MANAGEMENT BOARD S REPORT ON THE LC CORP GROUP S OPERATIONS IN THE FIRST HALF OF 2015

Transcription

1 MANAGEMENT BOARD S REPORT ON THE LC CORP GROUP S OPERATIONS IN THE FIRST HALF OF 2015 Wrocław, 28 August 2015

2 TABLE OF CONTENTS RULES FOR PREPARING THE LC CORP GROUP'S MID-YEAR CONDENSED CONSOLIDATED FINANCIAL STATEMENTS... 3 I. BASIC INFORMATION ABOUT THE GROUP... 3 II. GROUP'S ACTIVITY IN H III. ASSET, FINANCIAL AND REVENUE POSITION OF THE LC CORP GROUP IN H IV. EVENTS EXERTING OR POTENTIALLY EXERTING A SIGNIFICANT IMPACT ON THE GROUP'S ACTIVITY AND THE FINANCING OF THE GROUP'S ACTIVITY IN H V. OTHER EVENTS THAT OCCURRED SUBSEQUENT TO 30 JUNE VI. OPINION OF THE MANAGEMENT BOARD ON THE FEASIBILITY OF MEETING THE EARLIER PUBLISHED FINANCIAL FORECASTS FOR THE YEAR IN VIEW OF THE RESULTS PRESENTED IN THIS MID-YEAR REPORT AS COMPARED TO FORECASTED PERFORMANCE VII. LITIGATION VIII. FACTORS WHICH MAY AFFECT THE ISSUER'S PERFORMANCE IN THE NEXT QUARTER IX. OTHER INFORMATION MATERIAL FOR THE ASSESSMENT OF THE ISSUER'S PERSONNEL, ASSET, FINANCIAL AND PROFIT/LOSS STANDING AND ITS CHANGE, AND INFORMATION IMPORTANT FOR THE ASSESSMENT OF THE FEASIBILITY OF FULFILLING ITS OBLIGATIONS X. INFORMATION ON SIGNIFICANT, NON-ARM'S LENGTH, RELATED PARTY TRANSACTIONS OF THE ISSUER OR ITS SUBSIDIARY UNDERTAKING XI. INFORMATION ON LOAN OR BORROWING SURETIES ISSUED OR GUARANTEES GRANTED BY THE ISSUER OR ITS SUBSIDIARY UNDERTAKING FOR THE VALUE OF AT LEAST 10% OF THE ISSUER'S EQUITY XII. RISK FACTORS SIGNIFICANT FOR THE GROUP'S OPERATION XIII. SUMMARY

3 RULES FOR PREPARING THE LC CORP GROUP S MID-YEAR CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The LC Corp Group, where LC Corp S.A. is the Parent Undertaking, is obliged to draw up its consolidated financial statements in accordance with the International Financial Reporting Standards ( IFRS ) adopted by the European Union. The LC Corp Group's mid-year condensed consolidated financial statements for the reporting period from 1 January 2015 to 30 June 2015 were drawn up in accordance with the IFRS in their form adopted by the EU, applicable to mid-year financial reporting. The information on the rules used for drawing up the Group's mid-year condensed consolidated financial statements is also presented in Note 3 to the enclosed mid-year condensed consolidated financial statements. Changes in the accounting rules used by the LC Corp Group and their impact on the Groups accounting policy and methods of data presentation are described in Note 4 to the enclosed mid-year condensed consolidated financial statements. I. BASIC INFORMATION ABOUT THE GROUP The LC Corp Group (the Group ) consists of LC Corp S.A. and its subsidiary undertakings. LC Corp S.A. (hereinafter also LC Corp or the Issuer ) was established by the Notarial Deed dated 3 March 2006 and entered on 15 March 2006 into the Register of Entrepreneurs of the National Court Register kept by the District Court for Wrocław-Fabryczna in Wrocław, 6th Commercial Department of the National Court Register (KRS), under KRS No The Parent Undertaking's registered office is situated in Wrocław, Poland, at ul. Powstańców Śląskich 2-4. The Parent Undertaking has been assigned statistical identification number REGON and tax identification number NIP LC Corp's share capital totals PLN 447,558,311 (fully paid-up). The Parent Undertaking and the Group's subsidiaries have been established for an indefinite time. The Parent Undertaking's primary activity is: PKD Z Activities of financial holding companies The subsidiaries' primary activity is the carrying out of construction projects on the land belonging to these companies, for the purpose of the further rental and sale of residential and commercial property. LC Corp B.V., controlled by Mr Leszek Czarnecki, is the Parent Undertaking of LC Corp S.A. and the whole Group. As at 30 June 2015 and as at 31 December 2014, the LC Corp Group comprised the following subsidiaries of LC Corp S.A.: Company name Registered office 30 June 2015 Share in capital Effective participation of LC Corp S.A. 100% 100% (indirectly and directly) 31 December 2014 Share in capital Arkady Wrocławskie S.A. Wrocław 100% 100% Sky Tower S.A. seated in Wrocław Wrocław 100% 100% Warszawa Przyokopowa Sp. z o.o. Kraków Zielony Złocień Sp. z o.o. LC Corp Invest I Sp. z o.o. LC Corp Invest II Sp. z o.o. LC Corp Invest III Sp. z o.o. LC Corp Invest VII Sp. z o.o. LC Corp Invest VIII Sp. z o.o. Wrocław Wrocław Wrocław Wrocław Wrocław Wrocław Wrocław 100% (indirectly and directly) 100% (indirectly and directly) 100% 100% (indirectly and directly) 100% 100% 100% 100% 100% 100% 100% 100% 3

