Semi-annual report for H of the Dekpol Capital Group

Transcription

1 Semi-annual report for H of the Dekpol Capital Group Pinczyn, 11 th of September 2017

2 Table of contents Selected consolidated financial data... 3 Condensed interim consolidated financial statement... 4 Condensed Interim Consolidated Statement of Financial Position - assets... 4 Condensed Interim Consolidated Statement of Financial Position - liabilities... 5 Condensed Interim Consolidated Statement of Comprehensive Income... 6 Condensed Interim Consolidated Cash Flow Statement... 7 Changes of values of estimated amounts ADDITIONAL EXPLANATORY NOTES Property, plant and equipment Investment properties Goodwill and other intangible assets Shares and stocks Other financial assets Inventories Receivables Cash specifics Deferred charges Equities Provisions Financial liabilities Trade liabilities Deferred income balance Current assets held for sale and discontinued operations Operating revenues and costs Financial revenues and expenses Income tax Deferred income tax Financial instruments Financial instruments - risk Operating segments Construction services Cash reconciliation Transactions with affiliates Other information Events after balance sheet date Earnings per share Selected financial data Condensed Semi-Annual Separate Financial Statements Condensed Interim Separate Financial Position Report Interim Condensed Separate Statement of Comprehensive Income Condensed Interim Separate Cash Flow Statement Interim Condensed Separate Statement of Changes in Equity Principles of preparation of interim condensed consolidated financial statements

3 Selected consolidated financial data Selected financial data - consolidated Thousands of PLN Thousands of EUR I. Net revenue from sales of products, goods, and materials II. Profit (loss) on operating activity III. Profit (loss) before tax IV. Net profit (loss) V. Earnings (loss) per ordinary share (in PLN / EUR) 0,76 1,11 0,18 0,25 VI. Net cash flows from operating activity VII. Net cash flows from investment activity (1764) (16 360) (415) (3 735) VIII. Net cash flows from financial activity (42 655) (10 043) IX. Total net cash flows (28 307) (7 204) (6 665) X. Total assets XI. Liabilities and provisions for liabilities XII. Long-term liabilities XIII. Short-term liabilities XIV. Equity XV. Share capital XVI. Number of shares at the end of the period XVII. Book value per share (in PLN / EUR) The above financial data for the year 2017 and analogous period of the year 2016 have been converted into EUR according to the following principles: - individual items of assets and liabilities on the average exchange rate for the day: 31 December ,4240 PLN / EUR 30 June ,2265 PLN / EUR. - individual items of assets and liabilities and cash flow according to the exchange rate as the arithmetic average of average exchange rates set by the Polish National Bank on the last day of each month of given financial period: from 1 January to 30 June ,3805 PLN / EUR, from 1 January to 30 June ,2474 PLN / EUR. 3

4 Condensed interim consolidated financial statement Condensed Interim Consolidated Statement of Financial Position - assets Description Note Fixed assets Property, land and equipment Intangible assets Goodwill 0 0 Investment properties Stocks and shares Receivables Other long-term financial assets Long-term deferred charges Deferred income tax assets Current assets Inventory Construction services receivables Trade receivables and other receivables Other short-term financial assets Short-term deferred charges Cash and cash equivalent Assets classified for sale Assets in total

5 Condensed Interim Consolidated Statement of Financial Position - liabilities Description Note Equity Equity falling to shareholders of parent entity Common equity Own shares (-) 0 0 Equity from sales of shares over its nominal value Other equities Profits saved: Non-controlling shares 0 0 Liabilities Long-term liabilities Deferred income tax provision Liabilities and provisions on employee benefits Other long-term provisions Long-term credits, borrowings and debt instruments Other long-term financial liabilities Other long-term liabilities Short-term liabilities Z Liabilities and provisions on employee benefits Other short-term provisions Short-term credits, borrowings and debt instruments Other short-term liabilities Construction services liabilities Trade liabilities and other liabilities Receivables from future terms Liabilities connected to assets intended for sale Liabilities in total

