April 2018 with Global City Holdings B.V., as a result of this transaction the Company acquired shares in company holding one substage of the Nova Królikarnia project with an aggregate floor space of 3,300 m² for a total value of PLN 9.9 million. The total price for the third call option was paid on the transaction date.

Purchase of land in Poznań

On 31 March 2020, the Company (via its subsidiary) entered into a preliminary agreement concerning the purchase of the ownership right of an undeveloped property located in Poznań, Grunwald district, Grunwaldzka street. According to the valid zoning conditions, the plot is designated for development of residential multifamily project. The project will comprise 72 units with an aggregate floor space of 3,300 m² . The final agreement was signed on 28 of April 2020, while the price of the property has been fixed at PLN 3.0 million and paid.

On 6 November 2020 the Company (via its subsidiary) entered into a conditional preliminary agreement concerning the purchase of the perpetual usufruct right of a plot of land located in Poznań, at Swierzawskiego street, with an area of c.a. 2,900 m² . The Company expected that the final price for the Property will be not higher than PLN 5.0 million. On 15 February 2021 the Company announced that it resigned from the project due to negative due diligence.

On 3 December 2020 the Company (via its subsidiary) entered into a conditional preliminary agreement concerning the purchase of the ownership rights of a plot of land located in Poznań, Grunwald district , at Smardzewska street, with an area of c.a. 20,000 m² . The final agreement was signed on 11 February 2021, and the price in the amount PLN 26 million was fully paid.

Purchase of land in Warsaw

On 14 August 2020 Company (via its subsidiary) entered into a conditional preliminary agreement concerning the purchase of the perpetual usufruct right of a plot of land located in Warsaw, Wola district, with an area of c.a. 1.6 thousand m² . The final price of the Property will depend on the usable area of units to be built on the Property and will be calculated based on the valid building permit obtained by the selling entity. The final price for the Property shall be not higher than PLN 22 million. On 14 August 2020 the Company paid an advance for the transaction in an amount of PLN 2.7 million.

D. Agreements significant for the business activity of the Group

Purchase of land in Warsaw

On 27 October 2020 the Company (via its subsidiary) executed an agreement concerning the purchase of plots of land located in Warsaw, Mokotow District at Gąsocińska street. The total purchase price net amount was agreed at PLN 11.3 million, but it may be reduced in the event of failure to obtain specific permits for demolition of buildings and road investments related to the Property within the prescribed period. Part of the price in the amount of PLN 10.5 million was paid. The project will comprise 80 units with an aggregate floor space of 4,800 m² .

On 23 November 2020 the Company (via its subsidiary) entered into a preliminary agreement concerning the purchase of the ownership rights of a plot of land located in Warsaw, Białołęka dirstrict, at Epopei street, with an area of c.a. 27,500 m² . The price for the property was established at PLN 20.0 million. As at 31 December 2020 the Company paid PLN 1.0 million advance and 6.67 million notary deposit.

On 18 December 2020 the Company (via its subsidiary) concluded (through the special purpose vehicle, immediately after its acquisition for the total amount of PLN 1 million) the final agreement and became (through the acquisition of shares in this special purpose vehicle) a party to the preliminary agreement, which agreements jointly concern the acquisition of the ownership title to the land property located Warsaw, Wola District, at Studzienna street, with a total area of 2,715 m2. The total price of the property and the special purpose vehicle was agreed for the net amounts of PLN 13.5 million, for the final agreement the company paid PLN 8.5 million on the signing date, wherein the rest of the net amount of PLN 4 million will be paid upon signing the final contract for the part of the Property with an area of 1,042 m2, which is to be signed until 9 August 2021.

Overview of results

The net profit attributable to the equity holders of the parent company for the year ended 31 December 2020 was PLN 40,143 thousand and can be summarized as follows:

	For the year ended 31 December
	2020	2019
	PLN
	(thousands, except per share data)
Revenue from sales of residential units	401,233	226,118
Revenue from sales of land	-	6,500
Revenues	401,233	232,618
Cost of sales of residential units	(315,023)	(181,984)
Cost of sales of land	-	(6,312)
Cost of sales	(315,023)	(188,296)
Gross profit	86,210	44,322
Changes in the value of investment property	(307)	802
Selling and marketing expenses	(5,928)	(5,803)
Administrative expenses	(22,542)	(20,181)
Share of profit/(loss) from joint venture	(803)	9,082
Other expense	(1,477)	(2,029)
Result from operating activities	55,152	26,193
Finance income	558	750
Finance expense	(5,168)	(4,862)
Net finance income/(expense)	(4,610)	(4,112)
Profit/(loss) before taxation	50,542	22,081
Income tax benefit/(expenses)	(10,399)	(4,667)
Net profit/(loss) for the period before non-controlling interests	40,143	17,414
Non-controlling interests	-	-
Net profit/(loss) for the period attributable to the equity holders of the parent	40,143	17,414
Net earnings/(loss) per share attributable to the equity holders of the parent (basic and diluted)	0.246	0.106

Revenue from sales and services of residential projects

Revenue increased by PLN 175.1 million (77.4%) from PLN 226.1 million during the year ended 31 December 2019 to PLN 401.2 million during the year ended 31 December 2020, which is primarily explained by an increase in number of apartments (497 units more) delivered to the customers in terms in fully owned projects from 467 units delivered during the year ended 31 December 2019 to 964 during the year ended 31 December 2020.

Overview of results

Cost of sales of residential units

Cost of sales of residential units increased by PLN 133.0 million (73.1%) from PLN 182.0 million during the year ended 31 December 2019 to PLN 315.0 million during the year ended 31 December 2020, which is primarily explained by a increase of 497 apartments delivered to the customers in fully owned projects (without JV) from 467 units during year ended 31 December 2019 to 964 units delivered during the year ended 31 December 2020.

During the year ended 31 December 2020, as a result of Net Realizable Value (NRV) analysis and review, an impairment adjustment for some of the Group's inventory was reversed in the amount of 4.8 million, while for some other the Group's inventory and residential land-bank the impairment was made in the amount of PLN 2.0 million. The net impact of write-down adjustment on the gross profit amounted to PLN 2.8 million (positive), which compares to a write-down adjustment of PLN 0.6 million (positive) during the year ended 31 December 2019.

Gross margin

The gross margin from sales of residential units during the year ended 31 December 2020 was 21.5% which slightly increased comparing to a gross margin from sales of residential units during the year ended 31 December 2019 of 19.5%. The change in gross margin relates to a different mix of projects delivered to the customers characterized by a different profitability during 2020 compared to the mix of projects delivered to customers in 2019. The most profitable project, which significantly impacted revenues and profitability of the Group was the project City Link III in Warsaw (gross profit margin of 38.4%), partially offset by a delivery of low margin projects i.e. Panoramika and Miasto Marina.

Selling and marketing expenses

Selling and marketing expenses increased by PLN 0.1 million (2.2%) from PLN 5.8 million during the year ended 31 December 2019 to PLN 5.9 million during the year ended 31 December 2020, which is primarily explained by more effective management of selling and marketing costs, as well as changing the marketing strategy during the pandemic period, which contributed significantly to the increase of units sales.

Administrative expenses

Administrative expenses increased by PLN 2.3 million (11.4%) from PLN 20.2 million during the year ended 31 December 2019 to PLN 22.5 million during the year ended 31 December 2020. The increase is primarily explained by an increase in the Management Board remuneration (related to changes in the Management Board, Management performance bonuses) as well as general increase in personnel expenses.

Share of profit/(loss) from joint ventures

Share of profit/(loss) from joint ventures comprises the Company's shares in four entities where the Group is holding 50% interest and voting rights in each of those entities: Ronson IS Sp. z o.o. and Ronson IS Sp. z o.o. Sp.k which are running the first two stages of the City Link project, as well as Coralchief Sp. z o.o. and Coralchief Sp. z o.o. – Projekt 1 Sp.k. which are running the Wilanów Tulip project and yet was not completed.

During the year ended 31 December 2020, the loss from joint ventures allocated to the Company, amounted to PLN 0.8 million in comparison to a profit amounting to PLN 9.1 million during the year ended 31 December 2019. The decrease is mainly explained by higher delivery of units in City Link I-II project during the year ended 31 December 2019.

Other expenses, net

Other expenses net of other income decreased by PLN 0.6 million (27.2%) from PLN 2.0 million during the year ended 31 December 2019 to PLN 1.4 million during the year ended 31 December 2020, which is primarily explained by a decrease in costs of repairs and defects and costs related to VAT settlements from previous years, partially offset by higher allowance for doubtful accounts.

Overview of results

Net finance income/(expense)

Finance income/(expense) are accrued and capitalized as part of the cost price of inventory to the extent this is directly attributable to the construction of residential units. Unallocated finance income/(expense) not capitalized is recognized in the statement of comprehensive income.

The table below shows the finance income and expenses before capitalization into inventory and the total finance income and expenses capitalized into inventory.

	For the year ended 31 December 2020 PLN (thousands)

	Total amount	Amount capitalized	Amount capitalized (under IFRS 16)	Recognized as profit or loss
Finance income	558	-	-	558
Finance expense	(12,006)	6,875	-	(5,131)
Net finance income/(expense) before impact of IFRS 16	(11,448)	6,875	-	(4,573)
Finance expense - on lease liabilities	(949)	-	912	(37)
Net finance income/(expense) after impact of IFRS 16	(12,397)	6,875	912	(4,610)

	For the year ended 31 December 2019 PLN (thousands)

	Total amount	Amount capitalized	Amount capitalized (under IFRS 16)	Recognized as profit or loss
Finance income	750	-	-	750
Finance expense	(13,885)	9,059	-	(4,826)
Net finance income/(expense) before impact of IFRS 16	(13,135)	9,059	-	(4,076)
Finance expense - on lease liabilities Net finance income/(expense)	(2,141)	-	2,105	(36)
after impact of IFRS 16	(15,276)	9,059	2,105	(4,112)

Net finance expenses before capitalization and before the impact of IFRS 16 decreased by PLN 1.7 million (12.8%) from PLN 13.1 million during the year ended 31 December 2019 to PLN 11.5 million during the year ended 31 December 2020. The decrease is primarily a result of low interest rate of the financing obtained as a result of economic situation in Poland and the effect of COVID-19 pandemic during the year ended 31 December 2020 as well as lower average bonds balance during the year 2020.

Income tax benefit/(expense)

During the year ended 31 December 2020, the income tax expense amounted to PLN 10.4 million (20.57%), in comparison to a tax expense amounted to PLN 4.7 million for the year ended 31 December 2019 (21.1%). The high effective tax rate in year 2019 was mainly explained by the reversal of the higher amount of the surplus between the purchase price and the net assets value of Nova Królikarnia Group as at the transaction date (April 2018), which was allocated to the inventory, that for it deferred income tax was not recognized.

Selected financial data

	Exchange rate of Polish Zloty versus the Euro
PLN/EUR	Average exchange rate	Minimum exchange rate		Maximum exchange rate	Year end exchange rate
2020 (12 months) 2019 (12 months) Source: National Bank of Poland ('NBP')	4.445 4.299	4.228 4.241		4.633 4.389	4.615 4.259
Selected financial data		EUR*			PLN
		(thousands, except per share data)
		For the year ended 31 December
		2020	2019	2020	2019
Revenues		90,268	54,110	401,233	232,618
Gross profit		19,395	10,310	86,210	44,322
Profit/(loss) before taxation		11,371	5,136	50,542	22,081
Net profit/(loss) for the period attributable to the equity holders of the parent		9,031	4,051	40,143	17,414
Cash flows from/ operating activities		5,846	12,260	25,983	52,705
Cash flows from/(used in) investing activities		242	(311)	1,077	(1,338)
Cash flows from/(used in) financing activities		2,800	(13,167)	12,447	(56,604)
Increase/(decrease) in cash and cash equivalents		8,888	(1,218)	39,508	(5,237)
Average number of equivalent shares (basic)		163,103,163	163,689,616	163,103,163	163,689,616
Net earnings/ per share (basic and diluted)		0.055	0.025	0.246	0.106

Selected financial data	EUR*		PLN
	(thousands)
	As at
	31 December 2020	31 December 2019	31 December 2020	31 December 2019
Inventory and Land designated for development	153,906	179,005	710,247	762,381
Total assets	203,209	221,456	937,767	943,183
Advances received	48,597	59,866	224,267	254,970
Long term liabilities	40,204	37,861	185,534	161,248
Short term liabilities (including advances received)	80,700	101,301	372,416	431,441
Equity attributable to the equity holders of the parent	82,304	82,295	379,817	350,494

* Information is presented in EUR solely for presentation purposes. Due to the significant fluctuation of the Polish Zloty against the Euro over the past years, the Statement of Financial Position data do not accurately reflect the actual comparative financial position of the Company. The reader should consider changes in the PLN EUR exchange rate in 2020 comparing to 2019, when reviewing this data. Selected financial data were translated from PLN into EUR in the following way:

(i) Statement of financial position data were translated using the period end exchange rate published by the National Bank of Poland for the last day of the period.

(ii) Statement of comprehensive income and cash flows data were translated using the arithmetical average of average exchange rates published by the National Bank of Poland.

Overview of selected details from the Consolidated Statement of Financial Position

The following table presents selected details from the Consolidated Statement of Financial Position in which material changes had occurred.

	As at 31 December 2020	As at 31 December 2019
	PLN (thousands)
Inventory and Residential Land bank	710,247	762,381
Advances received	224,267	254,970
Loans and borrowings	230,072	200,844
Trade and other payables and accrued expenses	58,347	97,715

Inventory and Residential land bank

The balance of Inventory and Residential land bank is PLN 710.2 million as at 31 December 2020 compared to PLN 762.4 million as at 31 December 2019. The decrease is primarily explained by cost of sales recognized for a total amount of PLN 315.0 million during the year ended 31 December 2020, and was partially offset by the Group's investments associated with direct construction costs for a total amount of PLN 223 million and purchase of lands in the total amount PLN 34.2 million.

The table below presents Group's major contractors in 2020, in terms of the value of services purchased during the year:

General Contractor	Services purchased In thousands of Polish Zlotys (PLN)
Hochtief Polska S.A.	36,446
Karmar S.A.	58,990
EBUD - Przemysłówka Sp. z o.o.	10,770
Totalbud S.A.	7,048
Mostostal Warszawa S.A.	17,025
Danya Cebus Poland Sp. z o.o.	44,346
GLIF Sp. z o. o.	5,745
Erbud S.A.	23,758
Total	204,128

The entire turnover shown above concern services purchased by the Company and accounts for approximately 91% of the sum spent by the Group on construction, planning and permits costs in 2020.

Advances received

The balance of advances received is PLN 224.3 million as at 31 December 2020 compared to PLN 255.0 million as at 31 December 2019. The decrease is primarily explained by the decrease of advances received from clients regarding sales of units during the year ended 31 December 2020 for a total amount of PLN 365 million and advances recognized as revenues from the sale of residential units for a total amount of PLN 400.2 million.

Overview of selected details from the Consolidated Statement of Financial Position

Loans, bonds and borrowings

The total of short-term and long-term loans and borrowings is PLN 230.0 million as at 31 December 2020 compared to PLN 200.8 million as at 31 December 2019. The increase in loans and borrowings is primarily explained by the effect of a new bond loan net of issue costs for a total amount of PLN 98.3 million and partially offset by repayment of bond loans for a total amount of PLN 57.1 million and net repayment of bank loans for a total amount of PLN 13.2 million. Of the mentioned PLN 230 million, an amount of PLN 54.7 million comprises facilities maturing no later than 31 December 2021.

The balance of loans, bonds and borrowings may be split into two categories: 1) Bond loans and 2) Bank loans related to residential projects which are completed or under construction.

Bond loans as at 31 December 2020 amounted to PLN 230 million (as at 31 December 2019: PLN 188 million) comprising a bond loan principal amount of PLN 230.1 million plus accrued interest of PLN 2.0 million minus one-time costs directly attributed to the bond issuances which are amortized based on the effective interest method (PLN 2.1 million).

The bank loans supporting completed projects or projects under construction are tailored to the pace of construction works and sales. As at 31 December 2020, there were no loans in this category (as at 31 December 2019: PLN 12.9 million).

For additional information about loans, bonds and borrowings see Notes 25, 26 and 27 of the Consolidated Financial Statements.

Trade and other payables and accrued expenses

The balance of Trade and other payables and accrued expenses is PLN 58.3 million as at 31 December 2020 compared to PLN 97.7 million as at 31 December 2019. The decrease is mainly explained by final settlement of Nova Królikarnia project due to the exercise of all call options (decrease by the total amount of PLN 37.0 million).

Management Board Report

Overview of cash flow results

The Company funds its day-to-day operations principally from cash flows provided by its sales activities as well as from borrowings under several bonds and loans facilities. The net cash inflow from operating activities has enabled the Company to proceed with the development of its residential projects and purchasing new plots of lands whilst at the same time maintaining sufficient liquidity for its day-to-day operations.

The following table sets forth the cash flow on a consolidated basis:

	For the year ended 31 December
	2020	2019
	PLN (thousands)
Cash flow from operating activities	25,983	52,705
Cash flow from/(used in) investing activities	1,077	(1,338)
Cash flow from/(used in) financing activities	12,447	(56,604)

Cash flow from/(used in) operating activities

The Company's net cash inflow from operating activities during the year ended 31 December 2020 amounted to PLN 26 million which compared to a net cash inflow from operating activities during the year ended 31 December 2019 amounted to PLN 52.7 million. The decrease in cash inflow is principally explained by:

a cash out flow related to investment in projects under construction and purchases of land for the total amount of PLN 259.1 million during the year ended on 31 December 2020 comparing to cash out flow amounting to PLN 190.8 million during the year ended on 31 December 2019;
payment of advances for signed agreements for the purchase of land in the amount of PLN 3.7 million;
decrease of share of result from joint ventures from PLN 9.0 million gain during the year ended 31 December 2019 to PLN 0.8 million loss during the year ended 31 December 2020;
the amount was offset partly by a cash inflow from advances received from clients regarding sale of residential units amounting to PLN 364.9 million during the year ended on 31 December 2020 comparing to cash inflow amounting to PLN 325.9 during the year ended during the year ended on 31 December 2019.

Cash flow from investing activities

The Company's net cash inflow used in investing activities amounted to PLN 1.0 million during the year ended 31 December 2020 compared to a net cash outflow from investing activities amounted to PLN 1.3 million during the year ended 31 December 2019. The increase is primarily explained by a net cash inflow from proceeds from joint ventures loans amounting to PLN 2.0 million during the year ended 31 December 2020 offset partially by acquisition of new company in the amount of PLN 1.0 million and loan granted to joint ventures.

Overview of cash flow results

Cash flow from/(used in) financing activities

The Company's net cash inflow used in financing activities amounted to PLN 12.4 million during the year ended 31 December 2020 compared to a net cash outflow from financing activities amounted to PLN 56.6 million during the year ended 31 December 2019. The increase is primarily explained by:

the net amounts received from the issue of bonds PLN 96.2 million during the year ended on 31 December 2020 comparing to PLN 31.6 million issuing of new bonds during the year ended on 31 December 2019;
a net repayment of secured bank loans amounting to PLN 13.1 million during the year ended 31 December 2020 compared to net repayment from bank loans amounting to PLN 25.5 million during the year ended 31 December 2019.

The effect was partially offset by:

repayment of bonds loans in the amount of PLN 55.0 million during the year ended31 December 2020 comparing to payment of PLN 50.0 million bonds loans during the year ended on 31 December 2019;
a net repayment of loans from other in amount of PLN 3.5 million during 31 December 2020 compared to lack of such repayments during the year ended 31 December 2019.

Overview of the results during the three months ended 31 December 2020

The net profit for the three months ended 31 December 2020 was PLN 2,640 thousand and can be summarized as follows:

For the three months ended 31 December	2020	2019
In thousands of Polish Zlotys (PLN)	(Unaudited)	(Unaudited)
Revenue	79,299	53,667
Cost of sales	(68,415)	(39,933)
Gross profit	10,884	13,734
Changes in the value of investment property	(307)	802
Selling and marketing expenses	(911)	(1,800)
Administrative expenses	(5,871)	(6,173)
Share of profit/(loss) from joint ventures	(293)	120
Other income/(expense)	(172)	(541)
Result from operating activities	3,330	6,142
Finance income	101	167
Finance expense	(1,387)	(1,090)
Net finance income/(expense)	(1,286)	(923)
Profit/(loss) before taxation	2,044	5,219
Income tax benefit/(expenses)	596	(995)
Net profit/(loss) for the period attributable to the equity holders of the parent	2,640	4,224

A. Completed projects

The table below presents information on the total residential units in the completed projects/stages that the Group expects to sell and deliver during 2021:

					Number of residential units expected to
		Number of residential units delivered (1) Until 31	During the period ended 31 December	Total units deliver	Units sold as at 31 December	be delivered (1) Units for sale as at 31 December	Total units expected to be	Total project
Project name	Location	December 2019	2020	ed	2020	2020	delivered	units
City Link IV	Warsaw	66	288	354	9	5	14	368
Grunwald2	Poznań	-	236	236	17	15	32	268
Miasto Marina	Wrocław	21	125	146	2	3	5	151
Panoramika IV	Szczecin	9	100	109	1	1	2	111
Miasto Moje III	Warsaw	-	98	98	84	14	98	196
Panoramika V	Szczecin	-	95	95	4	16	20	115
Nova Królikarnia 2c	Warsaw	-	7	7	8	3	11	18
Miasto Moje I	Warsaw	199	3	202	-	3	3	205
Nova Królikarnia 2b	Warsaw	23	3	26	2	-	2	28
Nova Królikarnia 1d	Warsaw	9	2	11	-	1	1	12
Other (old) projects		-	7	7	5	23	23	30
Total exluding JV		327	964	1,291	132	84	216	1,507
City Link I & II (2)	Warsaw	509	2	511	-	-	-	511
Total including JV		836	966	1,802	132	84	216	2,018

(1) For the purpose of disclosing information related to the particular projects, the word "sell" ("sold") is used, that relates to signing the preliminary sale agreement with the client for the sale of the apartment; whereas the word "deliver" ("delivered") relates to the transferring of significant risks and rewards of the ownership of the residential unit to the client.

(2) The project is presented in the Consolidated Financial Statements under Investment in joint ventures; the Company's share in the project is 50%.

For information on the completed projects see "Business highlights during the year ended 31 December 2020 - A. Results breakdown by project".

B. Current projects under construction and/or on sale

The table below presents information on projects for which completion is scheduled in 2021 and in 2022. The Company has obtained construction permits for all projects/stages and has commenced construction.

Project name	Location	Units sold until 31 December 2020	Units for sale as at 31 December 2020	Total units	Total area of units (m2 )	Expected completion of construction
Ursus Centralny IIa	Warsaw	194	57	251	13,509	2021
Ursus Centralny Ia	Warsaw	136	2	138	8,146	2021
Miasto Moje IV	Warsaw	118	58	176	8,938	2021
Vitalia III	Wrocław	69	12	81	6,790	2021
Viva Jagodno I	Wrocław	64	57	121	6,241	2021
Nova Królikarnia 3a	Warsaw	22	9	31	3,188	2021
Nova Królikarnia 3b	Warsaw	21	2	23	2,270	2021
Nova Królikarnia 3c	Warsaw	17	6	23	2,298	2021
Nowe Warzymice I	Szczecin	29	25	54	3,234	2021
Panoramika VI	Szczecin	46	30	76	3,591	2021
Nowe Warzymice II	Szczecin	-	66	66	3,498	2022
Ursus Centralny Ib	Warsaw	34	63	97	5,740	2022
Miasto Moje V	Warsaw	51	119	170	8,559	2022
Subtotal excluding JV		801	506	1,307	76,002
Wilanów Tulip(1)	Warsaw	89	61	150	9,621	2021
Subtotal excluding JV		890	567	1,457	85,623

(1) The project is presented in the Consolidated Financial Statements under Investment in joint venture; the Company's share in the project is 50%.

For information on the completed projects see "Business highlights during the year ended 31 December 2020 - A. Results breakdown by project".

B. Current projects under construction and/or on sale

B. Current projects under construction and/or on sale

B. Current projects under construction and/or on sale

Panoramika VI

Description of project

The Panoramika VI project is being developed on a land strip located in Szczecin at Dunska street , and is a continuation of Panoramika I-V projects. The sixth and final stage of this project, it will comprise 76 apartments with an aggregated floor space of 3,591 m² .

Stage of development

The sales of the Panoramika VI project started on July 2020. Completion of the project is expected in the fourth quarter of 2021.

Wilanów Tulip

Description of project

The Wilanów Tulip project (the Company's share in the project is 50%) is being developed on a land strip located in Warsaw, Wilanów district, at Syta street. The project comprise 150 apartments with an aggregate floor space of 9,621 m² .

Stage of development

The construction of the Wilanów Tulip project commenced in March 2019, while completion is expected in the second quarter of 2021.

C. Projects for which construction work is planned to be commenced during 2021

As the Company is aware of the increasing competition in the market, the Company has been managing with due care the number of new projects and the makeup of such projects in order to answer consumers' demand. During 2021, the Company is considering the commencement of the 8 stages of ongoing projects and 3 new projects (comprising in total 1,162 units with a total area of 70,700 m² ), which management believes are well-suited to current customer requirements, including smaller apartments at more economical prices. Furthermore, in order to minimize market risk, the Company's management breaks down the part of the new projects into relatively smaller stages. In the event of any market distortion or difficulties with securing financing by the banks for the considered projects, management may further delay some of those plans. As of the date of the report not all building permit were obtained.

The table below presents information on projects for which the commencement of construction works is scheduled in 2021.

Project name	Location	Total units	Total area of units (m2 )
Ursus Centralny IIc	Warsaw	195	11,000
Ursus Centralny IIb	Warsaw	206	11,500
Nowe Warzymice III	Szczecin	64	4,200
Falenty I	Warsaw	40	3,300
Nova Królikarnia 3d	Warsaw	15	2,200
Nova Królikarnia 4b	Warsaw	23	5,800
Grunwaldzka	Poznań	72	3,300
Miasto Moje VI	Warsaw	227	11,500
Viva Jagodno IIa	Wrocław	154	8,600
Viva Jagodno IIb	Wrocław	74	4,500
Rennaissance I (Siekierki)	Warsaw	92	4,800
Total		1,162	70,700

D. Value of the preliminary sales agreements signed with clients for which revenue has not been recognized in the Consolidated Statement of Comprehensive Income

The current volume and value of the preliminary sales agreements signed with the clients do not impact the Consolidated Statement of Comprehensive Income immediately but only after final settlement of the contracts with the customers (for more details see under "A – Completed projects"). The table below presents the value of the preliminary sales agreements (excluding VAT thousands of PLN) executed with the Company's clients in particular for units that have not been recognized in the Consolidated Statement of Comprehensive Income:

Project name	Location	Value of the preliminary sales agreements signed with clients	Completed / expected completion of construction
Verdis I-II	Warsaw	2,746	Completed
City Link IV	Warsaw	5,909	Completed
Grunwald2	Poznań	7,260	Completed
Miasto Moje I	Warsaw	64	Completed
Miasto Moje III	Warsaw	29,301	Completed
Miasto Marina	Wrocław	872	Completed
Panoramika IV	Szczecin	383	Completed
Panoramika V	Szczecin	1,465	Completed
Nova Królikarnia 2b	Warsaw	2,071	Completed
Nova Królikarnia 2c	Warsaw	19,000	Completed
Other (old) projects		1,349	Completed
Subtotal completed projects		70,418
Ursus Centralny IIa	Warsaw	78,726	2021
Ursus Centralny Ia	Warsaw	56,257	2021
Miasto Moje IV	Warsaw	38,027	2021
Vitalia III	Wrocław	37,570	2021
Viva Jagodno I	Wrocław	22,731	2021
Nova Królikarnia 3a	Warsaw	26,010	2021
Nova Królikarnia 3b	Warsaw	23,230	2021
Nova Królikarnia 3c	Warsaw	20,018	2021
Nowe Warzymice I	Szczecin	9,119	2021
Panoramika VI	Szczecin	13,280	2021
Ursus Centralny Ib	Warsaw	14,763	2022
Miasto Moje V	Warsaw	15,531	2022
Subtotal ongoing projects		355,262
Wilanów Tulip (2)/(3)	Warsaw	47,865	2021
Subtotal project held by joint venture		47,865
Total		473,545

(1) For information on the completed projects see "Business highlights during the year ended 31 December 2020 – A. Results breakdown by project".

(2) For information on current projects under construction and/or on sale, see under "B".

(3) This project is presented in the Consolidated Financial Statements under Investment in joint ventures; the Company's share in this project is 50%.

Main risks and other factors important for the development of the Company and the Group

The Company's and the Group's business activities are significantly affected by global developments, and in particular by their impact on the Polish economy. The most important macroeconomic factors are the level of development of the Polish economy, the level of interest rates in Poland, the performance of banks and their ability to provide financing to developers and their customers as well as the ability of other financial institutions to invest in corporate bonds.

In terms of risks specific for the sector, in which the Group operates, a potential increase in construction costs and the challenge of securing lands for reasonable prices and the significant impact of increased costs and land prices on the margins of new phases and projects, a prolongation of administrative procedures and an increasing competition in the market are considered to be the most significant uncertainties for the financial year ending 31 December 2020.

Construction cost risk

Construction costs increased significantly over the last 2 years, but during the year 2020 become stable. The stabilisation was mainly related to the pandemic situation in which some of the developers suspended their projects or a slowdown in starting new construction due to uncertainty on the market. The Company and the Group do not operate in a construction business, but, instead, for each project an agreement is concluded with a third party general contractor, who is responsible for running the construction and for finalizing the project including obtaining all permits necessary for safe use of the apartments. In the year 2020 there were many changes in the constructions law, which might impact the cost of constructions. The biggest change refers to the increase in fire safety in case of a change in the use of the building or its part. The notification should be accompanied by an expert's opinion on fire safety, which by the end might be reflected in the construction costs offered by the general contractor. In order to mitigate the risk of the increase in construction costs, the Group are signing a lump-sum contract with the general contractor, which will allow the Group to complete the project based on the estimated budget.

Risk of non-performance by General Contractors

In each project or stage of the project, the Group has concluded and will conclude contracts for the construction and implementation of development projects with one general contractor. There is a risk that non-performance of the agreement by the general contractor may cause delays in the project or significantly impact the business, financial condition or results of the Group. The Group sees a potential risk for non-performance of obligations by the general contractor in the availability of qualified workforce, in the increase of salaries and cost of construction materials. Nonperformance may result in claims against general contractor with the risk that general contractor may also fail to fully satisfy possible claims of the Company and the Group. The Company and the Group Implement selection criteria when hiring a general contractor, which include, experience, professionalism, financial strength of the general contractor (with the obligation to provide bank or insurance guarantee) as well as the quality of the insurance policy covering all risks associated with the construction process.

Financing risk

The real estate development business, in which the Company and the Group operates, requires significant initial expenditures to purchase land and to cover construction, infrastructure, and design costs. As such, the Company and the Group, in order to continue and develop its business, require significant amounts of cash through external financing banks and issuance of bonds. The Company's and Group's ability to obtain such financing depend on many factors, in particular, on market conditions which are beyond the Company's and the Group's control. In the event of difficulties to obtain the required financing, there is a risk that the scale of the Company's and Group's development and pace of achieving its strategic objectives may differ from what was originally planned. In such situation as described above, there is no certainty whether the Company and the Group will be able to obtain the required financing, nor whether financial resources will be obtained under conditions that are favourable to the Company and the Group.

Administration

The nature of real estate development projects requires a number of licenses, approvals and arrangements to be obtained by the Company and the Group at every stage of the development process. Despite significant caution applied in the project execution schedules, there is always a risk of delay in their obtainment. In addition there is always the risk of protests made against permits decisions which have already been issued (also due to appeals with no consequences for the appellants) or in the worse scenario failing to obtain the relevant permits. Additional risk might rise with respect to properties under perpetual usufruct. All the above factors may affect the ability of the Company and the Group to conduct and complete its executed and planned projects.

Main risks and other factors important for the development of the Company and the Group

Changes in legislation

Potential future changes in the legislation (contemplated deletion of open escrow accounts as well as the possible introduction of compulsory contributions to the developer guarantee fund) also constitute a risk that could directly or indirectly affect the Company's and the Group's activities and results. The Management Board is in the opinion , that the possible introduction of such changes might have a negative impact on the Group's activities to a lesser extent than on other market operators, primarily due to the Company's and the Group's comfortable financial situation and also because of the trust and good reputation, which the Company and the Group enjoy among financial institutions.

Availability of mortgages

The demand for residential real estate largely depends on the availability of credits and loans for financing the purchase of apartments and houses by individuals, although interest rate on bank mortgages remain low. Possible increase in interest rates, deterioration of the economic situation in Poland or administrative restrictions on lending activities of the banks may cause a drop in demand for apartments and houses, and therefore a decrease in interest from potential buyers in the Group's development projects, which in turn may have a significant adverse impact on activities, financial standing or performance of the Company and the Group. In 2020, access to mortgages was selectively monitored by financing banks and was relatively available to selective customers according to bank qualifications. Interest rates are at levels around their historic minimum. The Covid-19 pandemic had a negative effect on bank financing in terms of conditions and length for obtaining banks approvals, the Company is continuously observing the situation and offering administrative help to its clients for obtaining required credits.

Regulatory risk, risk of interpretation and application of regulations

Frequent amendments, incoherence and lack of unified interpretation of legislation entail risks related to the legal and environment in which the Company and the Group operate. In particular the regulations and interpretations of tax legislations are subject to frequent changes. The practice of tax authorities, issued tax interpretations as well as judicial decisions in this area is not unified. In cases that Tax Authorities will adopt different interpretation of tax regulations from that of the Company, negative consequences can be expected with negative impact on the Company's business, its performance, its financial standing and its development prospects.

Interest rate risk

A vast majority of loans and borrowings obtained by the Group is against variable interest rates that are based on WIBOR rates plus a margin. Therefore, changes in the WIBOR rates will have impact on the cash flow and the profitability of the Group.

A. Introduction

The Ordinary General Meeting of Shareholders held on 30 June 2020, approved the Company's remuneration policy which sets forth the terms of remuneration of the members of the Management Board and Supervisory Board of Ronson Development SE (further: "Remuneration policy") meeting the requirements of Article 90 of the Act on Public Offering. It has replaced the existing rules for remunerating the Management Board of the Company contained in the Remuneration Policy for members of the Management Board adopted on October 1, 2007 by the Extraordinary General Meeting of Ronson Europe NV and the remuneration system for members of the Supervisory Board of the Company adopted by the same General Meeting.

B. Remuneration Policy

The Remuneration Policy was developed taking into account the business of the Company, its economic situation, market standards applicable in comparable companies, in particular in the construction industry, and the scope of responsibilities of each individual member of the Management Board and Supervisory Board. The Remuneration Policy aim is to contribute to the realization of the business strategy, long-term development and stability of the Company.

C. Remuneration of the Management Board

Boaz Haim

Mr Boaz Haim, as the President of the Management Board of the Company - based on the resolution of the Supervisory Board - is entitle to a monthly remuneration of the PLN equivalent to EUR 20,000, an American school in Warsaw for two children (in the approximately value of USD20,000 per year, per child ), accommodation cost up to 15,000 PLN per month and the costs of four round flights outside the Poland during each calendar year for Mr. Boaz and his family, purchase of residential premises in accordance with the Company's internal procedure and education on the Company and its subsidiaries costs. In addition Mr. Boaz in entitle to two types of annual performance bonuses of up to of EUR 81,000 each.

One of the bonuses is granted on the condition that the Company's total annual consolidated profit before tax, calculated on the basis of the Company's consolidated annual financial statements as published in the annual report, but excluding loss on valuation of land purchased before November 1, 2019 or losses related to the sale of land or projects whose purchase procedure began before November 1, 2019, exceeds a total of PLN 14.5 million.

Another bonus is granted on the condition that the average price of the Company's shares on the Warsaw Stock Exchange in the relevant full calendar year exceeded the average price of one share in the previous calendar year by 5% or more.

Mr. Boaz Haim is also remunerated as the President of the Management Board of Company's subsidiaries on the basis of resolutions of the Subsidiaries' General Meetings in the total amount of EUR 5,000 per month. In addition, he concluded an employment contract with Ronson Development Management, on the basis of which he receives a salary of EUR 2,000 per month (paid in PLN) and reimbursement of medical insurance costs and a company car.

Andrzej Gutowski

In connection with the adoption of the Remuneration Policy, the rules for remunerating Mr. Andrzej Gutowski were changed with the effect from 1 July 2020, while the total cost for the Company and its subsidiaries in respect of remuneration of Mr. Gutowski remained unchanged.

Until 1 July 2020, Andrzej Gutowski, as the Vice-President of the Management Board of the Company responsible for Marketing and Sales, was entitled as well – based on resolution of the Supervisory Board - to the total amount constituting 0.1% of the net value of the Group's sales results during the year, based on the adopted incentive plan.

From 1 July 2020, Andrzej Gutowski, as the Vice-President of the Management Board of the Company responsible for Marketing and Sales, is entitled to a monthly remuneration of PLN 20,000 and a bonus of 0.1% gross value of preliminary net sales contracts, provided in the Management Report on the Company's and Group's activities for a given financial year, published in the periodic report, payable after publication of the Consolidated Financial Statements. Mr. Gutowski is entitled to receive non-returnable quarterly advances for bonuses, calculated on the basis of the Management Reports published every quarter in the periodic report together with the interim financial statements, payable after their publication.