4 LC Corp Invest IX Sp. z o.o. Wrocław 100% 100% LC Corp Invest X Sp. z o.o. Wrocław 100% 100% LC Corp Invest XI Sp. z o.o. Wrocław 100% 100% LC Corp Invest XII Sp. z o.o. Wrocław 100% 100% LC Corp Invest XV Sp. z o.o. (1) Wrocław 100% 100% LC Corp Invest XVI Sp. z o.o. Wrocław 100% 100% LC Corp Invest XVII Sp. z o.o. Wrocław 100% 100% LC Corp Invest XVIII Sp. z o.o. Wrocław 100% 100% LC Corp Invest XV Sp. z o.o. Projekt 1 Sp. k. Wrocław 100% (indirectly) 100% (indirectly) LC Corp Invest XV Sp. z o.o. Projekt 2 Sp. k. Wrocław 100% (indirectly) 100% (indirectly) LC Corp Invest XV Sp. z o.o. Projekt 3 Sp. k. Wrocław 100% (indirectly) 100% (indirectly) LC Corp Invest XV Sp. z o.o. Projekt 4 Sp. k. Wrocław 100% (indirectly) 100% (indirectly) LC Corp Invest XV Sp. z o.o. Projekt 5 Sp. k. Wrocław 100% (indirectly) 100% (indirectly) LC Corp Invest XV Sp. z o.o. Projekt 6 Sp. k. Wrocław 100% (indirectly) 100% (indirectly) LC Corp Invest XV Sp. z o.o. Projekt 7 Sp. k. Wrocław 100% (indirectly) 100% (indirectly) LC Corp Invest XV Sp. z o.o. Projekt 8 Sp. k. Wrocław 100% (indirectly) 100% (indirectly) LC Corp Invest XV Sp. z o.o. Projekt 9 Sp. k. Wrocław 100% (indirectly) 100% (indirectly) LC Corp Invest XV Sp. z o.o. Projekt 10 Sp. k. Wrocław 100% (indirectly) 100% (indirectly) LC Corp Invest XV Sp. z o.o. Projekt 11 Sp. k. Wrocław 100% (indirectly) 100% (indirectly) LC Corp Invest XV Sp. z o.o. Projekt 12 Sp. k. (3) Wrocław 100% (indirectly) - 100% (indirectly and 100% (indirectly LC Corp Invest XV Sp. z o.o. Projekt 14 Sp. k. Wrocław directly) and directly) LC Corp Invest XVII Sp. z o.o. Projekt 20 Sp. k. (2) Wrocław 100% (indirectly and directly) 100% (indirectly and directly) LC Corp Invest XVII Sp. z o.o. Projekt 21 Sp. k. (4) Wrocław 100% (indirectly) - LC Corp Invest XV Sp. z o.o. Finance S.K.A. Wrocław 100% (indirectly) 100% (indirectly) 100% (indirectly 100% (indirectly LC Corp Invest XV Sp. z o.o. Investments S.K.A. Wrocław and directly) and directly) LC Corp Invest XVIII Sp. z o.o. Real Estate S.K.A Wrocław 100% (indirectly and directly) 100% (indirectly and directly) As at 30 June 2015 and 31 December 2014, the Parent Undertaking's share in the total vote in its subsidiary companies is equal to its participation in their share capital. (1) On 11 May 2015, the District Court for Wrocław-Fabryczna, 6th Commercial Department of the National Court Register (KRS) registered a change in the amount of the share capital of LC Corp Invest XV Sp. z o.o. As of this date the company's new share capital totals PLN 305, LC Corp S.A. holds all shares in this company. (2) On 12 May 2015, LC Corp S.A. increased the value of its contribution to LC Corp Invest XVII spółka z ograniczoną odpowiedzialnością Projekt 20 sp. k. by PLN 700,000,00. The current value of LC Corp S.A.'s contribution in LC Corp Invest XVII spółka z ograniczoną odpowiedzialnością Projekt 20 sp. k. amounts to PLN 61,600, On 18 June 2015, LC Corp S.A. increased the value of its contribution to LC Corp Invest XVII spółka z ograniczoną odpowiedzialnością Projekt 20 sp. k. by PLN 1,500, The current value of LC Corp S.A.'s contribution amounts to PLN 63,100, On 14 July 2015, LC Corp S.A. increased the value of its contribution to LC Corp Invest XVII spółka z ograniczoną odpowiedzialnością Projekt 20 sp. k. The current value of LC Corp S.A.'s contribution amounts to PLN 64,600,

5 On 23 July 2015, LC Corp S.A. increased the value of its contribution to LC Corp Invest XVII spółka z ograniczoną odpowiedzialnością Projekt 20 sp. k. The current value of LC Corp S.A.'s contribution amounts to PLN 67,600, (3) On 23 June 2015, a new company - LC Corp Invest XV Spółka z ograniczoną odpowiedzialnością Projekt 12 Spółka komandytowa - was registered. The company has KRS no.: and NIP no.: The limit partners of the Company are LC Corp Invest IX Sp. z o.o. and LC Corp Invest VIII Sp. z o.o., while the general partner representing it and handling its affairs is LC Corp Invest XV Spółka z ograniczoną odpowiedzialnością. (4) On 23 February 2015, a limited partnership - LC Corp Invest XVII Sp. z o. o. Projekt 21 Sp. k. - was registered, established on the basis of the partnership agreement concluded between the subsidiary undertakings of LC Corp S.A. i.e.: LC Corp Invest XVII Sp. z o.o. and LC Corp Invest XI Sp. z o.o. The above-mentioned company was established to complete a commercial investment in which LC Corp Invest XI Sp. z o. o. is a limited partner. The subsidiary companies are fully consolidated, and associated companies are valued with the equity method. 1. Major changes in the Group in H In the period of six months ended 30 June 2015, there occurred some changes in the composition of the Group, described below. 1. On 23 February 2015 a limited partnership - LC Corp Invest XVII Sp. z o. o. Projekt 21 Sp. k. - was registered, established on the basis of the partnership agreement concluded between the subsidiary undertakings of LC Corp S.A. i.e.: LC Corp Invest XVII Sp. z o.o. and LC Corp Invest XI Sp. z o.o. The company was established to complete a commercial investment in which LC Corp Invest XI Sp. z o. o. is a limited partner. 2. On 11 May 2015, the District Court for Wrocław-Fabryczna, 6th Commercial Department of the National Court Register (KRS) registered a change in the amount of the share capital of LC Corp Invest XV Sp. z o.o. As of this date the share capital of the company amounts to PLN 305,000. LC Corp S.A. holds all shares in this company. 3. On 12 May 2015, LC Corp S.A. increased the value of its contribution to LC Corp Invest XVII spółka z ograniczoną odpowiedzialnością Projekt 20 sp. k. by PLN 700,000. The current value of LC Corp S.A.'s contribution in LC Corp Invest XVII spółka z ograniczoną odpowiedzialnością Projekt 20 sp. k. amounts to PLN 61,600, On 18 June 2015, LC Corp S.A. increased the value of its contribution to LC Corp Invest XVII spółka z ograniczoną odpowiedzialnością Projekt 20 sp. k. by PLN 1,500,000. The value of LC Corp S.A.'s contribution amounted to PLN 63,100, On 23 June 2015, a new company - LC Corp Invest XV Spółka z ograniczoną odpowiedzialnością Projekt 12 Spółka komandytowa - was registered. The company has KRS no.: and NIP no.: The limit partners of the Company are LC Corp Invest IX Sp. z o.o. and LC Corp Invest VIII Sp. z o.o., while the general partner representing it and handling its affairs is LC Corp Invest XV Spółka z ograniczoną odpowiedzialnością. 6. On 14 July 2015, LC Corp S.A. increased the value of its contribution to LC Corp Invest XVII spółka z ograniczoną odpowiedzialnością Projekt 20 sp. k. by PLN 1,500,000. The value of LC Corp S.A.'s contribution amounts to PLN 64,600, On 23 July 2015, LC Corp S.A. increased the value of its contribution to LC Corp Invest XVII spółka z ograniczoną odpowiedzialnością Projekt 20 sp. k. by PLN 3,000,000. The value of LC Corp S.A.'s contribution amounts to PLN 67,600, Scope of business The Group's core activity comprises property development related to the construction projects underway, and the core activity of LC Corp S.A. reflected in REGON, i.e. the statistical records system, includes the activities of financial holding companies, management and consulting activities in the scope of business management, and the development and sale of own property. Over the period from 1 January to 30 June 2015, LC Corp S.A. and the Group were implementing the strategy 5