6 Condensed Interim Consolidated Statement of Comprehensive Income Description Note Sales revenues Costs of goods sold Gross profit (loss) from sales Selling costs General administrative expenses Other operating revenues Other operating costs Profit (loss) from operating activities Financial revenues Financial expenses Share in profit (loss) in entities priced by ownership value method 0 0 Profit (loss) before tax Income tax Profit (loss) from discontinued operations 0 0 Net profit (loss) Other net comprehensive income 0 0 Comprehensive income falling to non-controlling shareholders 0 0 Comprehensive income falling to shareholders of parent entity

7 Condensed Interim Consolidated Cash Flow Statement Description Profit (loss) before tax Adjustments: Depreciation Change of fair value of investment properties Profit (loss) from sales of non-financial tangible assets Profits (losses) from foreign exchange differences 0 0 Interests and shares in profits Other adjustments 0 0 Change of working capital Changes in stocks Changes in receivables Changes in liabilities Changes of provisions and deferred charges Other adjustments 0 4 Income tax from profit before taxation Income tax paid Net cash from operating activities Expenses related to acquisition of intangible assets Inflows from sales of intangible assets 0 37 Expenses related to acquisition of property, plant and equipment Inflows from sales of property, plant and equipment Expenses related to acquisition of investment properties Inflows from sales of investment properties 0 0 Repayments received from loans granted 0 0 Loans granted 0 0 Expenses related to acquisition of other financial assets 48 0 Net cash from investment activities Net inflows from issue of shares 0 0 Acquisition of own shares 0 0 Inflows from issue of debt securities Redemption of debt securities Inflows from loans and borrowings taken out Repayment of loans and borrowings Repayment of liabilities under finance lease Interest paid Dividends paid 0 0 Inflows from received grants Other inflows (expenses) from investment activities 0 0 Net cash from investment activities Change in net cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period Cash of limited disposal right

8 Condensed Interim Statement in Changes in Consolidated Equity For the period Description Common equity Equity from sale of shares over its nominal value 8 Reserve capital from retained earnings Other equities Unpaid profit retained Balance as at beginning of period Error correction of previous years Balance at the beginning of period after changes Issue of shares Dividends Transfer of financial result to capital Transactions with owners in total Other total comprehensive income Net profit (loss) Comprehensive income Balance at the end of period Za okres Description Common equity Equity from sale of shares over its nominal value Reserve capital from retained earnings Other equities Unpaid profit retained Balance as at beginning of period Error correction of previous years Balance at the beginning of period after Total Razem changes Issue of shares Dividends Transfer of financial result to capital Transactions with owners in total Other total comprehensive income Net profit (loss)

9 Comprehensive income Balance at the end of period

10 Additional Information to Condensed Interim Consolidated Financial Statement Principles of preparation of interim condensed consolidated financial statements and statement of compliance Interim condensed financial statement of Dekpol Capital Group for the first 6 month of the year ended 30 th of June 2017 has been prepared in accordance with International Accounting Standards and International Financial Reporting Standards and related interpretations announced in the form of regulations of European Commission (hereinafter referred to as IFRS). Interim condensed financial statement of Dekpol Capital Group has been prepared under assumption of continuation of business by the Company in the foreseeable future. Statement presents financial position of the Capital Group as at 30 June 2017 and 31 December 2016, results achieved with the Group s operations and cash flows for 6 months ended 30 June 2017 and 30 June In interim condensed consolidated financial statement for 6 months ended 30 June 2017 have been followed the same accounting principles (policy) and calculation methods as in the last annual consolidated financial statement for year In the reporting period, there were no changes in the applied accounting principles (policies). There were no material changes in estimates or changes in valuation of assets and liabilities and measurement of financial result during the reporting period. The consolidation has been prepared under the full method, and covered all entities within Capital Group. The functional currency of the Dekpol Capital Group and the presentation currency of these interim condensed consolidated financial statements is Polish Zloty (PLN). Seasonality and periodicity of business activity The operations of the Company are characterized by seasonality typical for the construction industry - an increase in demand for construction services in the period from spring to autumn. The highest revenue from sales is obtained in Q3 and Q4 of the year, which mainly results from weather conditions and the settlement of contracts at the end of the calendar year. The lowest revenues are, in turn, obtained in Q1 of the year. Weather anomalies may have an adverse effect on project execution dates which, if extended, may cause the increase of project costs and claims of the customers due to nonperformance. Particularly adverse weather conditions during winter may cause the decrease in sales which has a negative impact on the Issuer s performance. The Issuer attempts to prepare the schedule in such a way so as to make sure that finishing works inside of buildings and tasks possible to complete in sub-zero temperatures are carried out in winter. Moreover, the Issuer also solicits work connected with external rainwater drainage systems, sanitary sewage systems made of PVC pipes and water networks made of PE pipes which are planned to be performed during the low season when low temperatures do not particularly influence the quality of the services performed. Winter is also used to carry out the work connected with the solicitation of orders and the planning of future work. Despite the above, diverse financial performance in particular quarters of the year should be taken into account. 10