C. Remuneration of the Management Board

Andrzej Gutowski

Mr. Gutowski is also entitled to other benefits available to board members or employees of the Company or its subsidiaries, such as medical care, right to purchase of real estate units in accordance with the Company's internal procedure, etc.

From 1 July 2020, Mr. Andrzej Gutowski is also remunerated as a Member of the Ronson Development Management's Management Board on the basis of a resolution of the Shareholders' Meeting in the total amount of PLN 7,000 per month.

Moreover, Mr. Andrzej Gutowski concluded an employment contract with Ronson Development Management. From 1 July 2020, his monthly remuneration under the employment contract was reduced from PLN 30,000 to PLN 5,000. In addition, he is entitled to reimbursement of the costs of medical insurance and a company car.

Yaron Shama

From 1 Feb 2020 till 30 June 2020, Yaron Shama, as the Vice-President of the Management Board of the Company and the Group CFO, is entitled to a monthly remuneration of PLN 18,500 starting from 1 July 2020 is entitled to a monthly remuneration of PLN 21,500 and two annual performance bonuses PLN 41,500 gross each.

One of the bonuses is granted on the condition that the Company's total annual consolidated profit before tax, calculated on the basis of the Company's consolidated annual financial statements as published in the annual report, but excluding loss on valuation of land purchased before 1 February 2019 or losses related to the sale of land or projects whose purchase procedure began before 1 February 2019, exceeds a total of PLN 14,500,000.

Mr. Shama is also entitled to other benefits available to board members or employees of the Company or its subsidiaries, such as medical care, right to purchase of real estate units in accordance with the Company's internal procedure, etc.

Yaron Shama is entitled as a Member of the Ronson Development Management's Management Board on the basis of a resolution of the Shareholders' Meeting in the total amount of PLN 5,000 per month. In addition, he is entitled to reimbursement of the costs of medical insurance.

Mr. Yaron Shama providing Ronson Development SE services starting from 1 February 2020 through his consulting company for a remuneration of PLN 10,000 per month as well as he provides services to Ronson Development Management in the total amount of PLN 5,000 per month.

Alon Haver

As Mr Alon Haver is also a Management Board member of the indirect major shareholder of the Company (A. Luzon Group), he is not receiving any remuneration from Ronson Development SE nor from any of the Company's subsidiaries. The Company is covering expenses related to his activity as a Company's Management Board member, such as travel and accommodation expenses.

Rami Geris (until 31 January 2020)

Mr Rami Geris, as a member of the Management Board of Ronson Development SE, has entered into an employment contract with a subsidiary of the Company (Ronson Development Management Sp. z o.o.). The conditions of the employment contract included a monthly salary of PLN 5,000, an annual bonus between 2 to 4 monthly fees, reimbursement of the medical insurance costs, a company car and the costs of two round flights to Israel during each calendar year for Mr. Geris and his family.

C. Remuneration of the Management Board

Rami Geris (until 31 January 2020)

In addition Mr. Geris provided, through his consulting company, services to Ronson Development SE. The remuneration for these services amounted to a monthly fee of EUR 4,700 and PLN 14,500 and the bonus consisting of a fixed amount of PLN 55,000 paid in 12 monthly installments during the year for which the bonus was due and a variable part up to PLN 55,000. During year 2020 the remuneration and the fixed part of bonus for these services was paid only for January 2021 and not paid following the resignation of Mr. Geris.

Following the resignation of Mr Geris and the termination of the consulting contact, a termination fee equal to 3 monthly fee was due and paid in year 2020 in Ronson Development Management, and termination fee in Ronson Development SE in the amount of 3 monthly fee was paid in year 2020.

Total compensation of the Members of the Management Board, including bonuses and incentives linked to Company's financial performance, a company car, flights and accommodation amounted to PLN 4,793 thousand (2019: PLN 3,851 thousand).

The table below presents the breakdown of total compensation received by each member of the Management Board:

As at 31 December	From the Company	In other	Total
In thousands of Polish Zlotys (PLN)	companies

Salary and other short time benefit	222	70	292
Management bonus	83	-	83
Other(2)	149	55	204
Subtotal - Mr Yaron Shama	454	125	579

Salary and other short time benefit (2)	39	27	66
Management bonus	-	-	-
Termination fee (2)	203	38	241
Other (1)	0	0	0
Subtotal - Mr Rami Geris	242	65	307

Salary and other short time benefit	120	309	429
Incentive plan linked to financial
results	445	-	445
Other(1)	-	21	21
Subtotal - Mr Andrzej Gutowski	565	330	895
Salary and other short time benefit
	1,069	480	1,549
Management bonus	736	-	736
Signing bonus	-	-	-
Other(1)	658	70	728
Subtotal - Mr Boaz Haim	2,463	550	3,013
Total	3,723	1,070	4,793

(1) Mainly related to car expenses, flights and accommodation and an American school.

(2) Transactions with related parties.

D. Remuneration of the Supervisory Board

The supervisory directors are entitled to an annual fee of EUR 8,900 plus an amount of EUR 1,500 per board meeting (EUR 750 if attendance is by remote means of direct communication). The total amount due in respect of Supervisory Board fees during 2020 and 2019 amounted to PLN 333 thousand (EUR 75 thousand) and PLN 357 thousand (EUR 83 thousand), respectively.

Mr Amos Luzon did not receive any direct remuneration from the Company nor from any of the Company's subsidiaries.

Remuneration received by each Supervisory Board member for year 2020 is as follows:

Alon Kadouri, Member of the Supervisory Board PLN 57 thousands;
Ofer Kadouri, Member of the Supervisory Board PLN 73 thousands;
Przemysław Kowalczyk, Member of the Supervisory Board PLN 73 thousands;
Piotr Palenik, Member of the Supervisory Board PLN 57 thousands;
Shmuel Rofe, Member of the Supervisory Board PLN 73 thousands.

Assessment of the Group's finance management

In 2020, the management of the financial resources of the Group was mainly focused on obtaining sources of financing for both, projects being conducted as well as on maintaining safe financial ratios at all levels of its business activity. The Group has obtained funds from the issue of series V bonds in the amount of PLN 100 million designated for bonds refinancing and for financing the Group's operating activities.

The Group's leverage ratios have remained at a safe level as at 31 December 2020. The net debt (including cash paid by Company's clients blocked temporarily on the escrow accounts servicing ongoing projects that are under construction) to equity ratio as at 31 December 2020 was 23.5%.

Having considered the specifics of the real estate development industry with its long production cycle and tighter funding requirements for companies operating in this sector, the Group has been in a comfortable financial position. The liquidity ratios are driven by decisions around financing of current investments (including decisions when to commence the construction of new project/stage) and the strategy of acquiring new land. The Management Board considers the Group's liquidity to be at a safe level.

Leverage ratios	As at	As at
In thousands of Polish Zlotys (PLN)	31 December 2020	31 December 2019
Loan and borrowings	230,072	200,844
Interest bearing deferred trade payables	8,482	2,338
Cash and cash equivalents	(135,099)	(95,591)
Other current financial assets	(14,239)	(22,157)
Net debt	89,216	85,434

Total equity	379,817	350,494
Total capital employed	469,033	435,928

Total assets	937,767	943,183

Debt to equity ratio
loan and borrowings / equity	60.6%	57.3%
Net debt to equity ratio
net debt / equity	23.5%	24.4%
Equity ratio
equity / assets	40.5%	37.2%
Leverage ratio
net debt / capital employed	19.0%	19.6%

Assessment of the Group's finance management

Liquidity Ratios	As at	As at
In thousands of Polish Zlotys (PLN)	31 December 2020	31 December 2019

Current assets	856,550	862,660
Inventory	668,461	718,060
Short term liabilities less advances received	148,149	176,471
Cash and cash equivalents	135,099	95,591

Current ratio
current assets / short-term liabilities less advances received	5.78	4.89
Quick ratio
current assets less inventory and advance for land / short-term
liabilities less advances received	1.27	0.82
Cash ratio
cash and cash equivalents / short-term liabilities less advances
received	0.91	0.54

Information on loans, bonds, sureties and guarantees

Bonds loans contracted or redeemed

On 25 February 2020, the Company repaid all outstanding 10,000 series M bonds with total nominal value of PLN 10,000 thousand. After this repayment, the total number of outstanding bonds series M amounted to nil.

On 29 July 2020, the Company repaid all outstanding 15,000 series Q bonds with total nominal value of PLN 15,000 thousand. After this repayment, the total number of outstanding bonds series Q amounted to nil.

On 18 August 2020, the Company repaid all outstanding 10,000 series P bonds with total nominal value of PLN 10,000 thousand. After this repayment, the total number of outstanding bonds series P amounted to nil.

On 2 October 2020 the Company issued 100,000 series V non-secured bonds with a nominal value and issue price of PLN 1 thousand per Bond and an aggregate nominal value and issue price of PLN 100.0 million.

In October 2020, the Company signed the final agreement for the purchase for early redemption of all outstanding 20,000 series S bonds with total nominal value of PLN 20 million. After this repayment, the total number of outstanding bonds series S amounted to nil.

Bank loans contracted or repaid

In February 2019, the Company executed a loan agreement with Santander Bank Polska S.A. related to the Grunwald2 project in Poznań up to a total amount of PLN 57.7 million. Final repayment of loan was made in May 2020.

In September 2019, the Company executed a loan agreement with PKO Bank Polski S.A. relating to the fifth stage of the Panoramika project in Szczecin. Under this loan agreement PKO Bank Polski S.A. is to provide financing to cover the costs of construction up to a total amount of PLN 26.5 million. Under the loan agreement, the final repayment date of the loan facility is December 2021. Final repayment of loan was made in August 2020.

In March 2020, the Company executed a loan agreement with Alior Bank S.A. related to the Nova Królikarnia 2c project in Warsaw. Under this loan agreement Alior Bank S.A. is to provide financing and re-financing to cover the costs of construction up to a total amount of PLN 20.7 million. Under the loan agreement, the final repayment date is December 2021. As at 31 December 2020 the bank loan is not used.

In May 2020, the Company executed a loan agreement with Alior Bank S.A. related to Joint Venture project – Wilanów Tulip in Warsaw. Under the loan agreement Alior Bank is to provide financing and re-financing to cover the costs of construction up to total amount of PLN 51.3 million. Under the loan agreement, the final repayment date is December 2021.

Information on loans, bonds, sureties and guarantees

Guarantees received by the Group

The construction guarantees and post construction guarantees received by the Company and the Group from General Contractors during the year 2020 are presented in the table below: (excel please)

Entity name	Amount of guarantee In thousands of Polish Zlotys (PLN)
Danya Cebus Poland Sp. z o.o	77,057
EBUD-Przemyslowka Sp. z o.o	2,529
ERBUD S.A	4,135
GLIF Sp. z o.o	1,101
HOCHTIEF POLSKA S.A.	7,532
Kalter Sp. z o.o	2,378
KARMAR S. A.	16,995
Mostostal Warszawa S.A	11,409
OTIS SP. Z O.O	1,827
POZBUD T&R S.A	1,250
STRABAG SP. Z O.O	4,130
TOTALBUD S.A.	1,033
other	997
Total	132,374

Guarantees provided by the Company

As at 31 December 2020 the Company has no granted any guarantees.

Additional information to the report

Dividend policy

On 11 July 2018, the Management Board of Ronson Development SE resolved to update the dividend policy of the Company. The Management Board recommends in upcoming years a dividend payment of 50% of the consolidated net profit attributable to shareholders but not less than PLN 9,840,649 in total (representing PLN 0.06 per share at the current number of issued shares). The final recommendations regarding the payment of dividends will be made by the Management Board after the examination of the current and expected balance sheet of the Company, expected operating, financial and cash-flow position of the Company and taking into consideration: (i) the close observance of all balance-sheet linked debt covenants, (ii) ability of future repayment of debts, (iii) financial needs of the Company aiming to be ranked amongst leading residential developers and (iv) changing market environment.

Agreements between shareholders

The Company is not aware of any existing agreements between the shareholders.

Cooperation agreements

On 29 November 2018, the Company entered into a joint venture agreement with Konsili Limited providing for the joint investment and development of the Wilanów Tulip project. For details about the Wilanów Tulip project the reference is made to sections: (i) Business highlights during the year ended 31 December 2020 – D. Agreements significant for the business activity of the Group. Apart from the agreement mentioned above, the Company and the Group did not conclude any significant cooperation agreements with third parties during 2020.

Transactions with related entities

All transactions made by the Company or its subsidiaries with related entities are based on the arm's length principle. Transactions with the related entities are presented in Note 35 to the Consolidated Financial Statements for the year ended 31 December 2020.

Agreements with shareholders

The subsidiary entity of the Company (Ronson Development Management Sp. z o.o.) is a party to the consulting agreement with A. Luzon Group. Based on this agreement (that was signed during 2017) the Company pays to A. Luzon Group an amount of PLN 70 thousand monthly and covering travels and out of pocket expenses incurred in connection with rendering services.

Proceedings before the courts, arbitration or public administration authority

As of 31 December 2020 there was no individual proceeding before any court, authority competent for arbitration or public administration body, concerning the liabilities or receivables of the Company or the Group, the value of which would be at least 10% of the Company's shareholders' equity.

As at 31 December 2020 the total value of proceedings in progress any court, authority competent for arbitration or public administration body, concerning the liabilities or receivables of the Company and the Group amounted to about PLN 7.1 million out of which PLN 2.7 million relates to cases where Ronson Group is suing. With regard to the claims that the Company and the Group determined to be justified, provisions were established in the total amount of about PLN 1.0 million.

Employees

The average number of personnel employed by the Company and its subsidiaries – on a fulltime equivalent basis – during 2020 was 74 compared to 73 during 2019.

Research and development

The Company and its subsidiaries are not involved in any research and development activities.

Environmental protection

The Company, in conducting its business activities, undertakes to comply with all laws and regulations regarding use of land and protection of the natural environment. The Company is not a party to any pending proceedings regarding potential environmental protection violations.

Additional information to the report

Forecasts

The Company did not publish financial forecasts for 2020.

Assessment of the possibility to implement investment projects

In the opinion of the Management Board, the Company and the Group have resources necessary for the implementation of ongoing and planned projects as well as acquisition of new projects. The Company and the Group is financing its activity using own resources, advances from customers, as well as external financing - bank loans and bond issues.

Quarterly reporting by the Company

As a result of requirements pertaining to A. Luzon Group with the registered office in Raanana Israel, the Company's controlling shareholder, whose ultimate parent company is listed on the Tel Aviv Stock Exchange, the first quarter reports, semi-annual reports and third quarter reports are subject to a full scope review by the Company's auditors. For the Company itself that listed on the Warsaw Stock Exchange, only the semi-annual report is subject to a mandatory review. The Company has agreed with A. Luzon Group that the costs for the first and third quarter review will be shared between the Company and its shareholder. The Company considers having its first and third quarter report provided with a review report a benefit to all of its shareholders.

The Company prepared this Annual Report for the year ended 31 December 2020 in both English and Polish languages, while the Polish version is binding.

Disclosure obligations of controlling shareholder

Please note that A. Luzon Group, the Company's controlling shareholder, is a company listed on the Tel Aviv Stock Exchange is subject to certain disclosure obligations. Some of the documents published by A. Luzon Group in performance of such obligations, available here: http://maya.tase.co.il (some of which are only available in Hebrew), may contain certain information relating to the Company.

Commitments and contingencies

For information about investment commitments of the Group in respect of construction services to be rendered by the general contractors and contingent liabilities related to the purchase of new plots, see note 34 of the Consolidated Financial Statements for the year ended 31 December 2020.

Changes in the basic principles of business management of the Company and its Group

None.

Amendments to Tax Act in Poland

On 30 November 2020, the acts amending the Personal Income Tax Act, the Corporate Income Tax Act, the Act on Flat-Rate Income Tax on Certain Revenues Generated by Natural Persons and certain other Acts were published in the Polish Journal of Laws and thus entered into force. The acts, effective as of 1 January 2021, bring a raft of changes to the Polish income tax regulations, including extension of CIT obligations to limited partnerships and certain general partnerships, a requirement to prepare and publish a report on the tax strategy executed in the given tax year imposed on certain taxpayers or the possibility to apply an alternative CIT scheme (a solution dubbed "Estonian CIT").

As from 1 January 2021:

limited partnerships having their registered office or place of management in the territory of Poland; and
general partnerships having their registered office or place of management in the territory of Poland, in which general partners are not only natural persons (unless, before the beginning of a financial year (for the existing partnerships prior to 31 January 2021), they submit to the head of the competent tax office a relevant information on PIT payers who are entitled –directly or via entities non-taxable for income tax purposes – to a share in the partnership's profits or an update of such information, within 14 days from the date the change was made)
will become CIT payers.

Limited partnerships, however, may decide to apply the new rules from 1 May 2021.

Additional information to the report

Amendments to Tax Act in Poland

Essentially, the income generated by limited partnerships (and certain general partnerships) which, up to now, have been treated for CIT purposes as tax-transparent entities, is to be covered by CIT at the partnership level and PIT or CIT at the partner level.

At the same time, the new act provides for a tax exemption on the portion of revenue earned by limited partners through shares in a limited partnership. The exemption will encompass 50 percent of the revenue earned by a limited partner through shares in a limited partnership, however, no more than PLN 60k annually. However, the exemption will apply only to in principle unrelated limited partners.

In addition, the limited partners being the CIT taxpayers should be able to benefit from the dividend exemption, i.e. exemption on the same rules as in case of the dividends paid out from a company (the main conditions being holding at least 10% of shareholding for an uninterrupted period of 2 years and being the beneficial owner of the payment).

In turn, general partners will be entitled to deduct the income tax, calculated based on the income from the participation in the limited partnership's profits, by the amount of tax already paid by the partnership, proportionally encumbering the general partner's profit obtained from the participation in such partnership. .

Furthermore, the amendments impose on certain taxpayers a requirement to prepare and publish a report on the tax strategy executed in the given tax year.

The reporting obligation is to be placed on:

taxpayers whose revenue exceeded EUR 50 million in the given tax year;
tax capital groups.

The report must take into account the nature, type and size of the taxpayer's business activity and include information on:

the processes and procedures ensuring performance of taxpayers' obligations arising from tax regulations and proper obligation implementation, as well as an overview of forms of the taxpayer's voluntary cooperation with the National Revenue Administration (e.g. under a cooperation agreement entered into with the Head of the National Revenue Administration);
how the taxpayer performs their tax-related duties on the territory of Poland along with the information on the number of reports on tax arrangements submitted to the Head of the National Revenue Administration, grouped by the type of tax they apply to;
controlled transactions, the value of which exceeds 5 percent of the balance sheet assets, as well as undertaken or planned restructurings;
the submitted applications for issuing declaratory and binding rulings, binding rate information and binding excise information;
settlements made in countries that encourage abusive tax practices. (all with the exception of information covered by trade, commercial, professional or technological secrecy / confidentiality).

The report should be presented by taxpayers within 12 months from the end of the tax year. This means that taxpayers having the taxable year coinciding with the calendar year in general will have to present the information on the tax strategy executed in 2020 by the end of 2021.

Majority of the Group project are held under a limited liability partnership, the Group is assessing the tax effect of the changes implemented in the new Tax Act and made a decision to apply the new rules starting from 1 May 2021.

The above changes were taken under consideration while calculating the accounts for current and deferred tax assets and liabilities based on the requirements of IAS 12 Income taxes, based on taxable profit (tax loss), taxable base, carryforward of unused tax losses and carry-forward of unused tax credits, and tax rates, while considering the assessment of uncertainty related to tax settlements.

Additional data for the Company

The Company is mainly a holding company and management services provider with respect to the development of residential projects for its subsidiaries. The majority of the Company incomes are from the following sources: (i) interests from loans granted to subsidiaries for the development of projects, (ii) management fee received from subsidiaries for the provision of management services, and (iii) dividend received from subsidiaries. All above revenues are being eliminated on a consolidated level.

Below section presents main data on the Company activity that were not covered in other sections of this Management Board Report. For additional information see the only Company Financial Statements for the year ended 31 December 2020. The table below presented selected financial data for the Company.

	Exchange rate of Polish Zloty versus the Euro
PLN/EUR	Average exchange rate	Minimum exchange rate		Maximum exchange rate	Year end exchange rate
2020 (12 months) 2019 (12 months) Source: National Bank of Poland ('NBP')	4.445 4.299	4.228 4.241		4.633 4.389	4.615 4.259
	EUR			PLN
Selected financial data	(thousands)
		As at 31 December
		2020	2019	2020	2019
Investment in subsidiaries		94,451	98,576	435,874	419,835
Loan granted to subsidiaries		34,746	26,727	160,347	113,829
Total assets		135,910	127,542	627,199	543,203
Long term liabilities		40,676	35,473	187,712	151,078
Short term liabilities		12,930	9,775	59,670	41,631
Equity		82,304	82,295	379,817	350,494

	EUR		PLN
	(thousands, except per share data and number of shares)
	For the year ended 31 December
	2020	2019	2020	2019
Revenues from management services granted to subsidiaries	2,026	1,502	9,005	6,456
Financial income (vast majority from loans granted to subsidiaries)	1,483	1,710	6,594	7,352
Financial expenses (vast majority from Interest on bonds)	(2,194)	(2,623)	(9,753)	(11,278)
Profit for the year (including results from subsidiaries)	9,031	4,051	40,143	17,414
Cash flows (used in) operating activities	(1,041)	(3,231)	(4,627)	(13,890)
Cash flows from/(used in) investing activities	(3,973)	11,109	(17,661)	47,756
Cash flows from/(used in) financing activities	9,509	(6,709)	42,267	(28,840)
Increase in cash and cash equivalents	4,495	1,169	19,979	5,026
Average number of equivalent shares (basic)	163,103,163	163,689,616	163,103,163	163,689,616
Net earnings/(loss) per share (basic and diluted)	0.055	0.025	0.246	0.106

A. The application of the corporate governance principles

The set of the corporate governance principles which the Company adheres to and the place where the text of the set of the corporate governance principles is available to the general public

During 2020 the Company applied only the corporate governance principles of "Best Practices for the Warsaw Stock Exchange Listed Companies 2016" ("Warsaw Stock Exchange Best Practices"), adopted by the Management Board of the Warsaw Stock Exchange on 13 October 2015.

The Warsaw Stock Exchange Best Practices are available for review at the website of the Warsaw Stock Exchange at: https://www.gpw.pl/dobre-praktyki.

The Management Board and the Supervisory Board take appropriate steps towards further implementation of the corporate governance principles and better functioning of the corporate governance at the Company.

The extent to which the Company departs from the provisions of the corporate governance principles, with the list of such provisions and the reasons for doing so

In the period between 1 January 2020 through 31 December 2020 and as of the date of this Report, the Company did not apply the following recommendations and detailed principles of the Warsaw Stock Exchange Best Practices:

Principle I.Z.1.3.

There is no formal division of tasks and responsibilities among members of the Company's Management Board which could be evidenced in the form of a document publishable on the Company's corporate website. However, the division of duties between members of the management board performing operational functions is reflected in their respective titles (i.e. the President of the Management Board, the Finance Vice President of the Management Board and Chief Financial Officer and Vice President of the Management Board for Sales and Marketing). Relevant information is available on the Company's corporate website.

Principle I.Z.1.15.

There is no formal policy on diversity of the Company's governing bodies and its key managers. The Company's Supervisory and Management Board members are elected on the basis of a wide range of factors, such as experience, background, skills, knowledge and insight. The Company recognizes the benefits of diversity, including gender equality, and it strives to achieve a greater level of diversity on the Supervisory Board and the Management Board.

Principle I.Z.1.20.

The Company believes that the existing information policy in effect at the Company guarantees that investors have access to complete and thorough information about decisions adopted at the General Meeting of the Company. The Company therefore believes there is no need to publish an audio or video recording of the proceedings of the General Meeting on the Company's corporate website.

Recommendation II.R.3.

One of the Company's Management Board members, Alon Haver, acts as the CFO in the parent company of the Company, and also holds a managerial role in other companies belonging to the Company's parent company group. Additional activities of other members of the Management Board do not require such time commitment or effort to negatively affect the proper performance of the function in the Company.

Principle II.Z.2.

The Management Board Rules repeating in that regard the provisions of the Commercial Companies Code, provide that a member of the Management Board cannot, without the consent of the Company, participate in any competitive company as a member of the governing body of a capital company and cannot participate in any other competitive legal person as a member of such person's governing authority. Such consent is granted on behalf of the Company by the Supervisory Board.

According to the Company's best knowledge, the Management Board members do not participate in any competitive company or any other competitive legal person as members of their governing authorities.

In year 2020 Andrzej Gutowski, Yaron Shama and Boaz Haim did not sit on Management or Supervisory Boards of any companies outside of the Company's group. Alon Haver held a managerial role in companies of major shareholder of the Company – Luzon Group.

A. The application of the corporate governance principles

Principles III.Z.3 and III.Z.4.

No separate units responsible for the internal audit have been established at the Company, as there is no justification for this given the size and type of the Company's activity, which complies with Recommendation III.R.1. In previous years, the Company outsourced its internal audit functions to an external entity, which carried out internal audits in designated areas at the request of the Management Board and reported directly to the Company's Supervisory Board. In year 2020 the Company took actions in order to mandate external entity to conduct such internal audit in the field of Corporate Governance and implementation of the IT System but due to COVID-19 pandemic the internal audit in year 2020 was not conducted.

Principle IV.Z.2.

In the Company's opinion, ensuring real-time broadcasts of the General Meeting is unjustified in the light of the Company's shareholding structure. Moreover, providing the relevant technical infrastructure necessary for the efficient conduct of the General Meeting by means of electronic communication would involve financial expenditure and organisational effort incommensurate with the result achieved. Moreover, the Company's shareholders have not communicated any expectations to the Company regarding real-time broadcasts of the General Meeting.

Principle IV.Z.5.

In the Company's assessment, there is no need to adopt Rules of the General Meeting. In the Company's assessment, the Company's Articles of Association coupled with the provisions of the Commercial Companies Code and the Council Regulation (EC) No. 2157/2001 of 8 October 2001 on the Articles of Association for a European company (SE) (OJEU.L No. 294 of 10.11.2001), describe exhaustively the manner of convocation and conduct of the General Meeting, and of the adoption of resolutions.

Principle IV.Z.11.

In 2020, the Company held one General Shareholder's Meeting. At the Meeting attended at least one member of the Company's Management Board. The Company's Management Board is of the opinion that the decision of the Supervisory Board members to participate in the general meeting is in each case an individual decision of the given member of the Supervisory Board. In addition, the Company's Management Board is the only body authorized and obliged to respond to the shareholder during the general meeting (Article 428 of the Commercial Companies Code).

Principle V.Z.5.

The procedure for assessing transactions with related entities, providing for the consent of the Supervisory Board for transactions with related parties, was adopted by the Company's Supervisory Board on February 4, 2020. The procedure provides for the approval of material transactions (above 5% of assets of the Company) with related parties of the Company as defined by IAS 24.

B. Description of the general features of the internal audit and risk management systems applied by the Company with respect to the process of preparation of financial statements and consolidated financial statements

The Management Board of the Company is responsible for the internal control system in the Group and its effectiveness in the preparing of financial statements and periodic reports prepared and published in accordance with the Regulation by the Minister of Finance dated 29 March 2018 on the current and periodic submissions by securities issuers Regulation of the Minister of Finance of 29 March 2018 on current and periodic disclosures by issuers of securities and conditions for recognizing as equivalent information required by the law of a non-member state (Journal of Laws of 2018, item 757).

The Company's Management Board analyses current financial results, of the Group and its subsidiaries by comparing them with adopted budgets, on the basis of at least quarterly reports. At least once per quarter Management Board verifies projection of Company cash flows and analyzes adopted strategy of the Group.

Completeness, responsibility and verification in the preparation of financial information

The Group's financial department prepares financial statements, interim and monthly management reports of the Group and the Company under the supervision of the CFO of the Group. The Group's reports are drafted by highly qualified team of employees of the financial, accounting and legal departments. The preparation process is supervised by the financial department's mid-level management. The financial statements are verified by financial controller and CFO of the Group. Pursuant to the applicable legal regulations, the Group's financial statements are reviewed or audited, respectively, by an independent statutory auditor. This is always a prime and highly qualified statutory auditor.

Consistent accounting policies are applied by the Group for presenting its financial details in the financial statements, periodic financial reports and management reports.

C. The Company's Articles of Association – the rules governing the amendments of the Articles of Association

During 2020, the Company's Articles of Association were not subject to any changes.

According to the provisions of the Articles of Association and of the Commercial Companies Code, any amendment of the Company's Articles of Association requires a resolution of the General Meeting and entry in the register. A resolution regarding amendments of the Company's Articles of Association may be adopted by the General Meeting only by the majority of three-fourths of the votes cast.

D. Share capital and Major Shareholders

Major Shareholders

To the best of the Company's knowledge, as at the 9 March 2021, the following shareholders are entitled to exercise over 5% of the voting rights at the General Meeting of Shareholders in the Company:

	As of 9 March 2021		As of 31 December 2020	As of 31 December 2019
Shares	Number of shares / % of shares	Change in number of shares	Number of shares / % of shares	Change in number of shares	Number of shares / % of shares
Shares issued:	164,010,813	-	164,010,813	-	164,010,813
	108,349,187	-	108,349,187	-	108,349,187
I.T.R. Dori B.V. (1)	66.06%		66.06%	N/A	66.06%
Nationale Nederlanden Otwarty	23,884,091	4,091	23,880,000	(4,091)	23,884,091
Fundusz Emerytalny	14.56%		14.56%	0%	14.56%
Metlife Otwarty	N/A	N/A	N/A	N/A	N/A
Fundusz Emerytalny	Between 5%-10%		Between 5%-10%	N/A	Between 5%-10%

	As of 9 March 2021		As of 31 December 2020	As of 31 December 2019
Votes	Number of shares / % of shares	Change in number of shares(2)	Number of shares / % of shares	Change in number of shares(2)	Number of shares / % of shares
Shares issued(2):	162,442,859	(78,719)	162,521,578	(814,335)	163,335,913
	108,349,187	-	108,349,187	-	108,349,187
I.T.R. Dori B.V. (1)	66.70%	0.03%	66.67%	0.00%	66.34%
Nationale Nederlanden Otwarty	23,884,091	4,091	23,880,000	(4,091)	23,884,091
Fundusz Emerytalny	14.70%	0.01%	14.69%	0.00%	14.62%
Metlife Otwarty	N/A	N/A	N/A	N/A	N/A
Fundusz Emerytalny	Between 5%-10%	N/A	Between 5%-10%	N/A	Between 5%-10%

(1) The subsidiaries of A. Luzon Group.

(2) The overall number of votes decreased by the amount of votes resulting from own shares held by the Company, as in accordance with art. 364 § 2 of the Code of Commercial Companies, it does not exercise voting rights from own shares.

The total number of own shares held by the Company as at 31 December 2020 was equal to 1,489,235 shares, which constitute 0.91% of the share capital of the Company and votes at the General Meeting. As at 9 March 2021, the Company held 1,567,954 own shares representing 0.96% of total shares issued by the Company.

D. Share capital and Major Shareholders

Rights to control

All the Company's shares are common shares and none of them carries any special privileges.

Restrictions on the rights attached to the shares in respect of the exercise of the voting rights and the transfer of the ownership of the Company's securities

The Articles of Association of Ronson Development SE do not provide for any restrictions on the exercise of the voting rights, such as the restriction on the exercise of the voting rights by holders of a certain portion or number of the votes, the time restrictions on the exercise of the voting rights or the provisions stipulating that equity rights attached to securities are separated from the ownership of securities.

There are no restrictions on the transferability of the ownership of the shares in Ronson Development SE.

E. General Meeting

The manner of operation of the General Meeting and its basic powers, the description of the shareholders' rights and the manner of their exercise, in particular the rules arising from the Rules of the General Meeting, provided such Rules have been adopted, and provided such information does not arise directly from the law

The General Meeting of the Company has been held as either ordinary or extraordinary, and being one of the Company's governing authorities, it has operated pursuant to the legal regulations and the provisions of the Company's Articles of Association.

The General Meeting of the Company has not adopted its Rules, hence the manner of operation of that governing authority is set down by the legal regulations, including the Commercial Companies Code and the Council Regulation (EC) No. 2157/2001 of 8 October 2001 on the Articles of Association for a European company (SE) (OJEU.L No. 294 of 10.11.2001), and also the Company's Articles of Association.

The General Meeting of the Company is held at the Company's registered office or in the city which is home of the registered office of the company which operates a regulated market on which the Company shares are traded. The General Meeting may also be held at another location within the territory of the Republic of Poland, however, in such case important resolutions can only be adopted if the entire issued capital of the Company is represented in the General Meeting.

General Meeting is convened by the Management Board or the Supervisory Board pursuant to the rules and procedures set down in the Company's Articles of Association or the legal regulations. The General Meeting is convened by an announcement to be made not later than twenty-six days prior to the date of the General Meeting, in compliance with the formal requirements envisaged in the Commercial Companies Code. The General Meeting is opened by the President of the Management Board or the Vice-President and Finance Vice-President.

Resolutions of the General Meeting are adopted by the majority of the validly cast votes, without the requirement of a quorum, unless the Company's Articles of Association or the legal regulations specify otherwise. Votes attached to the shares whose holders do not participate in the vote, abstain from voting or cast a blank or damaged ballot paper, are not counted as votes cast.

In addition to other matters enumerated in the legal regulations and the Company's Articles of Association, a resolution of the General Meeting is required for the Company or its subsidiaries to acquire or dispose of assets whose value is equal to or greater than one third of the value of the assets disclosed in the consolidated balance sheet and the explanatory notes from the most recent approved annual financial statements of the Company. Subject to the foregoing, the acquisition and disposal of real property, perpetual usufruct right or a share in real property, does not require a resolution of the General Meeting.

In 2020, there was one Ordinary General Meeting of the Company's shareholders.

E. General Meeting

The Ordinary General Meeting of the Company's shareholders was held on 30 June 2020 in Warsaw. The agenda of the General Meeting included in particular the approval of the financial statements for the financial year 2019 and the acknowledgement of the fulfillment of duties by the Management and Supervisory Board members, and also distribution of net profit for 2019, adopting the Remuneration Policy for Members of the Management Board and Supervisory Board of Ronson Development SE, adopting a resolution on the remuneration of Members of the Supervisory Board of Ronson Development SE, adopting a resolution on approving the conclusion of indemnity agreements with Members of the Management Board and Supervisory Board of Ronson Development SE and adopting a resolution on adopting own share purchase plan The proceedings of the Ordinary General Meeting of the Company's shareholders complied with the provisions of the law and the provisions of the Company's Articles of Association.

F. The Management Board

The composition of the Management Board and its changes

As at 31 December 2020 and until the date of signing the Management Report, the composition of the Company's Management Board and the functions of its members were as follows:

Boaz Haim, President of the Management Board

Yaron Shama, Vice-President of the Management Board, Chief Financial Officer Andrzej Gutowski, Vice-President of the Management Board, Sales and Marketing Director Alon Haver, Member of the Management Board

Change on the position of the President of the Management Board

In 2020 there were no changes on the position.

Change on the position of the Finance Vice-President of the Management Board

On 20 December 2019, Rami Geris resigned from the function of the Finance Vice-President of the Management Board for Finance and a member of the Company's Management Board with effect from 31 January 2020. The resignation also concerned the function of a member of the management board held in the Group companies. On 16 January 2020, the Company's Supervisory Board appointed, as of 1 February 2020, Yaron Shama as the Finance Vice-President of the Management Board of the Company for a joint five-year term of office of the Management Board of the Company, which began on 1 April 2019.

Summarizing the above changes during 2020 and until the date of this report, the composition of the Company's Management Board and the functions of its members were as follows:

‒ in the period from 1 January 2020 to 31 January 2020:

Boaz Haim President of the Management Board,
Rami Geris Vice President of the Management Board and Chief Financial Officer,
Andrzej Gutowski Vice President of the Management Board for Sales and Marketing,
Alon Haver Member of the Management Board;

‒ in the period from 1 February 2020:

Boaz Haim President of the Management Board,
Yaron Shama Vice President of the Management Board and Chief Financial Officer,
Andrzej Gutowski Vice President of the Management Board for Sales and Marketing,
Alon Haver Member of the Management Board.

F. The Management Board

The rules of appointment and removal of the Management Board members

According to the provisions of the Articles of Association the Company's Management Board has at least three members to be appointed and removed by the Supervisory Board. Irrespective of the competences of the Supervisory Board in this respect, a member of the Management Board may be dismissed also by the general meeting.

The Supervisory Board appoints one member of the Management Board as the President of the Management Board and at least one member of the Management Board as Vice President of the Management Board and Chief Financial Officer. Notwithstanding the foregoing, the Management Board, by a resolution, may divide duties among its members.

The Management Board members are appointed for a joint, five-year tenure, which means that the mandate of the Management Board member appointed prior to the expiry of the given tenure will expire at the same time as the mandates of the other Management Board members.