6 compliant with their core activity, i.e. investment activity. 3. Group s share capital as at 30 June Ownership structure of significant blocks of the Issuer s shares 6

7 As at 30 June 2015, the share capital of LC Corp S.A. amounted to PLN 447,558,311 and was divided into 447,558,311 ordinary bearer shares carrying one vote at the General Meeting, with a par value of PLN 1.00 each. The ownership structure of significant blocks of the Issuer s shares as at the date of submitting the midyear financial statements for H1 2015, according to the information obtained by the Issuer. Shareholders possessing, directly or indirectly, over 5% of the total vote at the General Meeting of LC Corp S.A.: Shareholder Leszek Czarnecki directly and indirectly (1) including: LC Corp B.V. seated in Amsterdam AVIVA Otwarty Fundusz Emerytalny Number of shares 229,359, ,701,110 Number of votes 229,359, ,701,110 Participation (%) in share capital 51.24% 47.97% Share (%) in vote at general meeting 51.24% 47.97% AVIVA BZ WBK 30,200,000 30,200, % 6.75% ING Otwarty Fundusz Emerytalny 35,000,000 35,000, % 7.82% OFE PZU "Złota Jesień" 44,669,000 44,669, % 9.98% (1) Mr Leszek Czarnecki directly holds 14,657,685 shares representing 3.27% of the share capital and 3.27% of the votes at the General Meeting, and indirectly, through his subsidiary undertakings, Mr Leszek Czarnecki holds 214,702,110 shares representing 47.97% of the share capital and 47.97% of the votes at the General Meeting. Mr Leszek Czarnecki's subsidiary undertaking is LC Corp. B.V., seated in Amsterdam, holding 214,701,110 shares representing 47.97% of the share capital and 47.97% of the votes at the General Meeting, and RB Investcom Sp. z o.o., seated in Wrocław, holding 1,000 shares representing % of the share capital and % of the votes at the General Meeting. Shareholders possessing, directly or indirectly, over 5% of the total vote at the General Meeting of LC Corp S.A. as at the date of submitting the report for Q1 2015, according to the information obtained by the Issuer Shareholder Number of shares Number of votes Participation (%) in share capital Share (%) in vote at general meeting Leszek Czarnecki directly and indirectly (1) including: LC Corp B.V. seated in Amsterdam AVIVA Otwarty Fundusz Emerytalny 229,359, ,701, ,359, ,701, % 47.97% 51.24% 47.97% AVIVA BZ WBK 30,200,000 30,200, % 6.75% ING Otwarty Fundusz Emerytalny 35,000,000 35,000, % 7.82% OFE PZU "Złota Jesień" 44,000,000 44,000, % 9.83% 7

8 1) Mr Leszek Czarnecki directly holds 14,657,685 shares representing 3.27% of the share capital and 3.27% of the votes at the General Meeting, and indirectly, through his subsidiary undertakings, Mr Leszek Czarnecki holds 214,702,110 shares representing 47.97% of the share capital and 47.97% of the votes at the General Meeting. Mr Leszek Czarnecki's subsidiary undertaking is LC Corp. B.V., seated in Amsterdam, holding 214,701,110 shares representing 47.97% of the share capital and 47.97% of the votes at the General Meeting, and RB Investcom Sp. z o.o., seated in Wrocław, holding 1,000 shares representing % of the share capital and % of the votes at the General Meeting. In the period between the submission of the report for Q and the date of drawing up this report, i.e. by 28 August 2015, there were no significant changes in the ownership structure of significant blocks of the Issuer's shares Holding of the Issuer s shares or options by the management staff and the supervisory staff Full name Supervisory staff Leszek Czarnecki Andrzej Błażejewski Remigiusz Baliński Zbigniew Dorenda Jakub Malski Function in the body Chairman of the Supervisory Board Vice-Chairman of the Supervisory Holding of the Issuer s shares as at 15 May 2015(*) 14,657,685 Increase Decrease - - Holding of the Issuer s shares as at 28 August ,657,685 Board 151, ,142 Member of the Supervisory Board 32, ,722 Member of the Supervisory Board Member of the Supervisory Board 9, ,830 Management staff Dariusz Niedośpiał President of the Management Board 158, ,791 Joanna Jaskólska Tomasz Wróbel Mirosław Kujawski Małgorzata Danek Vice President of the Management Board 6, ,000 Member of the Management Board Member of the Management Board Member of the Management Board 15, ,000 (*) pursuant to the information included in the quarterly report for Q Share capital of LC Corp s subsidiary undertakings as at 30 June 2015 Subsidiary undertaking Share capital as at 30 June 2015 in PLN Share of LC Corp S.A. 8