11 Construction output is also sensitive to changes in economic condition. Increase in investments is perceptible in good economic situation, while negligent investments appear during recession. Items affecting assets, liabilities, share capital, net profit or cash flow, untypical due to its type, volume or recurrence In May 2016 has been accomplished the construction of Almond Hotel located in Gdańsk at Toruńska street. In June 2016 has been signed an agreement of lease of the hotel towards independent operator. The hotel has been classified as investment property and valued at fair value at the end of June Positive difference between the cost of construction of hotel property and estimated fair value in the amount of PLN 15,646 thousands was recognized in the income statement as other operating income. Fair value of the hotel was determined based on evaluation report prepared by use of income method, however Management Board decided to recognize an additional discount from value resulting from evaluation report of 8% (PLN thousands) until the time of gathering further history confirming assumptions posed in evaluation report and confirming pricing by other independent entity. For the purposes of valuation has been adopted an annual discount rate in the amount of 7.5%. Changes of values of estimated amounts According to the adopted accounting policy, the fair value of real estate investments is updated on the basis of the valuation prepared for 30 November of the financial year. The Board did not find any circumstances that would have the potential to significantly impact the hotel's valuation. The method described above has been described. The Management Board updated the estimates of expected long-term contract margins and advances, write-downs on inventories and receivables, deferred tax assets and liabilities, and other reserves. Estimates are provided in the notes below. No change in depreciation rates was made. Changes in the composition of the Dekpol Capital Group in the first half of 2017 and to the date of publication of this report In the first half of 2017 there were changes in the structure of the Dekpol Group, resulting in the creation of Dekpol Inwestycje Sp. z o.o., Dekpol Pszenna Sp. z o.o., Dekpol Inwestycje Sp. z o.o. Na Fali Sp.k. ; Dekpol Inwestycje Sp. z o.o. Rokitki Sp.k. ; Dekpol Inwestycje Sp. z o.o. Development Sp. k. The Issuer has decided to appoint special purpose vehicles to carry out property development projects in order to structure the business. Thanks to such activity, the Issuer wants to achieve greater transparency and efficiency in this segment of its business. This is also a response to the expectations of the market and financial institutions. In June 2017 the company UAB DEK LT Statyba was established in Lithuania. Dekpol S.A. owns 100% of the company's share capital. The company was registered in the Lithuanian Register of Commercial Companies on July 11, The purpose of establishing UAB DEK LT Statyba is the management of future contracts in the General Contractor implemented in Lithuania. On 26 July 2017 (event after the balance sheet date) the Dekpol Pszenna Sp. z o.o. Sp.k. was entered into the National Court Register. The purpose of the creation is realization of a real estate development project called Grano Residence in Gdańsk, at Pszenna Street. Dekpol Pszenna Sp. z o.o. 11