The rules of appointment and removal of the Management Board members

The term of office of members of the Management Board was unified by a resolution of the Supervisory Board of 11 March 2019. In this resolution the Supervisory Board decided that the current term of office of the Company's Management Board Members begins on 1 April 2019.

Each Management Board member may be elected for subsequent tenures, and also may be removed at any time prior to the expiry of his or her tenure. The foregoing is without prejudice to any claims he or she may have under the employment relationship or other legal relationship connected with his or her Management Board membership.

Each Management Board member may at any time tender his or her resignation. The resignation should be tendered in writing to at least one of the other Management Board members, with a copy to the other Management and Supervisory Board members.

The rules of operation of the Management Board and the rights of the Management Board members, in particular the right to adopt a decision regarding an issue or buyback of shares

The Company's Management Board operates pursuant to the Company's Articles of Association, the Management Board Rules (both these documents are available for review on the Company's corporate website) and the legal regulations, including to the Commercial Companies Code.

The Management Board manages the affairs of the Company and represents it before the courts of law, the administrative authorities and also in dealings with third parties. The powers of the Management Board cover all the matters of the Company which are not reserved by legal regulations, the Articles of Association or a resolution of the General Meeting as falling within the powers of the other governing authorities of the Company.

Two members of the Company's Management Board acting jointly have been required to represent the Company, and in particular to make representations on behalf of the Company and of those jointly acting members of the Management Board one has to be either the President of the Management Board or the Vice President of the Management Board and Finance Vice President.

The Management Board operates pursuant to the Rules it adopted, in the wording approved by the Supervisory Board on 17 December 2018.

The President of the Management Board directs the work of the Management Board, and in particular coordinates, supervises and organizes the work of the Management Board members and arranges Management Board meetings.

The Management Board may divide its duties among its members.

The Management Board must immediately inform the Supervisory Board about any matters likely to have a significant impact on the Company's functioning, and at least once every three months about the management of the Company's affairs and the expected development of the Company's activity and the parameters applied with respect to such expectations, should they change. When requested by any member of the Supervisory Board, the Management Board must provide such information in writing or on other durable media.

F. The Management Board

The rules of operation of the Management Board and the rights of the Management Board members, in particular the right to adopt a decision regarding an issue or buyback of shares

The Management Board is required to provide to the Supervisory Board members, whenever requested by them, minutes from the Management Board meetings held.

The Management Board adopts resolutions during meetings which may be held either with its members being present in person or by means of remote communication devices (teleconferences), or also by means of circular resolutions.

Each Management Board member has the right to cast one vote during the Management Board meeting. All resolutions of the Management Board require an absolute majority of votes. Resolutions regarding the acquisition of real property, perpetual usufruct right or share in real property are adopted by the Management Board by an absolute majority of the votes cast, including the approving vote of the President of the Management Board or the Vice President of the Management Board and Finance Vice President, with account being taken of the provisions of the Articles of Association.

According to Article 4.8 of the Articles of Association, the Management Board has the right to increase the Company's share capital by the amount which in total will not be greater than eight hundred and twenty thousand euros (€ 820,000), by way of one or several consecutive share capital increases, all within the above limit (the authorised share capital), by issue of new shares with the nominal value of two eurocents (€) 0.02 each, and in the total number not greater than 41,000,000 shares, in exchange for cash or non-cash contributions. The Management Board's right to increase the Company's share capital and to issue new shares within the authorised capital will expire upon the lapse of three years from the date of the Articles of Association's registration in the National Court Register (the date of the registration is 31 October 2018). The Management Board also has the right to issue subscription warrants. The General Meeting may strip shareholders, in whole or in part, of the right to subscribe for shares on the terms and conditions and in accordance with the provisions of the Commercial Companies Code.

In connection with the implementation of the treasury shares repurchase program that was approved under resolution No. 21 of the Ordinary General Meeting dated 30 June 2020 regarding the approval of a buy-back program (the "Authorization Resolution"), the Management Board of the Company on 1 July 2020 resolved to determine the detailed terms of the repurchase of the shares in the Company ("Buy-back"), which were also approved by the Supervisory Board of the Company. The treasury shares will be acquired under the Buy-back until three years starting from the adoption of the Authorization Resolution, by way of transactions concluded on the regulated market and on terms similar to those provided in the Commission Delegated Regulation (EU) 2016/1052 of 8 March 2016 supplementing Regulation (EU) No. 596/2014 of the European Parliament and of the Council with regards to regulatory technical standards for the conditions applicable to buy-back program and stabilization measures, in particular in terms of determining the price and the number of the shares, which may be acquired pursuant to the Buy-back. The maximum amount allocated for the purchase of all of the shares pursuant to the Buy-back shall not be higher than PLN 1,369,761.99 (one million, three hundred and sixty-nine thousand, seven hundred and sixty-one zloty and 99/100).

G. The Supervisory Board

The composition of the Supervisory Board and its changes

The members of the Company's Supervisory Board are as follows:

Amos Luzon Chairman of the Supervisory Board,
Przemysław Kowalczyk Member of the Supervisory Board,
Alon Kadouri Member of the Supervisory Board,
Ofer Kadouri Member of the Supervisory Board,
Piotr Palenik Member of the Supervisory Board,
Shmuel Rofe Member of the Supervisory Board.

The rules of appointment and removal of the Supervisory Board members

According to the provisions of the Articles of Association the Supervisory Board has at least 5 (five) and not more than 9 (nine) members, of whom at least two members should meet the criteria of independence within the meaning of Article 129.3 of the Statutory Auditors, Audit Firms and Public Supervision Act of 11 May 2017 (consolidated text: Official Journal of Laws of Poland of 2020 item 1415,), and at least one member should have skills and knowledge of accounting or auditing of financial statements. The General Meeting sets the number of the Supervisory Board members for a given tenure.

The Supervisory Board members are appointed and removed by the General Meeting by an absolute majority of votes. Voting on appointments and removals of the Supervisory Board members is secret.

The Supervisory Board members are appointed for a joint, five-year tenure.

Prior to being appointed to the Supervisory Board, a candidate for an independent member of the Supervisory Board must submit a written declaration to the effect that he or she meets the criteria of independence referred to above.

If the mandate of a member of the Supervisory Board expires prior to the end of his or her tenure due to resignation or death, the other Supervisory Board members may elect (co-opt) a new member of the Supervisory Board. The first next General Meeting should approve the election of the co-opted member of the Supervisory Board or appoint another member of the Supervisory Board to replace the member co-opted by the Supervisory Board. The election by the General Meeting of a new member of the Supervisory Board to replace the co-opted member, or refusal to approve the co-opted member, terminates the mandate of the co-opted member of the Supervisory Board, however, without affecting the validity and effectiveness of the actions taken by such member since the date of his or her being co-opted to the Supervisory Board.

The number of the Supervisory Board members who have been co-opted to the Supervisory Board by the Board itself and have not yet been approved by the General Meeting cannot be greater than half of all the members elected by the General Meeting.

The rules of operation of the Supervisory Board

The Company's Supervisory Board operates pursuant to the Company's Articles of Association, the Supervisory Board Rules (both these documents are available for review on the Company's corporate website) and the legal regulations, including the Commercial Companies Code.

The duties and powers of the Supervisory Board are set down in the Articles of Association and the legal regulations in force. The duty of the Supervisory Board is to exercise supervision over all the areas of the Company's activity. While performing their duties, the Supervisory Board members should consider the interests of the Company and its business.

The duties of the Supervisory Board have included among others:

a. to assess the Management Board report on the Company's activity and the financial statements for a given financial year in terms of their consistency with the accounting books and the actual state of affairs;

b. to assess the Management Board proposals regarding distribution of profits or covering of losses;

c. to submit to the General Meeting annual written reports on the outcomes of the assessments referred to in points a and b above;

d. to elect a statutory auditor to audit financial statements;

e. to approve annual and long-term business plans of the Company;

f. do other things as envisaged by the Articles of Association and the Commercial Companies Code.

G. The Supervisory Board

The Supervisory Board members will be given access to the buildings, facilities and sites of the Company and will be authorised to review the books and files maintained by the Company and other data media in the Company's possession. For this purpose, the Supervisory Board may appoint one or more persons from among its members or an expert. The Supervisory Board has the right to engage services of experts also in other situations.

The acquisition and sale by the Company or its subsidiary of an asset or assets with a unit value or total value greater than PLN 45,000,000 (forty-five million zlotys) requires the consent of the Supervisory Board.

The Supervisory Board may use the offices and technical facilities of the Company. The Company's Management Board will provide the Supervisory Board with administrative and technical support services. The operating costs of the Supervisory Board are covered by the Company.

The Supervisory Board meetings are convened as needed, however, not less frequently than three times per financial year. The Supervisory Board meetings are to be chaired by the Chairman of the Supervisory Board. The Supervisory Board meetings may be attended by the President of the Management Board or other Management Board members.

The Chairman of the Supervisory Board is required to convene a meeting of the Supervisory Board upon a written request of any member of the Company's Supervisory or Management Board. Such meeting should be held within two weeks from the request. Each Supervisory Board member has one vote during the Supervisory Board meeting. All resolutions of the Supervisory Board are adopted by an absolute majority of the votes cast, with at least half of its members present. In case the votes are tied, the Chairman of the Supervisory Board has a casting vote.

The Supervisory Board may adopt resolutions by means of circular resolutions or by means of remote communication devices. A resolution is valid provided all the Supervisory Board members have been notified of the draft of such resolution.

The Supervisory Board members may participate in the adoption of resolutions by casting their vote in writing through another member of the Supervisory Board. Votes cannot be cast in writing on matters placed on the agenda during the Supervisory Board meeting.

Resolutions cannot be adopted by means of circular resolutions or by means of remote communication devices when they concern appointments of the Chairman and Vice Chairman of the Supervisory Board, appointment of a member of the Management Board, and removal or suspension of those persons.

The Supervisory Board meetings may be held without being formally convened provided all its members are present and none of them raises any objection to either holding the meeting without it being formally convened or its agenda.

H. The Supervisory Board Committees

According to the provisions of the Articles of Association the Supervisory Board must establish two committees: the Supervisory Board Audit Committee and the Supervisory Board Remuneration Committee. Moreover, the Supervisory Board may establish from among its members other committees, either standing or ad hoc ones, and task them in particular with preparing certain matters for discussion during the meeting of the Supervisory Board.

In 2020, the Company had two unchanged Supervisory Board committees - the Audit Committee (composed of: Shmuel Rofe as Chairman, Ofer Kadouri and Przemysław Kowalczyk) and the Remuneration Committee (composed of: Alon Kadouri as Chairman, Piotr Palenik and Shmuel Rofe).

H. The Supervisory Board Committees

The Audit Committee

The Audit Committee is the standing committee of the Supervisory Board.

According to the Rules of the Audit Committee in the wording adopted on 10 December 2018, the Audit Committee has 3 members, including the Chairman of the Audit Committee, elected by the Company's Supervisory Board from among its members, however at least one member must have skills and knowledge of accounting or auditing of financial statements, at least one member must have skills and knowledge of the industry in which the Company operates or individual members in their respective scopes must have skills and knowledge of this industry, and the majority of the Audit Committee members, including its Chairman, must be independent within the meaning of Article 129.3 of the Statutory Auditors, Audit Firms and Public Supervision Act of 11 May 2017.

The Audit Committee members who meet the statutory criteria of independence are Shmuel Rofe (the Chairman of Audit Committee) and Przemysław Kowalczyk.

The Audit Committee members who have skills and knowledge of accounting or auditing of financial statements are Ofer Kadouri, Shmuel Rofe and Przemysław Kowalczyk.

The Audit Committee members who have skills and knowledge of the industry in which the Company operates are Shmuel Rofe and Przemysław Kowalczyk.

Ofer Kadouri holds BA in economics and accounting and has been a certified accountant in Israel since 1989. In his work as an accountant, he is the managing partner of an accounting firm whose clients include companies from the construction industry.

Przemysław Kowalczyk acquired his skills and knowledge of accounting while he served as the Chief Financial Officer of Hyundai Motor Poland, being responsible for accounting, finances and controlling. He acquired his skills and knowledge of the industry in which the Company operates during his many years of service as a member of the Company's Supervisory Board (since 2011).

Shmuel Rofe, since 2014 is an entrepreneur and consultant in real estate. From 2009 until 2013 he served as Chief Executive Officer of Ogen Properties Ltd. During the years 2004 through 2009 he was a Chief Financial Officer and a Chief Executive Officer of Gilaz Properties Ltd. Earlier he served for four years as Chief Financial Officer of Zementcal Ltd. Earlier he also performed a role of controller at Haifa University, Israel.

The tenures and mandates of the Audit Committee members expire on the expiry date of their tenure and mandate as members of the Company's Supervisory Board. When a member is removed or resigns from the Audit Committee, the Supervisory Board is required to immediately appoint a replacement member of the Audit Committee.

The organisation, manner of operation and powers of the Audit Committee are set down in the Audit Committee Rules which are published on the Company's corporate website.

The duties of the Audit Committee include in particular:

‒ to make recommendations on appointment, reappointment and removal by the Company's Supervisory Board of an external statutory auditor or audit firm to audit the financial statements, and to assess the levels of remuneration and the terms and conditions of engagement of a statutory auditor or audit form, and to assess their independence;

‒ to prepare and apply the policy and procedure for the selection of an audit firm to audit the financial statements of the Company, to be adopted in the form of a resolution of the Audit Committee;

‒ to prepare a policy concerning the provision by the audit firm selected to audit the financial statements of the Company, the affiliates of such firm, and also by a member of the audit firm network, of the permitted services other than auditing of the Company's financial statements, to be adopted in the form of a resolution of the Audit Committee;

‒ to perform an initial assessment of the financial statements and monitor the Company's financial reporting process;

‒ to supervise, monitor and advise the Management Board on the internal risk management and control systems, including to supervise and implement the relevant provisions and legal regulations, and also to supervise the effects of the application of the codes of conduct;

H. The Supervisory Board Committees

The Audit Committee

‒ to monitor, in consultation with statutory auditors or audit firms of the Company, the financial audit procedures and activities of the Company, the fairness of the Company's financial statements and all the formal representations and declarations relating to the Company's financial results, and also to verify the significant financial assumptions and estimates included therein, and to make recommendations on these areas to the Company's governing authorities and to notify the Supervisory Board about audit results, the role of the Audit Committee and fairness;

‒ to supervise disclosure and reporting of financial information by the Company;

‒ to supervise the compliance with recommendations and observations of internal auditors and external statutory auditors or audit firms of the Company;

‒ to monitor and supervise the internal audit activities and functioning;
‒ to supervise the financing of the Company;
‒ to supervise the use of ICT systems and tools;
‒ to liaise on permanent basis and supervise the relations with external statutory auditors or audit firms of the Company.

In 2020, the Audit Committee held four meetings in the form as teleconference.

The Remuneration Committee

The Remuneration Committee is the standing committee of the Supervisory Board.

According to the Rules of 10 December 2018, the Remuneration Committee has three members, including the Chairman of the Remuneration Committee, to be elected by the Company's Supervisory Board from among its members. According to the Rules of the above committee:

‒ at least two of the three members must be independent,

‒ the current (former) members of the Management Board and members of the management boards of other listed company may not act (simultaneously) as the Chairman of the Remuneration Committee, and

‒ not more than one of the three members may (simultaneously) act as a member of another, listed, public company.

Persons who meet the statutory independence criteria in the Remuneration Committee are Shmuel Rofe and Piotr Palenik. All current members of the Remuneration Committee meet the remaining criteria.

The tenures and mandates of the Remuneration Committee members expire on the expiry date of their tenures and mandates as members of the Company's Supervisory Board.

The duties of the Remuneration Committee include in particular:

to make proposals regarding the remuneration policy applicable to the Management Board members;
to make proposals regarding remuneration of individual Management Board members, which will be adopted by the Supervisory Board and which in any case should include (i) the remuneration structure, and (ii) the amount of fixed remuneration, shares and/or options and/or other variable elements of remuneration, pension rights, severance pay, and other forms of awardable remuneration, and also the performance criteria and their application;
to recommend and monitor the levels and structures of remuneration provided to the top level management;
to ensure that the contractual terms and conditions of the termination of employment contract and all the associated payments are fair both for a given employee and from the Company's point of view, and that no errors or misconduct are awarded, and that the duty to limit losses is fully reflected in such terms and conditions.

In 2020, the Remuneration Committee held no meetings.

I. Shares in the Company owned by Management Board and Supervisory Board members in the year ended 31 December 2020 and until the date of publication of the report

Mr Amos Luzon, member of the Supervisory Board, as at 31 December 2019 held 64.19%, while as at 31 December 2020 held 83.71% and at the day preceding the publication of this report held 72.77% of the shares and voting rights in A. Luzon Group (to the best of the company's knowledge, inter alia through A. Luzon Properties and Investments Ltd., a private company owned by Mr Amos Luzon "99%"), and as a result, thus indirectly held a 41.98% of shares in the Company as at 31 December 2019 and 54.75% as at 31 December 2020 and 47.59% at the day preceding the publication of this report. Taking into account own shares held by the Company as at 31 December 2019, 31 December 2020 and as at the day preceding the publication of this report, Mr. Amos Luzon indirectly controlled following percentage of votes at those dates: 42.02%, 55.25% and 48.05%, respectively.

Mr Piotr Palenik, member of the Supervisory Board, as at 31 December 2019, 31 December 2020 and at the day preceding the publication of this report held 0.012% of the shares and voting rights in the Company (in total 20 thousand shares). Number of shares owned by the Company did not influence the percentage of votes held by Mr. Piotr Palenik after rounding.

Other members of the Management Board and of the Supervisory Board did not in year 2020 and do not own as of the date of this report any shares in the Company.

J. Policy on diversity

The Company has not adopted a policy on diversity. When electing persons to serve in the Company's governing authorities, and directors of the departments within the organizational structure of the Company, the key selection criteria are the knowledge, competences and previous experience, whereas gender and age are of secondary importance.

At present, there are no women holding any positions in the managing and supervisory authorities of the Company. The Supervisory Board is aware of the advantages of the diversity, especially as regards the gender equality. That is why the Supervisory Board continues efforts to enhance the diversity of the Management Board.

K. Appointment of the Auditor

The Company applies, adopted on 10 December 2018 by resolution of the Audit Committee of the Supervisory Board, Policy and procedure for the selection of an audit company and the Policy for the provision of additional non-audit services by an audit firm or its affiliate.

The main assumptions underlying the Policy concerning the selection of an audit firm to audit the financial statements of the Company are as follows:

According to the Company's Articles of Association, an entity authorized to audit financial statements is selected by the Supervisory Board by a resolution, acting upon the recommendations of the Company's Audit Committee.
The Audit Committee, prior to making the recommendation, and then the Supervisory Board, during the selection of the audit firm to audit the financial statements of the Company from among those recommended by the Audit Committee, consider the following criteria relating to the entity authorized to audit the financial statements of the Company:

a) impartiality and independence of the entity;

b) its reputation in the financial markets, and also the references, if they were requested in the request for proposal;

c) the price quoted by the entity;

d) the experience in auditing of financial statements of companies listed on the Warsaw Stock Exchange;

e) the guarantee of proper provision of the services requested by the Company;

f) the professional qualifications and experience of the persons to be directly involved in the provision of the services for the Company;

g) the availability to perform an audit within the timeframes indicated by the Company.

The main assumptions of the procedure for the selection of an audit firm to audit the financial statements of the Company are as follows:

The request for proposal connected with the selection of an audit firm to perform a statutory audit the Company's financial statements is to be prepared by the Chief Financial Officer of the Company or the person acting upon his or her instruction, by 31 September of the year preceding the audit year. The request for proposal is to be sent to at least two entities authorised to audit financial statements and must state the requirements that must be met by them. The requirement to send a request for proposal to at least two entities does not apply to a renewal of the financial statements audit contract. The Audit Committee, after consulting with the Chief Financial Officer, has the right to appoint additional entities authorised to audit financial statements to which the request for proposal should be sent.

K. Appointment of the Auditor

The proposals received by the Company in response to the requests for proposals sent are to be passed on to the Audit Committee which will analyse the proposals sent based on the criteria specified in the policy for the selection of audit firms and the requirements set down in the legal regulations in force.
The Audit Committee may set dates of meetings with all or some of the entities authorised to audit financial statements which have sent their proposals, with a view to obtaining additional information from such entities and having negotiations with them.
The above meetings and negotiations must be approved by the Audit Committee.
An audit firm is to be selected with account being taken of the rule of rotation of an audit firm and the key statutory auditor to ensure that the maximum uninterrupted duration of the statutory audit engagement with the same audit firm or its affiliated audit firm or any member of the network operating in any of the European union member states to which such audit firms belong, does not exceed five years, and the key statutory auditor does not carry out statutory audits of the Company for longer than five years.
The key statutory auditor may carry out statutory audits of the Company after at least three years have passed since the end of his or her last statutory audit.

The main assumptions underlying the Policy for the provision of additional non-audit services by an audit firm or any entity affiliated with such audit firm, are as follows:

1. A statutory auditor or an audit firm carrying out statutory audits of the Company, or any member of the network to which the statutory auditor or the audit firm belongs, may not directly or indirectly provide to the Company any prohibited non-audit services indicated in Article 5.1(2) of the Regulation (EU) No. 537/2014 of the European Parliament and of the Council of 16 April 2014 on specific requirements regarding statutory audit of public-interest entities and repealing Commission Decision 2005/909/EC.
1. The provision of the permitted services is possible only to the extent unrelated to the Company's tax policy, following the Audit Committee's assessment of the threats to independence and the safeguards applied in accordance with Articles 69–73 of the Statutory Auditors, Audit Firms and Public Supervision Act of 11 May 2017. This will require the consent of the Audit Committee and a recommendation on the services to be supplied.
1. The prohibited non-audit services mean:
a) tax services relating to:
(i) preparation of tax forms;

(ii) payroll tax;

(iii) customs duties;

(iv) identification of public subsidies and tax incentives unless support from the statutory auditor or the audit firm in respect of such services is required by law;

(v) support regarding tax inspections by tax authorities unless support from the statutory auditor or the audit firm in respect of such inspections is required by law;

(vi) calculation of direct and indirect tax and deferred tax;
(vii) provision of tax advice;
b) services that involve playing any part in the management or decision-making of the audited entity;
c) bookkeeping and preparing accounting records and financial statements;
d) provision of tax advice;

e) designing and implementing internal control or risk management procedures related to the preparation and/or control of financial information or designing and implementing financial information technology systems;

f) valuation services, including valuations performed in connection with actuarial services or litigation support services;
g) legal services, with respect to:
(i) the provision of general counsel;

K. Appointment of the Auditor

(ii) negotiating on behalf of the audited entity; and

(iii) acting in an advocacy role in the resolution of litigation;

h) services related to the audited entity's internal audit function;

i) services linked to the financing, capital structure and allocation, and investment strategy of the audited entity, except providing assurance services in relation to the financial statements, such as the issuing of comfort letters in connection with prospectuses issued by the audited entity;

j) promoting, dealing in, or underwriting shares in the audited entity;

k) human resources services, with respect to:

(i) management in a position to exert significant influence over the preparation of the accounting records or financial statements which are the subject of the statutory audit, where such services involve:

‒ searching for or seeking out candidates for such position; or

‒ undertaking reference checks of candidates for such positions;

(ii) structuring the organisation design and cost control.

A statutory auditor or an audit firm carrying out statutory audits of the Company, or any member of the network to which the statutory auditor or the audit firm belongs, may not directly or indirectly provide to the Company any prohibited non-audit services:

a) in the period between the beginning of the period audited and the issuing of the audit report; and

b) in the financial year immediately preceding the period referred to in point a) legal services, with respect to (i) the provision of general counsel, (ii) negotiating on behalf of the audited entity, and (iii) acting in an advocacy role in the resolution of litigation.

The selection procedure for the audit company for 2020 was made together with the selection of the audit company for 2021.

The recommendation made by the Audit Committee on the selection of an audit firm to audit the financial statements for the financial year 2020 and 2021 complied with the terms and conditions in force and was made following the completion of the selection procedure organized by the Company which meets the applicable criteria.

On 7 January 2020, the Company concluded an agreement with PricewaterhouseCoopers Polska spółka z ograniczoną odpowiedzialnością Audyt sp.k. with its registered office in Warsaw to audit the Company's Financial Statements and the Group's Consolidated Financial Statements for the years ended 31 December 2020 and 31 December 2021, as well as the review of the Company's Condensed Interim and quarterly Financial Statements and the Group's Condensed Interim and quaterly Consolidated Financial Statements. In addition, the agreement includes verification of the Financial Statements and presentation of a separate report, in an agreed form, directly to the auditors of the main shareholder of the Company.

The selection of an audit firm to audit the consolidated and standalone financial statements for the years ended 31 December 2020 and 31 December 2021 of the Company and the Group was made by the Supervisory Board in the resolution of 4 December 2019, after the recommendation of the Company's Audit Committee of 6 November 2019.

Apart of the aforementioned services, in 2020 the Company did use additional attestation services from PricewaterhouseCoopers Polska spółka z ograniczoną odpowiedzialnością Audyt sp.k. in relation to inclusion of the Company's financial statements in the A. Luzon Group's prospectus, prepared in connection with the admission of bonds issued by A. Luzon Group to trading on the regulated market in Israel.

Information on the remuneration paid and payable for the financial year and previous financial year, separately for the audit of the annual financial statements, other assurance services, including a review of the financial statements, tax advisory services and other services are included in the note 17 of the Company Financial Statement for the year ended 31 December 2020.

Statement of the Management Board regarding on choosing the auditor

In accordance with 70 sec. 1 point 7 and § 71 sec. 1 point 7 of the Regulation of the Minister of Finance dated as of 29 March 2018 regarding current and periodic information published by issuers of securities and conditions for recognizing as equivalent information required by the laws of a non-member state (Journal of Laws of 2019 r, item no. 757), based on the statement of the Supervisory Board dated 9 March 2021, the Management Board hereby declares that the choice of a PricewaterhouseCoopers Polska spółka z ograniczoną odpowiedzialnością Audyt sp.k. (company auditing annual standalone and consolidated financial statement) was executed by the Company in accordance with the provisions of law relating to selection and procedure of choosing the audit company, including in particular:

a) within the Company the selection of the auditor company was executed to perform the audit of the annual standalone and consolidated financial report for the financial year ended 31 December 2020 in accordance with the generally applicable provisions of law. The Company has its internal procedure for selection of the audit company and the selection of the auditor company was executed in accordance with this procedure. The choice of the auditor auditing the financial statements was made by the Supervisory Board by adoption of a resolution dated as of 4 December 2019 acting pursuant to the recommendation of the Audit Committee as of 6 November 2019;
b) the audit company, as well as members of the team that performed the audit of the annual standalone and consolidated financial statements for the financial year ended 31 December 2020, met the criteria for execution of an unbiased and independent audit report of the annual financial statements in accordance with the applicable provisions of law, professional standards as well as the rules of the professional ethics;
c) the Company abides the applicable provisions of law relating to the rotation of the audit firm and the key statutory auditor and mandatory grace periods;
d) within the Company there is the policy of selecting an auditing company and a policy on rendering by the audit company, an entity related to the auditing company or a member of its network of additional non-audit services, including conditionally exempted services rendered by the audit company, which policies and procedures have been adopted in a form of the resolution of the Audit Committee dated as of 10 December 2018.

Statement of the Management Board regarding financial statements and the Management Board Report

The Management Board of Ronson Development SE hereby declares that:

a) to the best of its knowledge, the annual financial statements of the Company and Consolidated Financial Statements of the Group and comparative data have been prepared in accordance with the applicable accounting principles and that they reflect in a true, reliable and clear manner financial position of the Company, the Group and its financial result,
b) the Management Board Report contains a true picture of the Company's and Group's development and achievements, as well as a description of the main threats and risks;

This Management Board Report of activities of the Company and the Group in 2020 was prepared and approved by the Management Board of the Company on 10 March 2021.

The Management Board

___________________ ___________________ Boaz Haim Yaron Shama

President of the Management Board Finance Vicepresident of the Management Board, CFO

Andrzej Gutowski Alon Haver Vicepresident of the Management Board, Member of the Management Board Sales and Marketing Director

___________________ ___________________

Ronson Development SE

Consolidated Financial Statements for the year ended 31 December 2020

Management Board

Supervisory Board

Amos Luzon, Chairman Ofer Kadouri Alon Kadouri Przemysław Kowalczyk Piotr Palenik Shmuel Rofe

Registered office

Al. Komisji Edukacji Narodowej 57 02-797 Warsaw Poland

Auditors

PricewaterhouseCoopers Polska spółka z ograniczoną odpowiedzialnością Audyt sp. k. ul. Polna 11 00-633 Warsaw Poland

Consolidated Financial Statements for the year ended 31 December 2020 Consolidated Statement of Comprehensive Income for the year ended 31 December 2020 1 Consolidated Statement of Financial Position as at 31 December 2020 2 Consolidated Statement of Changes in Equity for the year ended 31 December 2020 3 Consolidated Statement of Cash Flows for the year ended 31 December 2020 4 Notes to the Consolidated Financial Statements 5

Consolidated Statement of Comprehensive Income

For the year ended 31 December		2020	2019
In thousands of Polish Zlotys (PLN)	Note

Revenue from residential projects	6	400,257	223,464
Revenue from the sale of land		-	6,500
Revenue from sale of services	6	976	2,654
Revenue		401,233	232,618
Cost of sales residential projects	7	(315,023)	(181,984)
Cost of sales of land		-	(6,312)
Cost of sales		(315,023)	(188,296)
Gross profit		86,210	44,322
Changes in the value of investment property	16	(307)	802
Selling and marketing expenses	8	(5,928)	(5,803)
Administrative expenses	9	(22,542)	(20,181)
Share of profit/(loss) from joint ventures	17	(803)	9,082
Other expenses	11	(3,401)	(3,763)
Other income	12	1,923	1,734
Result from operating activities		55,152	26,193
Finance income	13	558	750
Finance expense	13	(5,168)	(4,862)
Net finance income		(4,610)	(4,112)
Profit/(loss) before taxation		50,542	22,081
Income tax benefit	14	(10,399)	(4,667)
Profit/(loss) for the year		40,143	17,414

Other comprehensive income		-	-
Total comprehensive income for the year, net of tax		40,143	17,414
Total profit/(loss) for the year attributable to:
equity holders of the parent	24	40,143	17,414
non-controlling interests		-	-
Total profit/(loss) for the year		40,143	17,414

Total comprehensive income attributable to:
equity holders of the parent		40,143	17,414
Non-controlling interests		-	-
Total comprehensive income for the year, net of tax		40,143	17,414
Weighted average number of ordinary shares (basic and dilluted)	24	163,103,163	163,689,616
In Polish Zlotys (PLN)
Net earnings per share attributable to the equity holders of the parent (basic)	24	0.246	0.106
Net earnings per share attributable to the equity holders of the parent (dilluted)	24	0.246	0.106

The notes on pages 5 to 69 are an integral part of these consolidated financial statements.

Consolidated Statement of Financial Position

As at 31 December		2020	2019
In thousands of Polish Zlotys (PLN)	Note
Assets
Non-current assets
Property and equipment	15	8,797	8,552
Investment property	16	8,956	10,098
Intangible fixed assets		39	-
Investment in joint ventures	17	8,902	10,617
Deferred tax assets	18	9,037	6,935
Land designated for development	19	45,486	44,321
Total non-current assets		81,217	80,523

Current assets
Inventory	19	664,761	718,060
Trade and other receivables and prepayments Advances for Land	20	37,374 3,700	24,745 -
Income tax receivable		338	130
Loans granted to joint ventures	17	1,039	1,977
Other current financial assets	21	14,239	22,157
Cash and cash equivalents	22	135,099	95,591

Total current assets		856,550	862,660
Total assets		937,767	943,183
Equity and liabilities
Equity
Shareholders' equity	23
Share capital		12,503	12,503
Share premium		157,905	150,278
Treasury shares		(1,613)	(580)
Retained earnings		211,022	188,293
Total equity		379,817	350,494
Liabilities
Non-current liabilities
Floating rate bond loans		175,382	151,078
Deferred tax liability	25, 26 18	9,562	9,618
Lease liabilities related to perpetual usufruct of investment
property	28	590	552
Total non-current liabilities		185,534	161,248
Current liabilities
Trade and other payables and accrued expenses	29	58,347	97,715
Floating rate bond loans	25,26	52,625	34,924
Other payables - accrued interests on bonds		2,065	1,967
	25,26
Secured bank loans	25,26	- 8,482	12,875
Interest bearing deferred trade payables			2,338
Advances received	30	224,267	254,970
Income tax payable		11,734	1,087
Provisions	31	994	2,016
Lease liabilities related to perpetual usufruct of land	28	13,902	23,549
Total current liabilities		372,416	431,441
Total liabilities		557,950	592,689
Total equity and liabilities		937,767	943,183

The notes on pages 5 to 69 are an integral part of these consolidated financial statements.

Consolidated Statement of Changes in Equity

For the years ended 31 December 2020 and 31 December 2019:

In thousands of Polish Zlotys (PLN)	Share capital	Share premium	Treasury shares	Retained earnings	Total equity
Balance at 1 January 2020	12,503	150,278	(580)	188,293	350,494
Comprehensive income:
Profit for the year ended 31 December 2020	-	-	-	40,143	40,143
Other comprehensive income	-	-	-	-	-
Total comprehensive income/(expense)	-	-	-	40,143	40,143
Own shares acquired	-	-	(1,033)	-	(1,033)
Dividend	-	-	-	(9,787)	(9,787)
Allocation of 2019 result - share premium increase	-	7,627	-	(7,627)	-
Balance at 31 December 2020	12,503	157,905	(1,613)	211,022	379,817

	Share		Treasury
In thousands of Polish Zlotys (PLN)	capital	Share premium	shares	Retained earnings(1) Total equity
Balance at 1 January 2019	12,503	150,278	-	180,699	343,480
Comprehensive income: Profit for the year ended 31 December 2019	-	-	-	17,414	17,414
Other comprehensive income	-	-	-	-	-
Total comprehensive income	-	-	-	17,414	17,414
Dividend paid	-	-	-	(9,820)	(9,820)
Repurchase of own shares	-	-	(580)	-	(580)
Balance at 31 December 2019	12,503	150,278	(580)	188,293	350,494

(1) In order to fund the purchase of own shares under the buyback program, a capital reserve (within retained earnings) is established for an amount of PLN 2,000 thousand. The capital reserve is subsequently reduced by the amount of the consideration paid for the shares bought back. The capital reserve as at 31 December 2019 amounted to PLN 1,420 thousand and is presented as a part of the retained earnings. As at 25 January 2020 the capital reserve was liquidated.

The notes on pages 5 to 69 are an integral part of these consolidated financial statements.

Consolidated Financial Statements for the year ended 31 December 2020

Consolidated Statement of Cash Flows

For the year ended 31 December		2020	2019
In thousands of Polish Zlotys (PLN)	Note
Cash flows from/(used in) operating activities
Profit/(loss) for the period		40,143	17,414
Adjustments to reconcile profit for the period to net cash used in operating activities
Depreciation		1,029	983
Decrease/(increase) in the value of investment property		(163)	(802)
Write-down/(reversal) of inventory		1,326	(594)
Finance expense		5,168	4,862
Finance income		(558)	(750)
Loss/(profit) on sale of property and equipment		60	(115)
Share of loss /(profit) from joint ventures		803	(9,082)
Income tax expense/(benefit)	14	10,399	4,667
Decrease/(increase) in inventory and land designated for
development	38	46,262	(7,496)
Acqustion of Nova Królikarnia project	5	(46,914)	(46,069)
Decrease/(increase) in advances for land		(3,700)	-
Decrease/(increase) in trade and other receivables and prepayments	38	(11,669)	(8,147)
Decrease/(increase) in other current financial assets		7,918	(7,838)
Increase/(decrease) in trade and other payables and accrued expenses	38	17,580	19,566
Increase/(decrease) in provisions		(1,022)	(549)
Increase/(decrease) in advances received		(30,703)	102,518
Interest paid		(8,331)	(12,269)
Interest received		473	582
Income tax received/(paid)	14	(2,118)	(4,176)
Net cash from/(used in) operating activities		25,983	52,705
Cash flows from/(used in) investing activities
Acqustion of new entity		(1,000)	-
Acquisition of property and equipment		(70)	(1,549)
Proceeds from loans garnet to JV		3,127	3,450
Loans granted to joint ventures		(1,126)	(16,190)
Dividend received from joint ventures		-	12,836
Proceeds from sale of property and equipment		146	115
Net cash from/(used in) investing activities		1,077	(1,338)
Cash flows (used in)/from financing activities
Proceeds from bank loans, net of bank charges	27	26,029	71,200
Repayment of bank loans	27	(39,217)	(96,754)
Proceeds from bond loans, net of issue costs and of bonds replacement	26	96,223	31,560
Repayment of bond loans	26	(55,000)	(50,000)
Repayment of loans from other		(3,500)	-
Payment of dividend	23	(9,787)	(9,820)
Payment of perpetual usufruct rights	28	(1,268)	(2,210)
Buy-back of shares	23	(1,033)	(580)
Net cash from/(used in) financing activities		12,447	(56,604)

Net change in cash and cash equivalents		39,508	(5,237)
Cash and cash equivalents at beginning of period		95,591	100,828
Cash and cash equivalents at end of period*		135,099	95,591

* Including restricted cash that amounted to PLN 17,606 thousand and PLN 3,829 thousand as 31 December 2020 and as 31 December 2019, respectively. The notes on pages 5 to 69 are an integral part of these consolidated financial statements.