9 Arkady Wrocławskie S.A. 113,700, % Sky Tower S.A % Warszawa Przyokopowa Sp. z o.o. 33,001, % (indirectly and directly) Kraków Zielony Złocień Sp. z o.o. 11,230, % LC Corp Invest I Sp. z o.o. 5, % (indirectly and directly) LC Corp Invest II Sp. z o.o. 88,800, % LC Corp Invest III Sp. z o.o. 6,700, % LC Corp Invest VII Sp. z o.o. 4,000, % LC Corp Invest VIII Sp. z o.o. 13,500, % LC Corp Invest IX Sp. z o.o. 4,700, % LC Corp Invest X Sp. z o.o. 10,300, % LC Corp Invest XI Sp. z o.o. 41,000, % LC Corp Invest XII Sp. z o.o. 24,800, % LC Corp Invest XV Sp. z o.o. Finance S.K.A. 50, %(indirectly) LC Corp Invest XV Sp. z o.o. 305, % LC Corp Invest XVI Sp. z o.o. 5, % LC Corp Invest XVII Sp. z o.o. 5, % LC Corp Invest XVIII Sp. z o.o. 5, % LC Corp Invest XV Sp. z o. o. Projekt 1 Sp. k. * 110, % (indirectly) LC Corp Invest XV Sp. z o. o. Projekt 2 Sp. k. * 10, % (indirectly) LC Corp Invest XV Sp. z o. o. Projekt 3 Sp. k. * 10, % (indirectly) LC Corp Invest XV Sp. z o. o. Projekt 4 Sp. k. * 10, % (indirectly) LC Corp Invest XV Sp. z o. o. Projekt 5 Sp. k. * 110, % (indirectly) LC Corp Invest XV Sp. z o. o. Projekt 6 Sp. k. * 10, % (indirectly) LC Corp Invest XV Sp. z o. o. Projekt 7 Sp. k. * 10, % (indirectly) LC Corp Invest XV Sp. z o. o. Projekt 8 Sp. k. * 10, % (indirectly) LC Corp Invest XV Sp. z o. o. Projekt 9 Sp. k. * 10, % (indirectly) LC Corp Invest XV Sp. z o. o. Projekt 10 Sp. k. * 10, % (indirectly) LC Corp Invest XV Sp. z o. o. Projekt 12 Sp. k. * 10, % (indirectly) LC Corp Invest XV Sp. z o.o. Projekt 14 Sp.k. * 5,050, %(indirectly and directly) LC Corp Invest XV Sp. z o. o. Projekt 20 Sp. k. * 63,100, % (indirectly and directly) LC Corp Invest XV Sp. z o. o. Projekt 21 Sp. k. * 10, % (indirectly) LC Corp Invest XV Sp. z o.o. Investments S.K.A % (indirectly and directly) LC Corp Invest XV Sp. z o.o. Finance S.K.A. 50, % (indirectly) LC Corp Invest XV Sp. z o.o. Real Estate S.K.A. 50, % (indirectly and directly) * owing to the fact that a limited partnership is a personal partnership, the items presented in the table above as the share capital refer to the amount of the commendam sum II. GROUP S ACTIVITY IN H In the first half of 2015 LC Corp S.A. focused its activities on administrating, managing and exercising owner's supervision over its subsidiary undertakings, acquiring funds for their project related activity and searching for the land for new projects. LC Corp's subsidiary undertakings were active on the property development market continuing their projects or preparing to start building projects as well as managing Wola Center, an office and retail complex in Warsaw, Silesia Star, an office and retail complex in Katowice, and two office and retail complexes in Wrocław, Arkady Wrocławskie and Sky Tower. 1. Basic products, goods for resale and services 9

10 The main source of revenue for the Group in the first half of 2015 was the sale of residential and retail premises, which represented approx. 69.7% of the total revenue. Other Group's revenue, at the level of about 30.3%, was produced by commercial property rental services. The table below presents revenue and profits (PLN '000) of the Group's respective segments for the period of six months ended 30 June 2015: Period of 6 months ended 30 June 2015 (unaudited) Rental activity development activity Property Overall activity (other) Holding activity Total revenue from sales Gross profit (loss) on sales - Result of the segment 63, , ,915 42,623 36, , Market situation The Group operates in Poland and its key projects are located in big cities: Warsaw, Wrocław, Kraków, Gdańsk, Łódź and Katowice. Revenue earned in H were attributed to the property development activity of the Group's undertakings carried out on the home market in Warsaw, Wrocław, Kraków, Gdańsk and Łódź. In H the total of 826 flats and retail premises were sold (pre-sale/property development agreements; having taken account withdrawals), i.e. 34% more than in the corresponding period last year, and 535 flats and retail premises were transferred on the basis of notarial deeds (sales disclosed in the income statement - i.e. 109% more than in H1 2014). The Group consistently implements its strategy of diversifying the location of its investment projects and expanding its activity on the residential property market of Warsaw, Wrocław, Kraków and Gdańsk, which is illustrated by the sales summary in H in relation to H1 2014, presented below (in the tables: number of residential and retail premises): pre-sale city HI'2014 HI'2015 Warsaw Wrocław Kraków Gdańsk Łódź 7 7 total sales city HI'2014 HI'2015 Warsaw 6 84 Wrocław Kraków Gdańsk 9 8 Łódź 6 6 total % 109% 10

11 offer city 30 June 2015 to be introduced in 2015 Warsaw Wrocław Kraków Gdańsk Łódź 19 total 1,593 1,373 The Group's projects, ongoing and under preparation, are described below. 3. Completed property development projects 3.1. Commercial projects Project name City District Segment Completion date Area (m²) Wola Center Warsaw Wola Office Q and services Arkady Wrocławskie Wrocław Krzyki Office retail Q and services Office Sky Tower Wrocław Krzyki retails Q and services Silesia Star Bogucice Office Katowice (Building A) Zawodzie and services 3.2. Residential projects 33,203 39,211 51,510 Q ,015 Project name City District Segment Completion date Number of flats and commercial premises Area (m²) Osiedle Przy Promenadzie (stages I, II and III) Warsaw Praga- Południe Flats, services Q ,160 Rezydencja Kaliska Warsaw Śródmieście- Ochota Flats, services Q ,441 Osiedle Powstańców 33 Ząbki Flats, (stages I and II) near Warsaw services Osiedle Na Woli (stage I) Osiedle Maestro (stages I and II) Osiedle Potokowa (stages I, IIc and III) Warsaw Wola Flats, services Q ,919 Q ,141 Q ,008 Krzyki- Q ,352 Wrocław Jagodno Flats Q ,829 Q ,819 Flats and Wrocław Maślice houses Q ,486 Osiedle Graniczna (stages I and II) Wrocław Fabryczna Flats Q ,622 Q ,200 Q ,716 10