12 Sp.k. is an indirect subsidiary of Dekpol S.A. through Dekpol Pszenna Sp. z o.o.. Dekpol Pszenna Sp. z o.o. is a general partner of Dekpol Pszenna Sp. z o.o. Sp.k., owning 25% of the shares in this company, while Dekpol S.A. being a limited partner of this company holds 50% of shares. Due to the above changes as at the date of submission of this report (ie September 11, 2017), the Dekpol Group consists of Dekpol S.A. as the dominant entity and eleven subsidiaries. ADDITIONAL EXPLANATORY NOTES 1. Property, plant and equipment Item Land Buildings and structures Machines and technical devices Vehicles Other fixed assets Fixed assets under construction Advances in respect of tangible fixed assets Net value of property, plant and equipment Investment properties Item Land not leased 0 0 Real estate leased Advances for investment properties Net carrying amount Goodwill and other intangible assets Item Goodwill 0 0 Patents and licenses Development costs Other intangible assets 0 0 Intangible assets total: Shares and stocks None. 5. Other financial assets Item Derivatives 0 0 Other long-term financial assets Long-term granted loans 0 30 Other long-term financial assets Short-term loans 0 0 Other short-term financial assets

13 6. Inventories 6.1 Structure of inventories Description Finished premises balance value Goods balance value Finished products balance value Premises under construction balance value Semi-finished products and work in progress Materials balance value Inventories Inventory write-offs Description Inventory write-offs reversal in period (-) Inventory write-offs at the beginning of period Inventory write-offs created in period Inventory write-offs other changes 0 0 Inventory write-offs at the end of period Receivables 7.1 Long-term receivables Description Deposits from construction services Deposits from other titles 4 3 Other receivables 0 0 Receivables write-offs (-) 0 0 Long-term receivables Long-term receivables write-offs Description Status at the beginning of period 0 0 Write-offs as cost in period 0 0 Write-offs used (-) 0 0 Write-offs terminated added as income in period (-) 0 0 Other changes (net FX differences from settlement) 0 0 Status at the end of period Short-term receivables Description Other receivables balance value Prepayments and payables balance value Deposits from other titles 0 0 Deposits from construction services balance value Payables due to other taxes, duties and social security Current income tax payables Net trade receivables Trade receivables and other receivables

14 7.4 Short-term receivables write-offs Description Status at the beginning of period Write-offs terminated added as income in period (-) Write-offs used (-) Write-offs as cost in period Other changes (net FX differences from settlement) 0 0 Status at the end of period Cash specifics Description Banking deposits a Visa Cash of limited disposal right Cash in deposit Long-term deposits Other cash and cash equivalent 0 0 Cash and cash equivalents Deferred charges Description Insurance Guarantees Provisions from sale of premises Other Deferred charges in total Equities Share capital Share capital As of As of Share capital Total: Equity The number of shares issued as of The number of shares issued as of The number of shares authorized for issue as of The number of shares authorized for issue as of Series A Series B Total:

15 10.2. Major shareholders Major shareholders Number of shares Number of votes Nominal value of shares Proportion of ownership interest Mariusz Tuchlin ,13% Nationale- Nederlanden OFE ,82% Total: ,93% 11. Provisions Description Other long-term provisions 0 0 Provision for retirement benefits long-term Provisions for employee benefits long-term Provision for retirement benefits short-term 5 5 Provisions for employee benefits short-term 5 5 Other provisions 0 39 Provisions for guarantee repairs Provisions for losses from construction contracts 0 0 Provisions for court litigations Provisions for unused holidays Other short-term provisions Provisions Financial liabilities Specification of financial liabilities Description Loans, borrowings and long-term debt-instruments Other long-term financial liabilities Long-term financial liabilities Loans, borrowings and short-term debt-instruments Other short-term financial liabilities Short-term financial liabilities Financial liabilities in total Loans and borrowings Loans and borrowings as of Loan value Balance Currency Interest rate Date of repayment Long-term loan BGŻ BNP PARIBAS um. WAR/4100/15/348/CB PLN WIBOR 3M+ margin