1. Background and business of the Company

(a) Ronson Development SE ('the Company'), formerly named Ronson Europe N.V., is an European Company with its statutory seat in Warsaw, Poland. The registered office is located at al. Komisji Edukacji Narodowej 57. The Company was incorporated in the Netherlands on 18 June 2007 as Ronson Europe N.V. with statutory seat in Rotterdam. During 2018, the Company changed its name and was transformed into an European Company (SE) and, effectively as of 31 October 2018, transferred its registered office of the Company from the Netherlands to Poland. Address of the Company's registered office is the same as domicile of the Company.

The Company (together with its subsidiaries, 'the Group') is active in the development and sale of residential units, primarily apartments, in multi-family residential real-estate projects to individual customers in Poland. The Company prepared Consolidated Financial Statements for the year ended 31 December 2020, which was authorized for issue on 10 March 2021.

The shares of the Company are traded on the Warsaw Stock Exchange since 5 November 2007. According to publicly available information, as at 31 December 2020, 66.06% of the outstanding shares are controlled indirectly by Amos Luzon Development and Energy Group Ltd. ('A. Luzon Group') and 0.91% of the shares are held by the Company. The remaining 33.03% of the outstanding shares are held by other investors including Nationale Nederlanden Powszechne Towarzystwo Emerytalne S.A. and Metlife Powszechne Towarzystwo Emerytalne S.A.. The number of shares held by the investors is equal to the number of votes, as there are no privileged shares issued by the Company. It shall be noted that as at 31 December 2020, the Company held 1,489,235 own shares (0.91%) and, in accordance with art. 364 § 2 of the Code of Commercial Companies, it does not exercise voting rights from own shares.

As at 31 December 2020, the Groups' market capitalization was below the value of net assets. Although, the Company strongly believes that this is a temporary situation due to many different factors, including low liquidity of the Company's shares listed on WSE, Management took appropriate steps to review the Company's assets to determine if there is any additional write-down required and found no basis for it. Management verified that the forecast margin potential in respect of the inventory is positive. Therefore, no indicators for potential additional impairment have been identified.

(b) The details of the entities whose financial statements have been included in these Consolidated Financial Statements, the year of incorporation and the percentage of ownership and voting rights directly or indirectly held by the Company as at 31 December 2020 and as at 31 December 2019, are presented below and on the following page.

The projects managed by the entities are in various stages of development ranging from being in the process of acquiring land for development to projects which are completed or near completion.

1. Background and business of the Company

		Year of	Share of ownership & voting
	Entity name	incorporation	rights at the end of
	Share of ownership & voting rights at the end of		31 December 2020	31 December 2019
a.	held directly by the Company:
1	Ronson Development Management Sp. z o.o.	1999	100%	100%
2	Ronson Development 2000 Sp. z o.o. (2)	2000	-	100%
3	Ronson Development Warsaw Sp. z o.o.	2000	100%	100%
4	Ronson Development Investment Sp. z o.o.	2011	100%	100%
5	Ronson Development Metropol Sp. z o.o.	2011	100%	100%
6	Ronson Development Properties Sp. z o.o. (2)	2002	-	100%
7	Apartments Projekt Sp. z o.o. (2)	2003	-	100%
8	Ronson Development Enterprise Sp. z o.o. (2)	2004	-	100%
9	Ronson Development Company Sp. z o.o. (2)	2005	-	100%
10	Ronson Development Creations Sp. z o.o.	2005	100%	100%
11	Ronson Development Buildings Sp. z o.o. (2)	2005	-	100%
12	Ronson Development Structure Sp. z o.o. (2)	2005	-	100%
13	Ronson Development Poznań Sp. z o.o. (2)	2005	-	100%
14	E.E.E. Development Sp. z o.o. (2)	2005	-	100%
15	Ronson Development Innovation Sp. z o.o. (2)	2006	-	100%
16	Ronson Development Wrocław Sp. z o.o. (2)	2006	-	100%
17	Ronson Development Capital Sp. z o.o. (2)	2006	-	100%
18	Ronson Development Sp. z o.o.	2006	100%	100%
19	Ronson Development Construction Sp. z o.o.	2006	100%	100%
20	City 2015 Sp. z o.o.	2006	100%	100%
21	Ronson Development Village Sp. z o.o. (1)	2007	100%	100%
22	Ronson Development Conception Sp. z o.o. (2)	2007	-	100%
23	Ronson Development Architecture Sp. z o.o. (2)	2007	-	100%
24	Ronson Development Skyline Sp. z o.o.	2007	100%	100%
25	Continental Development Sp. z o.o. (2)	2007	-	100%
26	Ronson Development Universal Sp. z o.o. (1)	2007	100%	100%
27	Ronson Development Retreat Sp. z o.o. (2)	2007	-	100%
28	Ronson Development South Sp. z o.o.	2007	100%	100%
29	Ronson Development Partner 5 Sp. z o.o.	2007	100%	100%
30	Ronson Development Partner 4 Sp. z o.o.	2007	100%	100%
31	Ronson Development North Sp. z o.o.	2007	100%	100%
32	Ronson Development Providence Sp. z o.o.	2007	100%	100%
33	Ronson Development Finco Sp. z o.o.	2009	100%	100%
34	Ronson Development Partner 2 Sp. z o.o.	2009	100%	100%
35	Ronson Development Skyline 2010 Sp. z o.o. w likwidacji (2)	2010	-	100%
36	Ronson Development Partner 3 Sp. z o.o.	2012	100%	100%
	37 ACG 23 Sp. z o.o. / Ronson Development Studzienna Sp. z o.o. (9)	2019	100%	-

1. Background and business of the Company

Entity name		Year of incorporation	Share of ownership & voting rights at the end of
			31 December 2020	31 December 2019
	Share of ownership & voting rights at the end of
b. 38	held indirectly by the Company : Nova Królikarnia B.V. (Company with the registered office in the Netherlands)	2016	100%	100%
39	AGRT Sp. z o.o.	2007	100%	100%
40	Ronson Development Partner 4 Sp. z o.o. – Panoramika Sp.k.	2007	100%	100%
41	Ronson Development Sp z o.o. - Estate Sp.k.	2007	100%	100%
42	Ronson Development Sp. z o.o. - Home Sp.k.	2007	100%	100%
43	Ronson Development Sp z o.o. - Horizon Sp.k.	2007	100%	100%
44	Ronson Development Partner 3 Sp. z o.o. - Sakura Sp.k.	2007	100%	100%
45	Destiny Sp. z o.o. (6)	2007	-	100%
46	Ronson Development Millenium Sp. z o.o. (6)	2007	-	100%
47	Ronson Development Partner 3 sp. z o.o. – Viva Jagodno sp. k.	2009	100%	100%
48	Ronson Development Sp. z o.o. - Apartments 2011 Sp.k.	2009	100%	100%
49	Ronson Development Sp. z o.o. - Idea Sp.k.	2009	100%	100%
50	Ronson Development Partner 2 Sp. z o.o. – Destiny 2011 Sp.k.	2009	100%	100%
51	Ronson Development Partner 2 Sp. z o.o. - Enterprise 2011 Sp.k.	2009	100%	100%
52	Ronson Development Partner 2 Sp. z o.o. - Retreat 2011 Sp.k.	2009	100%	100%
53	Ronson Development Partner 5 Sp. z o.o - Vitalia Sp.k.	2009	100%	100%
54	Ronson Development Sp. z o.o. - 2011 Sp.k.	2009	100%	100%
55	Ronson Development Sp. z o.o. - Gemini 2 Sp.k.	2009	100%	100%
56	Ronson Development Sp. z o.o. - Verdis Sp.k.	2009	100%	100%
57	Ronson Espresso Sp. z o.o.	2006	100%	100%
58	Ronson Development Apartments 2010 Sp. z o.o. (6)	2010	-	100%
59	RD 2010 Sp. z o.o. (6)	2010	-	100%
60	Retreat Sp. z o.o.	2010	100%	100%
61	Enterprise 2010 Sp. z o.o.(6)	2010	-	100%
62	Wrocław 2010 Sp. z o.o. (6)	2010	-	100%
63	E.E.E. Development 2010 Sp. z o.o. (6)	2010	-	100%
64	Ronson Development Nautica 2010 Sp. z o.o.	2010	100%	100%
65	Gemini 2010 Sp. z o.o. (6)	2010	-	100%
66	Ronson Development Sp. z o.o. - Naturalis Sp.k.	2011	100%	100%
67	Ronson Development Sp. z o.o. - Impressio Sp.k.	2011	100%	100%
68	Ronson Development Partner 3 Sp. z o.o.- Nowe Warzymice Sp. k	2011	100%	100%
69	Ronson Development Sp. z o.o. - Providence 2011 Sp.k.	2011	100%	100%
70	Ronson Development Partner 2 Sp. z o.o. - Capital 2011 Sp. k.	2011	100%	100%
71	Ronson Development Partner 5 Sp. z o.o. - Miasto Marina Sp.k.	2011	100%	100%
72	Ronson Development Partner 5 Sp. z o.o. - City 1 Sp.k.	2012	100%	100%
73	Ronson Development Partner 2 Sp. z o.o. - Miasto Moje Sp. k.	2012	100%	100%
74	Ronson Development sp. z o.o. – Ursus Centralny Sp. k.	2012	100%	100%
75	Ronson Development Sp. z o.o. - City 4 Sp.k.	2016	100%	100%
76	Ronson Development Partner 2 Sp. z o.o. – Grunwald Sp.k.	2016	100%	100%
	Ronson Development Sp. z o.o. Grunwaldzka" Sp.k. (before named as Ronson Development Sp. z o.o. - Projekt 2 Sp.k.)	2016	100%	100%
77
78	Ronson Development Sp. z o.o. - Projekt 3 Sp.k.	2016	100%	100%
79	Ronson Development Sp. z o.o. - Projekt 4 Sp.k.	2017	100%	100%
80	Ronson Development Sp. z o.o. - Projekt 5 Sp.k.	2017	100%	100%
81	Ronson Development Sp. z o.o. - Projekt 6 Sp.k.	2017	100%	100%
82	Ronson Development Sp. z o.o. - Projekt 7 Sp.k.	2017	100%	100%
83	Ronson Development Sp. z o.o. - Projekt 8 Sp.k.	2017	100%	100%
84	Ursus 2017 Sp. z o.o. (4)	2017	-	100%
85	Projekt City Sp. z o.o. (5)	2017	-	100%
86	Bolzanus Limited (Company with the registered office in Cyprus)	2013	100%	100%
87	Park Development Properties Sp. z o.o. - Town Sp.k.	2007	100%	100%
88	Tras Sp. z o.o. (7)	2015	-	100%
89	Pod Skocznią Project Sp. z o.o. (7)	2015	-	100%
90	District 20 Sp. z o.o. (7)	2015	-	100%
91	Arkadia Development Sp. z o.o. (7)	2015	-	100%
92	Królikarnia 2015 Sp. z o.o. (7)	2015	-	100%
93	Tras 2016 Sp. z o.o.	2011	100%	100%
94	Pod Skocznia Projekt 2016 Sp. z o.o. (3)	2011	-	100%

1. Background and business of the Company

		Year of	Share of ownership & voting
	Entity name	incorporation	rights at the end of
			31 December	31 December
	Share of ownership & voting rights at the end of		2020	2019
b.	held indirectly by the Company :
95	District 20 – 2016 Sp. z o.o. (3)	2011	-	100%
96	Arkadia Development 2016 Sp. z o.o. (3)	2011	-	100%
97	Królikarnia 2016 Sp. z o.o. (3)	2011	-	100%
98	Kroli Development Sp. z o.o. (3)	2012	-	100%
99	Park Development Properties Sp. z o.o.	2011	100%	100%
100	Jasminova 2016 Sp. z o.o.	2016	100%	100%
101	Town 2016 Sp. z o.o.	2016	100%	100%
102	E.E.E. Development 2016 Sp. z o.o. (7)	2016	-	100%
103	Enterprise 2016 Sp. z o.o.	2016	100%	100%
104	Wrocław 2016 Sp. z o.o.	2016	100%	100%
105	Darwen Sp. z o.o.	2017	100%	100%
106	Truro Sp. z o.o.	2017	100%	100%
107	Tregaron Sp. z o.o.	2017	100%	100%
108	Totton Sp. z o.o.	2017	100%	100%
109	Tring Sp. z o.o.	2017	100%	100%
110	Thame Sp. z o.o.	2017	100%	100%
111	Troon Sp. z o.o.	2017	100%	100%
112	Tywyn Sp. z o.o. (8)	2018	100%	-
c.	other entities not subject to consolidation:
113	Coralchief sp. z o.o.	2018	50%	50%
114	Coralchief sp. z o.o. - Projekt 1 sp. k.	2016	n/a	n/a
115	Ronson IS sp. z o.o.	2009	50%	50%
116	Ronson IS sp. z o.o. sp. k.	2012	n/a	n/a

(8) Acquired during execution of third call option agreement on 9 April 2020.

(9) Entity acquired on 18 December 2020. Change of the name into Ronson Development Studzienna Sp. z o.o. was registered in KRS on 8 March 2021.

2. Basis of preparation and measurement

(a) Basis of preparation and statement of compliance

These Consolidated Financial Statements have been prepared in accordance with International Financial Reporting Standards as adopted by the EU ('IFRS'). In light of the nature of the Group's activities, the IFRSs applied by the Group are not different from the IFRSs endorsed by the European Union, which are effective for the financial year ended 31 December 2020. The Group is aware about new standards and interpretations that have been issued but have not yet become effective. Information about standards and interpretations were presented below.

The Consolidated Financial Statements were authorized by the Boards of Directors of Ronson Development SE on 10 March 2021. These Consolidated Financial statements have been prepared on the assumption that the Group is a going concern, meaning it will continue in operation for the foreseeable future and will be able to realize assets and discharge liabilities in the normal course of its operations. The Company prepared Consolidated Financial Statements for the year ended 31 December 2020 in both English and Polish languages, while the Polish version is binding.

New and amended standards adopted by the Group

The Group has applied the following standards and amendments for the first time for their annual reporting period commencing 1 January 2020:

Definition of Material amendments to IAS 1 and IAS 8
Definition of a Business amendments to IFRS 3
Interest Rate Benchmark Reform amendments to IFRS 9, IAS 39 and IFRS 7
Revised Conceptual Framework for Financial Reporting

The Group also elected to adopt the following amendments early:

• Annual Improvements to IFRS Standards 2018-2020 Cycle.

The above standards, amendments and improvements do not have any material impact on the Consolidated Financial Statements of the Group and should not have any material impact on current and future periods.

New standards and interpretations not yet adopted

Certain new accounting standards and interpretations have been published that are not mandatory for 31 December 2020 reporting periods and have not been early adopted by the Group. These standards are not expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.

(b) Basis of measurement

The Consolidated Financial Statements have been prepared on the historical cost basis, except for investment property which was measured at fair value. The methods used to measure fair values for the purpose of preparing the Consolidated Financial Statements are discussed further in Note 3(q), Note 16 and Note 32.

(c) Functional and presentation currency

Items included in the financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (the 'functional currency') being Polish Zloty ('PLN'). Polish Zloty is the presentation currency of the Consolidated Financial Statements of the Group, and is also the functional currency of the parent company.

The Consolidated Financial Statements are presented in thousands of Polish Zloty, except when otherwise indicated.

2. Basis of preparation and measurement

(d) Use of estimates and judgments

The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income and expenses during the reported period. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing-basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised. In particular, information about significant areas of estimation, uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements, are described in the following notes:

Note 16 Investment property
Note 18 Deferred tax asset recognition
Note 19 Inventory and residential land bank
Note 31 Provisions
Note 34 Commitments and contingencies

The Company conducts residential units projects and developing activities in dedicated SPVs. The Company reflects in its Consolidated Financial Statements the activities and transactions related to such projects based on the substance rather than legal form. Such transactions are accounted for in accordance with IAS 2 and IFRS 15, whereby inventory is sold and revenue should be recognized after the criteria are met.

Recognition of revenue

The revenue from the sale of real estate (residential units, commercial units, etc.) is recognised at the moment when control over the real estate is transferred to the customer of said real estate together with the transfer of significant risks and rewards typical to the ownership rights. According to the Company's judgement this occurs at the moment of handover of the real estate to the customer, which is based on a handover document signed by both parties and subject to the condition that the customer has paid 100% of the sale price for the real estate.

Estimation of net realizable value for inventory and residential land bank

Inventory and residential land bank is stated at the lower of cost and net realizable value (NRV). NRV for completed inventory property (Finished goods) is assessed with reference to market conditions and prices existing at the reporting date and is determined by the Group having taken suitable external advice and in the light of recent market transactions. NRV in respect of work in progress and residential land bank is assessed with reference to market prices at the reporting date for similar completed property, less estimated costs to complete construction and less an estimate of the time value of money to the date of completion.

Valuation of investment property

The fair value of the investment property is determined by independent real estate valuation experts based on the discounted cash flow approach. The determination of the fair value of the investment property requires the use of estimates such as future cash flows from assets (such as lettings, tenants' profiles, future revenue streams, capital values of fixtures and fittings, any environmental matters and the overall repair and condition of the property) and discount rates applicable to those assets.

Valuation of lease liability

According to the IFRS 16 standard that was implemented by the Company the lease payments shall be discounted using the rate implicit in the lease contract, or if this rate cannot be readily determined, the Company's incremental borrowing rate. The Company decided to use incremental borrowing rate ('IBR') that was determined based on reference rate adjusted by margin. The IBR rate was built based on reference rate (30 years state bonds quotation) increased by margin which represents higher credit risk of the Company due to worse ratios, risk related to unusual length of potential financing and no possibility to establish security for such long-term financing.

2. Basis of preparation and measurement

(d) Use of estimates and judgments

Deferred tax asset recognition

Deferred tax assets are recognized for unused tax losses and deductible temporary differences to the extent that it is probable that taxable profit will be available against which the losses and deductible temporary differences can be utilized. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable profits together with future tax strategies.

Uncertain tax treatment

Regulations regarding VAT, corporate profits tax and social security contributions are subject to frequent changes. These changes result in there being little point of reference and few established precedents that may be followed. The binding regulations also contain uncertainties, resulting in differences in opinion regarding the legal interpretation of tax regulations both between government bodies, and between government bodies and companies.

Tax and other settlements may be subject to inspection by administrative bodies authorized to impose high penalties and fines, and any additional taxation liabilities calculated as a result must be paid together with high interest. The above circumstances mean that tax exposure is greater in Poland than in countries that have a more established taxation system. Accordingly, the amounts shown in the financial statements may change at a later date as a result of the amend to the final decision of the tax authorities.

The GAAR clause should be applied to the transactions performed after clause effective date and to the transactions which were performed prior to GAAR clause effective date, but for which after the clause effective date tax gains were realised or continue to be realised. The implementation of the above provisions will enable Polish tax authority challenge such arrangements realised by tax remitters as restructuring or reorganization.

The Group accounts for current and deferred tax assets and liabilities based on the requirements of IAS 12 Income taxes, based on taxable profit (tax loss), taxable base, carry-forward of unused tax losses and carryforward of unused tax credits, and tax rates, while considering the assessment of uncertainty related to tax settlements. If uncertainty exists as to whether and to what extent tax authority will accept individual tax treatments of made transactions, the Group discloses these settlements while accounting for uncertainty assessment. Further details on taxes are disclosed in Note 14 and Note 18.

2. Basis of preparation and measurement

(e) Basis of consolidation

These Consolidated Financial Statements comprise the financial statements of the Company and its subsidiaries as at 31 December 2020. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if, and only if, the Group has:

power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee);
exposure, or rights, to variable returns from its involvement with the investee;
the ability to use its power over the investee to affect its returns.

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group's accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.

If the Group loses control over a subsidiary, it derecognizes the related assets (including goodwill), liabilities, non-controlling interest and other components of equity while any resultant gain or loss is recognized in profit or loss. Any investment retained is recognized at fair value.

The financial statements of subsidiaries are prepared for the same period as the financial statement of parent. The Group entities keep books of accounts in accordance with accounting policies specified in the Accounting Act dated 29 September 1994 ('the Accounting Act') with subsequent amendments and the regulations issued based on that Act (all together: 'Polish Accounting Standards'). These consolidated financial statements include a number of adjustments not included in the books of account of the Group entities, which were made in order to bring the financial statements of those entities in conformity with IFRSs as adopted by EU.

Until 31 of October 2018, Ronson Development SE kept its books of accounts in accordance with accounting policies required by the Dutch law. On 31 October 2018, the Company transferred its registered office from the Netherlands to Poland. On 20 December 2018, the Extraordinary General Meeting of the Company adopted a resolution regarding the preparation of the financial statements of Ronson Development SE in accordance with IFRS, starting with the financial statements for the financial year 2018.

Where property is acquired, via corporate acquisitions or otherwise, the management considers the substance of the assets and activities of the acquired entity in determining whether the acquisition represents the acquisition of a business or assets. Where such acquisitions are not judged to be an acquisition of a business, they are not treated as business combinations. Rather, the cost to acquire the corporate entity is allocated between the identifiable assets and liabilities of the entity based on their relative fair values at the acquisition date. Accordingly, no goodwill or additional deferred taxation arises. Otherwise, acquisitions are accounted for as business combinations.

3. Significant accounting policies

The accounting policies set out below have been applied consistently in all periods presented in these Consolidated Financial Statements.

(a) Foreign currency

Transactions in foreign currencies are translated to the respective functional currencies of the Group entities at exchange rates prevailing at the dates of the transactions using:

the purchase or selling rate of the bank whose services are used by the Group in case of foreign currency sales or purchase transactions, as well in the case as of the debt or liability payment transactions;
the average rate specified for a given currency by the National Bank of Poland as on the transaction date, unless a customs declaration or other binding document indicates another rate – in case of other transactions.

Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency spot rate of exchange ruling at the reporting date. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions.

(b) Revenue from contracts with customers

Revenues from the sale of residential units are recognized when (or as) the Group has satisfied a performance obligation by transferring a promised good to a customer. A residential unit is transferred when (or as) the customer obtains control of the residential unit (i.e. upon signing of the protocol of technical acceptance and transfer of the key to the unit and payment of the entire amount resulting from the sale agreement), after receiving valid occupancy permit for the building.

Advances received related to pre-sales of residential units, which represent deferred income, are deferred when they do not meet the criteria to be recognized as revenue. When they subsequently meet these criteria, they are recognized as revenue.

(c) Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument to another entity.

Financial assets

The classification of financial assets at initial recognition depends on the financial asset's contractual cash flow characteristics and the Group's business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient, the Group initially measures a financial asset at its fair value plus transaction costs. In the case of a financial asset not at fair value through profit or loss. Trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient are measured at the transaction price determined under IFRS 15.

In order for a financial asset to be classified and measured at amortized cost or fair value through OCI, it needs to give rise to cash flows that are 'solely payments of principal and interest (SPPI)' on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level. For purposes of subsequent measurement, financial assets are classified in four categories:

Financial assets at amortised cost (debt instruments)
Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt instruments)
Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments)
Financial assets at fair value through profit or loss

3. Significant accounting policies

(c) Financial instruments

For the Group the first category is most relevant. Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.

The Group recognizes an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).

For trade receivables and contract assets, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.

Financial liabilities

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.

All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.

Loans and borrowings is the category most relevant to the Group. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss.

3. Significant accounting policies

(c) Financial instruments

The financial instruments of the Group are classified into one of the following categories:

Category	Statement of financial position item	Measurement

	Other current financial assets	Amortized cost method
Assets measured at	Loans granted to joint ventures	Fair value through P&L
amortized costs	Cash and cash equivalent	Amortized cost method
	Trade and other receivables and prepayments	Amortized cost method
	Bond loans	Amortized cost method
Liabilities measured at amortized costs	Secured bank loans	Amortized cost method
	Trade and other payables and accrued expenses	Amortized cost method

(d) Property and equipment

(i) Recognition and measurement

Items of property and equipment are measured at cost less accumulated depreciation and accumulated impairment losses.

Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of selfconstructed assets includes the cost of materials and direct labor, any other costs directly attributable to bringing the asset to a working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located.

When significant parts of property, plant and equipment are required to be replaced in intervals, the Group recognizes such parts as individual assets with specific useful lives and depreciation, respectively. Likewise, when a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in the statement of comprehensive income as incurred.

(ii) Depreciation

Depreciation is calculated on the straight-line basis over the estimated useful life of each component of an item of property and equipment.

The estimated useful life of property and equipment, depending on the class of asset, ranges from 2 to 40 years. Leased assets are depreciated over the shorter of the lease term and their useful lives. Land is not depreciated.

When parts of an item of property and equipment have different useful lives, they are accounted for as separate items (major components) of property and equipment.

Depreciation methods, useful lives and residual values are reassessed at the reporting date, and adjusted prospectively since the beginning of the following year, if appropriate.

(e) Leases

The Group recognizes assets and liabilities resulting from leases with a period exceeding 12 months, unless the underlying asset is of low value. The only material lease agreements with a period exceeding 12 months into which the Group has entered, are the rights of perpetual usufruct of real estate properties.

3. Significant accounting policies
(e) Leases

The method of valuation and presentation of lease in the Group's financial statements

The Group recognizes a lease liability, measured at the present value of the remaining lease payments, discounted using the lessee's incremental borrowing rate at the date of initial application. The Group recognizes the respective right-of-use asset at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments recognized immediately before the date of initial application. The Group has decided to present right-of-use assets under the same item in the Consolidated Statement of Financial Position, under which the relevant underlying assets would be presented if they were owned by the Group. The lease liabilities are presented separately from other liabilities in long term liabilities with respect to lease of investment properties and short term liabilities with respect to lease of inventory.

The right of perpetual usufruct of land related to residential projects:

Assets - was recognized in the Consolidated Statement of Financial Position under "Inventory".

Liabilities - was presented in the Consolidated Statement of Financial Position as a short term under "Lease liabilities related to perpetual usufruct of land".

Costs - the Group depreciates the right of use asset on straight line basis over the lease period. On the other hand the Group recognizes finance expense to reflect interest expense on lease liability. Those costs are capitalized to Inventory as long as development project qualifies for capitalization.

Derecognition – at the moment occupancy permit is issued the Group becomes the owner of the land (based on The Act of July 20, 2018 on transformation of the right of perpetual usufruct of land built for housing purposes into the ownership right of these lands). Since then the Group is no longer liable for perpetual usufruct fees but pays conversion fees. At the moment occupancy permit is issued and revenue from the sale of residential units is recognized (when the performance obligations are satisfied and when the customer obtains control of the good, i.e. upon signing of the protocol of technical acceptance and the transfer of the key to the buyer of the residential unit and total payment obtained) the liability for conversion fee and related asset are reclassified to other payables and other receivables and are presented under "Trade and other payables and accrued expenses" and "Trade and other receivables and prepayments" respectively. The Group is legally released from the obligation to pay conversion fees only upon signing the final notary deed for transferring the ownership of unit together with share in the land to the client. Carrying amounts of receivables and payables are derecognized from Consolidated Statement of Financial Position once final notary deeds are signed with clients.

Despite the fact that based on the Group's core business the operating cycle of inventory is on average 5 years i.e. plots of land are purchased for the purpose of the development of residential projects and transferring the ownership of the units together with share in the land to the client. Under IFRS 16 the Group is not allowed to consider the period for which the Group expects to be the usufructuary despite the fact that the period is quite precisely known. Therefore once lease liabilities are recognized, the Group is required to discount all future payments resulting from the right of perpetual usufruct for the period for which the right is granted to individual properties (it can be up to 99 years). Following the requirements of IFRS 16 the Group recognize lease liabilities of which majority will not be paid by the Group.

The right of perpetual usufruct of investment properties:

Assets - was recognized in the balance sheet under "Investment properties".

Liabilities - was presented in the balance sheet as a long term under "Lease liabilities related to perpetual usufruct of investment property".

3. Significant accounting policies

(e) Leases

Costs - the Group fair values the right of use asset at each balance sheet date and recognizes finance expense to reflect interest expense on lease liability.

(f) Investment property

Investment properties are measured initially at cost, including transaction costs. Subsequently to initial recognition, investment properties are stated at fair value, which reflects market conditions at the reporting date. Gains or losses arising from changes in the fair values of investment properties are included in the statement of comprehensive income in the period in which they arise.

Investment properties are derecognized when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognized in the statement of comprehensive income in the period of derecognition.

Transfers are made to or from investment property only when there is a change in use. For a transfer from investment property to owner occupied property, the deemed cost for subsequently accounting is the fair value at the date of change in use. If owner occupied property becomes an investment property, the Group accounts for such property in accordance with the policy stated under property, plant and equipment up to the date of change in use.

(g) Residential land bank and Inventories

The Group estimates that an operating cycle for projects/stage of a big project lasts for about 5 years. The operating cycle is divided into two phases: (i) the pre-construction preparation phase lasting about 3 years (obtaining necessary site permits, environmental decisions or construction permits, designing, etc.), and (ii) construction phase lasting also about 2 years.

When a project is within the operating cycle the project presented as short-term assets under inventory, in other cases the project presented as long-term under Residential land bank.

(i) Inventory

Inventory is measured at cost increased by capitalized costs incurred relating to the preparation of the projects for construction, in the value not higher than the net realizable value. The cost of inventory includes expenditure incurred relating to the construction of a project.

Inventory comprises residential real estate projects to individual customers.

Costs relating to the construction of a project are included in inventory of residential units as follows:

costs incurred relating to projects or a stage of a project which are not available for sale (work in progress),
costs incurred relating to units unsold associated with a project.

Project construction costs include:

a) land or leasehold rights for land,
b) construction costs paid to the general contractor building the residential project,
c) planning and design costs,
d) perpetual usufruct fees and real estate taxes incurred during the period of construction,
e) borrowing costs to the extent they are directly attributable to the development of the project,
f) professional fees attributable to the development of the project,
g) construction overheads and other directly related costs.
h) lease assets, see note 3 (e).

Inventory is recognized as a cost of sales in the statement of comprehensive income when the sale of residential units is recognized.

3. Significant accounting policies

(g) Residential land bank and Inventories

(ii) Residential land bank

Long-term part of the land bank (if a commencement of construction phase is not planned within the period of 3 years from the reporting date) is presented in non-current assets of the consolidated statement of financial position, as "Residential land bank", whereas short-term part of the land bank is presented in current assets of the consolidated statement of financial position, in inventory balance. Residential land bank is measured at cost increased by capitalized costs incurred relating to the preparation of the projects for construction, in the value not higher than the net realizable value.

(h) Equity

(i) Share capital

Share capital includes the proceeds received from the issue of ordinary shares on the nominal value in exchange for cash.

(ii) Share premium

Share premium includes the excess of proceeds received from the issue of shares over the nominal value of shares. Shares issuance costs are deducted from the share premium.

(iii) Treasury shares

Own shares that are reacquired (treasury shares) are recognized at cost and deducted from equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the Group's own equity instruments.

(i) Impairment of non-financial assets

The carrying amounts of the Group's non-financial assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the asset's or a cash generating unit's recoverable amount is estimated.

An impairment loss is recognized if the carrying amount of an asset or a cash generating unit exceeds its recoverable amount.

The recoverable amount of an asset or a cash generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

Impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

(j) Provisions

A provision is recognized if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.

3. Significant accounting policies

(k) Borrowing costs

Borrowing costs directly attributable to the inventory of properties which necessarily take a substantial period of time to get ready for their intended use or sale, are capitalized as part of the cost of the respective assets.

The interest capitalized is calculated using the Group's weighted average cost of borrowings after adjusting for borrowings associated with specific developments. Where borrowings are associated with specific developments, the amount capitalized equals the gross interest incurred on those borrowings. Interest is capitalized as from the commencement of the development work until the date of completion. The capitalization of borrowing costs is suspended if there are prolonged periods when development activity is interrupted.

(l) Income tax expense

Income tax expense comprises current and deferred tax. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Current tax expense is calculated according to tax regulations in effect in the jurisdiction in which the individual companies are domiciled.

Deferred income tax is provided, using the balance sheet method, for all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, and for tax losses carried forward, except for the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit.

Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. At each reporting date deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realized. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

(m) Earnings per share

The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. The computations of the basic earnings per share are determined on the basis of the weighted average number of shares outstanding during the year. The diluted earnings per share are determined by adjusting the statement of comprehensive income and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which comprise share options granted and rights to obtain shares by employees.

(n) Cash and cash equivalents

Cash and cash equivalents in the statement of financial positions comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, except for collateralized deposits.

For the purpose of the consolidated statement cash flows, cash and cash equivalents consist of cash and short-term deposits as defined above, net of outstanding bank overdrafts.

3. Significant accounting policies

(o) Investment in joint ventures

A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.

Under the equity method, the investment in a joint venture is initially recognized at cost. The carrying amount of the investment is adjusted to recognize changes in the Group's share of net assets of the joint venture since the acquisition date. Upon making an investment in an associate or joint venture, the amount by which the costs of such investment exceed the value of the Group's share in the net fair value of identifiable assets and liabilities of this entity is recognized as goodwill and included in the carrying amount of the underlying investment.

The statement of profit or loss reflects the Group's share of the results of operations of the joint venture. Any change in Other comprehensive income of joint ventures are presented as part of the Group's Other comprehensive income. In addition, when there has been a change recognized directly in the equity of the joint venture, the Group recognizes its share of any changes, when applicable, in the statement of changes in equity. Unrealized gains and losses resulting from transactions between the Group and the joint venture are eliminated to the extent of the interest in the joint venture.

The financial statements of the joint venture are prepared for the same reporting period as the Group. When necessary, adjustments are made to bring the accounting policies in line with those of the Group.

After application of the equity method, the Group determines whether it is necessary to recognize an impairment loss on its investment in joint venture. At each reporting date, the Group determines whether there is objective evidence that the investment in the joint venture is impaired. If there is such evidence, the Group calculates the amount of impairment as the difference between the recoverable amount of the joint venture and its carrying value, and then recognizes the loss as 'Share of profit/(loss) of a joint venture' in the statement of profit or loss.

Upon loss of joint control over the joint venture, the Group measures and recognizes any retained investment at its fair value. Any difference between the carrying amount of the joint venture upon loss of joint control and the fair value of the retained investment and proceeds from disposal is recognized in profit or loss.

(p) Employee benefits

Obligations for contributions to defined contribution pension plans are recognized as an expense in the statement of comprehensive income as incurred.

The Company's subsidiaries are required, under applicable regulations, to pay, on a monthly basis, social security contributions for the employees' future pension benefits. These benefits, according to IAS 19 'Employee Benefits', are state plans and are characterized as defined contribution plans. Therefore, the Company's subsidiaries have no legal or constructive obligation to pay future pension benefits and their obligation is limited to payment of contributions as they fall due.

3. Significant accounting policies

(q) Fair Value

The Group measures investment properties at fair value at each balance sheet date. In addition, fair values of financial instruments measured at amortized cost are disclosed in Note 32 and Note 16.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

- in the principal market for the asset or liability, or
- in the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible to by the Group.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
- Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices);
- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

For assets and liabilities that are recognized in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

4. Segment reporting

The Group's operating segments are defined as separate entities developing particular residential projects, which for the reporting purposes were aggregated. The aggregation for reporting purpose is based on geographical locations (Warsaw, Poznań, Wrocław and Szczecin) and type of activity (development of apartments and development of houses). Moreover, for particular assets the reporting was based on type of income: rental income from investment property. The segment reporting method requires also the Company to present separately joint venture within Warsaw segment.

According to the Management Board's assessment, the operating segments identified have similar economic characteristics. Aggregation based on the type of development within the geographical location has been applied since primarily the location and the type of development determine the average margin that can be realized on each project and the project's risk factors. Considering the fact that the production process for apartments is different from that for houses and considering the fact that the characteristics of customers buying apartments slightly differ from those of customers interested in buying houses, aggregation by type of development within the geographical location has been used for segment reporting and disclosure purposes.

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated indirectly based on reasonable criteria. The unallocated result for the year comprises mainly head office expenses. Unallocated assets comprise mainly unallocated cash and cash equivalents and income tax assets. Unallocated liabilities comprise mainly bond loans and income tax liabilities.