12 Terraced Osiedle Nowalia Wrocław Klecina houses Q ,634 Brzeska 5 Wrocław Krzyki Flats, services Q ,889 Stabłowicka 77 (stages I and II) Słoneczne Miasteczko (stages I, II and III) Okulickiego 59 Grzegórzecka 77 (stage I) Osiedle Przy Srebrnej (stages IIa IIb and IIc) Kraków Śródmieście Flats, services Q ,259 Wrocław Fabryczna Flats 60 3,159 Q Q ,624 Bieżanów- Kraków Prokocim Flats Q ,959 Q ,163 Kraków Mistrzejowice Flats, services Q ,701 Q ,008 Q ,795 Flats, Gdańsk Łostowice services Q Q ,168 Osiedle Dębowa Ostoja (stage I) Łódź Bałuty Terraced houses Q ,548 Osiedle Pustynna 43 (stage I) Łódź Górna Flats Q , Ongoing projects 4.1. Commercial projects Project name City District Segment Anticipated commence ment date Anticipated completion date Area (m²) Silesia Star (Building B) Katowice Bogucice Zawodzie Office and services Q Q , Residential projects Project name City District Segment Completion date Number of flats and commercial premises Area (m²) Osiedle Na Woli (stage II) Mała Praga (stage I) Warsaw Wola Flats Q ,638 Warsaw Praga Południe Osiedle Poborzańska Warsaw Targówek Flats, services Q ,356 Flats, services Q ,167 11

13 Osiedle Powstańców 33 (stage III) Ząbki near Warsaw Flats Q ,512 Osiedle Przy Promenadzie (stage IV) Osiedle Krzemowe (stage I) Osiedle Graniczna (stage III) Warsaw Praga Pł Flats Q ,781 Warsaw Mokotów Flats Q ,592 Wrocław Fabryczna Flats Q ,689 Osiedle Graniczna Wrocław Fabryczna Flats Q ,443 (stages IV and V) Q ,086 Osiedle Dolina Piastów Wrocław Fabryczna Flats Q ,254 Słoneczne Miasteczko (stage IV) Grzegórzecka (stages II, III and IV) Kraków Kraków Bieżanów- Prokocim Flats Q ,457 Śródmieście Flats, services Q ,064 Q ,579 Q ,908 5 Dzielnica (stage I building B3) Centralna Park (stage I) Osiedle Przy Srebrnej (stages II d and IIe) Osiedle Przy Alejach (stage I) Kraków Krowodrza Flats Q ,178 Kraków Czyżyny Flats Q ,036 Gdańsk Łostowice Flats Q ,101 Q ,676 Gdańsk Zaspa Flats Q , Property development projects under preparation 5.1. Commercial projects Project name City District Segment Anticipated commence ment date Anticipated completion date Area (m²) Office building at ul.piłsudskiego Wrocław Stare Miasto Office QI/II 2016 Q , Residential projects Project name City District Segment Anticipated commencem ent date Anticipated completion date Number of flats and commercial premises Area (m²) Ostrobramska (stage I) Warsaw Praga Płd Flats Q Q ,995 Mała Praga Warsaw Praga Flats Q Q ,356 12

14 (stage II) Południe Tęczowa Wrocław Stare Miasto Flats Q Q ,994 Osiedle Maestro (stage III) Słoneczne Miasteczko (stage V) 5 Dzielnica Wrocław Jagodno Flats Q Q ,256 Kraków Bieżanów- Prokocim Flats Q Q ,919 (stage II building B5) Kraków Krowodrza Flats Q Q ,708 Osiedle Przy Alejach (stage II) Gdańsk Zaspa Flats Q Q ,065 Osiedle Wałowa (stage I) Gdańsk Śródmieście Flats Q Q ,541 Furthermore, depending on the rate of sales of premises in a project, the company plans to start its next stages. In the first half of 2015 preparatory works aiming at starting next projects by the Group companies and seeking attractive property for new projects both in the commercial and residential property sector. 6. Group s dependence on suppliers and recipients Service recipients In the first half of 2015, with regard to the sale of residential and retail premises, the Group companies were not dependent on any service recipient, as the Group's clients are mainly natural persons, belonging to a broadly understood consumer group. Service suppliers In the first half of 2015, the Group companies were not dependent on specific suppliers building services are offered by numerous companies competing on the Polish developed construction market and the Group companies use the services provided by various construction companies to eliminate the risk of being dependent on a single entity. The Group enters into contracts on construction works selecting contractors by way of tenders and choosing the most advantageous bid. 7. Significant agreements, insurance agreements On 25 May 2015, LC Corp Invest XV Sp. z o.o. Projekt 2 sp. k. concluded a preliminary sales agreement with Polski Holding Obronny sp. z o.o., having its registered office in Warsaw, of the perpetual usufruct right of undeveloped real estate located in Warsaw, Wola District, at ul. Sowińskiego and Człuchowska, having the total area of 46,984 sq. m for the net amount of PLN 76,205, increased by VAT at a rate of 23%, i.e. in the amount of PLN 17,527, On 11 June 2015, in performance of the agreement, the parties concluded a conditional agreement under the condition that the Mayor of the Capital City of Warsaw does not exercise its preemption right, and on 31 July 2015 the parties concluded an agreement transferring the usufruct right of the above-mentioned real property. Apart from the above-mentioned agreement, in the first half of 2015 the Group companies did not conclude any significant agreements whose value would represent at least 10% of the Issuer's equity. In the remaining scope significant for the Group companies such agreements (in particular those concerning financing and purchasing of real property) are described in these statements. III. ASSET, FINANCIAL AND REVENUE POSITION OF THE LC CORP GROUP IN H Basic economic and financial figures Position as at 30 June 2015 PLN 000 Position as at 30 June 2014 PLN 000 Non-current assets 1,591,509 1,486,587 13