16 loan BGŻ BNP PARIBAS um. WAR/4100/15/348/CB PLN WIBOR 3M+ margin loan MBank agreement. WIBOR O/N+ 10/020/17/Z/VV PLN margin Borrowing PLN Fixed rate Long-term loans and borrowings in total Short-term loan Millennium um.10536/17/475/ PLN WIBOR 3M+ margin debt purchase agreement ING um. 891/2017/ / PLN WIBOR 1M+ margin loan SGB um. KG\ PLN WIBOR 3M+ margin other 353 PLN Short-term loans and borrowings in total Violations of loan agreements: they do not occur. Loans and borrowings as of Loan Date of Balance Currency Interest rate value repayment Long-term loan Z/73/Dz/ PLN WIBOR 3M+ margin WIBOR 3M + loan KRI\ PLN margin loan KRI\ PLN WIBOR 3M + margin loan BGŻ BNP PARIBAS um. WAR/4100/15/348/CB PLN WIBOR 3M + margin loan BGŻ BNP PARIBAS um. WAR/4100/15/348/CB PLN WIBOR 3M + margin Borrowing PLN Fixed rate Long-term loans and borrowings in total Short-term loan 8363/15/400/ PLN WIBOR 3M + margin loan KRI\ PLN WIBOR 3M + margin loan Z/73/Dz/ PLN WIBOR 3M+ margin Short-term loans and

17 borrowings in total Violations of loan agreements: they do not occur Bonds - nominal value Bonds as of reporting period Value Balance Currenc y Interest rate Date of repayment Long-term Bonds series D PLN WIBOR 3M+ margin Long-term bonds in total Short-term Short-term bonds in total Bonds as of reporting period Currenc Date of Value Balance Interest rate y repayment Long-term Bonds series C PLN WIBOR 3M+ margin Bonds series C PLN WIBOR 3M+ margin Bonds series C PLN WIBOR 3M+ margin Bonds series D PLN WIBOR 3M+ margin Bonds series E PLN WIBOR 3M+ margin Bonds series E PLN WIBOR 3M+ margin Bonds series E PLN WIBOR 3M+ margin Bonds series E PLN WIBOR 3M+ margin Long-term bonds in total Short-term Bonds series B PLN WIBOR 3M + margin Short-term bonds in total Trade liabilities Long-term liabilities Description Deposits received Other financial liabilities (long-term) 0 0 Other long-term liabilities Short-term liabilities Description Other short-term liabilities Prepayments and deposits received for supplies Short-term received bails Liabilities due to other taxes, duties and social securities Liabilities due to current income tax Liabilities due to remunerations Trade liabilities Trade and other liabilities

18 14. Deferred income balance 14.1 Specification of deferred income in reporting period Description Short-term Long-term Total Grants received Deferred charges Other charged Liabilities deferred charges in total Current assets held for sale and discontinued operations None. 16. Operating revenues and costs Revenues from sales Description Revenues from sales of products Revenues from sales of services Revenues from sales of goods and materials Sales revenues Costs by type Description Administrative expenses Selling costs Own work capitalized Employee benefits Cost of goods and materials sold Depreciation Employee benefits Consumption of materials and energy Outsourced services Taxes and fees Other costs by type Costs by type Movements in the balance of products Own selling cost Own selling cost Description Cost of products sold Cost of services sold Cost of goods and materials sold Own selling cost Other operating revenues Description Re-invoices 0 0 Pricing of investment properties to its fair value Release of provisions 0 0 Fines and compensations

19 Grants Overdue liabilities 0 0 Scrap yield 0 0 Bonus from turnover 0 0 Surplus stock 0 0 Other titles Provisions write-offs reversal in period (-) Receivables write-offs reversal in period (-) 9 52 Profit on disposal of non-financial fixed assets Other operating revenues Other operating costs Description Loss on disposal of non-financial fixed assets 0 0 Loss on disposal of non-financial fixed assets 0 0 Establishment of provisions 0 0 Costs related to acquisition of subsidiaries 0 0 Costs of defects repairs and scrap page 3 8 Donations Bonus from turnover 0 0 Inventory deficits 0 0 Receivables 0 0 Contractual penalties 0 0 Other titles Material losses Court litigation costs 0 0 Re-invoicing costs 0 0 Compensations Provisions write-offs reversal in period (-) Receivables write-offs reversal in period (-) Other operating costs Financial revenues and expenses Financial revenues Description Dividends 0 0 Interests Profit from sale of financial assets 0 0 Reversal of write-offs 0 0 Other financial revenues 0 0 Surplus of positive exchange differences over the negative ones 0 77 Financial revenues Financial expenses Description Interests Other financial costs 0 0 Write-offs