Data presented in the table below are aggregated by type of development within the geographical location:

In thousands of Polish Zlotys (PLN)					As at 31 December 2020
	Warsaw				Poznań Wrocław			Szczecin		Unallocated	IFRS adjustments	Total
	Apartments Houses		Joint venture	Rental	Apartments	Houses	Apartments	Houses	Apartments	Houses
Segment assets Unallocated assets	417,474 -	224,241 -	57,143 -	9,797 -	39,602 -	- -	86,106 -	- -	72,486 -	- -	- 78,119	(47,202) -	859,648 78,119
Total assets	417,474	224,241	57,143	9,797	39,602	-	86,106	-	72,486	-	78,119	(47,202)	937,767
Segment liabilities Unallocated liabilities	187,191 -	64,058 -	48,937 -	1,552 -	5,601 -	- -	45,123 -	- -	11,047 -	- -	- 243,378	(48,937) -	314,572 243,378
Total liabilities	187,191	64,058	48,937	1,552	5,601	-	45,123	-	11,047	-	243,378	(48,937)	557,950

In thousands of Polish Zlotys (PLN) As at 31 December 2019

	Warsaw			Poznań Wrocław		Szczecin		IFRS Unallocated adjustments	Total
	Apartments	Houses	Joint venture	Rental	Apartments	Houses	Apartments	Houses	Apartments	Houses
Segment assets Unallocated	478,448	108,162	34,104	10,098	90,333	-	88,723	-	100,179	-	-	(21,510)	888,537
assets	-	-	-	-	-	-	-	-	-	-	54,646	-	54,646
Total assets	478,448	108,162	34,104	10,098	90,333	-	88,723	-	100,179	-	54,646	(21,510)	943,183
Segment liabilities Unallocated liabilities	214,686 -	38,902 -	22,090 -	- -	49,344 -	- -	50,928 -	- -	37,333 -	- -	- 201,496	(22,090) -	391,193 201,496
Total liabilities	214,686	38,902	22,090	-	49,344	-	50,928	-	37,333	-	201,496	(22,090)	592,689

4. Segment reporting

	In thousands of Polish Zlotys (PLN)					For the year ended 31 December 2020
	Warsaw				Poznań Wrocław			Szczecin		Unallocated	IFRS adjustments	Total
	Apartments	Houses	Joint venture	Rental	Apartments	Houses	Apartments	Houses	Apartments	Houses
Revenue	186,290	28,027	2,065	747	82,924	-	46,600	-	56,645	-	-	(2,065)	401,233
Segment result Unallocated	62,931	4,405	(911)	(260)	17,648	-	(395)	-	994	-	-	911	85,322
result Result from operating activities	- 62,931	- 4,405	- (911)	- (260)	- 17,648	- -	- (395)	- -	- 994	- -	(30,169) (30,169)	- 911	(30,169) 55,153
Net finance income/ (expenses)	(275)	(450)	(533)	(49)	(44)	-	(414)	-	(110)	-	(3,269)	533	(4,611)
Profit/(loss) before tax	62,655	3,955	(1,444)	(309)	17,604	-	(809)	-	884	-	(33,438)	1,444	50,542
Income tax expenses Profit for the year													(10,399) 40,143
Capital expenditure	-	-	-	-	-	-	-	-	-	-	-	-	-

In thousands of Polish Zlotys (PLN)				For the year ended 31 December 2019
	Warsaw					Poznań Wrocław Szczecin			Unallocated	IFRS adjustments	Total
	Apartments	Houses	Joint venture	Rental	Apartments	Houses	Apartments	Houses	Apartments	Houses
Revenue	161,545	15,118	87,190	767	10,392	-	41,621	-	3,175	-	-	(87,190)	232,618
Segment result Unallocated result	33,558 -	108 -	20,688 -	431 -	(3,228) -	- -	5,696 -	- -	1,347 -	- -	- (20,801)	(11,606) -	46,994 (20,801)
Result from operating activities	33,558	108	20,688	431	(3,228)	-	5,696	-	1,347	-	(20,801)	(11,606)	26,193
Net finance income/ (expenses) Profit/(loss) before tax	(105) 33,453	(22) 86	(216) 20,472	(37) 394	(28) (3,256)	- -	(30) 5,666	- -	(17) 1,330	- -	(3,873) (24,674)	216 (11,390)	(4,112) 22,081
Income tax expenses Profit/(loss) for the year													(4,667) 17,414
Capital expenditure	830	-	-	-	-	-	317	-	-	-	402	-	1,549

5. Acquisition of the Nova Królikarnia project

On 10 April 2018, the Company completed the acquisition of certain shares and loans granted to project companies owning properties constituting the Nova Królikarnia project for a price of PLN 83.8 million under a sale and purchase agreement with Global City Holdings B.V. ('GCH'). The Nova Królikarnia project is located around Jaśminowa street in Warsaw and consists of 197 units and an aggregate floor space of 19,500 m² (at the day of the transaction the project included, completed projects with 53 units and an aggregate floor space of 4,950 m² , projects under construction with 126 units and an aggregate floor space of 11,150 m² and a project in pipeline with 18 units and an aggregate floor space of 3,400 m² ). All amounts were repaid as at 31 December 2019.

In addition to the above, the Company and GCH have concluded call option agreements for a total value of PLN 78.9 million, under which the Company has been granted three call options with respect to the shares in the eight other project companies holding the remaining stages of the Nova Królikarnia project. The exercise of the three call options allows the Company to develop 161 units with an aggregate floor space of approximately 21,500 m² .

A package of customary security, such as mortgages, share pledges and statement on submission to voluntary enforcement has been established for the benefit of GCH to secure the obligations of the Company under the sale and purchase agreement and the call option agreement. Also, it has been agreed with GCH that the Company will continue to manage the Nova Królikarnia project in whole, including the stages of the project that are related to the call option agreement.

On 5 April 2019, the Company exercised the first call option under the Call Option Agreements for the total price of PLN 33.9 million as a result of which the Company (via its subsidiary) acquired shares in companies holding four substages of Nova Królikarnia project comprising 84 units with an aggregate floor space of around 9,200 m² . Moreover the Company signed the annex changing the schedule of payment of the first call option in which the price was determined to be paid in three installments: PLN 7.0 million was paid in April 2019, PLN 16.9 million was paid in October 2019 and PLN 10.0 million was paid in October 2020.

On 7 October 2019, the Company exercised the second call option under the Call Option Agreements for the total price of PLN 35.1 million as a result of which the Company (via its subsidiary) acquired shares in companies holding three substages of Nova Królikarnia project comprising 44 units with an aggregate floor space of around 9,000 m² . Moreover the Company signed the annexes changing the schedule of payment of second call option in which the price is determined to be paid in three installments: PLN 8.1 million was paid in October 2019, PLN 5.0 million was paid in February 2020 and PLN 22.0 million was paid in April 2020.

On 9 April 2020, the Company (via its subsidiary) exercised that last (third) call option under the Call Option Agreement in total amount of PLN 9.9 mio, as a result of this transaction the Company acquired shares in one substage of the Nova Królikarnia project with an aggregate floor space of 3,300 m² . All price for realization of third call option in amount of PLN 9.9 mio was paid in April 2020.

All payments concerning realization of all three call options were made according to the abovementioned schedule. As at 31 December 2020 all payables related to Acquisition of Nova Królikarnia Project were reduced to nil.

Certain fees in the maximum amount of PLN 11.9 million were due by the Company if the Company would not exercise all three call options within certain deadlines. As at 31 December 2020 as a result of realization of all three call options all fees were reduced to nil.

The table below presents the analysis of cash flows on the acquisition of the Nova Królikarnia project:

For the year ended 31 December In thousands of Polish Zlotys (PLN)	2020	2019
Purchase consideration paid (Nova Królikarnia transaction)	-	13,000
Purchase consideration paid (Call Option I)	10,000	23,916
Purchase consideration paid (Call Option II)	27,000	8,084
Purchase consideration paid (Call Option III)	9,900	-
Transaction costs	22	1,071
Less: Net cash acquired at the transaction date	-	(2)
Net cash outflow	46,922	46,069

6. Revenue

The majority of Group's revenues are generated through development and sale of units, primarily apartments, in residential real-estate projects to individual customers in Poland ("residential units"). The Group recognizes revenues at the moment performance obligations are satisfied. According to Group's policy the performance obligation is satisfied at the moment, the residential unit is handed over to the customer, which happens only after construction process is finalized and issuance of occupancy permit, based on hand-over protocol signed between the Group representatives and the customer and provided that the entire amount resulting from the sale agreement has been paid by the customer. The agreements with the customers do not contain variable considerations. The agreements, in the opinion of the Group, do not contain a significant financing component. Based on such characteristics of revenues, the Group, as a rule, does not present any receivables or other contract assets, except for costs to obtain the contract, capitalized to prepayments. Contract liabilities, are reflected by advances received, which are disclosed in the Note 30.

The table below presents breakdown of Revenue from residential projects per project:

For the year ended 31 December	2020	2019
In thousands of Polish Zlotys (PLN)

City Link III	149,448	30,950
Grunwald2	80,916	-
Miasto Marina	46,485	4,356
Panoramika IV	28,888	2,241
Miasto Moje III	33,388	-
Panoramika V	27,757	-
Nova Królikarnia 2c	18,584	-
Miasto Moje I&II	1,446	51,979
Nova Królikarnia 2b	4,074	50,998
Nova Królikarnia 1d	2,237	28,162
Vitalia I & II	-	29,763
Chilli IV	-	6,103
Moko	-	8,847
Młody Grunwald	1,248	3,775
Other	5,786	6,290
Total revenue	400,257	223,464

(1) Other revenue are related to sales of 7 units, parking places and storages in old projects that were completed in previous years, as well as, rental revenues.

Revenues from sale of services are associated with fee income for management services provided to joint ventures. Revenues from sale of services amounted to PLN 976 thousand during the year ended 31 December 2020 and to PLN 2,654 thousand during the year ended 31 December 2019.

7.	Cost of sales

For the year ended 31 December		2020	2019
In thousands of Polish Zlotys (PLN)

City Link III		91,999	18,955
Grunwald2		62,265	-
Miasto Marina		46,472	4,356
Panoramika IV		28,639	2,241
Miasto Moje III		27,546	-
Panoramika V		27,034	-
Nova Królikarnia 2c		16,856	-
Miasto Moje I&II		1,127	40,632
Nova Królikarnia 2b		3,676	45,909
Nova Królikarnia 1d		1,845	24,124
Vitalia I & II		-	24,644
Chilli IV		-	5,878
Moko		-	6,545
Młody Grunwald		1,199	3,775
Other		5,041	5,519
Write-down of inventory and residential land bank (1)		1,325	(594)
Total cost of sales		315,023	181,984

(1) For additional information see Note 19.
8. Selling and marketing expenses
For the year ended 31 December		2020	2019
In thousands of Polish Zlotys (PLN)

Advertising		4,684	4,560
Depreciation		385	509
Other		859	734
Total selling and marketing expenses		5,928	5,803

9. Administrative expenses
For the year ended 31 December		2020	2019

In thousands of Polish Zlotys (PLN)	Note
Personnel expenses	10
External services		15,762	14,450
Consulting fees to main shareholder		3,007	2,889
Materials and energy		865	840
Depreciation		628	653
Taxes and charges		644	474
Other		1,336	157
		300	718
Total administrative expenses		22,542	20,181

10. Personnel expenses
For the year ended 31 December	2020	2019
In thousands of Polish Zlotys (PLN)

Wages and salaries	13,746	12,489
Social security and other benefits	2,016	1,961
Total personal expense	15,762	14,450
Average number of personnel employed	74	73

11. Other expenses

For the year ended 31 December	2020	2019
In thousands of Polish Zlotys (PLN)
Maintenance expense of unsold units	1,463	1,344
Cost of repairs and defects	548	1,087
Expense for contractual penalties and compensation	106	274
Settlement of VAT related of previous periods	-	399
Write-down of trade receivables	1,081	163
Cost of research and due diligence of new projects	-	63
Other expenses	202	433
Total other expenses	3,401	3,763

12. Other income

For the year ended 31 December	2020	2019
In thousands of Polish Zlotys (PLN)

Revenues from contractual penalties and compensation	299	337
Rental income from inventory	455	706
Net profit on sale of property and equipment	321	115
Return of perpetual usefruct from the city hall related to
previous years	-	508
Other income	847	68
Total other income	1,923	1,734

13. Finance income and expense

For the year ended 31 December 2020		Amount	Amount capitalized	Recognized in the statement of comprehensive
In thousands of Polish Zlotys (PLN)	Total amount	capitalized	(under IFRS 16)	income

Interest on granted loans	375	-	-	375
Interest income on bank deposits	133	-	-	133
Other Finance income	50	-	-	50
Finance income	558	-	-	558
Interest expense on financial
liabilities	(8,428)	5,156	-	(3,272)
Commissions and fees	(2,943)	1,718	-	(1,225)
Other finance expense	(639)	-	-	(639)
Finance expense	(12,011)	6,875	-	(5,136)
Finance expense - on lease liabilities	(949)	-	917	(32)
Net finance income	(12,401)	6,875	917	(4,610)

For the year ended 31 December 2019

		Amount	Amount capitalized	Recognized in the statement of
In thousands of Polish Zlotys (PLN)	Total amount	capitalized	(under IFRS16)	comprehensive income

Interest on granted loans	257	-	-	257
Interest income on bank deposits	396	-	-	396
Other finance income	97	-	-	97
Finance income	750	-	-	750

Interest expense on financial liabilities	(11,013)	7,187	-	(3,826)
Commissions and fees	(2,651)	1,766	-	(885)
Other finance expense	(221)	106	-	(115)
Finance expense	(13,885)	9,059	-	(4,826)
Finance expense - on lease liabilities	(2,141)	-	2,105	(36)
Net finance expense	(15,276)	9,059	2,105	(4,112)

14. Income tax

For the year ended 31 December	2020	2019
In thousands of Polish Zlotys (PLN)

Current tax
Current period	12,558	3,438
Taxation in respect of previous periods	-	363
Total current tax expense	12,558	3,801

Deferred tax
Origination and reversal of temporary differences	(792)	932
Tax losses utilized/(recognized)	(1,367)	(66)
Total deferred tax expense/(benefit)	(2,159)	866
Total income tax expense	10,399	4,667

For the year ended 31 December	2020	2019
In thousands of Polish Zlotys (PLN)

Profit for the year	40,143	17,414
Total income tax benefit	10,399	4,667
Profit before income tax	50,542	22,081

Expected income tax using the Polish tax rate (19%)	9,603	4,195
Tax effect on:
Taxes in respect of previous periods	(334)	363
Non-deductible expenses, net	368	567
Movement in unrecognized deferred tax assets on loss
carry forward in Poland	315	938
Tax benefit in connection with the organizational
restructuring of the Group	(452)	(2,422)
Reversal of surplus in Nova Transaction (1)	735	1,770
Unrecognized deferred tax assets in previous periods	-	(325)
Deferred tax asset write-off	506	-
Other differences	(342)	(419)
Tax expense/(benefit) for the period	10,399	4,667

Effective tax rate	20.57%	21.14%

(1) The surplus between the purchase price (including transaction cost) and the net assets value of Nova Group as the transaction date, was allocated to the inventory, in relation to which the provision for deferred income tax was not recognized on the basis of an exception (IAS 12 par. 15 (b)).

15. Property and equipment

For the year ended 31 December 2020

In thousands of Polish Zlotys (PLN)	Vehicles	Equipment	Building	Total

Cost or deemed cost Balance at 1 January	1,510	3,374	8,632	13,516
	-	-	-	-
Additions	-	70	1,473	1,543
Sales and disposals	(480)	-	-	(480)
Closing balance	1,030	3,444	10,105	14,579

Depreciation and impairment losses
Balance at 1 January	582	2,435	1,947	4,964
Depreciation for the period	237	525	267	1,029
Sales and disposals	(211)	-	-	(211)
Closing balance	608	2,960	2,214	5,782

Carrying amounts
At 1 January	928	939	6,685	8,552
Closing balance	422	484	7,891	8,797

For the year ended 31 December 2019
In thousands of Polish Zlotys (PLN)	Vehicles	Equipment	Building	Total

Cost or deemed cost
Balance at 1 January	1,220	2,941	8,116	12,277
Additions	600	433	516	1,549
Sales and disposals	(310)	-	-	(310)
Closing balance	1,510	3,374	8,632	13,516

Depreciation
Balance at 1 January	669	1,897	1,725	4,291
Depreciation for the period	223	538	222	983
Sales and disposals	(310)	-	-	(310)
Closing balance	582	2,435	1,947	4,964

Carrying amounts At 1 January	551	1,044	6,391	7,986

As at 31 December 2020 and 31 December 2019, the Property for the amount of PLN 6,489 thousands and of PLN 5,402 thousands was used to secure bond loans series R, respectively.

Impairment loss

In the years ended 31 December 2020 and 31 December 2019, the Group did not recognize any impairment loss with respect to property and equipment.

16. Investment property

For the year ended 31 December	2020	2019
In thousands of Polish Zlotys (PLN)
	10,098	8,743
Balance at 1 January IFRS 16	(8)	553
Transfer to Property, equipment and intangible assets	(827)	-
Change in fair value during the year	(307)	802
Balance as at 31 December, including:	8,956	10,098
Cost	3,646	4,058
IFRS 16	545	553
Fair value adjustments	4,765	5,487

As at 31 December 2020, the investment property included property held for long-term rental yields and capital appreciation, and were not occupied by the Group. The investment property consists of a plot of land located in Warsaw (71, Gwiaździsta Street) and an office building with an aggregate usable floor space of 1,318 m² located on this plot that is leased to third parties under lease agreements with an indefinite term subject to a three-month notice period for termination ("Bielany IP").

Investment property is valued at fair value determined as at 31 December 2020 by an independent appraiser, having an appropriate recognized professional qualification using the method of discounted cash flows. As at 31 December 2019, the fair value of Investment property was determined by the Management.

As at 31 December 2020, the Bielany IP was valued based on the discounted cash flow approach, including the assumption as to an annual discount rate of 7% (during a 6 year forecast period), a capitalization exit yield of 7.5%, a monthly rate of PLN 45 per m² . If the yields used for the appraisals of investment property on 31 December 2020, had been 100 basis points higher than was the case at that time, the value of the investments would have been 10% lower. In this situation, the Company's shareholders' equity would have been PLN 874 thousand lower.

During the year ended 31 December 2020 and 2019 the rental income from investment property amounted to PLN 757 thousand and PLN 767 thousand, respectively.

The investment properties are currently occupied.

The investment properties are used to secure bond loans series R.

17. Investment in joint ventures

As at 31 December

In thousands of Polish Zlotys (PLN)	2020	2019

Loans granted	11,634	12,311
Share in net equity value of joint ventures	(1,693)	283
The Company's carrying amount of the investment	9,941	12,594
Presented as Loans granted to joint ventures (current
assets)	(1,039)	(1,977)
Investment in joint ventures	8,902	10,617

Share of profit/(loss) from joint ventures

The Investment in joint ventures comprise the Company's 50% interest in four joint ventures companies:

Ronson IS sp. z o.o. and in Ronson IS Sp. z o.o. Sp.k., both involved in the development and sale of residential units in Warsaw known as City Link I and II,
Coralchief Sp. z o.o. and Coralchief Sp. z o.o. – Projekt 1 Sp.k. which are running the Wilanów Tulip project.

The investments in joint ventures are accounted for using the equity method.

The table below present the movements in the share in net equity value of joint ventures:

As at 31 December

In thousands of Polish Zlotys (PLN)	2020	2019
Opening balance	(572)	3,439
Share of profit/(loss) in joint ventures
Net result from joint venture during the period	(1,121)	8,825
Offsetting net results of the joint venture with inter
company interest during the period	318	257
Share of profit/(loss) of joint ventures	(803)	9,082
Dividend paid	-	(12,836)
Closing balance before offsets	(1,375)	(315)
Cancelling the offset of intercompany interest accrued
during the period	(318)	(257)
Total closing balance	(1,693)	(572)
Cancelling the negative result from joint venture during
the period	-	855
Total closing balance	(1,693)	283

17. Investment in joint ventures

Share of profit/(loss) from joint ventures

Summarised financial information of the joint ventures is presented below:

As at 31 December	2020	2019
In thousands of Polish Zlotys (PLN)
Assets
Fixed assets	40	98
Inventory	52,026	26,011
Cash and cash equivalents	1,942	2,511
Other current financial assets	3,177	2,560
Loans granted to related parties	-	1,977
Other assets	-	947
Liabilities
Loans from shareholders	(28,476)	(26,143)
Advances received	(24,760)	(4,620)
Other liabilities	(7,335)	(4,485)
Equity	(3,386)	(1,144)
Company share	(1,693)	(572)

The summarised statement of comprehensive income for the joint ventures in aggregate is as follows:

For the year ended 31 December	2020	2019
In thousands of Polish Zlotys (PLN)

Revenue	2,065	87,190
Cost of sales	(1,511)	(65,300)
Gross profit	554	21,890
Administrative expenses(1)	(1,123)	(3,058)
Selling and marketing expenses	(627)	(429)
Other income/(cost)	(215)	(277)
Finance income	12	75
Finance expense	(843)	(548)
Profit/(loss) before taxation	(2,242)	17,653
Income tax benefit/(expense)	-	(1)
Profit for the year (continuing operations)	(2,242)	17,652
Total comprehensive income for the year (continuing
operations)	(2,242)	17,652
The Company's share of profit/(loss) for the year	(1,121)	8,825

(1) Including management fee to the Group amounting to 976 thousand and PLN 2,564 thousand during the year ended 31 December 2020 and 31 December 2019, respectively.

17. Investment in joint ventures

Loans granted to the joint ventures

The table below present the movements in the loans granted to the joint ventures.

As at 31 December

In thousands of Polish Zlotys (PLN)	2020	2019

Opening balance	13,166	-
Loans granted	1,126	16,190
Loans repaid	(3,107)	(3,450)
Accrued interest	595	514
Interest paid	(146)	(88)
Total closing balance	11,634	13,166
Offset of the negative result from joint venture during
the period	-	(855)
Total closing balance	11,634	12,311

As at 31 December 2020, from the total amount of loans granted to joint ventures (amounting in total to PLN 11,634 thousand – before offset) loans in the aggregate amount of PLN 1,039 thousand are maturing no later than 31 December 2021. The short term loans granted to joint ventures cannot be regarded as a part of the investment in joint ventures and are presented in the Consolidated Statement of the Financial Position under current assets as Loans granted to joint ventures.

The loans granted to joint venture bear a variable rate of WIBOR 3M plus 4% margin.

18. Deferred tax assets and liabilities

Recognized deferred tax assets and liabilities

Deferred tax assets and liabilities as at the beginning and end of the financial periods are attributable to the following:

	Opening balance 1 January	Recognized in the statement of comprehensive	Closing balance
In thousands of Polish Zlotys (PLN)	2020	income	31 December 2020
Deferred tax assets
Tax loss carry forward	2,124	1,367	3,491
Accrued interest	3,704	856	4,560
Accrued expense	657	62	719
Write-down on work in progress	2,452	(850)	1,602
Other*	4,106	(438)	3,668
Total deferred tax assets	13,043	997	14,040
Deferred tax liabilities Difference between tax base and carrying value of
inventory	13,732	(947)	12,785
Accrued interest	437	(271)	166
Fair value gain on investment property	1,042	(11)	1,031
Other	515	67	582
Total deferred tax liabilities	15,726	(1,162)	14,564
Total deferred tax benefit (see Note 14)		(2,159)
Deferred tax assets	13,043		14,040
Deferred tax liabilities	15,726		14,564
Offset of deferred tax assets and liabilities for individual companies	(6,108)		(5,003)
Deferred tax assets reported
in the Consolidated Statement of Financial Position	6,935		9,037
Deferred tax liabilities reported
in the Consolidated Statement of Financial Position	9,618		9,562

* Including deferred tax asset from contributions.

18. Deferred tax assets and liabilities

	Opening balance	Recognized in the statement of
	1 January	comprehensive	Closing balance
In thousands of Polish Zlotys (PLN)	2019	income	31 December 2019
Deferred tax assets
Tax loss carry forward	2,058	66	2,124
Accrued interest	2,348	1,356	3,704
Accrued expense	777	(120)	657
Write-down of inventory and residential landbank	2,788	(336)	2,452
Other*	1,437	2,669	4,106
Total deferred tax assets	9,408	3,635	13,043

Deferred tax liabilities
Difference between tax base and carrying value of inventory	9,521	4,211	13,732
Accrued interest	-	437	437
Fair value gain on investment property	890	152	1,042
Other	814	(299)	515
Total deferred tax liabilities	11,225	4,501	15,726
Total deferred tax benefit		866
Deferred tax assets	9,408		13,043
Deferred tax liabilities	11,225		15,726
Offset of deferred tax assets and liabilities for individual
companies	(3,877)		(6,108)
Deferred tax assets reported in the
Consolidated Statement of Financial Position	5,531		6,935
Deferred tax liabilities reported in the Consolidated Statement of Financial Position	7,348		9,618

* Including deferred tax asset from contributions.

Realization of deferred tax assets

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. In order to fully realize the deferred tax asset (before offsetting against deferred tax liability), the Group will need to generate future taxable income of approximately PLN 73,895 thousand. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible. The management believes there is a higher probability that the Group will realize the benefits of these deductible differences. The amount of the deferred tax asset which is considered realizable, could however be reduced in the near term if estimates of future taxable income during the tax loss carry-forward period are reduced.

Tax losses in Poland are required to be utilized within 5 years following the period in which they originated, subject to the limitation that a maximum of 50% of the loss carry-forward can be used in one year.

18. Deferred tax assets and liabilities

Tax losses carry forward

As as 31 December		2020			2019
In thousands of Polish Zlotys (PLN)	Recognized tax losses	Unrecognized tax losses	Total tax losses	Recognized tax losses	Unrecognized tax losses	Total tax losses
Tax loss 2015 carried forward	-	-	-	3	47	50
Tax loss 2016 carried forward	2	126	129	-	145	145
Tax loss 2017 carried forward	6,318	87	6,405	3,950	4,086	8,036
Tax loss 2018 carried forward	3,228	222	3,450	4,050	386	4,436
Tax loss 2019 carried forward	2,894	610	3,504	3,179	965	4,144
Tax loss 2020 carried forward	5,931	2,880	8,811
Total tax losses carried forward	18,373	3,926	22,299	11,182	5,629	16,811

The deferred tax assets on tax losses carried forward expire in the following years:

In thousands of Polish Zlotys (PLN)	As at 31 December 2020

2021	2,267
2022	1,137
2023	86
2024	2
2025	-
Total tax losses carry forward	3,491

Movement in unrecognized deferred tax assets on tax losses carried forward

Unrecognized deferred tax assets on tax losses carried forward in Poland are presented in the table below:

In thousands of Polish Zlotys (PLN)	Balance 1 January 2019	Tax losses expired	Additions/ (Realizations)	Balance 31 December 2019	Tax losses expired	Additions/ (Realizations)	Balance 31 December 2020
Tax losses	154	(22)	938	1,070	(9)	(315)	746
Total	154	(22)	938	1,070	(9)	(315)	746

Unrecognized deferred tax assets

A deferred tax asset is recognized only to the extent that it is more likely than not that future taxable profits will be available against which the asset can be utilized. Unrecognized deferred tax assets relate primarily to tax loss carry-forwards, which are not considered probable of realization prior to their expiration.

The Company did not recognize the entire deferred tax asset at consolidation level resulting from contributions as the recoverability of such assets is uncertain. Total unrecognized deferred tax assets as at 31 December 2020 are estimated to be PLN 4,548 thousand (31 December 2019: PLN 5,035 thousand).

Unrecognized deferred tax liabilities

Unrecognized deferred tax liabilities with respect to acquisition of Nova Królikarnia project amounts to PLN 841 thousand (IAS 12 par. 15(b)) as at 31 December 2020.

19. Inventory and Residential land bank

For the year ended 31 December 2020:

Inventory

In thousands of Polish Zlotys (PLN)	As at 1 January 2020	Transferred from/to land designated for development	Transferred to finished units	Additions	As at 31 December 2020
Land and related expense	293,592	1,443	(34,804)	34,199	294,430
Construction costs	131,467	(1,640)	(158,306)	223,018	194,539
Planning and permits	20,408	(1,507)	(4,036)	1,895	16,760
Borrowing costs (2)	32,291	3,312	(7,633)	6,875	34,844
Borrowing costs on lease and deprecation perpetual usefruct right (1)	1,656	-	(164)	1,266	2,758
Other	4,426	64	(2,320)	1,669	3,839
Work in progress	483,840	1,672	(207,263)	268,921	547,170

				Recognized in the
				statement of	As at
	As at		Transferred from	comprehensive	31 December
In thousands of Polish Zlotys (PLN)	1 January 2020		work in progress	income	2020
Finished goods	217,123	-	207,263	(314,967)	109,419

	As at	Transferred from/to land	Revaluation write-down recognized in statement of comprehensive income		As at
In thousands of Polish Zlotys (PLN)	1 January 2020	designated for development	Reversal	Utilization	31 December 2020
Write-down	(6,023)	(4,330)	680	4,170	(5,503)

In thousands of Polish Zlotys (PLN)	As at 1 January 2020	First adoption of IFRS 16	Depreciation	Transfer to Other receivables	As at 31 December 2020
Perpetual usefruct right	23,120	-	(268)	(9,177)	13,675

Inventory, valued at lower of - cost and net realisable value 718,060 664,761

(1) For additional information see Note 28.

(2) Borrowing costs are capitalized to the value of inventory with 4.50% average effective capitalization interest rate.

19. Inventory and Residential land bank

For the year ended 31 December 2019:

Inventory

		Acquisition of			As at
In thousands of Polish Zlotys (PLN)	As at 1 January 2019	Nova Królikarnia (1)	Transferred to finished units	Additions	31 December 2019


Land and related expense	294,484	70,108	(74,596)	3,596	293,592
Construction costs	172,340	-	(221,401)	180,528	131,467
Planning and permits	20,359	-	(6,661)	6,710	20,408
Borrowing costs (2)	36,205	-	(12,973)	9,059	32,291
Borrowing costs on lease and
deprecation of the perpetual usefruct right	-	-	(889)	2,545	1,656
Other	4,772	-	(3,543)	3,197	4,426
Work in progress	528,160	70,108	(320,063)	205,635	483,840

				Recognized in
				the statement
				of	As at
In thousands of Polish Zlotys (PLN)	As at 1 January 2019		Transferred from work in progress	comprehensive income	31 December 2019



Finished goods	78,491		320,063	(181,431)	217,123

				Revaluation write-down recognized in statement of comprehensive
				income	As at
	As at				31 December
In thousands of Polish Zlotys (PLN)	1 January 2019		Reversal	Utilization	2019

Write-down	(9,724)		2,524	1,177	(6,023)

		First adoption
		/Recalculation			As at
	As at	adjustment of		Transfer to	31 December
In thousands of Polish Zlotys (PLN)	1 January 2019	IFRS 16	Depreciation	Other receivables	2019

Perpetual usufruct rights	-	25,872	(440)	(2,312)	23,120

Inventory, valued at lower of - cost and net realisable value	596,927				718,060

(1) For additional information see Note 5.

(2) Borrowing costs are capitalized to the value of inventory with 5.78% average effective capitalization interest rate.

19. Inventory and Residential land bank

Residential land bank

In December 2020, plots of land purchased for development purposes on which construction is not planned within a period of three years has been reclassified as Residential land bank presented within non-current assets. The table below presents the movement in the Residential land bank:

For the year ended 31 December	2020	2019
In thousands of Polish Zloty (PLN)
Openning balance	44,321	46,227
Reclassified from inventory	31,920	-
Moved to inventory	(28,750)	24
Write-down adjustment	(2,005)	(1,930)
Total closing balance	45,486	44,321
Closing balance includes: Book value	50,043	51,203
Write-down	(4,557)	(6,882)
Total Closing balance	45,486	44,321

Write-down revaluating the inventory and residential land bank:

The Management internally assessing the net realizable value of the inventory and residential land bank and decrease the value when the net realizable value is lower than the cost amount. In view of the situation in the property market in which the Group operates, during the year ended 31 December 2020 and 31 December 2019 the Group performed an inventory and residential land bank review with regard to its valuation to net realizable value based on the most reliable evidence available to the Group.

During the year ended 31 December 2020 the Group reversed a write-down adjustment made during previous periods of PLN 4,849 thousand, whereas a write-down adjustment of PLN 2,005 thousand was made, which is included as part of cost of sales in the Consolidated Statement of Comprehensive Income. During the year ended 31 December 2019 the Group made a net write-down adjustment of PLN 594 thousand. The Group examined a possible write-down on inventory for each project separately, according to the projection of revenues net of cost of sales.

The valuation of inventory and residential land bank is as follows:

	2020	2019
As at 31 December
In thousands of Polish Zlotys (PLN)

Valued at cost	640,348	610,829
Valued at net realizable value	69,899	151,552

Total Inventory and residential land bank	710,247	762,381

For information about future commitments to the general contractor for construction services related to inventory construction, see Note 34. For information about the balance sheet value of Inventory and Residential land bank used to secure banks loans and bond loans (series R and U), see Note 25.

20. Trade and other receivables and prepayments

As at 31 December	2020	2019
In thousands of Polish Zlotys (PLN)

Value added tax (VAT) receivables	12,748	12,361
Trade and other receivables	8,649	3,696
Trade and other receivables - IFRS 16	1,377	1,753
Bid bond	1,437	1,437
Notary's deposit(2)	6,765	-
Prepayments(1)	6,398	5,498
Total trade and other receivables and prepayments	37,374	24,745

(1) For additional information see Note 3

(2) For additional information see Note 40

During the year ended 31 December 2020 and 31 December 2019, the Group booked allowance for doubtful accounts in the amount of PLN 999 thousand and PLN 163 thousand, respectively as irrecoverable debts included in trade and other receivables.

21. Other current financial assets

Other current financial assets comprise escrow accounts only. The regulations related to the activity of the residential developers imposed on all residential developers in Poland an obligation to open an escrow account for all customers purchasing residential units during the construction period. According to these regulations, all amounts paid by the customers have to be paid directly to the escrow account. The developer is entitled to receive the money only once certain conditions – related mainly to progress of the construction process – are met or the upon the transfer of the ownership of the apartment to the customer.

As long as the money is kept in the escrow account, the Company cannot dispose of the cash in any way.

22. Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and in hand and short-term deposits freely available for the Group. Cash at bank comprises of overnight deposits, the short-term deposits have an original maturity varying from one day to three months.

As at 31 December	2020	2019
In thousands of Polish Zlotys (PLN)

Cash at bank and in hand	112,127	59,982
Short-term deposit	5,366	31,780
Restricted cash	17,606	3,829
Total cash and cash equivalents	135,099	95,591

Cash at bank earns interest at floating rates based on daily bank deposit rates. As at 31 December 2020 and 31 December 2019 the Group held in saving accounts amounting to PLN 0 thousand and PLN 45,269 thousand, respectively. As at 31 December 2020 and 31 December 2019 the saving accounts that earn interest rates varying between 0.25% - 1.16% and 0.85% - 1.10%, respectively.

Short-term deposits have a duration varying between one day and three months depending on the immediate cash requirements of the Group. As at 31 December 2020 and 31 December 2019, they earn interest at the respective short-term deposit rates varying between 0.35% - 1.2% and 0.00% - 0.44%, respectively.

Restricted cash are pledge to the benefit of banks for securing construction loans.

For information about the fair value of cash and cash equivalents see Note 32.

23. Shareholders' equity

Share capital

The authorized share capital of the Company consists of 800,000,000 shares of EUR 0.02 par value each. The number of issued and outstanding ordinary shares as at 31 December 2020 amounted to 164,010,813 (as at 31 December 2019: 164,010,813 shares issued and outstanding). The number of outstanding shares equals the number of votes, as there are no privileged shares issued by the Company. As at 31 December 2020, the Company held 1,489,235 own shares (0.91%) in treasury (see below) and, in accordance with art. 364 § 2 of the Code of Commercial Companies, it does not exercise voting rights from own shares.

There are no restrictions regarding dividend payments, future dividends may be proposed and paid.

Treasury shares

During the Extraordinary General Meeting of Shareholders held on 24 January 2019, the shareholders of the Company resolved to approve a share buyback program and the establishment of a capital reserve for the purpose of such program, whereby the Management Board of the Company is authorized to purchase ordinary bearer shares in the Company. In order to fund the purchase of own shares under the buyback program a capital reserve (within retained earnings) is established for an amount of PLN 2.0 million. The capital reserve is subsequently reduced by the amount of the consideration paid for the shares bought back. The amount of capital reserve as at 24 January 2020 amounted to PLN 1,369 thousand and was presented as a part of the retained earnings. As at 25 January 2020 the capital reserve was liquidated.

During the year ended 31 December 2020, the Company acquired 814,335 own shares for a total price of PLN 1,030 thousand (on average PLN 1.265 per share).

As at 9 March 2021, the Company held 1,567,954 own shares representing 0.96% of total shares issued by the Company.

Dividend

On 30 June 2020, the General Meeting of the Company resolved to distribute the net profit of the Company for year 2019 in the amount of PLN 17,414 thousands in a following way:

to allocate for the dividend payment to the shareholders of the Company the amount of PLN 0.06 (six groszy) per share, with the total amount depending on the number of own shares (where there is no right to dividend) held by the Company on the dividend record date and such total amount not exceeding, in any case, PLN 9,787 thousands,
to allocate the remaining portion of the net profit of the Company for year 2019 in amount of PLN 7,627 thousand to retained earnings of the Company.

The dividend in the total amount of PLN 9,787 thousand was paid on 24 August 2020 (in 2019: PLN 9,820 thousand).

There are no restrictions regarding dividend payments, future dividends may be proposed and paid.

23. Shareholders' equity

Proposed profit appropriation

The Management Board, in line with the prevailing dividend policy, will evaluate the possibility to recommend to the Ordinary General Meeting of the Company to be held in 2021 to distribute the dividend for year 2020, after the examination of the current and expected balance sheet of the Company, expected operating, financial and cash-flow position of the Company and taking into consideration: (i) the close observance of all balance-sheet linked debt covenants, (ii) ability of future repayment of debts, (iii) financial needs of the Company aiming to be ranked amongst leading residential developers and (iv) changing market environment.