15 Current assets 1,126, ,548 Equity 1,297,611 1,213,348 Liabilities and provisions for liabilities 1,419,899 1,266,787 Balance-sheet total 2,717,510 2,480,135 Revenue from sales 209, ,468 Gross profit on sales 79,870 59,332 Operating profit (loss) 55,599 48,681 Gross profit 52,109 34,730 Net profit 40,477 30,661 In the period ended 30 June 2015, the Company earned revenue from sales in the total amount of PLN 209,915,000 and net profit of PLN 40,477,000. Major factors and events which had a material impact on the financial results of the LC Corp Group in the period of six months ended 30 June 2015 include in particular: 1. realized sales (transfers) of residential and retail premises in the property development projects, 2. realization of the planned profit from the operation of retail and office centres, Arkady Wrocławskie and Sky Tower, and office centres, Wola Center and Silesia Star, Structure of the consolidated balance sheet assets and equity and liabilities, including its assessment in respect of the Group s liquidity Assets 30 June 2015 PLN 000 Structure % A. Non-current assets 1,591, % 1. Intangible assets % 2. Property, plant and equipment 4, % 2.1. Tangible assets 4, % 2.2. Tangible assets under construction % 3. Non-current receivables 6, % 4. Investment property 1,567, % 5. Non-current prepayments and accrued income % 6. Deferred tax assets 11, % B. Current assets 1,126, % 1. Inventories 887, % 2. Trade and other receivables 50, % 3. Income tax receivable % 4. Current financial assets 14, % 5. Cash and cash equivalents 166, % 6. Current prepayments and accrued income 7, % C. Non-current assets classified as held for sale % Total assets 2,717, % Equity and liabilities A. Equity 1,297, % I. Equity attributable to shareholders of the parent undertaking 1,297, % 1. Share capital 447, % 2. Other capital 809, % 3. Net profit / (loss) 40, % II. Minority interest % B. Non-current liabilities 1,063, % 14

16 1. Non-current liabilities on account of loans and bonds 828, % 2. Non-current liabilities on account of the acquisition of a subsidiary undertaking 145, % 3. Non-current trade and other payables % 4. Provisions % 5. Deferred tax liability 89, % C. Current liabilities 356, % 1. Current liabilities on account of loans and bonds 71, % 2. Current liabilities on account of the acquisition of a subsidiary undertaking 39, % 3. Current trade and other payables 72, % 4. Income tax payable % 5. Provisions % 6. Accrued expenses and revenue 171, % Total equity and liabilities 2,717, % IV. EVENTS EXERTING OR POTENTIALLY EXERTING A SIGNIFICANT IMPACT ON THE GROUP S ACTIVITY AND THE FINANCING OF THE GROUP S ACTIVITY IN H Loan agreements concluded by the Group companies 1.1. Loan agreement concluded by LC Corp Invest XII Sp. z o.o. and repayment of the loan On 15 January 2015, LC Corp Invest XII Sp. z o.o. concluded the loan agreement with mbank Hipoteczny SA up to the amount of PLN 28,530,000. On 5 March, LC Corp Invest XII Sp. z o.o., in performance of the loan agreement, established collaterals necessary to initiate the loan, inter alia a declaration of establishing a mortgage up to the amount of PLN 57,060,000 on the company's real property was submitted, financial and registered pledges were established on bank accounts and shares, as well as other standard security for loan agreements. Also, a blank bill of exchange was issued by LC Corp Invest XII Sp. z o.o. and guaranteed by LC Corp S.A. until relevant courts enter the registered pledge on the shares and the mortgage on the real property. The loan was initiated and was repaid in full on 27 May Annexe to the loan agreement concluded by LC Corp S.A. and Getin Noble Bank S.A On 19 February 2015, the Issuer concluded with Getin Noble Bank S.A. an annexe to the loan agreement of 18 June 2014, postponed the maturity date of the loan in the amount of PLN 40,000,000 until the end of June As at 30 June 2015, the loan was not initiated. Another annexe to this agreement postpones the term for using the loan until the end of 2015 (item V.5) Annexe to the agreement on the issue of investment notes issued by LC Corp S.A. On 29 June 2015, LC Corp S.A. concluded with Arkady Wrocławskie S.A. an annexe to the Agreement on the issue, acquisition and redemption of securities in the form of notes of 20 January Pursuant to the annexe, the redemption of 10 notes issued by LC Corp S.A., acquired by Arkady Wrocławskie S.A. was postponed to from 30 June 2015 to 29 June Issue of investment notes by LC Corp Invest I Sp. z o.o. On 29 April 2015, LC Corp Invest I Sp. z o.o. issued, pursuant to the laws of bills of exchange, 15 investment notes having a par value of PLN 15,000,000 each, under arm's length terms, with maturity date 27 April 2018, which were acquired by a subsidiary undertaking, LC Corp Invest XV Sp. z o.o. Projekt 14 Sp. k.. 2. Repayment of the loans taken out by the Group companies from the banks 2.1. Repayments of the loan taken out by Arkady Wrocławskie with the consortium of banks In the period of six month ended 30 June 2015, Arkady Wrocławskie S.A. made, in accordance with the repayment schedule, the repayments of the loan taken out in EUR with the consortium banks: ING Bank Śląski S.A. and Kredyt Bank S.A. (at present BZ WBK S.A.) of PLN 8,243,000. As at 30 June 2015, the total amount to be repaid, after conversion into PLN, amounted to PLN 157,926, Repayments of the loan taken out by Sky Tower S.A. with the consortium of banks 15

17 In the period of six months ended 30 June 2015, Sky Tower S.A. made, in accordance with the repayment schedule, the repayments of the loan taken out in EUR with the consortium of banks: in the amount of PLN 4,001,000. As at 30 June 2015, the total amount to be repaid, after conversion into PLN, amounted to PLN 226,956, Repayments of the loans taken by Warszawa Przyokopowa Sp. z o.o. In the period of six months ended 30 June 2015, Warszawa Przyokopowa Sp. z o.o. made, in accordance with the repayment schedule, the repayments of the loan taken out in EUR from the bank: in the amount of PLN 4,511,000. As at 30 June 2015, the total amount to be repaid, after conversion into PLN, amounted to PLN 221,746, Repayments of the loans taken by LC Corp Invest XVII Sp. z o.o. Projekt 20 Sp. k In the period of six months ended 30 June 2015, LC Corp Invest XVII Sp. z o.o. Projekt 20 Sp. k disbursed, in accordance with the loan agreement, the loan in EUR of the total value of PLN 7,825,000 and net disbursement (disbursement less fees) of a revolving loan for VAT in the amount of PLN 886, Full repayment of the loan by LC Corp Invest XII Sp. z o.o. On 27 May 2015, LC Corp Invest XII Sp. z o.o. made a full repayment of the bank loan to mbank Hipoteczny SA taken on 15 January Payment of dividends by subsidiary undertakings a) On 17 June 2015, the Ordinary General Meeting of LC Corp Invest I Sp. z o.o. adopted a resolution on payment of dividend for 2014 of the total of PLN 125,000 (including PLN 25,000 to LC Corp S.A.). The payment was made on 15 July b) On 22 June 2015, the Shareholders' Meeting of LC Corp Invest XV Sp. z o.o. Projekt 8 Sp. k adopted a resolution on the payment of profit for 2014 to the company's shareholders (LC Corp Invest XV Sp. z o.o., and LC Corp Invest XII Sp. z o.o.) of the total amount of PLN 11,817,000. The payment was made on 17 July c) On 22 June 2015, the Shareholders' Meeting of LC Corp Invest XV Sp. z o.o. Projekt 1 Sp. k adopted a resolution on the payment of profit for 2014 to the company's shareholders (LC Corp Invest XV Sp. z o.o., LC Corp Invest XI Sp. z o.o. and LC Corp Invest XII Sp. z o.o.) of the total amount of PLN 7,300,000. The payment was made on 24 August d) On 22 June 2015, the Shareholders' Meeting of LC Corp Invest XV Sp. z o.o. Projekt 2 Sp. k adopted a resolution on the payment of profit for 2014 to the company's shareholders (LC Corp Invest XV Sp. z o.o. and Kraków Zielony Złocień Sp. z o.o.) of the total amount of PLN 4,874,000, taking account of the advance payment on profits made pursuant to the resolution of 27 May 2014 in the amount of PLN 2,000,000. The payment was made on 17 July e) On 22 June 2015, the Shareholders' Meeting of LC Corp Invest XV Sp. z o.o. Projekt 5 Sp. k adopted a resolution on the payment of profit for 2014 to the company's shareholders (LC Corp Invest XV Sp. z o.o., LC Corp Invest X Sp. z o.o. and Kraków Zielony Złocień Sp. z o.o.) in the total amount of PLN 4,443,000. The payment was made on 24 August f) On 29 June 2015, the General Meeting of LC Corp Invest XVI Sp. z o.o. adopted a resolution on the payment of dividend for 2014 in the total amount of PLN 108,000 to the sole shareholder - LC Corp S.A. The payment was made on 15 July g) On 30 June 2015, the General Meeting of Sky Tower S.A. adopted a resolution on payment of dividend for 2014 in the total amount of PLN 8,000,000 to the sole shareholder - LC Corp S.A. The payment of dividend was made on 24 August Issue and redemption of securities 1) On 20 March 2015, LC Corp S.A. issued 65,000 five-year unsecured coupon bonds, having the value of 1,000 each and the total par value of PLN 65,000,000 pursuant to the Agreement on the Bonds Issue Programme, concluded with the banks: Pekao S.A., having its registered seat in Warsaw, and BRE Bank S.A., having its registered seat in Warsaw, with the redemption scheduled for 20 March The funds obtained from the above-mentioned issue will be allocated entirely to redeem the securities issued on 1 June 2012 under the above-mentioned Agreement on the Bonds Issue Programme, whose maturity date falls on 25 May ) On 25 May 2015, the Issuer performed the timely redemption of 650 unsecured, dematerialized coupon bonds of LCC series and ISIN PLLCCRP00041 code, having a par value of PLN 100, each and the total 16

18 par value of PLN 65,000,000, that were issued on 1 June V. OTHER EVENTS THAT OCCURRED SUBSEQUENT TO 30 JUNE On 17 July 2015, LC Corp Invest XVII Sp. z o.o. Projekt 20 Sp. k. as a borrower, concluded with PKO BP S.A. an annexe to the loan agreement of 14 May 2014, on regulating the principles of completion of stage II of Silesia Star project. In connection with the concluded annexe, changes of collaterals to the loan agreement were made: an agreement on the assignment of loan rights which may be granted by LC Corp Invest I Sp. z o.o. for the construction of the building was concluded, an annexe to a support agreement entered into between the Borrower, the Bank and the Issuer, under which the Issuer acting as a guarantor inter alia obliged itself, in certain situations specified in the agreement, to provide the Borrower with financial support connected with the implementation of stage II of the project was concluded, and declarations of the Borrower and the Issuer of submission to enforcement to the bank with regard to fulfilment of liabilities. 2. On 21 July 2015, the Ordinary General Meeting of Arkady Wrocławskie S.A. adopted a resolution on payment of dividend for 2014 in the total amount of PLN 4,548,000 to the sole shareholder - LC Corp S.A. The payment of dividend was paid on 23 July On 14 and 23 July 2015, LC Corp S.A. increased the value of its contribution to LC Corp Invest XVII spółka z ograniczoną odpowiedzialnością Projekt 20 sp. k. The current value of LC Corp S.A.'s contribution amounts to PLN 67,6000, On 31 July 2015, the Extraordinary General Meeting of LC Corp S.A. adopted a resolution on the consent and authorisation of the management board to the company's purchase of own shares pursuant to Art of the Code of Commercial Companies in accordance with the principles defined in the adopted resolution. 5. On 19 August 2015, the Issuer concluded with Getin Noble Bank S.A. an annexe to a bank loan agreement of 18 June 2014, extending the term of payment of the loan in the amount of PLN 40,000,000 until December As at the day of preparing the statement the loan was not released. 6. On 28 August 2015, LC Corp Invest XV Sp. z o.o. Sp. k. as collateral for a loan agreement concluded by the Issuer with Getin Noble Bank S.A. in the amount of PLN 40,000,000 described in item 5 above, submitted a declaration of establishing a joint mortgage up to PLN 60,000,000 on properties held in perpetual usufruct of this company, provided a surety for the above amount and submitted a declaration of submission to enforcement with the restriction to lift enforcement from mortgaged property. 7. LC Corp Invest I Sp. z o. o. concluded the following cash loans with LC Corp Group companies: a) on 3 July 2015 the company concluded with LC Corp Invest XV Sp. z o.o. Finance S.K.A. a loan agreement for the amount of PLN 100,000 on arm's length basis, for an indefinite period of time. b) on 15 July 2015 the company concluded with LC Corp Invest XVII Sp. z o.o. Projekt 21 Sp. k. a loan agreement for the amount of PLN 100,000 on arm's length basis, for an indefinite period of time. c) On 21 July 2015 the company concluded with LC Corp Invest XVII Sp. z o.o. Projekt 21 Sp. k. a loan agreement for the amount of PLN 500,000 on arm's length basis, for an indefinite period of time. d) On 24 August 2015 the company concluded with LC Corp Invest XV Sp. z o.o. Projekt 5 Sp. k. a loan agreement for the amount of PLN 10,000,000 on arm's length basis, for an indefinite period of time. Apart from the events listed above, there were no other events taking place after 30 June 2015 which could significantly affect the financial results of the LC Corp Group. VI. OPINION OF THE MANAGEMENT BOARD ON THE FEASIBILITY OF MEETING THE EARLIER PUBLISHED FINANCIAL FORECASTS FOR THE YEAR IN VIEW OF THE RESULTS PRESENTED IN THIS MID-YEAR REPORT AS COMPARED TO FORECASTED PERFORMANCE The Issuer did not publish any financial forecasts for the year