24. Net earnings per share

Basic and diluted earnings per share

Basic earnings per share amounts are calculated by dividing net profit/(loss) attributable to equity holders of the parent company for the year by the weighted average number of ordinary shares outstanding and in circulation during the year. Diluted earnings per share amounts are calculated by dividing the net profit/(loss) attributable to equity holders of the parent company for the year by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive instruments into ordinary shares, no such instruments exists as at 31 December 2020 and 2019.

Weighted average number of ordinary shares (basic):

For the year ended 31 December	2020	2019
(in thousands of Polish Zlotys)

Net income attributable to the equity
holders of the parent company	40,143	17,414
Balance at beginning of the period	163,335,913	164,010,813
Treasury shares - average value	(232,750)	(321,197)
Weighted average number of ordinary
shares (basic)	163,103,163	163,689,616

Basic earnings per share	0.246	0.106

25. Loans, borrowings and bonds

As at 31 December		2020	2019
In thousands of Polish Zlotys (PLN)	Note

Floating rate bonds	26	230,072	187,969
Secured bank loans		-	12,875
Total loans and borrowings		230,072	200,844

Information about the contractual terms of the Group's interest-bearing loans and borrowings is presented in the table below. For more information about the Group's exposure to interest rate, see Note 36.

Borrowings and bonds as at 31 December 2020:

In thousands of Polish Zlotys (PLN)	Currency	Nominal interest rate	Year of maturity	Capital	Accrued interest	Charges and fees	Carrying value
Bonds loans series R	PLN	Wibor + 2.85%	2021	47,859	151	(81)	47,929
Bonds loans series T	PLN	Wibor + 3.50%	2022	50,000	277	(233)	50,045
Bonds loans series U(1)	PLN	Wibor + 3.50%	2023	32,317	512	(334)	32,495
Bonds loans series V(2)	PLN	Wibor + 4.30%	2024	100,000	1,124	(1,521)	99,604
Total				230,176	2,065	(2,168)	230,072

1) The series U bonds are subject to mandatory depreciation at the end of the 4th and the 6th interest period (on 31 January 2021 and 31 January 2022, respectively) by reducing the nominal value of each Bond each time in the amount of PLN 150 for each bond.

2) The series V bonds are subject to repayment in 2 tranches 40% (PLN 40 million) of the amount together with accumulated interest to be repaid by October 2023 and the remaining amount of 60% (PLN 60 million) together with accumulated interest to be paid by April 2024.

Borrowings and bonds as at 31 December 2019:

In thousands of Polish Zlotys (PLN)	Currency	Nominal interest rate	Year of maturity	Capital	Accrued interest	Charges and fees	Carrying value
Bond loans series M	PLN	Wibor + 3.65%	2020	10,000	191	(7)	10,184
Bond loans series P	PLN	5.25%	2020	10,000	62	(30)	10,032
Bond loans series Q	PLN	Wibor + 3.50%	2020	15,000	337	(38)	15,299
Bond loans series R	PLN	Wibor + 2.85%	2021	50,000	235	(286)	49,949
Bond loans series S	PLN	Wibor + 3.40%	2021	20,000	34	(54)	19,980
Bond loans series T	PLN	Wibor + 3.50%	2022	50,000	391	(405)	49,986
Bond loans series U(1)	PLN	Wibor + 3.50%	2023	32,317	717	(495)	32,539
Subtotal (Bond loans)				187,317	1,967	(1,315)	187,969

Bank loans	PLN	Wibor + 2.54%	2021	5,802	-	(205)	5,597
Bank loans	PLN	Wibor + 2.7%	2021	7,431	10	(163)	7,278
Subtotal (Bank loans) (2)				13,233	10	(368)	12,875

Total				200,550	1,977	(1,683)	200,844

1) The series U bonds will be subject to mandatory depreciation at the end of the 4th and the 6th interest period (on 31 January 2021 and 31 January 2022, respectively) by reducing the nominal value of each Bond each time in the amount of PLN 150 for each bond.

2) According to the projected cash flow, the Group is planning to repay outstanding Bank loans during the year 2020, therefore Bank loans are presented under the Current liabilities in the Consolidated Statement of Financial Positions.

25. Loans and borrowings and bonds

Balance sheet value of assets used to secure loans received from banks and bond loans series R and U:

As at 31 December	2020	2019
In thousands of Polish Zlotys (PLN)
Inventory and Land designated for development	106,028	229,492
Investment property	8,411	10,098
Property and equipment	9,727	5,402
Balance sheet value of pledged assets	124,166	244,992
Amount of bonds secured	80,424	95,363
Ratio of securities*	154.4%	256.9%

* The required security ratio for Series U bonds in accordance with the Bonds Issue Terms must be not lower than 150%.

26. Bond Loans

The table below presents the movement in bond loans:

	For the year ended 31 December 2020	For the year ended 31 December 2019
In thousands of Polish Zloty (PLN)
Opening balance	187,969	205,547
Repayment of bond loans	(57,141)	(50,000)
Proceeds from bond loans	100,000	32,317
Issue cost	(1,636)	(757)
Issue cost amortization	783	854
Accrued interest	8,429	10,351
Interest repayment	(8,331)	(10,343)
Total closing balance	230,072	187,969
Closing balance includes:
Current liabilities	54,690	36,891
Non-current liabilities	175,382	151,078
Total Closing balance	230,072	187,969

During the year ended 31 December 2020, the Company issued 100,000 series V bonds (total nominal value of PLN 100,000 thousand).

As at 31 December 2020 and as at 31 December 2019 all covenants on bond loans are met.

The series R bonds are secured with a joint mortgage established by the subsidiaries of the Company up to PLN 75,000 thousand. In order to secure series U bonds a joint mortgage was established up to the amount of 150% of total nominal value of series U bonds (as at the date of issuance of these bonds up to PLN 48,476 thousand). The plots on which abovementioned mortgage was established and that are the subject of this mortgage as at 31 December 2020 were valued at PLN 124,544 thousand (according to valuations prepared in May 2020). The series T and V bonds are not secured.

26. Bond Loans

Series V

On 2 October 2020, the Company issued 100,000 series V bonds with a total nominal value of PLN 100,000 thousand. The nominal value of one bond amounts to PLN 1,000 and is equal to its issue price.

The Bonds shall be redeemed by the Issuer through the payment of an amount equal to the nominal value of each Bond in 2 installments: the first at the end of the 6th interest period, on 2 October 2023, by redeeming 40% of the nominal value of the originally issued Bonds and the second on 2 April 2024 by redeeming the remaining part of the nominal value. The Bonds bear an interest at a variable rate based on the WIBOR rate for six-month deposits, increased by a margin of 4,3%. Interest is payable semi-annually.

Together with issuance of series V bonds the Company purchased for redemption series R bonds with a value of PLN 2,141 thousand from the bondholder who purchased the Bonds for the same amount. These transactions were settled without cash (by set-off), except for accrued interest on series R bonds, which were paid by the Company.

On 5 October 2020, the Company signed the final agreement for the purchase for early redemption of all series S bonds of the Company issued on 14 June 2017, i.e. 20,000 bonds, each with a nominal value of PLN 1,000 and with a total nominal value of PLN 20.0 million. Above mentioned bonds have been acquired by the Company at the price lower than nominal value i.e. PLN 990 for each bond (in total for PLN 19.8 million). Moreover, the company has paid the interest at the date of early repayment amounting to PLN 10.92 per bond.

Bond loans repaid during the year ended 31 December 2020:

Financial ratio covenants:

Series R:

Based on the conditions of bonds R in each reporting period the Company shall test the ratio of Net debt to Equity (hereinafter "Net Indebtedness Ratio). The Ratio shall not exceed 80% on the Check Date.

The Net Indebtedness Ratio is Non-GAAP Financial Measure and is calculated according to formulas provided below:

Net debt - shall mean the total consolidated balance sheet value of all interest-bearing liabilities (as well as payment guarantees) less the consolidated value of cash and cash equivalents and less cash paid by clients blocked temporarily on the escrow accounts servicing ongoing projects that are under construction (presented in the Company's consolidated balance sheet under Other current financial assets; the limit is PLN 40 million).

26. Bond loans

Financial ratio covenants:

Series R:

Equity - shall mean the consolidated balance sheet value of the equity attributable to equity holders of the parent, less the value of the intangible assets (excluding any financial assets and receivables), including specifically (i) the intangible and legal assets, goodwill and (ii) the assets constituting deferred income tax decreased by the value of the provisions created on account of the deferred income tax, however, assuming that the balance of those two values is positive. If the balance of assets and provisions on account of deferred income tax is negative, the adjustment referred to in item (ii) above shall be zero.

Check date – last day of each calendar quarter.

The table presenting the Net Indebtedness Ratio as at the end of the Reporting period:

As at	As at 31 December 2020
In thousands of Polish Zlotys (PLN)
Net Debt	89,216
Equity	379,817
Ratio	23.5%

Series T, U and V:

Based on the conditions of bonds T, U and V in each reporting period the Company shall test the ratio of Net debt to Equity (hereinafter "Net Indebtedness Ratio"). The Ratio shall not exceed 80% on the Check Date.

The Net Indebtedness Ratio is Non-GAAP Financial Measure and is calculated according to formulas provided below:

Net debt - shall mean the total consolidated balance sheet value of all interest-bearing liabilities (as well as payment guarantees) less the consolidated value of cash and cash equivalents and less cash paid by Company's clients blocked temporarily on the escrow accounts servicing ongoing projects that are under construction (presented in the Company's consolidated balance sheet under Other current financial assets).

Equity - shall mean the consolidated balance sheet value of the equity attributable to equity holders of the parent.

Check date – last day of each calendar quarter.

The table presenting the Net Indebtedness Ratio as at the end of the Reporting period:

As at	As at 31 December 2020
In thousands of Polish Zlotys (PLN)
Net Debt	89,216
Equity	379,817
Ratio	23.5%

26. Bond loans

Financial ratio covenants:

Impact of IFRS 16 on financial ratios in bond covenants:

Terms and conditions of issuance of Bonds of the Company ("T&C's") provide that only certain, specified types of financial indebtedness should be taken into account when determining the level of financial indebtedness for the purpose of calculating financial ratios in accordance with T&C's. In particular, certain T&C's require that financial indebtedness resulting from finance lease agreements (in Polish: umowy leasingu finansowego) should be included in calculation of the financial indebtedness. Those T&C's do not provide that the indebtedness resulting from finance lease agreements shall also include other financial indebtedness which is recognized as lease liability in accordance with IFRS 16.

Given the above, and taking into account the type of activities carried out by the Group, despite changes in the IFRS in this respect, the Company concluded that inclusion of other type of financial indebtedness, in particular liabilities from annual fees for perpetual usufruct, for the purposes of calculations of financial ratios would not be in line with T&C's and therefore the Company does not include such finance lease alike items in such calculations.

Other covenants:

Series R, T, U and V:

Based on the conditions of bonds R, T, U and V transactions with related-parties (shareholders holding more than 25% of the shares in the Company "within the meaning of IAS 24 or with related parties "including with entities controlling the Company whether jointly or individually, whether directly or indirectly or with their subsidiaries which are not members of the Group) shall not exceed the aggregate amount of PLN 1.0 million during any given calendar year.

During the year ended 31 December 2020, the consulting fees related to A. Luzon Group amounted to PLN 864 thousand. For additionally information see Note 35.

27. Secured bank loans

The table below presents the movement in Secured bank loans:

As at 31 December	2020	2019
In thousands of Polish Zlotys (PLN)
Opening balance	12,875	37,687
New bank loan drawdown	26,096	71,940
Bank loans repayments	(39,217)	(96,754)
Bank charges paid	(67)	(740)
Bank charges amortization	323	786
Accrued interest/(interest repayment) on bank loans, net	(10)	(44)
Total closing balance	-	12,875
Closing balance includes:
Current liabilities	-	12,875
Non-current liabilities	-	-
Total Closing balance	-	12,875

For information related to unutilized bank loan facilities see Note 34.

27. Secured bank loans

Covenants on secured bank loans:

As at 31 December 2020 and 2019, the Company has not breached any loan covenant, which would expose the Company for risk of obligatory and immediate repayment of any loan.

For the bank loans the following collateral was given:

Ordinary and floating mortgages on Inventory, see Note 19.
Pledge over bank accounts which are presented in the Consolidated Statement of Financial Position as Cash and cash equivalents (Restricted cash), see Note 22.
Assignment of receivables arising from insurance agreements and from agreements concluded with clients.
Subordination agreement on loans from related parties.
Blank promissory note drawn by particular subsidiary companies with a promissory note declaration up to the amount of the loan plus interest.
Advance payments of dividends by the borrowers until full repayment of loans are not allowed.

28. IFRS 16

The movement on the right of use assets and lease liabilities during the period ended 31 December 2020 and 31 December 2019 is presented below:

In thousands of Polish Zlotys (PLN)	1 January 2020	Depreciation charge	Fair value adjustment	Racalculation adjustment	Transfer to trade receivables	31 December 2020
Right of use assets related to inventory	23,120	(268)	-	-	(9,177)	13,675
Right of use assets related to investment property	553	n.a	-	-	n.a	553

In thousands of Polish Zlotys (PLN)	1 January 2020	Finance expense	Payments	Racalculation adjustment	Transfer to trade payables	31 December 2020
Lease liabilities related to inventory	23,549	912	(1,268)	-	(9,291)	13,902

In thousands of Polish Zlotys (PLN)	1 January 2019	Depreciation charge	Fair value adjustment	Recalculation adjustment(1)	Transfer to trade receivables	31 December 2019
Right of use assets related to inventory	32,977	(440)	-	(7,105)	(2,312)	23,120
Right of use assets related to investment property	553	n.a	-	-	n.a	553
In thousands of Polish Zlotys (PLN)	1 January 2019	Finance expense	Payments	Recalculation adjustment(1)	Transfer to trade payables	31 December 2019
Lease liabilities related to inventory	32,977	2,105	(2,173)	(7,058)	(2,302)	23,549
Lease liabilities related to investment property	553	36	(37)	-	n.a	552

29. Trade and other payables and accrued expenses

As at 31 December	2020	2019
In thousands of Polish Zlotys (PLN)
Trade payables	26,994	32,032
Payables for NK project (1)	-	37,022
Accrued expenses	22,215	20,400
Guarantees for construction work	5,310	1,589
Value added tax (VAT) and other tax payables	1,087	4,122
Non-trade payables	1,343	853
Other trade payables - IFRS 16	1,398	1,697
Total trade and other payables and accrued expenses	58,347	97,715

(1) Payables related to Acquisition of the Nova Królikarnia project. For more information see Note 5.

Trade and non-trade payables are non-interest bearing and are normally settled on 30-day terms.

30. Advances received

Advances received (as defined in IFRS 15 "contract liabilities") consist of customer advances for construction work in progress (deferred revenue) and comprise customer advances for the following projects:

		Advances
		recognized as	Advances
		revenue during the	received	As at 31
In thousands of Polish Zlotys (PLN)	As at 31 December 2019	12 months ended 31 December 2020	during the year 2020	December 2020
City Link III	120,796	(149,448)	32,150	3,497
Nova Królikarnia 1a-1e	333	(4,208)	3,875	-
Nova Królikarnia 2a & 2b	1,620	(5,236)	5,546	1,930
Nova Królikarnia 2c	8,440	(18,584)	19,567	9,423
Nova Królikarnia 3b	3,236	-	14,003	17,239
Nova Królikarnia 3a	-	-	17,922	17,922
Nova Królikarnia 3c	-	-	9,592	9,592
Vitalia III	4,878	-	22,886	27,764
Miasto Moje I & II	256	(1,446)	1,190	-
Miasto Moje III	14,271	(33,388)	45,231	26,114
Miasto Moje IV	639	-	14,694	15,333
Miasto Moje V	-	-	1,661	1,661
Miasto Marina	36,498	(46,485)	10,238	251
Panoramika IV	20,412	(28,888)	8,850	374
Panoramika V	4,165	(27,757)	24,182	590
Panoramika VI	-	-	2,466	2,466
Grunwald2	32,235	(80,916)	50,929	2,248
Ursus Centralny Ia	6,338	-	35,424	41,762
Ursus Centralny IIa	-	-	28,158	28,158
Ursus Centralny Ib		-	1,704	1,704
Viva Jagodno I	167	-	7,778	7,945
Nowe Warzymice I	-	-	2,332	2,332
Other	686	(3,901)	4,554	1,339
Total	254,970	(400,256)	364,932	219,645

The rest of the balance consists of deferred income due to issued invoices for sold apartments but not paid as at 31 December 2020 in the amount of PLN 4,621 thousand.

30. Advances received

For information about contingent receivables from signed contracts with clients, see Note 34. The income from these contracts will be recognized as revenue at the moment units are handed over to the customers, which is expected to happen once the building process is completed and necessary administrative decisions are obtained by the Group, which usually takes from 1 up to 3 months following completion of the construction.

31. Provisions

For the year ended 31 December	2020	2019
In thousands of Polish Zlotys (PLN)
Balance as at 1 January	2,016	2,565
Increase	-	919
Decrease	(1,022)	(1,468)
Closing Balance	994	2,016

As at 31 December 2020, the provision included expected necessary costs of guarantees for construction works amounting to PLN 993 thousand, whereas as at 31 December 2019, the provision included expected necessary costs of guarantees for construction works amounting to PLN 2,016 thousand.

32. Fair value estimation of financial assets and liabilities

The fair values of financial assets and liabilities, together with the carrying amounts shown in the Consolidated Statement of Financial Position, are as follows:

In thousands of Polish Zlotys (PLN)	Category	Note	As at 31 December 2020
			Carrying amount	Fair value
Assets:
Trade and other receivables	Assets measured at amortized costs	20	8,649	8,649
Other current financial assets	Assets measured at amortized costs	21	14,239	14,239
Cash and cash equivalents	Assets measured at amortized costs	22	135,099	135,099
Loans granted to joint ventures	Assets measured at amortized costs	17	11,634	12,028
Liabilities:
Bond loans	Liabilities measured at amortized costs	25, 26	230,072	229,412
Secured bank loans	Liabilities measured at amortized costs	27	-	-
Interest bearing deferred trade payables	Liabilities measured at amortized costs		8,482	8,575
Lease liabilities related to perpetual usufruct
of land and investment property	Liabilities measured at amortized costs	28	14,492	14,492
Trade and other payables and accrued
expenses	Liabilities measured at amortized costs	29	49,209	49,209
Unrecognized profit/(loss)				961

In thousands of Polish Zlotys (PLN)	Category	Note	As at 31 December 2019
			Carrying amount	Fair value
Assets:
Trade and other receivables	Assets measured at amortized costs	20	3,696	3,696
Other current financial assets	Assets measured at amortized costs	21	22,157	22,157
Cash and cash equivalents	Assets measured at amortized costs	22	95,591	95,591
Loans granted to joint ventures	Assets measured at amortized costs	17	13,166	13,295
Liabilities:
Bond loans	Liabilities measured at amortized costs	25, 26	187,969	186,785
Secured bank loans	Liabilities measured at amortized costs	27	12,875	12,868
Interest bearing deferred trade payables Lease liabilities related to perpetual usufruct	Liabilities measured at amortized costs		2,338	2,318
of land and investment property Trade and other payables and accrued	Liabilities measured at amortized costs	28	24,101	24,101
expenses	Liabilities measured at amortized costs	29	89,454	89,454
Unrecognized profit/(loss)				1,340

32. Fair value estimation of financial assets and liabilities

Estimation of fair values

The following methods and assumptions were used to estimate the fair value of each class of financial instruments:

trade and other receivables, cash and cash equivalents, other current financial assets and trade and other payables and accrued expenses: the carrying amounts approximate fair value because of the short maturity of these instruments;
loans and borrowings and loans granted to joint ventures: the fair value is estimated by discounting the future cash flows of each instrument using discount rates offered to the Group for similar instruments of comparable maturities by the Group's bankers. The own non-performance risk as at 31 December 2020 was assessed as insignificant.

Interest rates used for determining fair value

The interest rates used to discount estimated cash flows (PLN denominated), where applicable, are based on WIBOR plus margin as at 31 December 2020 and 31 December 2019 and are as follows:

As at 31 December	2020	2019

Loans and borrowings	2.9-4.3%	4.4-5.8%
Lease liabilities related to perpetual usufruct of land and
investment property	6.9%	6.9%

33. Fair value measurement hierarchy

The table below provides the fair value measurement hierarchy of the Group's assets and liabilities:

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices);
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Quantitative disclosures fair value hierarchy for assets and liabilities as at 31 December 2019 and 31 December 2020:

		Fair value measurement using:
	Date of	Quoted prices in active markets	Significant observable inputs	Significant unobservable inputs
In thousands of Polish Zlotys (PLN)	valuation	(Level 1)	(Level 2)	(Level 3)
Assets measured at fair value:
Investment property	31-Dec-20	-	-	8,411
Loans granted to joint ventures	31-Dec-20	-	12,028	-
Liabilities for which fair values are disclosed:
Bond loans	31-Dec-20	-	229,412	-
Interest bearing deferred trade payables	31-Dec-20	-	8,575	-
Secured bank loans	31-Dec-20	-	-	-

33. Fair value measurement hierarchy

Quantitative disclosures fair value hierarchy for assets and liabilities as at 31 December 2019 and 31 December 2020:

		Fair value measurement using:
In thousands of Polish Zlotys (PLN)	Date of valuation	Quoted prices in active markets (Level 1)	Significant observable inputs (Level 2)	Significant unobservable inputs (Level 3)
Assets measured at fair value:
Investment property	31-Dec-19	-	-	10,098
Loans granted to joint ventures	31-Dec-19	-	13,295	-
Liabilities for which fair values are disclosed:
Bond loans	31-Dec-19	-	186,785	-
Interest bearing deferred trade payables	31-Dec-19	-	2,318	-
Secured bank loans	31-Dec-19	-	12,868	-

34. Commitments and contingencies

Investment commitments:

The amounts in the table below present uncharged investment commitments of the Group in respect of construction services to be rendered by the general contractors:

As at 31 December In thousands of Polish Zlotys (PLN)	2020	2019
Ursus Centralny Ia	3,936	25,589
Ursus Centralny IIa	39,298	-
Ursus Centralny Ib	21,897	-
Viva Jagodno I	7,097	26,590
Panoramika V	58	8,472
Panoramika VI	11,420	-
Vitalia III	1,902	20,598
Miasto Moje III	-	22,477
Nove Warzymice I	1,945	12,157
Miasto Moje IV	18,854	37,243
Miasto Moje V	32,567	-
Nova Królikarnia 3a	1,657	15,639
Nova Królikarnia 3b	1,643	6,887
Nova Królikarnia 3c	1,643	11,419
Nova Królikarnia 2c	-	7,048
Grunwald2	37	12,379
Total	143,954	206,498

34. Commitments and contingencies

Unutilized construction loans:

The table below presents the list of the construction loan facilities, which the Group arranged for in conjunction with entering into loan agreements with the banks in order to secure financing of the construction and other outstanding costs of the ongoing projects. The amounts presented in the table below include the unutilized part of the construction loans available to the Group:

As at 31 December In thousands of Polish Zlotys (PLN)	2020	2019
Grunwald2	-	24,119
Panoramika V	-	19,070
Nova Królikarnia 2c (Wrocław 2016)	20,725	-
Total (excluding JV)	20,725	43,189
Wilanów Tulip	28,324	-
Total (including JV)	49,049	43,189

Contingent receivables - contracted sales not yet recognized:

The table below presents amounts to be received from the customers having bought apartments from the Group and which are based on the value of the sale and purchase agreements signed with the clients until 31 December 2020 after deduction of payments received at reporting date (such payments being presented in the Consolidated Statement of Financial Position as Advances received):

As at 31 December	2020	2019
In thousands of Polish Zlotys (PLN)
Panoramika IV	-	2,065
Panoramika V	874	9,276
Panoramika VI	10,814	-
Vitalia III	9,809	11,961
Grunwald2	5,979	30,751
Miasto Moje I & II	27	117
Miasto Moje III	3,230	23,488
Miasto Moje IV	22,694	8,565
Miasto Moje V	13,870	-
Ursus Centralny Ia	14,509	31,583
Ursus Centralny IIa	50,569	-
Ursus Centralny Ib	13,059	-
Miasto Marina	620	1,068
City Link III	6,371	22,257
Nowe Warzymice I	6,787	-
Nova Królikarnia 1a - 1e	-	2,998
Nova Królikarnia 2a & 2b	142	5,033
Nova Królikarnia 2c	9,577	4,181
Nova Królikarnia 3b	5,992	11,001
Nova Królikarnia 3a	8,097	-
Nova Królikarnia 3c	10,426	-
Viva Jagodno I	14,786	1,530
Other (old) projects	3,126	2,352
Total	211,357	168,226

34. Commitments and contingencies

Contingent liabilities on purchase of plots

Nova Królikarnia transaction

The Company and GCH have concluded call option agreements for a total value of PLN 78.9 million, under which the Company has been granted three call options with respect to the shares in the eight other project companies holding the remaining stages of the Nova Królikarnia project. The last option shall be executed the latest till April 2020. The exercise of the three call options will allow the Company to develop 161 units with an aggregate floor space of approximately 21,500 m² .

In respect of purchase of land agreement concluded with Global City Holding in 2018 (more information in Note 5) the Company could have been charged with certain fees in the maximum amount of PLN 11.9 million if the Company would not exercise all three call options within deadlines. As at 31 December 2020 all call options were realized by the Group and all of the payables were reduced to nil.

35. Related parties

Parent company

The Company enters into various transactions with its subsidiaries and with its directors and executive officers. For a list of subsidiaries reference is made to Note 1(b).

The main related parties' transactions arise on:

agreement with the major shareholder for remuneration of Management Board and Supervisory Board member;
transactions with key management personnel;
loans granted to related parties;
other.

Outstanding balances with related parties as at 31 December 2020 and as at 31 December 2019 are unsecured, interest free and settlement occurs in cash. The Group did not record any impairment of receivables relating to amounts owed by related parties in either year. This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates. All transactions with related parties were performed based on market conditions.

Agreement with the major shareholder for remuneration of Board member

During the year ended 31 December 2017, the subsidiary of the Company entered into a consulting agreement with its major (indirect) shareholder, A. Luzon Group for total monthly amount of PLN 70 thousand and covering travels and out of pocket expenses incurred in connection with rendering services. In the year 2019 and 2020 the agreement was continued.

35. Related parties

Transactions with key management personnel

During the year ended 31 December 2020 and the year ended 31 December 2019, key management personnel of the Company included the following members of the Management Board:

Nir Netzer (until 30 November 2019)	- President, Chief Executive Officer
Boaz Haim (from 1 December 2019)	- President, Chief Executive Officer
Rami Geris (until 31 January 2020)	- Member, Chief Financial Officer
Yaron Shama (from 1 February 2020)	- Member, Chief Financial Officer
Andrzej Gutowski	- Member, Sales & Marketing Director
Alon Haver	- Member of the Management Board

Key Management Board personnel compensation

Apart from the compensation listed below, there were no further benefits granted/paid to key management personnel. Key management personnel compensation can be presented as follows:

As at 31 December	2020	2019
In thousands of Polish Zlotys (PLN)

Salary and other short time benefit Termination fee	- -	1,000 155
Other	-	272
Subtotal - Mr Nir Netzer	-	1,427

Salary and other short time benefit	292	-
Management bonus	83	-
Other (2)	204	-
Subtotal - Mr Yaron Shama	579	-

Salary and other short time benefit (2)	66	512
Management bonus	-	75
Termination fee (2)	241	104
Other	-	35
Subtotal - Mr Rami Geris	307	726

Salary and other short time benefit	429	420
Incentive plan linked to financial results	445	331
Other (1)	21	35
Subtotal - Mr Andrzej Gutowski	895	786
Salary and other short time benefit	1,549	117
Management bonus	736	57
Signing bonus	-	237
Other (1)	728	501
Subtotal - Mr Boaz Haim	3,013	912

Total	4,793	3,851

(1) Mainly related to car expenses, flights and accommodation and an American school.

(2) Transactions with related parties.

35. Related parties

Key Management Board personnel compensation

Mr Alon Haver did not receive any direct remuneration from the Company nor from any of the Company's subsidiaries.

Loans to directors

As at 31 December 2020 and 31 December 2019, there were no loans granted to directors.

Other transactions with directors and management personnel

During the year ended 31 December 2020, the Group sold three residential units and one parking place to Mr Andrzej Gutowski for a total net amount (excluding VAT) of PLN 764 thousand. This transaction was executed at arm's length and was in adherence to the Group's policy in respect of related-party transactions. During the year ended 31 December 2019, the Group sold one commercial unit including two parking places to Mr Andrzej Gutowski for a total net amount (excluding VAT) of PLN 696 thousand. This transaction was executed at arm's length and was in adherence to the Group's policy in respect of related-party transactions.

Supervisory Board remuneration

The supervisory directors are entitled to an annual fee of EUR 8,900 plus an amount of EUR 1,500 per board meeting (EUR 750 if attendance is by telephone). The total amount due in respect of Supervisory Board fees during 2020 and 2019 amounted to PLN 397 thousand (EUR 88 thousand) and PLN 357 thousand (EUR 83 thousand), respectively. In additional the Company paid social security contributions at the amount of PLN 60 thousand in the year ended 31 December 2020.

Mr Amos Luzon did not receive any direct remuneration from the Company nor from any of the Company's subsidiaries.

Loans granted to related parties

All loans granted to the joint venture (Coralchief Sp. z o.o. – Projekt 1 Sp.k.). For additional information see Note 17.

Other

As a result of requirements pertaining to A. Luzon Group, one of the Company's larger (indirect) shareholders, whose shares are listed on the Tel Aviv stock exchange, the first quarter reports, semi-annual reports and third quarter reports are subject to a full scope review by the Company's auditors. For the Company itself that is listed on the Warsaw Stock Exchange, only the semi-annual report is subject to required review by the auditor. The Company has agreed with A. Luzon Group that the costs for the first and third quarter auditors' reviews will be shared between the Company and its shareholder.

36. Financial risk management, objectives and policies

The Group's activities expose it to a variety of financial risks: market risk (including currency risk, price risk and interest rate risk), credit risk and liquidity risk. The Group's overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group's financial performance. The Management Board reviews and agrees policies for managing each of these risks and they are summarized below. The Group also monitors the market price risk arising from all financial instruments.

The Group does not use derivative financial instruments to hedge currency or interest rate risks arising from the Group's operations and its sources of finance. It is, and has been throughout the year ended 31 December 2020 and 2019, the Group's policy that no trading in (derivative) financial instruments shall be undertaken.

The Group's principal financial instruments comprise cash balances, bank loans, bonds, trade receivables and trade payables. The main purpose of these financial instruments is to manage the Group's liquidity and to raise finance for the Group's operations.

Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counter party to a financial instrument fails to meet its contractual obligations. Financial instruments that potentially expose the Group to concentrations of credit risk consist principally of cash and cash equivalents and receivables.

The Group is making significant cash payments as security for preliminary land purchase agreements. The Group minimizes its credit risk arising from such payments by registering advance repayment obligations in the mortgage register of the respective property. Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. The Group does not expect any counter parties to fail in meeting their obligations. The carrying amounts of the financial assets represent the maximum credit risk exposure. The maximum exposure to credit risk at the reporting date was as follows:

In thousands of Polish Zloty (PLN)	As at 31 December 2020	As at 31 December 2019
Trade and other receivables	16,484	10,631
Loans granted to joint ventures	11,634	13,166
Cash and cash equivalents	135,099	95,591
Other current financial assets	14,239	22,157
	177,456	141,545

The Group places its cash and cash equivalents in financial institutions with high credit ratings. Management does not expect any counterparty to fail to meet its obligations. Concentrations of credit risk with respect to trade receivables are limited due to the large number of customers comprising the Group's customer base. The credit quality of cash at banks and short-term bank deposits can be assessed by reference to external credit ratings:

In thousands of Polish Zloty (PLN)	As at 31 December 2020	As at 31 December 2019
Rating
AAA	-	1
A	69,008	51,011
BBB	5,937	5,599
BB	60,155	38,980
Total cash at banks and short-term bank deposits	135,099	95,591

36. Financial risk management, objectives and policies

Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices, such as foreign exchange rates and interest rates will affect the Group's income or the value of its holdings of financial instruments, such as bond loans, bank loans, cash and cash equivalents. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing return.

(i) Foreign currency risk

The Group is exposed to foreign currency risk on receivables and payables denominated in a currency other than PLN to a limited extent only. As at 31 December 2020 and 2019, trade receivables and payables denominated in foreign currencies were insignificant.

(ii) Price risk

The Group's exposure to marketable and non-marketable securities price risk does not exists because the Group has not invested in securities as at 31 December 2020 and as at 31 December 2019.

(iii) Interest rate risk

Except for bonds series P amounting to PLN 10.0 million (all bonds series P were repaid during 2020) and Interest bearing deferred trade payables, the Group did not enter into any fixed-rate borrowings transaction. The Group's variable-rate borrowings are exposed to a risk of change in cash flows due to changes in interest rates. Short-term receivables and payables are not exposed to interest rate risk.

Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group's reputation.

The Group monitors its risk to a shortage of funds using a recurring liquidity planning tool. This tool considers the maturity of both its financial investments and financial assets (e.g. accounts receivable, other financial assets) and projected cash flows from operations. The Group's objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, bank loans and bond loans.

36. Financial risk management, objectives and policies

Interest rate risk and liquidity risk analyzed

In respect of income-earning financial assets and interest-bearing financial liabilities, the following tables indicate their average effective interest rates at the reporting date and the periods in which they mature or, if earlier, re-price.

		As at 31 December 2020
In thousands of Polish Zlotys (PLN)	Note	Average effective interest rate	Total	6 months or less	6-12 months		1-2 years 2-5 years	More than 5 years
Fixed rate instruments
Cash and cash equivalents	22	0.0%-0.1%	129,733	129,733	-	-	-	-
Interest bearing deferred trade payables		4.90%	(8,482)	-	(8,482)	-	-	-
Variable rate instruments
Cash and cash equivalents	22	0.35%-1.20%	5,366	5,366	-	-	-	-
Floating rate bonds	25,26	Wibor 6M + 2.85%-4.3%	(230,072)	(54,640)	-	(116,345)	(59,087)	-
Loans granted to joint ventures	17	Wibor 3M + 4%	11,634	-	-	11,634	-	-

	As at 31 December 2019
In thousands of Polish Zlotys (PLN)	Note	Average effective interest rate	Total	6 months or less	6-12 months	1-2 years	2-5 years	More than 5 years
Fixed rate instruments
Cash and cash equivalents	22 25,	0.0%	13,669	13,669	-	-	-	-
Bond loans	26	5.25%	(10,032)	(62)	(9,970)	-	-	-
Interest bearing deferred trade payables		4.90%	(2,338)	-	(2,338)	-	-	-
Variable rate instruments

Cash and cash equivalents	22	0.35%-1.20%	81,922	81,922	-	-	-	-
Secured bank loans	27	Wibor + 2.54% - 2.7%	(12,875)	(5,607)	(7,268)	-	-	-
Floating rate bonds	25, 26	Wibor 6M + 2.85%-4.0%	(177,937)	(11,897)	(14,962)	(74,434)	(76,644)	-
Loans granted to joint ventures	17	Wibor 6M + 4.0%	13,166	-	1,977	-	11,189	-

36. Financial risk management, objectives and policies

Interest rate risk and liquidity risk analyzed

It is estimated that a general increase of one percentage point in interest rates at the reporting date would increase/(decrease) the net assets and the statement of comprehensive income by the amounts listed in the table below. The analysis prepared for 12-month periods assumes that all other variables remain unchanged.

	31 December 2020			31 December 2019
In thousands of Polish Zlotys (PLN)	Increase by 1%	decrease by 1%	Increase by 1%	decrease by 1%
Income statement
Variable interest rate assets	18	(18)	273	(273)
Variable interest rate liabilities*	(767)	767	(636)	636
Total	(749)	749	(363)	363
Net assets
Variable interest rate assets	18	(18)	273	(273)
Variable interest rate liabilities*	(767)	767	(636)	636
Total	(749)	749	(363)	363

* The financial costs which are related to loans and borrowing are capitalized by the Group to work-in-progress. Such costs are gradually recognized in the statement of comprehensive income based on the proportion of residential units sold. It has been assumed in the above analysis that one third of the financial costs calculated and capitalized in a given period is disclosed in the statement of comprehensive income based on the proportion of residential units sold of a given period and the remaining part of the costs remains in the inventories and will be disclosed in the statement of comprehensive income in the following accounting periods.