19 VII. LITIGATION As at 30 June 2015, no single proceedings were initiated with regard to liabilities or receivables of the Issuer or its subsidiaries, whose value amounted to at least 10% of the equity of the Issuer. As at 30 June 2015, there were also no proceedings initiated with regard to liabilities or receivables of the Issuer and its subsidiaries, whose total value amounted to at least 10% of the equity of the Issuer. VIII. FACTORS WHICH MAY AFFECT THE ISSUER S PERFORMANCE IN THE NEXT QUARTER The financial performance of the LC Corp Group will be significantly affected by the macroeconomic situation, in particular by the availability of mortgage loans for prospective customers. These factors determine to a considerable extent the demand for new apartments and the structure and prices of such apartments. In accordance with the definition contained in IAS 18, the LC Corp Group recognizes revenue from sales of residential and retail premises at the time when principally all risks and benefits related to the given premises are transferred to the client and revenue can be reasonably measured. In consequence, revenue from sales in the following quarter will depend on the value of the premises transferred to the clients, in accordance with the above definition, in this period. Operating results of the Group will also be influenced by the level of revenue generated from the rental of commercial space in the Arkady Wrocławskie, Sky Tower, Wola Center and Silesia Star centres, which depends on the euro exchange rate. The euro exchange rate will also influence the valuation of foreign currency loans and investment properties, i.e. Arkady Wrocławskie, Sky Tower, Wola Center and Silesia Star (stages I and II). In the opinion of the Management Board, the long-term impact on the Group's results will also be exerted, among others, by: - the fulfilment of the strategy of acquiring land intended for residential projects and carrying out such projects on this land to expand the Group's offer in the way corresponding to the market demand, - the fulfilment of the strategy of increasing the share of commercial property in the portfolio of the LC Corp Group. IX. OTHER INFORMATION MATERIAL FOR THE ASSESSMENT OF THE ISSUER S PERSONNEL, ASSET, FINANCIAL AND PROFIT/LOSS STANDING AND OF THE FEASIBILITY OF FULFILLING ITS OBLIGATIONS In the discussed reporting period, there were no events material for the assessment of the Issuer's personnel, asset, or financial standing and of the feasibility of discharging its obligations, apart from those disclosed in the financial statements and in the Management Board's Report on the Group's operations. X. INFORMATION ON SIGNIFICANT, NON-ARM S LENGTH, RELATED PARTY TRANSACTIONS OF THE ISSUER OR ITS SUBSIDIARY UNDERTAKING In the first half of 2015, the Issuer or its subsidiaries did not conclude any transactions with related undertakings that could be classified as significant or concluded under non-arm's length terms. XI. INFORMATION ON LOAN OR BORROWING SURETIES ISSUED OR GUARANTEES GRANTED BY THE ISSUER OR ITS SUBSIDIARY UNDERTAKING FOR THE VALUE OF AT LEAST 10% OF THE ISSUER S EQUITY In this reporting period there were no such transactions in the LC Corp Group. XII. RISK FACTORS SIGNIFICANT FOR THE GROUP S OPERATION Risk related to the situation on the financial and real estate markets 18

20 The factors that could exert a negative impact on the Group's activity include the policy implemented by the banking sector with regard to property development companies, as the scale of giving loans to property development companies will have a significant influence on the scale of commencing new projects. The policy of the banking sector with regard to mortgage loans affecting natural persons also represents a substantial risk factor. More restrictive criteria adopted by the banks to assess their clients' creditworthiness caused that numerous new potential residential buyers encounter the credit rating barrier. The lack of new credit solutions and the limited credit availability may be a factor reducing the demand for new flats and houses. Limited lending by the banks due to the act on conversion of loans in CHF will also have a significant negative impact on the sale of flats. Foreign exchange risk Revenue and liabilities resulting from an agreement on financing of the companies managing the commercial properties are denominated in EUR. In consequence, the Group is exposed to foreign exchange risk related to the fluctuations of PLN/EUR exchange rate. The currency risk which results from the servicing of a foreign currency loan is minimized by collecting rent indexed against the currency of the loan financing the investment. The risk posed by timing differences between invoicing and loan repayment is reduced, depending on the market situation, by purchasing a relevant amount of foreign currency at the dates of invoicing rents. The currency risk includes also the balance sheet valuation of the commercial properties and valuation of the loans (financing these investment projects), which as at the balance sheet date are converted from EUR to PLN according to the average exchange rate of National Bank of Poland effective on that date. Interest rate risk The interest rate risk concerns mainly non-current financial liabilities, based on a floating interest rate. This risk is partly compensated by the indexation of lease revenue. In some companies, financed with non-current investment loans, the transactions hedging against the interest rate risk are will be effected and the hedge accounting will be kept, in accordance with the provisions of these loan agreements. Credit risk The Group concludes transactions with renowned companies of good credit capacity. Moreover, owing to the current monitoring of receivables, the Group's exposure to the risk of uncollectible receivables is negligible. With reference to the Group's other financial assets, such as cash and cash equivalents, the Group's credit risk is minimal, because the Group deposits resources in banks of good, stable financial standing. There is no significant concentration of credit risk in the Group. Liquidity risk The Group aims to maintain the balance between the continuity and flexibility of financing, by using different sources of financing, such as bank loans and bonds. The Group has its own funds to secure the current activity and ongoing projects, however in order to expand its business the Group needs to obtain additional financing by entering into bank loan agreements or issuing bonds. Maturity dates of successive repayments are adjusted to projected proceeds from the sale of individual projects. Risk related to the implementation of property development projects The carrying out of property development projects entails numerous significant risks due to the complex legal and technical nature of such projects. These risks include, in particular, the failure to obtain permits indispensable to make use of real property as planned by the Group, delays in the completion of projects, costs exceeding the costs assumed in the budget due to unfavourable weather conditions, insolvency of contractors or subcontractors, labour disputes concerning contractors or subcontractors, shortage of construction materials or equipment, accidents or unforeseeable technical difficulties, impossibility of obtaining occupancy permits or other required permits regarding a building or buildings, 19