The table below analyses the Group's financial liabilities into relevant maturity groupings based on the remaining period from reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

	Year ended 31 December 2020
	Less than	Between	Between 3 and 5	Over
In thousands of Polish Zlotys (PLN)	1 year	1 and 2 years	years	5 years

Bond loans	61,059	128,908	61,372	-
Secured bank loans	-	-	-	-
Interest bearing deferred trade payables	8,482	-	-	-
Lease liabilities related to perpetual usufruct of land and investment property	958	838	2,201	10,495
Trade and other payables	56,949	-	-	-
Total	127,448	129,746	63,573	10,495

	As at 31 December 2019
		Between	Between
	Less than	1 and 2	3 and 5	Over
In thousands of Polish Zlotys (PLN)	1 year	years	years	5 years

Lease liabilities related to perpetual usufruct of land and investment property	1,001	875	2,300	19,925
Bond loans	45,575	80,366	79,724	-
Secured bank loans	13,609	-	-	-
Interest bearing deferred trade payables	2,452	-	-	-
Trade and other payables	96,018	-	-	-
Total	158,655	81,241	82,024	19,925

36. Financial risk management, objectives and policies

Real-estate risk

COVID-19 pandemic hit hard the world economy and Poland was not an exception, most of the real estate sectors suffered from the lockdown imposed by the government, the less effected sector was the residential sector in which the company operate. Year 2020 was exceptional year in all aspects for the company, the company performed well under this changing conditions and achieved impressive results although operating within pandemic period and government restrictions. The overall economic situation and geopolitical situation in Europe and in Poland and the ongoing uncertainties in the real estate market is still vulnerable due to the COVID-19 effect. This situation make it very difficult to predict with precision the results for 2021. The level of development of the Polish economy, the performance of the banking industry and consumers' interest in new housing projects, changes in construction cost, the challenge of securing lands for considerable prices and the significant impact of it on the margins of new phases and projects, as well as increasing competition in the market and on top of all operating in global pandemic situation are considered to be the most significant uncertainties for the financial year ending 31 December 2021.

Construction cost risk

Construction costs increased significantly over the last 2 years and stabilized during 2020, there is a risk that construction costs might continue to increase also during 2021. The potential increase is mainly related to the growth in costs of hiring qualified workforce, as well as to an increase in costs of building materials. The Company and the Group do not operate a construction business, but, instead, for each project an agreement is concluded with a third party general contractor, who is responsible for running the construction and for finalizing the project including obtaining all permits necessary for safe use of the apartments. In the year 2020 there were many changes in the constructions law, which might impact the cost of constructions. The biggest change refers to the increase in fire safety in case of a change in the use of the building or its part. The notification should be accompanied by an expert's opinion on fire safety, which by the end might be reflected in the construction costs offered by the general contractor. In order to mitigate the risk of the increase in construction costs, the Company and the Group are signing a lump-sum contact with the general contractor, which will allow the Group to complete the project based on the estimated budget.

Risk of non-performance by General Contractors

In each project or stage of the project, the Group has concluded and will conclude contracts for the construction and implementation of development projects with one general contractor. There is a risk that non-performance of the agreement by the general contractor may cause delays in the project or significantly impact the business, financial condition or results of the Company and the Group. The Company sees a potential risk for nonperformance of obligations by the general contractor in the availability of qualified workforce, in the increase of salaries and cost of construction materials. Non-performance may result in claims against general contractor with the risk that general contractor may also fail to fully satisfy possible claims of the Company and the Group. The company and the Group Implement selection criteria when hiring a general contractor, which include, experience, professionalism, financial strength of the general contractor (with the obligation to provide bank or insurance guarantee) as well as the quality of the insurance policy covering all risks associated with the construction process.

Changes in legislation

Potential future changes in the legislation (contemplated deletion of open escrow accounts as well as the possible introduction of compulsory contributions to the developer guarantee fund) also constitute a risk that could directly or indirectly affect the Company's and the Group's activities and results. The Management Board assesses, however, that the possible introduction of such changes might have a negative impact on the Group's activities to a lesser extent than on other market operators, primarily due to the Company's and the Group's comfortable financial situation and also because of the trust and good reputation, which the Company and the Group enjoy among financial institutions.

Availability of mortgages

The demand for residential real estate largely depends on the availability of credits and loans for financing the purchase of apartments and houses by individuals. Possible increase in interest rates, deterioration of the economic situation in Poland, the new pandemic situation and the increase in unemployment in Poland as well as possible administrative restrictions on lending activities of the banks may cause a drop in demand for apartments and houses, and therefore a decrease in interest from potential buyers in the Group's development projects, which in turn may have a significant adverse impact on activities, financial standing or performance of the Company and the Group.

36. Financial risk management, objectives and policies

Real-estate risk

Availability of mortgages

In 2020, access to mortgages was selective due to pandemic outbreak restrictions imposed by banks interest rates on a mortgage loans remain low and stable, at levels around their historic minimum. The restrictive approach of the banks post pandemic outbreak in the beginning of 2020 is seems to be unwinding which may contribute to a better access to Mortgage Loans, hens effecting positively on potential demand for the Housing market.

Administration

The nature of real estate development projects requires a number of licenses, approvals and arrangements to be obtained by the Company and the Group at every stage of the development process. Despite significant caution applied in the project execution schedules, there is always a risk of delay in their obtainment. In addition there is always the risk of protests made against permits decisions which have already been issued (also due to appeals with no consequences for the appellants) or in the worse scenario failing to obtain the relevant permits. Additional risk might rise with respect to properties under perpetual usufruct. All the above factors may affect the ability of the Group to conduct and complete its executed and planned projects.

37. Capital management

When managing capital, it is the Group's objective to safeguard the Group's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the profit appropriation, return capital to shareholders, issue new shares or sell assets to reduce debt. Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio and leverage. The Group's policy is to keep the gearing ratio of the Group lower than 60%, and a leverage of the Group lower than 50%.

Banking covenants vary according to each loan agreement, but typically are not related directly to the gearing ratio of the Company but to the proportion of loan to value of the mortgage collateral which usually is required not to cross the limit of 70% or 75%. Moreover the Company is obliged to monitor its indebtedness according to the conditions of the bond issuance, which require, amongst others, that in each reporting period the Company shall test the ratio between Net debt to Equity. The Ratio shall not exceed 80% (for additional information see Note 26).

The gearing ratio is calculated as net debt divided by total equity. Net debt is calculated as total borrowings (including 'current and non-current borrowings' as shown in the consolidated Statement of Financial Position) less cash and cash equivalents and less Other current financial assets. Leverage is calculated as net debt divided by total capital employed. Total capital employed is calculated as 'equity' as shown in the Consolidated Statement of Financial Position plus net debt financing assets in operation.

The gearing ratios and leverage at 31 December 2020 and 31 December 2019 were as follows: As at 31 December 2020 2019

In thousands of Polish Zlotys (PLN)

Loan and borrowings, including current portion	230,072	200,844
Interest bearing deferred trade payables	8,482	2,338
Less: cash and cash equivalents	(135,099)	(95,591)
Less: other current financial assets	(14,239)	(22,157)
Net debt	89,216	85,434

Total equity	379,817	350,494
Total capital employed	469,033	435,928

Gearing ratio	23.5%	24.4%
Leverage	19.0%	19.6%

37. Capital management

Neither the Company nor its subsidiaries are subject to externally imposed capital requirements. There were no changes in the Groups approach to capital management during the year.

During the period the Group did not breach any of its loan and borrowings covenants, nor did it default on any other of its obligations under its loan agreements.

38. Cash flow reconciliation

Inventory and Residential land bank
For the year ended 31 December	2020	2019
In thousands of Polish Zlotys (PLN)
Balance sheet change in inventory	52,134	(112,922)
Finance expense, net capitalized into inventory	6,875	9,059
Impact of IFRS 16	(8,266)	25,665
Acquisition of the Nova Królikarnia project	-	70,108
Aquisition of Studzienna	628	-
Write-down of inventory	(1,326)	594
Other	(3,783)	-
Change in inventory in the consolidated statement of cash flows	46,262	(7,496)
Trade and other receivables and prepayments
For the year ended 31 December	2020	2019
In thousands of Polish Zlotys (PLN)
Balance sheet change in trade and other receivables and prepayments	(12,629)	(10,052)
Impact of IFRS 16	960	1,753
Acquisition of the Nova Królikarnia project	-	152
Change in Trade and other receivables and prepayments in the
consolidated statement of cash flows	(11,669)	(8,147)

Trade and other accounts payable
For the year ended 31 December	2020	2019
In thousands of Polish Zlotys (PLN)
Balance sheet change in Trade and other accounts payable	(29,917)	45,466
Impact of IFRS 16	409	(1,697)
Other	174	(12)
Acquisition of the Nova Królikarnia project	46,914	(24,191)
Change in Trade and other payables and accrued expenses in the
consolidated statement of cash flows	17,580	19,566

39. Information about agreed-upon engagements of the Company's auditor

Information about audit agreements and the values from those agreements is disclosed below:

For the year ended 31 December	2020	2019
In thousands of Polish Zlotys (PLN)
Audit and review remuneration	460	461
Other services	46	-
Audit remuneration for prior periods	-	56
Reimbursed audit review costs (1)	(127)	(73)
Total remuneration for the expense of the Company	379	444

(1) Costs in respect of the audit review of the Company's first and third quarter reports have been reimbursed in 50% to Main Company's shareholder. For an explanation reference is made to Note 35 (under 'Other').

40. Events during the financial year

Bonds loans

More information about Bond loans and repayments of Bond loans during 2020 was included in Note 25 and Note 26.

Bank loans

In March 2020, the Company executed a loan agreement with Alior Bank S.A. related to the Nova Królikarnia 2c project in Warsaw. Under this loan agreement Alior Bank S.A. is to provide financing and refinancing to cover the costs of construction up to a total amount of PLN 20.7 million. Under the loan agreement, the final repayment date is December 2021. As at 31 December 2020 the bank loan is not used.

Commencements of new projects

In January 2020, the Company commenced the sales of the Ursus Centralny IIa project comprising of 243 apartments and 8 commercial units with an aggregate floor space of 13,500 m² .

In July 2020, the Company commenced the sales of Panoramika VI project comprising of 76 apartments with an aggregate floor space of 3,600 m² .

In September 2020, the Company commenced the sales of Miasto Moje V project comprising of 170 apartments with an aggregate floor space of 8,500 m² .

In September 2020, the Company commenced the sales of the Ursus Centralny Ib project comprising of 90 apartments and 7 commercial units with an aggregate floor space of 5,700 m² .

In December 2020, the Company commenced construction of the Nowe Warzymice II project comprising of 66 apartments with an aggregate floor space of 3,500 m² .

40. Events during the financial year

Completions of projects

In April 2020, the Company completed the construction of Grunwald2 project comprising 267 apartments and 1 commercial unit with an aggregate floor space of 14,500 m² .

In August 2020, the Company completed the construction of the Panoramika V project comprising 115 units with an aggregate floor space of 6,000 m² .

In September 2020, the Company completed the construction of the Nova Królikarnia 2c project comprising 18 houses with a total area of 3,600 m² .

In November 2020, the Company completed the construction of the Miasto Moje III project comprising 196 units with a total area of 10,200 m² .

Purchase of land

On 28 April 2020 Company (via its subsidiary) executed a final agreement, based on which it purchased the ownership right of an undeveloped property located in Poznań, Grunwald district. According to the valid zoning conditions, the plot is designated for development of residential multifamily project. The purchase price was agreed at PLN 3.0 million and paid. The project will comprise 72 units with an aggregate floor space of 3,300 m² .

On 27 October 2020 the Company (via its subsidiary) executed an agreement concerning the purchase of plots of land located in Warsaw, Mokotów district, at Gąsocińska street. The purchase price was agreed at PLN 13.9 million, but it may be reduced in the event of failure to obtain specific permits for demolition of buildings and road investments related to the Property within the prescribed period. Part of the price in the amount of PLN 13.0 million was paid. The project will comprise 80 units with an aggregate floor space of 4,800 m² .

On 6 November 2020 the Company (via its subsidiary) entered into a conditional preliminary agreement concerning the purchase of the perpetual usufruct right of a plot of land located in Poznań, at Swierzawskiego street, with an area of c.a. 2,900 m² . The final price for the Property shall be not higher than PLN 5.0 million. On 15th of February 2021 the company announce of withdrawal from the transaction due to failure to fulfill condition precedents for conclusion of the final deal.

On 23 November 2020 the Company (via its subsidiary) entered into a preliminary agreement concerning the purchase of the ownership rights of a plot of land located in Warsaw, Białołęka district, at Epopei street, with an area of c.a. 27,500 m² . The price for the property was established at PLN 20.0 million. As at 31 December 2020 the Company paid PLN 1.0 million advance and 6.67 million notary deposit.

On 3 December 2020 the Company (via its subsidiary) entered into a conditional preliminary agreement concerning the purchase of the ownership rights of a plot of land located in Poznań, Grunwald district, at Smardzewska street, with an area of c.a. 20,000 m² . The final price for the property was established at PLN 26.0 million. Final purchase agreement was signed on 11th of February 2021.

40. Events during the financial year

Purchase of land

On 18 December 2020 the Company (via its subsidiary) concluded (through the special purpose vehicle, immediately after its acquisition) the final agreement and became (through the acquisition of shares in the same special purpose vehicle) a party to the preliminary agreement, which agreements jointly concern the acquisition of the ownership title to the land property located in Warsaw, Wola district, at Studzienna street, with a total area of 2,715 m² . The total price of the property net amounts to PLN 13.5 million, wherein the net amount of PLN 4 million will be paid upon signing the final contract for the part of the Property with an area of 1,042 m² , which is to be signed until 9 August 2021.

Share buyback program

The total number of own shares held by the Company as at 31 December 2020 was equal to 1,489,235 shares, which constitute 0.91% of the share capital of the Company and votes at the General Meeting, out of which 814,335 were acquired during 2020. More information about Buyback Program was presented in note 23.

Changes in the Management Board and Supervisory Board

On 20 December 2019, Mr Rami Geris submitted his resignation as Finance Vice President and as member of the Management Board of the Company with effective date as of 31 January 2020.

On 16 January 2020, the Supervisory Board of the Company appointed Mr Yaron Shama to the position of member of the Management Board of the Company and Finance Vice President as of 1 February 2020 for a five-year joint term of office of the Management Board, which commenced on 1 April 2020.

There were no changes in Supervisory Board during the year ended 31 December 2020.

Dividend

The dividend in the total amount of PLN 9,787 thousand was paid on 24 August 2020. More information about dividend was presented in note 23.

COVID-19

During the period of 12 months ended on 31 December 2020, like the rest of Poland and the world, the Company was facing a challenging period in which the COVID-19 pandemic outbreak was a risk in terms of operations of the Company as well as its effect on the business environment in which the Company is operating.

The Company identifies few areas of business risks which could significantly influence the Company's shortand long-term operational activity. The following aspects have been recognized and have been the focus of the Management Board efforts to minimize their effect on the Company's operations:

potential decrease in Company's sales due to lower demand, as a result of tightening the accessibility to mortgages from banks or increase of unemployment;
potential risk of delay in completing the Company's projects (on time or on budget), which could be caused by shortage of construction personal, shortage of raw materials or prolongation of administrative procedures and delays with obtaining building permits and occupancy permits;
potential problems with obtaining bank financing for the Company or issuance of bonds for further development of the Company projects and land bank;
all of the above could potentially affect the company cash standing and liquidity;
potential effect on the covenants requirements to our bond's holders.

The above points were monitored on a daily basis by the Management Board of the Company, together with the hard work of the Company's employees. During this period the Management Board adopted and implemented counter measuring precautions in order to address each of the above potential risk.

40. Events during the financial year

COVID-19

As a result, the current cash position of the company and its financial standing was stable and unaffected by the impact of Covid-19 pandemic. The Company maintain very good net debts to equity ratios which are very important factors to our investors and bond's holders.

The sale results of the Company during the pandemic period reached to 918 units (which is a new record in the company history), outperform the Company expectations and projections for this year and significantly better than the results in year 2019. The Company delivered a record high number of units during 2020 reaching to 966 units comparing to 658 units in 2019.

The Company managed also to issue bond in the amount of PLN 100 million which was exceeding the Company initial requirements and show the trust of our investors and bondholders in the Company and in its activity.

The Company did not have any problem with obtaining bank financing to its on-going projects if such would be needed.

During 2020, the Company signed number of final purchase agreements and entered into numbers of preliminary purchase agreements securing a purchase of plots in order to secure its midterm and long term operations.

The Company managed to obtain on time, in most of its project, all the administrative permits including building permits and occupancy permits which are vital for its daily operations.

The Management Board is aware of the fact that although the good results presented by the Company in the year 2020, there is still uncertainty prevailing in Poland due to the COVID-19 pandemic. The Management Board will continue monitoring the situation on an on-going basis, and adopt further actions, if necessary, in order to reduce as much as it is possible the effect of the COVID-19 on the company operations and strategy.

41. Subsequent events

Buy-back of own shares

From 31 December 2020 until 9 March 2021, the Company acquired 78,719 own shares for a total price of PLN 118.2 thousand. As at 9 March 2021, the Company held 1,567,954 own shares representing 0.96% of total shares issued by the Company.

Bond loans

On 1 February 2021, the Company repaid 15% of outstanding series U bonds with value of PLN 4,848 thousand. After this repayment, the nominal value was set as PLN 850 per bond and the total amount of outstanding series U bonds amounted to PLN 27,469 thousand.

Purchase of land

On 27 January 2021 the Company (via its subsidiary) entered into preliminary agreement concerning the purchase of the perpetual usufruct right of a plot of land located in Warsaw, Ursus district. The price of the Property was established at PLN 1,500 net per PUM however not higher than PLN 150 million. According to initial evaluation it shall be feasible to construct on the Property a complex of multi-family residential buildings with underground car parks, commercial areas on the ground floors and the necessary infrastructure with a total area of 100 thousand m² . The conclusion of the final agreement will take place only upon fulfillment of conditions precedent, including conducting by the Company satisfactory due diligence process of the Property and after such a change in the purpose and permitted use of the Property to enable the development project to be carried out on it, as described above. The parties also reserved the right to withdraw from the Agreement by either party if the PUM is lower than 90 thousand m² . The conclusion of the final agreement shall take place not later than 31 December 2027. The Company paid PLN 10.0 million deposit to the notary.

41. Subsequent events

Purchase of land

On 11 February 2021 entered into final agreements concerning the purchase of the ownership rights of a plot of land located in Poznań, at Smardzewska street, with an area of c.a. 20,000 m2, which was announced on 3 December 2020. The final price was PLN 26 million and is fully paid.

On 3 March 2021 the Company (via its subsidiary) entered into preliminary agreement concerning the purchase of the perpetual usufruct right of a plot of land located in Warsaw, Ursynów district, with an area of c.a. 2.4 thousand m² . The price of the property was established at PLN 15.9 million net. According to the Company's initial evaluation it shall be feasible to construct on the property a multifamily residential building with underground car parks, commercial areas and the necessary infrastructure with a total usable area of approx. 5.7 thousand m² .

Conclusion of a material agreement for General contractors

On the 11 February 2020 the Company (via its subsidiary) executed an option to mandate Karmar S.A. (the General contractor) with the execution of stage IIa and IIb of Viva Jagodno investment, construction works will commence no later than 31 March 2021. Completion of substage IIa is envisaged within 18.5 months as of commencement and of substage IIb within 26.5 months. Viva Jagodno II consists of residential building (226 units) with three above-ground parts connected by a common underground part. The fee for the General contractor under this agreement will amount to PLN 52.0 million.

Nova Królikarnia 3b and Vitalia III - occupancy permit

On 16 February 2021 the Company has obtained a legally valid occupancy permit for Nova Królikarnia 3b property developed in Warsaw.

On 2 March 2021 the Company has obtained a legally valid occupancy permit for Vitalia III property developed in Wrocław.

Commencements of new projects

On 1 March 2021, the Company has obtained a legally valid building permit for Grunwaldzka project in Poznan comprising of 72 units with an aggregated floor space of 3,300 m² .

On 2 March 2021, the Company has obtained a legally valid building permit for Ursus Centralny IIb project comprising of 206 units with an aggregated floor space of 11,800 m² and for Ursus Centralny IIc project comprising of 195 units with an aggregated floor space of 11,100 m² .

___________________ ___________________ Boaz Haim Yaron Shama

President of the Management Board Vicepresident of the Management Board, CFO

___________________ ___________________ Andrzej Gutowski Alon Haver Vicepresident of the Management Board, Member of the Management Board Sales and Marketing Director

Anna Rzeczkowska Person responsible for the accounting records

___________________

Ronson Development SE

Company Financial Statements for the year ended 31 December 2020

Financial Statements for the year ended 31 December 2020 Statement of Comprehensive Income 1 Statement of Financial Position 2 Statement of Changes in Equity 3 Statement of Cash Flows 4 Notes to the Financial Statements 5

Company Statement of Comprehensive Income

For the year ended 31 December		2020	2019
In thousands of Polish Zlotys (PLN)	Note

Revenues from consulting services	4	9,005	6,456
General and administrative expense	5	(5,420)	(4,444)
Other revenues/(expenses)		17	(151)
Operating profit		3,602	1,861
Result from subsidiaries after taxation	9	40,775	18,944
Operating profit after result from subsidiaries		44,378	20,805

Finance income	7	6,594	7,352
Finance expense	7	(9,753)	(11,278)
Net finance income/(expense)		(3,159)	(3,926)

Profit/(loss) before taxation		41,219	16,879
Income tax benefit/(expense)	8	(1,076)	535
Profit for the period		40,143	17,414

Other comprehensive income			-
Total comprehensive income/(expense) for the period, net of tax		40,143	17,414

Weighted average number of ordinary shares (basic and diluted)		163,103,163	163,689,616

In Polish Zlotys (PLN)
Net earnings/(loss) per share attributable to the equity holders of
the parent (basic and diluted)		0.246	0.106

Company Statement of Financial Position

As at 31 December		2020	2019
In thousands of Polish Zlotys (PLN)	Note
Assets
Intangible assets		39	-
Investment in subsidiaries	9	435,874	419,835
Loan granted to subsidiaries	10	160,040	89,606
Deferred tax assets		-	1,015
Total non-current assets		595,953	510,456
Trade and other receivables and prepayments		88	107
Receivable from subsidiaries		3,699	1,244
Loan granted to subsidiaries	10	307	24,223
Cash and cash equivalents		27,152	7,173
Total current assets		31,246	32,747
Total assets		627,199	543,203

Equity
Shareholders' equity	11
Share capital		12,503	12,503
Share premium reserve		157,905	150,278
Treasury shares		(1,613)	(580)
Retained earnings		211,022	188,293
Total shareholders' equity		379,817	350,494

Liabilities
Long-term liabilities
Bond loans	12	175,382	151,078
Loans from subsidiaries		12,270	-
Deferred tax liabilities		61	-
Total long-term liabilities		187,712	151,078

Current liabilities
Bond loans	12	52,625	34,924
Other payables - accrued interests on bonds	12	2,065	1,967
Loans from subsidiaries	12	3,309	3,309
Trade and other payables and accrued expenses	13	1,670	1,431
Total current liabilities		59,670	41,631
Total liabilities		247,382	192,709
Total shareholders' equity and liabilities		627,199	543,203

The notes included on pages 5 to 29 are an integral part of these company financial statements

Company Statement of Changes in Equity

In thousands of Polish Zlotys (PLN)	Share capital	Share premium	Treasury shares	Retained earnings	Total equity
Balance at 1 January 2020	12,503	150,278	(580)	188,293	350,494
Net profit for the period ended 31 December 2020	-	-	-	40,143	40,143
Allocated to share premium	-	7,627	-	(7,627)	-
Repurchase of own shares	-	-	(1,033)		(1,033)
Payment of dividends	-	-	-	(9,787)	(9,787)
Balance at 31 December 2020	12,503	157,905	(1,613)	211,022	379,817

In thousands of Polish Zlotys (PLN)	Share capital	Share premium	Treasury shares	Retained earnings(1)	Total equity
Balance at 1 January 2019	12,503	150,278	-	180,699	343,480
Net profit for the year ended 31 December 2019	-	-	-	17,414	17,414
Dividend paid	-	-	-	(9,820)	(9,820)
Repurchase of own shares	-	-	(580)	-	(580)
Balance at 31 December 2019	12,503	150,278	(580)	188,293	350,494

The notes included on pages 5 to 29 are an integral part of these company financial statements

Company Statement of Cash Flows

For the 12 months period ended 31 December	2020	2019



































Cash and cash equivalents at 31 December	27,152	7,173

The notes included on pages 5 to 29 are an integral part of these company financial statements

1. General

Ronson Development SE ('the Company'), formerly named Ronson Europe N.V., is an European Company with its statutory seat in Warsaw, Poland. The registered office is located at al. Komisji Edukacji Narodowej 57. The Company was incorporated in the Netherlands on 18 June 2007 as Ronson Europe N.V. with statutory seat in Rotterdam. During 2018, the Company changed its name and was transformed into an European Company (SE) and, effectively as of 31 October 2018, transferred its registered office of the Company from the Netherlands to Poland.

The details of the entities, the year of incorporation and the percentage of ownership and voting rights directly or indirectly held by the Company as at 31 December 2020 and as at 31 December 2019, are presented below and on the following page.

Entity name incorporation voting rights at the end of 31 December 31 December Share of ownership & voting rights at the end of 2020 2019 a. held directly by the Company: 1 Ronson Development Management Sp. z o.o. 1999 100% 100% Ronson Development 2000 Sp. z o.o. (2) 2 2000 - 100% 3 Ronson Development Warsaw Sp. z o.o. 2000 100% 100% 4 Ronson Development Investment Sp. z o.o. 2011 100% 100% 5 Ronson Development Metropol Sp. z o.o. 2011 100% 100% Ronson Development Properties Sp. z o.o. (2) 6 2002 - 100% Apartments Projekt Sp. z o.o. (2) 7 2003 - 100% Ronson Development Enterprise Sp. z o.o. (2) 8 2004 - 100% Ronson Development Company Sp. z o.o. (2) 9 2005 - 100% 10 Ronson Development Creations Sp. z o.o. 2005 100% 100% Ronson Development Buildings Sp. z o.o. (2) 11 2005 - 100% Ronson Development Structure Sp. z o.o. (2) 12 2005 - 100% Ronson Development Poznań Sp. z o.o. (2) 13 2005 - 100% E.E.E. Development Sp. z o.o. (2) 14 2005 - 100% Ronson Development Innovation Sp. z o.o. (2) 15 2006 - 100% Ronson Development Wrocław Sp. z o.o. (2) 16 2006 - 100% Ronson Development Capital Sp. z o.o. (2) 17 2006 - 100% 18 Ronson Development Sp. z o.o. 2006 100% 100% 19 Ronson Development Construction Sp. z o.o. 2006 100% 100% 20 City 2015 Sp. z o.o. 2006 100% 100% Ronson Development Village Sp. z o.o. (1) 21 2007 100% 100% Ronson Development Conception Sp. z o.o. (2) 22 2007 - 100% Ronson Development Architecture Sp. z o.o. (2) 23 2007 - 100% 24 Ronson Development Skyline Sp. z o.o. 2007 100% 100% Continental Development Sp. z o.o. (2) 25 2007 - 100% Ronson Development Universal Sp. z o.o. (1) 26 2007 100% 100% Ronson Development Retreat Sp. z o.o. (2) 27 2007 - 100% 28 Ronson Development South Sp. z o.o. 2007 100% 100% 29 Ronson Development Partner 5 Sp. z o.o. 2007 100% 100% 30 Ronson Development Partner 4 Sp. z o.o. 2007 100% 100% 31 Ronson Development North Sp. z o.o. 2007 100% 100% 32 Ronson Development Providence Sp. z o.o. 2007 100% 100% 33 Ronson Development Finco Sp. z o.o. 2009 100% 100% 34 Ronson Development Partner 2 Sp. z o.o. 2009 100% 100% Ronson Development Skyline 2010 Sp. z o.o. w likwidacji (2) 35 2010 - 100% 36 Ronson Development Partner 3 Sp. z o.o. 2012 100% 100% 37 ACG 23 Sp. z o.o. / Ronson Development Studzienna Sp. z o.o. (9) 2019 100% -		Year of	Share of ownership &

1. General

	Entity name	Year of incorporation		Share of ownership & voting rights at the end of

	Share of ownership & voting rights at the end of		31 December 2020	31 December 2019
b.	held indirectly by the Company :
38	Nova Królikarnia B.V. (Company with the registered office in the Netherlands)	2016	100%	100%
39	AGRT Sp. z o.o.	2007	100%	100%
40	Ronson Development Partner 4 Sp. z o.o. – Panoramika Sp.k.	2007	100%	100%
41	Ronson Development Sp z o.o. - Estate Sp.k.	2007	100%	100%
42	Ronson Development Sp. z o.o. - Home Sp.k.	2007	100%	100%
43	Ronson Development Sp z o.o. - Horizon Sp.k.	2007	100%	100%
44	Ronson Development Partner 3 Sp. z o.o. - Sakura Sp.k.	2007	100%	100%
45	Destiny Sp. z o.o. (6)	2007	-	100%
46	Ronson Development Millenium Sp. z o.o. (6)	2007	-	100%
47	Ronson Development Partner 3 sp. z o.o. – Viva Jagodno sp. k.	2009	100%	100%
48	Ronson Development Sp. z o.o. - Apartments 2011 Sp.k.	2009	100%	100%
49	Ronson Development Sp. z o.o. - Idea Sp.k.	2009	100%	100%
50	Ronson Development Partner 2 Sp. z o.o. – Destiny 2011 Sp.k.	2009	100%	100%
51	Ronson Development Partner 2 Sp. z o.o. - Enterprise 2011 Sp.k.	2009	100%	100%
52	Ronson Development Partner 2 Sp. z o.o. - Retreat 2011 Sp.k.	2009	100%	100%
53	Ronson Development Partner 5 Sp. z o.o - Vitalia Sp.k.	2009	100%	100%
54	Ronson Development Sp. z o.o. - 2011 Sp.k.	2009	100%	100%
55	Ronson Development Sp. z o.o. - Gemini 2 Sp.k.	2009	100%	100%
56	Ronson Development Sp. z o.o. - Verdis Sp.k.	2009	100%	100%
57	Ronson Espresso Sp. z o.o.	2006	100%	100%
58	Ronson Development Apartments 2010 Sp. z o.o. (6)	2010	-	100%
59	RD 2010 Sp. z o.o. (6)	2010	-	100%
60	Retreat Sp. z o.o.	2010	100%	100%
	Enterprise 2010 Sp. z o.o.(6)
61	Wrocław 2010 Sp. z o.o. (6)	2010	-	100%
62	E.E.E. Development 2010 Sp. z o.o. (6)	2010	-	100%
63		2010	-	100%
64	Ronson Development Nautica 2010 Sp. z o.o.	2010	100%	100%
65	Gemini 2010 Sp. z o.o. (6)	2010	-	100%
66	Ronson Development Sp. z o.o. - Naturalis Sp.k.	2011	100%	100%
67	Ronson Development Sp. z o.o. - Impressio Sp.k.	2011	100%	100%
68	Ronson Development Partner 3 Sp. z o.o.- Nowe Warzymice Sp. k	2011	100%	100%
69	Ronson Development Sp. z o.o. - Providence 2011 Sp.k.	2011	100%	100%
70	Ronson Development Partner 2 Sp. z o.o. - Capital 2011 Sp. k.	2011	100%	100%
71	Ronson Development Partner 5 Sp. z o.o. - Miasto Marina Sp.k.	2011	100%	100%
72	Ronson Development Partner 5 Sp. z o.o. - City 1 Sp.k.	2012	100%	100%
73	Ronson Development Partner 2 Sp. z o.o. - Miasto Moje Sp. k.	2012	100%	100%
74	Ronson Development sp. z o.o. – Ursus Centralny Sp. k.	2012	100%	100%
75	Ronson Development Sp. z o.o. - City 4 Sp.k.	2016	100%	100%
76	Ronson Development Partner 2 Sp. z o.o. – Grunwald Sp.k.	2016	100%	100%
	77 Ronson Development Sp. z o.o. Grunwaldzka" Sp.k. (previously: as Ronson Development Sp. z o.o. - Projekt 2 Sp.k.)	2016	100%	100%
78	Ronson Development Sp. z o.o. - Projekt 3 Sp.k.	2016	100%	100%
79	Ronson Development Sp. z o.o. - Projekt 4 Sp.k.	2017	100%	100%
80	Ronson Development Sp. z o.o. - Projekt 5 Sp.k.	2017	100%	100%
81	Ronson Development Sp. z o.o. - Projekt 6 Sp.k.	2017	100%	100%
82	Ronson Development Sp. z o.o. - Projekt 7 Sp.k.	2017	100%	100%
83	Ronson Development Sp. z o.o. - Projekt 8 Sp.k.	2017	100%	100%
84	Ursus 2017 Sp. z o.o. (4)	2017	-	100%
85	Projekt City Sp. z o.o. (5)	2017	-	100%
86	Bolzanus Limited (Company with the registered office in Cyprus)	2013	100%	100%
87	Park Development Properties Sp. z o.o. - Town Sp.k.	2007	100%	100%
88	Tras Sp. z o.o. (7)	2015	-	100%
89	Pod Skocznią Project Sp. z o.o. (7)	2015	-	100%
90	District 20 Sp. z o.o. (7)	2015	-	100%
91	Arkadia Development Sp. z o.o. (7)	2015	-	100%
92	Królikarnia 2015 Sp. z o.o. (7)	2015	-	100%
93	Tras 2016 Sp. z o.o.	2011	100%	100%
94	Pod Skocznia Projekt 2016 Sp. z o.o. (3)	2011	-	100%

1. General

		Year of		Share of ownership & voting
	Entity name	incorporation		rights at the end of
			31 December	31 December
	Share of ownership & voting rights at the end of		2020	2019
b.	held indirectly by the Company :
95	District 20 – 2016 Sp. z o.o. (3)	2011	-	100%
96	Arkadia Development 2016 Sp. z o.o. (3)	2011	-	100%
97	Królikarnia 2016 Sp. z o.o. (3)	2011	-	100%
98	Kroli Development Sp. z o.o. (3)	2012	-	100%
99	Park Development Properties Sp. z o.o.	2011	100%	100%
100	Jasminova 2016 Sp. z o.o.	2016	100%	100%
101	Town 2016 Sp. z o.o.	2016	100%	100%
102	E.E.E. Development 2016 Sp. z o.o. (7)	2016	-	100%
103	Enterprise 2016 Sp. z o.o.	2016	100%	100%
104	Wrocław 2016 Sp. z o.o.	2016	100%	100%
105	Darwen Sp. z o.o.	2017	100%	100%
106	Truro Sp. z o.o.	2017	100%	100%
107	Tregaron Sp. z o.o.	2017	100%	100%
108	Totton Sp. z o.o.	2017	100%	100%
109	Tring Sp. z o.o.	2017	100%	100%
110	Thame Sp. z o.o.	2017	100%	100%
111	Troon Sp. z o.o.	2017	100%	100%
112	Tywyn Sp. z o.o. (8)	2018	100%	-
c.	other not subject to full consolidation:
113	Coralchief sp. z o.o.	2018	50%	50%
114	Coralchief sp. z o.o. - Projekt 1 sp. k.	2016	n/a	n/a
115	Ronson IS sp. z o.o.	2009	50%	50%
116	Ronson IS sp. z o.o. sp. k.	2012	n/a	n/a

(8) Acquired during execution of third call option agreement on 9 April 2020.

(9) Entity acquired on 18 December 2020. Change of the name into Ronson Development Studzienna Sp. z o.o. was registered in KRS on 8 March 2021.

1. General

The shares of the Company are traded on the Warsaw Stock Exchange since 5 November 2007. According to publicly available information, as at 31 December 2020, 66.06% of the outstanding shares are controlled indirectly by Amos Luzon Development and Energy Group Ltd. ('A. Luzon Group') and 0.91% of the shares are held by the Company. The remaining 33.03% of the outstanding shares are held by other investors including Nationale Nederlanden OFE and Metlife OFE. The number of shares held by the investors is equal to the number of votes, as there are no privileged shares issued by the Company. It shall be noted that as at 31 December 2020, the Company held 1,489,235 own shares (0.91%) and, in accordance with art. 364 § 2 of the Code of Commercial Companies, it does not exercise voting rights from own shares.

As at 9 March 2021, the Company held 1,567,954 own shares representing 0.96% of total shares issued by the Company.

	As of		As of		As of
	09.mar.21		31.gru.20		31.gru.19 Number of
	Number of shares /	Change in number of	Number of shares /	Change in number of	shares /
Shares	% of shares	shares	% of shares	shares	% of shares
Shares issued:	164,010,813	-	164,010,813	-	164,010,813
	108,349,187	-	108,349,187	-	108,349,187
I.T.R. Dori B.V. (1)	66.06%		66.06%	N/A	66.06%
Nationale Nederlan den Otwarty Fun	23,884,091	4,091	23,880,000	(4,091)	23,884,091
dusz Emerytalny	14.56%		14.56%	0%	14.56%
Metlife Otwarty	N/A	N/A	N/A	N/A	N/A
Fundusz Emerytalny	Between 5%-10%		Between 5%-10%	N/A	Between 5%-10%
	As of		As of		As of
	09.mar.21		31.gru.20		31.gru.19
	Number of shares /	Change in number of	Number of shares /	Change in number of	Number of shares /
Votes	% of shares	shares(2)	shares(2) % of shares		% of shares
Shares issued(2):	162,442,859	(78,719)	162,521,578	(814,335)	163,335,913

Shares issued(2):	162,442,859	(78,719)	162,521,578	(814,335)	163,335,913
	108,349,187	-	108,349,187	-	108,349,187
I.T.R. Dori B.V. (1)	66.70%	0.03%	66.67%	0.00%	66.34%
Nationale Nederlan den Otwarty Fun	23,884,091	4,091	23,880,000	(4,091)	23,884,091
dusz Emerytalny	14.70%	0.01%	14.69%	0.00%	14.62%
Metlife Otwarty	N/A	N/A	N/A	N/A	N/A
Fundusz Emerytalny	Between 5%-10%	N/A	Between 5%-10%	N/A	Between 5%-10%

(1) The subsidiary of A. Luzon Group.

2. Accounting principles

a) Basis of preparation and statement of compliance

The Company Financial Statements of Ronson Development SE have been prepared in accordance with IFRS as endorsed by the European Union ("IFRS"). IFRSs comprise standards and interpretations accepted by the International Accounting Standards Board ("IASB") and the International Financial Reporting Interpretations Committee ("IFRIC").

The Company's Financial Statements of Ronson Development SE were approved by the Management Board for publication on 10 March 2021 in both English and Polish languages, while the Polish version is binding.

The Company's Financial Statements of Ronson Development SE have been prepared on the going concern assumption, i.e. the continuation of the Company's business activity in the foreseeable future. As at the day of the approval of these financial statements, there were no circumstances identified implying any threats to the continuation of the Company's activity.

The financial statements have been prepared on a historical cost basis. With regards to valuation of investment in subsidiaries IAS 27 allows for valuation either at cost or at fair value or in accordance with the equity method. The Company decided to select the equity method.

New and amended standards adopted by the Group

The Company has applied the following standards and amendments for the first time for their annual reporting period commencing 1 January 2020:

Definition of Material amendments to IAS 1 and IAS 8
Definition of a Business amendments to IFRS 3
Interest Rate Benchmark Reform amendments to IFRS 9, IAS 39 and IFRS 7
Revised Conceptual Framework for Financial Reporting

The Company also elected to adopt the following amendments early:

• Annual Improvements to IFRS Standards 2018-2020 Cycle.

The above standards, amendments and improvements do not have any material impact on the financial statements of the Company.

New standards and interpretations not yet adopted

Certain new accounting standards and interpretations have been published that are not mandatory for 31 December 2020 reporting periods and have not been early adopted by the Company. These standards are not expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.

b) Functional and reporting currency

Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (the "functional currency"). The Company Financial Statements are presented in thousands of Polish Zloty ("PLN"), which is the Company's functional and presentation currency.

Transactions in currencies other than the functional currency are accounted for at the exchange rates prevailing at the date of the transactions. Gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in currencies other than the functional currency are recognized in the statement of comprehensive income.

2. Accounting principles

c) Use of estimates and judgements

Uncertain tax treatment

Tax and other settlements may be subject to inspection by administrative bodies authorised to impose high penalties and fines, and any additional taxation liabilities calculated as a result must be paid together with high interest. The above circumstances mean that tax exposure is greater in Poland than in countries that have a more established taxation system. Accordingly, the amounts shown in the financial statements may change at a later date as a result of the final decision of the tax authorities.

On 15 July 2016, amendments were made to the Tax Ordinance to introduce the provisions of General Anti-Avoidance Rules (GAAR). GAAR are targeted to prevent origination and use of fictitious legal structures set up to avoid payment of tax in Poland. GAAR define tax evasion as an activity performed mainly with a view to realising tax gains, which is contrary, under given circumstances, to the subject and objective of the tax law. In accordance with GAAR, an activity does not bring about tax gains, if its modus operandi was false. Any instances of (i) unreasonable division of an operation (ii) involvement of agents despite lack of economic rationale for such involvement, (iii) mutually exclusive or mutually compensating elements, as well as (iv) other activities similar to those referred to earlier may be treated as a hint of artificial activities subject to GAAR. New regulations will require considerably greater judgment in assessing tax effects of individual transactions. The GAAR clause should be applied to the transactions performed after clause effective date and to the transactions which were performed prior to GAAR clause effective date, but for which after the clause effective date tax gains were realised or continue to be realised. The implementation of the above provisions will enable Polish tax authority challenge such arrangements realised by tax remitters as restructuring or reorganization.

The Company accounts for current and deferred tax assets and liabilities based on the requirements of IAS 12 Income taxes, based on taxable profit (tax loss), taxable base, carry-forward of unused tax losses and carryforward of unused tax credits, and tax rates, while considering the assessment of uncertainty related to tax settlements. If uncertainty exists as to whether and to what extent tax authority will accept individual tax treatments of made transactions, the Company discloses these settlements while accounting for uncertainty assessment.

3. Significant accounting policies

The accounting policies applied in the preparation of the attached financial statements are consistent with those applied in the preparation of the financial statements of the Company for the year ended 31 December 2019 and have been applied consistently in all periods presented in the Company's Financial Statements.

(a) Foreign currency

Transactions in foreign currencies are translated to the respective functional currency at exchange rates prevailing at the dates of the transactions using:

the purchase or selling rate of the bank whose services are used by the Company in case of foreign currency sales or purchase transactions, as well in the case as of the debt or liability payment transactions;
the average rate specified for a given currency by the National Bank of Poland as on the transaction date, unless a customs declaration or other binding document indicates another rate – in case of other transactions.

(b) Revenue from contracts with customers

Revenue from consulting services represents fees charged by the Company to its subsidiaries. Revenue is recognized when control of the goods or services are transferred at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The Company has generally concluded that it is the principal in its revenue arrangements because it typically controls the goods or services before transferring them to the related parties.

(c) Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

Financial assets

The classification of financial assets at initial recognition depends on the financial asset's contractual cash flow characteristics and the Company's business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Company has applied the practical expedient, the Company initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component or for which the Company has applied the practical expedient are measured at the transaction price determined under IFRS 15.

In order for a financial asset to be classified and measured at Amortized cost or fair value through OCI, it needs to give rise to cash flows that are 'solely payments of principal and interest (SPPI)' on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level.

For purposes of subsequent measurement, financial assets are classified in four categories:
Financial assets at Amortized cost (debt instruments);
Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt instruments)
Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments);
Financial assets at fair value through profit or loss.

3. Significant accounting policies

(c) Financial instruments

For the Company the first category is most relevant. Financial assets at Amortized cost are subsequently measured using the effective interest (EIR) method and are subject to impairment. Gains and losses are recognized in profit or loss when the asset is derecognized, modified or impaired.

The Company recognizes an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Company expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

ECLs are recognized in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).

For trade receivables and contract assets, the Company applies a simplified approach in calculating ECLs. Therefore, the Company does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Company has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.

Financial liabilities

All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.

Loans and borrowings is the category most relevant to the Company. After initial recognition, interest-bearing loans and borrowings are subsequently measured at Amortized cost using the EIR method. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the EIR amortization process. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the statement of profit or loss.

3. Significant accounting policies

(c) Financial instruments

The financial instruments of the Company are classified into one of the following categories:

Category	Statement of financial position item	Measurement
	Loans granted to subsidiaries	Amortized cost method
Assets measured at amortized costs	Cash and cash equivalent	Amortized cost method
	Trade and other receivables and prepayments	Amortized cost method
Liabilities measured at amortized costs	Bond loans	Amortized cost method
	Loans from subsidiaries	Amortized cost method
	Trade and other payables and accrued expenses	Amortized cost method

Investments in subsidiaries

Subsidiaries are entities the Company controls directly or indirectly. The Company accounts, based on IAS 27 par 10(c), for investments in subsidiaries under equity method. Under the equity method of accounting, the investments are initially recognized at cost and adjusted subsequently for the post-acquisition changes in share of the net assets of subsidiaries. Dividends received or receivable from subsidiaries are recognized as a reduction in the carrying amount of the investment. The financial statements of subsidiaries are prepared for the same period as the financial statement of the Company. All subsidiaries (apart from Nova Krolikarnia B.V.) keep books of accounts in accordance with accounting policies specified in the Accounting Act dated 29 September 1994 ('the Accounting Act') with subsequent amendments and the regulations issued based on that Act. The Company accounts for investments in subsidiaries based on their financial statements as per books of accounts adjusted in order to bring the financial statements of those entities in conformity with IFRSs as adopted by EU.

(d) Equity

(i) Share capital

Share capital includes the proceeds received from the issue of ordinary shares on the nominal value in exchange for cash.

(ii) Share premium

Share premium includes the excess of proceeds received from the issue of shares over the nominal value of shares. Shares issuance costs are deducted from the share premium.

(iii) Treasury shares

(e) Provisions

A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.

3. Significant accounting policies

(f) Income tax expense

(g) Share options granted

Equity-settled transactions

The fair value of share options granted to management and other employees as at the grant date is recognized as an employee expense, with a corresponding increase in equity recognized in retained earnings, over the period during which the employees become unconditionally entitled to the options. The amount recognized as an expense is adjusted to reflect the actual number of share options that vest.

Cash-settled transactions

The cost of cash-settled transactions is measured initially at fair value at the grant date. This fair value is expensed over the period until the vesting date with recognition of a corresponding liability. The liability is remeasured to fair value at each reporting date up to, and including the settlement date, with changes in fair value recognized in employee benefits expense.

(h) Cash and cash equivalents

Cash and cash equivalents in the statement of financial positions comprise cash at banks and on hand and shortterm deposits with an original maturity of three months or less, except for collateralized deposits.

For the purpose of the consolidated statement cash flows, cash and cash equivalents consist of cash and shortterm deposits as defined above, net of outstanding bank overdrafts.

(i) Employee benefits

Obligations for contributions to defined contribution pension plans are recognized as an expense in the statement of comprehensive income as incurred.

4. Revenue

The Company provides services related to the preparation and organization of the investment process with respect to development projects owned by the Company's subsidiaries. As part of its responsibilities, the Company undertakes the performance of advisory, management, legal and other activities necessary to manage the investment process. The Company recognizes revenues when the obligation to perform the service is fulfilled, i.e. during the service provision period. The concluded agreements do not contain a significant element of financing. Due to such characteristics of the contracts signed, there are no significant balances of contract assets or contract liabilities, except for trade receivables.

The increase of revenues for the year ended 31 December 2020 as compared to the year ended 31 December 2019 results from increase of the revenues recognized on:

Nova Królikarnia project from PLN 1,800 thousand at the year ended 31 December 2019 to PLN 2,600 thousand during the year ended 31 December 2020;
Management of investment process from PLN 4.600 thousand at year ended 31 December 2019 to PLN 6,300 thousand during the year ended 31 December 2020.

5. General and administrative expense

For the year ended 31 December	2020	2019
In thousands of Polish Zlotys (PLN)

External services	980	806
Remuneration fees	4,109	3,349
Other	331	289
Total	5,420	4,444

6. Directors' remuneration

Management Board personnel compensation

Management Board personnel compensation, payable by the Company, is presented in the table below. For compensations paid by other entities in the Group reference is made to the Consolidated Financial Statements.

As at 31 December	2020	2019
In thousands of Polish Zlotys (PLN)

Salary and other short time benefit	-	851
Termination fee	-	155
Other	-	209
Subtotal - Mr Nir Netzer	-	1,215

Salary and other short time benefit	222	-
Management bonus	83	-
Other(2)	149	-
Subtotal - Mr Yaron Shama	453	-

Salary and other short time benefit(2)	39	414

Management bonus	-	55
Termination fee (2)	203	104
Subtotal - Mr Rami Geris	242	573

Salary and other short time benefit	120	-
Incentive plan linked to financial results	445	331
Subtotal - Mr Andrzej Gutowski	565	331

Salary and other short time benefit	1,069	85
Management bonus	736	57
Signing bonus	-	173
Other (1)	658	491
Subtotal - Mr Boaz Haim	2,463	806

Total	3,723	2,925

(1) Mainly related to car expenses, flights and accommodation and an American school.

(2) Transactions with related parties.

6. Directors' remuneration

Alon Haver

Supervisory Board remuneration

As at 31 December	2020	2019
In thousands of Polish Zlotys (PLN)
Mr Ofer Kadouri (appointed 1 March 2017)	73	69
Mr Alon Kadouri (appointed 1 March 2017)	57	64
Mr Shmuel Rofe (appointed 20 November 2017)	73	82
Mr Piotr Palenik (appointed 30 June 2017)	57	69
Mr Przemyslaw Kowalczyk (re-appointed 24 June 2015)	73	73
Total	333	357

The supervisory directors are entitled to an annual fee of EUR 8,900 plus an amount of EUR 1,500 per board meeting (EUR 750 if attendance is by telephone). The total amount due in respect of Supervisory Board fees during 2020 and 2019 amounted to PLN 333 thousand (EUR 75 thousand) and PLN 357 thousand (EUR 83 thousand), respectively. In addition the Company paid social security contributions at the amount of PLN 52 thousand in the year ended 31 December 2020.

Mr Amos Luzon did not receive any direct remuneration from the Company nor from any of the Company's subsidiaries.

7. Net finance income and expense

For the year ended 31 December	2020	2019
In thousands of Polish Zlotys (PLN)

Interests and fees on granted loans to subsidiaries	6,298	7,274
Interest income on bank deposits	7	70
Other	289	8
Finance income	6,594	7,352

Interest expense on bonds measured at amortized cost	(8,428)	(10,351)
Interests and fees on received loans from subsidiaries	(405)	-
Commissions and fees	(912)	(894)
Other	(8)	(33)
Finance expense	(9,753)	(11,278)
Net finance income	(3,159)	(3,926)

8. Income tax
For the year ended 31 December	2020	2019
In thousands of Polish Zlotys (PLN)

Current tax expense/(benefit)
Current period	-	-
Reversal of withholding tax in the Netherlands	-	-
Total current tax expense	-	-

Deferred tax expense/(benefit)
Origination and reversal of temporary differences	1,391	207
Expense/(benefit) of tax losses recognized	(315)	(742)
Total deferred tax expense/(benefit)	1,076	(535)

Total income tax expense/(benefit)	1,076	(535)

9. Investment in subsidiaries
The subsidiaries of the Company are valued with equity pick-up method.
For the year ended 31 December	2020	2019
In thousands of Polish Zlotys (PLN)

Balance at beginning of the period	419,835	407,309
Investments in subsidiaries	1,000	-
Net result subsidiaries during the period	40,775	18,944
Change of presentation	9,000	-
Dividend from subsidiary	(34,736)	(6,418)
Balance at end of the period	435,874	419,835

On 18 December 2020 the Group concluded acquisition of 100% shares in ACG 23 Sp. z o.o. (currently: Ronson Development Studzienna Sp. z o.o) for the amount of PLN 1.0 million.

In the year 2020 the Company received the dividend and advance towards the expected dividend from a subsidiary Ronson Development Construction Sp. z o.o. – more information about the transaction is included in the Note 19 of this Financial Statements.

The Company holds and owns (directly and indirectly) 78 companies. For information about companies in the Group, controlled directly and indirectly, which financial data are included in the Note 1 of this Financial Statements. These companies are active in the development and sale of units, primarily apartments, in multifamily residential real-estate projects to individual customers in Poland. The projects managed by the companies are in various stages of development ranging from being in the process of acquiring land for development to projects which are completed or near completion.

10. Loan granted to subsidiaries

Movements in loans granted to subsidiaries

For the year ended 31 December	2020	2019
In thousands of Polish Zlotys (PLN)
Opening balance	113,829	155,836
Loans granted	79,354	46,916
Loans repayment during the year	(27,956)	(88,254)
Change of presentation	(9,000)	-
Amortization of charges and fees	88	215
Accrued interest	6,297	7,059
Repayment of interest	(2,265)	(7,943)
Total closing balance	160,347	113,829
Closing balance includes:
Current assets	307	24,223
Non-current assets	160,040	89,606
Total closing balance	160,347	113,829

Loans as at 31 December

2020:

In thousands of Polish Zlotys (PLN)	Currency	Nominal interest rate	Year of maturity	Capital	Accrued interest	Impairment	Carrying value

Ronson Development Finco	PLN	6.00%	2021	10	297	-	307
Ronson Development Skyline	PLN	6.00%	2022	4,350	4,650	(9,000)	-
Ronson Development Finco	PLN	Wibor 6M + 4.0%	2023	87	2	-	89
Nova Królikarnia B.V.	PLN	Wibor 6M + 4.0%	2022	49,212	4,187	-	53,399
Nova Królikarnia B.V.	PLN	Wibor 6M + 4.0%	2024	5,000	373	-	5,373
Tras 2016 Sp. z o.o.	PLN	Wibor 6M + 4.0%	2023	22,000	997	-	22,997
Tras 2016 Sp. z o.o.	PLN	Wibor 6M + 4.0%	2024	29,000	1,012	-	30,012
Tras 2016 Sp. z o.o.	PLN	Wibor 6M + 4.0%	2023	11,916	760	-	12,676
Ronson Development Finco	PLN	Wibor 6M + 3.2%	2025	13,899	91	-	13,990
Ronson Development Finco	PLN	Wibor 6M + 3.2%	2025	5,000	18	-	5,018
Ronson Development Finco	PLN	Wibor 6M + 3.2%	2025	6,000	17	-	6,017
Ronson Development Finco	PLN	Wibor 6M + 3.2%	2025	10,455	13	-	10,468
Total loans granted to Subsidiaries				156,929	12,417	(9,000)	160,347

10. Loan granted to subsidiaries

Loans as at 31 December 2019:

In thousands of Polish Zlotys (PLN)	Currency	Nominal interest rate	Year of maturity	Capital	Accrued interest	Charges and fees	Carrying value
Ronson Development Finco	PLN	Wibor 6M + 4.15%	2020	10,000	199	(8)	10,191
Ronson Development Finco	PLN	5.75%	2020	1,043	68	(33)	1,078
Ronson Development Finco	PLN	6.00%	2020	10	296	-	306
Ronson Development Skyline	PLN	6.00%	2020	7,350	5,298	-	12,648
Ronson Development Finco	PLN	Wibor 6M + 3.90%	2021	6,000	114	(45)	6,069
Ronson Development Finco	PLN	Wibor 6M + 4.0%	2023	5,000	105	-	5,105
Ronson Development Finco	PLN	Wibor 6M + 4.0%	2023	3,000	20	-	3,020
Nova Królikarnia B.V.	PLN	Wibor 6M + 4.0%	2022	49,212	1,704	-	50,916
Nova Królikarnia B.V.	PLN	Wibor 6M + 4.0%	2024	5,000	121	-	5,121
Tras 2016 Sp. z o.o.	PLN	Wibor 6M + 4.0%	2023	7,000	300	-	7,300
Tras 2016 Sp. z o.o.	PLN	Wibor 6M + 4.0%	2023	11,916	159		12,075
Total loans granted to subsidiaries				105,531	8,384	(86)	113,829

The loans are not secured as at 31 December 2020 and 31 December 2019.

11. Shareholders' equity

Treasury shares

During the Extraordinary General Meeting of Shareholders held on 24 January 2019, the shareholders of the Company resolved to approve a share buyback program and the establishment of a capital reserve for the purpose of such program, whereby the Management Board of the Company is authorized to purchase ordinary bearer shares in the Company. In order to fund the purchase of own shares under the buyback program a capital reserve (within retained earnings) is established for an amount of PLN 2.0 million. The capital reserve is subsequently reduced by the amount of the consideration paid for the shares bought back. From 1 January 2020 until 24 January 2020, the Company acquired 59,622 own shares for a total price of PLN 50.2 thousand. The amount of capital reserve as at 24 January 2020 amounted to PLN 1,573 thousand and was presented as a part of the retained earnings. As at 25 January 2020 the capital reserve was liquidated.

In connection with the implementation of the treasury shares repurchase program that was approved under resolution No. 21 of the Ordinary General Meeting dated 30 June 2020 regarding the approval of a buy-back program (the "Authorisation Resolution"), the Management Board of the Company on 1 July 2020 resolved to determine the detailed terms of the repurchase of the shares in the Company ("Buy-back"), which were also approved by the Supervisory Board of the Company. The treasury shares will be acquired under the Buy-back until three years starting from the adoption of the Authorisation Resolution, by way of transactions concluded on the regulated market and on terms similar to those provided in the Commission Delegated Regulation (EU) 2016/1052 of 8 March 2016 supplementing Regulation (EU) No. 596/2014 of the European Parliament and of the Council with regards to regulatory technical standards for the conditions applicable to buy-back programs and stabilisation measures, in particular in terms of determining the price and the number of the shares, which may be acquired pursuant to the Buy-back. The maximum amount allocated for the purchase of all of the shares pursuant to the Buy-back shall not be higher than PLN 1,369,761.99 (one million, three hundred and sixty-nine thousand, seven hundred and sixty-one zloty and 99/100).

During the year ended 31 December 2020, the Company acquired 814,335 own shares for a total price of PLN 1,030 thousand (on average PLN 1.265 per share).

As at 9 March 2021, the Company held 1,567,954 own shares representing 0.96% of total shares issued by the Company.

11. Shareholders' equity

Dividend

On 30 June 2020, the General Meeting of the Company resolved to distribute the net profit of the Company for year 2019 in the amount of PLN 17,414 thousands in a following way:

to allocate for the dividend payment to the shareholders of the Company the amount of PLN 0.06 (six groszy) per share, with the total amount depending on the number of own shares (where there is no right to dividend) held by the Company on the dividend record date and such total amount not exceeding, in any case, PLN 9,787 thousands,
to allocate the remaining portion of the net profit of the Company for year 2019 in amount of PLN 7,627 thousand to retained earnings of the Company.

The dividend in the total amount of PLN 9,787 thousand was paid on 24 August 2020.

There are no restrictions regarding dividend payments, future dividends may be proposed and paid

During the year ended 31 December 2019, a dividend out of retained earnings reserve (i.e. dividend) in the amount of PLN 9,820 thousand which represents PLN 0.06 per ordinary share, was distributed (paid on 25 June 2019).

12. Bond loans, loans from subsidiaries

Bonds
For the year ended 31 December	2020	2019

In thousands of Polish Zloty (PLN)

Opening balance	187,969	205,547
Repayment of bond loans	(57,142)	(50,000)
Proceeds from bond loans	100,000	32,317
Issue cost	(1,636)	(757)
Issue cost amortization	783	854
Accrued interest	8,429	10,351
Interest repayment	(8,331)	(10,343)
Total closing balance	230,072	187,969
Closing balance includes:
Current liabilities	54,690	36,891
Non-current liabilities	175,382	151,078
Total Closing balance	230,072	187,969

12. Bond loans, loans from subsidiaries

Bonds

Together with issuance of series V bonds the Company purchased for redemption series R bonds with a value of PLN 2,141 thousand from the bondholder who purchased the Bonds for the same amount. After this repayment the total amount of outstanding series R bonds amounted to 47,859 thousand. As at 31 December 2020 and as at 31 December 2019 all covenants on bond loans are met. More details on bonds are presented in the Consolidated Financial Statements in the Note 26.

Loans from subsidiaries

Loans as at 31 December 2020:

In thousands of Polish Zlotys (PLN)	Currency	Nominal interest rate	Year of maturity	Capital	Accrued interest	Carrying value
Ronson Development Finco	PLN	6.00%	2021	-	3,309	3,309
Construction	PLN	5.79%	2024	2,065	190	2,255
Ronson Development Finco	PLN	6.00%	2024	9,800	214	10,014
Total loans granted to Subsidiaries				11,865	3,714	15,579

As at 31 December 2019 the Company had only loan from Finco in amount of PLN 3,309 thousand.

For the year ended 31 December	2020	2019
In thousands of Polish Zlotys (PLN)
Opening balance	3,309	3,309
Loans received	24,600	-
Loans repayment during the year	(12,735)	-
Accrued interest	405	-
Total closing balance	15,579	3,309
Closing balance includes:
Current liabilities	3,309	3,309
Non-current liabilities	12,269	-
Total closing balance	15,579	3,309

13. Trade and other payables and accrued expenses

As at 31 December	2020	2019
In thousands of Polish Zlotys (PLN)

Trade payables and accrued expenses	1,670	1,431
Total trade and other payables and accrued expenses	1,670	1,431

14. Commitments and contingencies

Nova Królikarnia transaction

As part of the Nova Królikarnia acquisition, the Company (through its subsidiary) and Global City Holdings B.V. ("GCH") have concluded call option agreements for a total value of PLN 78.9 million, under which the Company has been granted three call options with respect to the shares in the eight other project companies holding the remaining stages of the Nova Królikarnia project. The last option was executed in April 2020. The exercise of the three call options will allow the Company to develop 161 units with an aggregate floor space of approximately 21,500 m² .

Certain fees in the maximum amount of PLN 11.9 million were due by the Company if the Company does not exercise all three call options within certain deadlines. However, the fees were reduced proportionally to the extent options have been exercised. As at the 31 December 2020, as the result of all call options having been exercised, the amount of the fee contingency decreased to nil.

Guarantees provided by the Company

As at 31 December 2020 there were no sureties with respect to the construction loans contracts granted by the Company. The table below present sureties that were provided by the Company as at 31 December 2019 to banks with respect to the construction loan contacts signed by the Company's subsidiaries:

Entity name In thousands of Polish Zlotys (PLN)	Sureties up to the amount of	Amount as at 31 December 2019

Santander Bank Polska S.A.	29,857	4,881
Powszechna Kasa Oszczędności Bank Polski S.A.	1,965	1,965
Total	31,822	6,846

15. Related party transactions

During the financial years ended 31 December 2020 and 31 December 2019, respectively, there were no transactions between the Company on the one hand, and its shareholders, their affiliates and other related parties which would qualify as not being at arm's length.

The Company's related party transactions included primarily investment in subsidiaries, dividends received; loans granted and received revenues from consulting services and remuneration of Management and Supervisory Board Members. Details on the transactions are presented in these financial statements.

For further information on related party transactions reference is made to Note 35 of the Consolidated Financial Statements.

16. Financial risk management, objectives and policies

The Company on standalone basis and as a parent to Ronson Group is exposed to a variety of financial risks: market risk (including currency risk, price risk and interest rate risk), credit risk and liquidity risk. The Group's overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group's financial performance. The Management Board reviews and agrees policies for managing each of these risks on the consolidated level. For a description of the Group's financial risk management, objectives and policies reference is made to Note 36 of the Consolidated Financial Statements. Details regarding the financial risk factors in relation to the Company are described below.

The Company's principal financial instruments comprise cash balances, bond loans, loans granted, trade receivables and trade payables. The main purpose of these financial instruments is to manage the Company's liquidity and to raise finance for the Company's and Group's operations. The Company and the Group does not use derivative financial instruments to hedge currency or interest rate risks arising from the Company's or Group's operations and its sources of finance. It is, and has been throughout the year ended 31 December 2020 and 2019, the Company's and Group's policy that no trading in (derivative) financial instruments shall be undertaken.

Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counter party to a financial instrument fails to meet its contractual obligations. Financial instruments that potentially expose the Company to concentrations of credit risk consist principally of cash and cash equivalents, receivables and loans granted to subsidiaries. The carrying amounts of the financial assets represent the maximum credit risk exposure.

The Company does not expect any counter parties to fail in meeting their obligations. In particular with respect to the loans granted to subsidiaries, the Company as a parent, is able to monitor on ongoing basis the financial standing of counter parties. All loans granted were determined as low credit risk instruments at initial recognition and with respect to none loan the credit risk has increased. The Company places its cash and cash equivalents in financial institutions with high credit ratings. Management does not expect any counterparty to fail to meet its obligations. Concentrations of credit risk with respect to trade receivables are limited due to the large number of customers comprising the Group's customer base, primarily related parties and past history confirm recoverability of amounts due. Given such characteristics of the financial instruments the Management estimates that credit risk loss allowance with respect to all financial instruments, including primarily loans granted, is immaterial.

Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices, such as foreign exchange rates and interest rates will affect the Company's income or the value of its holdings of financial instruments, such as bond loans, bank loans, cash and cash equivalents. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing return.

(i) Foreign currency risk

The Company is exposed to foreign currency risk on receivables and payables denominated in a currency other than PLN to a limited extent only. As at 31 December 2020 and 2019, trade receivables and payables denominated in foreign currencies were insignificant.

(ii) Price risk

The Company's exposure to marketable and non-marketable securities price risk does not exists because the Company has not invested in securities as at 31 December 2020 and 2019.

16. Financial risk management, objectives and policies

Market risk

(iii) Interest rate risk

Except for bonds series P amounting to PLN 10.0 million, the Company did not enter into any fixed-rate borrowings transaction. All bonds series P were repaid during 2020. The Group's variable-rate borrowings are exposed to a risk of change in cash flows due to changes in interest rates. The Company's risk is offset by loans granted, which terms and conditions reflects terms and conditions of bond loans received. Short-term receivables and payables are not exposed to interest rate risk.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's or Group's reputation.

The Company's liquidity risk is managed with respect to the Group's risk using a recurring liquidity planning tool. This tool considers the maturity of both its financial investments and financial assets (e.g. accounts receivable, other financial assets) and projected cash flows from operations. The Group's objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, bank loans and bond loans.

Effective interest rates and liquidity risk analysis

	As at 31 December 2020
In thousands of Polish Zlotys (PLN)	Note	Average effective interest rate	Total	6 months or less	6-12 months	1-2 years	2-5 years	More than 5 years
Fixed rate instruments
Cash and cash equivalents		0.00%	27,152	27,152	-	-	-	-
Loans from subsidiaries	12	5.79-6.00%	(15,579)	(3,309)	-	-	(12,269)	-
Loans granted to subsidiaries	10	6.00%	307	-	-	307	-	-
Variable rate instruments		Wibor 6M + 2.85%-
Floating rate bonds	12	4.30%	(230,072)	(54,640)	-	(116,345)	(59,087)	-
Loans granted to subsidiaries	10	Wibor 6M + 4.00%	160,039	-	-	53,399	106,641	-

	As at 31 December 2019
In thousands of Polish Zlotys (PLN)	Note	Average effective interest rate	Total	6 months or less	6-12 months	1-2 years	2-5 years	More than 5 years
Fixed rate instruments
Cash and cash equivalents		0.00%	7,173	7,173	-	-	-	-
Bonds	12	5.25%	(10,032)	(62)	(9,970)	-	-	-
Loans from subsidiaries	12	6.00%	(3,309)	-	(3,309)	-	-	-
Loans granted to subsidiaries	10	5.75-6.00%	14,032	-	14,032	-	-	-
Variable rate instruments Floating rate bonds	12	Wibor 6M + 2.85%- 4.00%	(177,937)	(11,897)	(14,962)	(74,434)	(76,644)	-
		Wibor 6M + 3.90%-
Loans granted to subsidiaries	10	4.15%	99,797	10,191	-	6,069	83,537	-

16. Financial risk management, objectives and policies

Liquidity risk

Effective interest rates and liquidity risk analysis

		31 December 2020	31 December 2019
In thousands of Polish Zlotys (PLN)	Increase by 1%	decrease by 1%	Increase by 1%	decrease by 1%
Income statement
Variable interest rate assets	-	-	-	-
Variable interest rate liabilities	(767)	767	(593)	593
Total	(767)	767	(593)	593
Net assets
Variable interest rate assets	-	-	-	-
Variable interest rate liabilities	(767)	767	(593)	593
Total	(767)	767	(593)	593

17. Information about agreed-upon engagements of the Company's auditor

Information about audit agreements and the values from those agreements is disclosed below:

For the year ended 31 December	2020	2019
In thousands of Polish Zlotys (PLN)

Audit and review remuneration	460	461
Other services	46	-
Audit remuneration for prior periods	-	56
Reimbursed audit review costs (1)	(127)	(73)
Total remuneration for the expense of the Company	379	444

18. Proposed profit appropriation

The Management Board, in line with the prevailing dividend policy, will evaluate the possibility to recommend to the Ordinary General Meeting of the Company to be held in 2020 to distribute the dividend for year 2020, after the examination of the current and expected balance sheet of the Company, expected operating, financial and cash-flow position of the Company and taking into consideration: (i) the close observance of all balancesheet linked debt covenants, (ii) ability of future repayment of debts, (iii) financial needs of the Company aiming to be ranked amongst leading residential developers and (iv) changing market environment.

19. Other events during the financial year

Share buyback program

As at 31 December 2020, the Company held 1,489,235 own shares (0.91%). For more information please refer to Note 11.

Changes in the Management and Supervisory Board

On 20 December 2019, Mr Rami Geris submitted his resignation as Finance Vice President and as member of the Management Board of the Company with effective date as of 31 January 2020.

On 16 January 2020, the Supervisory Board of the Company appointed Mr Yaron Shama to the position of member of the Management Board of the Company and Finance Vice President as of 1 February 2020 for a fiveyear joint term of office of the Management Board, which commenced on 1 April 2019.

19. Other events during the financial year

Other events

On 2 April 2020, the Annual Shareholders Meeting of Ronson Development Construction Sp. z o.o. decided that the profit for the financial year 2019 in the net amount of PLN 12.7 million shall be allocated to dividend payment. The Company had an obligation against Ronson Development Construction Sp. z o.o. for intercompany loan in amount of PLN 14.9 million. The parties agreed that the Company repay PLN 12.7 million of intercompany loan received. The parties made a deduction of mentioned amounts and as a result of which these obligations were cancelled mutually. As a result the Company still has loan in the amount of PLN 2.2 million left to repay.

On 7 April 2020, the Management Board of Ronson Development Construction Sp. z o. o. decided to pay to the Company the advance towards the expected dividend from the profit for 2020 in the amount of PLN 22.0 million. The advance was already paid on 7 April 2020.

COVID - 19

The Company identifies few areas of business risks which could significantly influence the Company's shortand long-term operational activity. The following aspects have been recognised and have been the focus of the Management Board efforts to minimise their effect on the Company's operations:

potential decrease in Company's sales due to lower demand, as a result of tightening the accessibility to mortgages from banks or increase of unemployment;
potential risk of delay in completing the Company's projects (on time or on budget), which could be caused by shortage of construction personal, shortage of raw materials or prolongation of administrative procedures and delays with obtaining building permits and occupancy permits;
potential problems with obtaining bank financing for the Company or issuance of bonds for further development of the Company projects and land bank;
all of the above could potentially affect the company cash standing and liquidity;
potential effect on the covenants requirements to our bond's holders.

The Company did not have any problem with obtaining bank financing to its on-going projects if such would be needed.

19. Other events during the financial year

COVID - 19

The Company managed to obtain on time, in most of its project, all the administrative permits including building permits and occupancy permits which are vital for its daily operations.

20. Subsequent events

Buy-back of own shares

From 31 December 2020 until 9 March 2021, the Company acquired 78,719 own shares for a total price of PLN 118.3 thousand. As at 9 March 2021, the Company held 1,567,954 own shares representing 0.96% of total shares issued by the Company.

Bond loans and loans from subsidiaries

The Management Board

Boaz Haim Yaron Shama

____________________ ____________________

President of the Management Board Vicepresident of the Management Board, CFO

____________________ ____________________ Andrzej Gutowski Alon Haver Vicepresident of the Management Board, Member of the Management Board Sales and Marketing Director

Anna Rzeczkowska person responsible for preparation of financial statements

Warsaw, 10 March 2021

____________________

AI assistant

Amos Luzon Development And Energy Group Ltd. — Annual Report 2020

6899_rns_2021-03-11_eea96cbc-95ce-44c6-8eee-23f4b23f7986.pdf

Ronson Development SE

Management Board

Supervisory Board

Registered office

Auditors

To our shareholders

Table of Contents

Letter from the President of the Management Board

Management Board Report on the Activity of the Company and the Group for the financial year 2020

Management Board Report

Introduction

Overview of the Activity of the Company and the Group

Management Board Report

Overview of the Activity of the Company and the Group

The Company's group structure and information on the Company's organizational structure

Overview of the Activity of the Company and the Group

The Company's group structure and information on the Company's organizational structure

Overview of the Activity of the Company and the Group

The Company's group structure and information on the Company's organizational structure

A. Results breakdown by project

A. Results breakdown by project

Projects completed in 2020

Grunwald2

Nova Królikarnia 2c

Panoramika V

Miasto Moje III

A. Results breakdown by project

Projects completed

Business highlights during the year ended 31 December 2020

B. Units sold during the period and units offered for sale

B. Units sold during the period

C. Commencements of new projects

D. Agreements significant for the business activity of the Group

Exercise of the third call option agreement – Nova Królikarnia

Purchase of land in Poznań

Purchase of land in Warsaw

D. Agreements significant for the business activity of the Group

Purchase of land in Warsaw

Overview of results

Revenue from sales and services of residential projects

Overview of results

Cost of sales of residential units

Gross margin

Selling and marketing expenses

Administrative expenses

Share of profit/(loss) from joint ventures

Other expenses, net

Overview of results

Net finance income/(expense)

Income tax benefit/(expense)

Selected financial data

Overview of selected details from the Consolidated Statement of Financial Position

Inventory and Residential land bank

Advances received

Overview of selected details from the Consolidated Statement of Financial Position

Loans, bonds and borrowings

Trade and other payables and accrued expenses

Management Board Report

Overview of cash flow results

Cash flow from/(used in) operating activities

Cash flow from investing activities

Overview of cash flow results

Cash flow from/(used in) financing activities

Overview of the results during the three months ended 31 December 2020

A. Completed projects

B. Current projects under construction and/or on sale

B. Current projects under construction and/or on sale

Vitalia III

Description of project

Stage of development

Ursus Centralny IIa

Description of project

Stage of development

Ursus Centralny Ia

Description of project

Stage of development

Miasto Moje IV

Amos Luzon Development And Energy Group Ltd. Annual Report 2020