20 Loss from sale of financial assets 0 0 Surplus of negative exchange differences over the positive 58 0 Financial expenses Income tax Income tax Description Current income tax Deferred income tax Income tax Deferred income tax Deferred tax Description Deferred income tax assets at the beginning of reporting period Deferred income tax provision at the beginning of reporting period Deferred income tax assets and provisions for balance at the beginning of reporting period Other total income (+/-) 0 0 Financial result (+/-) Deferred income tax assets and provisions for balance at the end of reporting period Deferred income tax assets Deferred income tax provision Financial instruments Financial instruments assets Description Long-term receivables Trade receivables and other receivables Receivables evaluated at nominal value Loans and receivables evaluated at depreciated cost Stocks and shares in subsidiaries 0 0 Assets evaluated at fair value through financial result 0 0 Cash and cash equivalents Financial assets available for sale 0 0 Financial assets held to maturity 0 0 Financial assets Financial instruments - liabilities Description Liabilities evaluated at fair value through financial value 0 0 Liabilities evaluated at nominal value Liabilities evaluated at depreciated cost Financial liabilities

21 21. Financial instruments - risk In the activity of DEKPOL Capital Group important are the following types of financial risks: interest rate risk while operating on the market, the Group is exposed to interest rate risk. The Group has financial liabilities, whose financial cost is calculated based on the underlying variable interest rate WIBOR and a fixed margin. foreign exchange risk and the risk of changes in raw material prices - due to a small scale of operations in foreign currencies exchange rate risk is not significant for the Group. credit risk - the possible economic crisis may cause financial instability of the Group s customers and hence periodic impediments to the recovery and the formation of payment gridlock. The Group minimizes credit risk through diversification of the portfolio of customers and consistent using of procedures for monitoring and collection of overdue receivables. ryzyko płynności spółka zarządza ryzykiem płynności poprzez planowanie finansowe, dopasowywanie zapadalności aktywów do wymagalności pasywów oraz poprzez nadwyżkę dostępnych źródeł finansowania nad bieżącymi potrzebami Grupy. Liquidity risk - the Company manages liquidity risk by financial planning, operational activities in order to be completely matched and by the surplus of available financing sources over the current needs of the Group. Relevant data on maturity dates of financial assets and financial liabilities are presented in the earlier part of the report. The Group has no hedging instruments designated financial risks and does not apply hedge accounting. The Group aims to minimize these risks by using ongoing monitoring of specific risk areas through the implemented control procedures and regular analysis of risk exposure. 21

22 22. Operating segments Revenues, result and other in reporting period Description General contracting Property development Production of steel structures and accessories Other Exclusions Total Revenues from external clients Revenues from other segments Sales revenues in total Operating expenses in total Other operating revenues Other operating expenses Operating result Financial revenues Financial expenses Income tax Income tax Revenues, result and other in previous reporting period Description General contracting Property development Production of steel structures and accessories Other Exclusions Total Revenues from external clients Revenues from other segments Sales revenues in total Operating expenses in total Other operating revenues Other operating expenses Operating result Financial revenues Financial expenses Income tax

23 Income tax

24 23. Construction services Agreements on construction services active contracts cumulatively until the balance sheet date Description Invoiced revenues from agreements on construction services Estimated revenues from agreements on construction services Costs from agreements on construction services Result set in agreements on construction services (until balance sheet date) Future revenues from agreements on construction services Future costs from agreements on construction services Joint planned result on agreements on construction services Cash reconciliation The specification of cash is presented in note Transactions with affiliates According to the specifications on the next page. 24

25 25.1. Transactions and balances with affiliates in reporting period Description Consolidated Subsidiary not Associated and consolidated interdependent Other affiliated Total Dividends paid Dividends received Short-term liabilities Long-term liabilities Short-term receivables Long-term receivables Loans received Loans granted Cost of interests Revenues from interests Net purchases (without VAT) Net sales (without VAT) Total Transactions and balances with affiliates in previous reporting period Description Consolidated Subsidiary not Associated and consolidated interdependent Other affiliated Total Dividends paid Dividends received Short-term liabilities Long-term liabilities Short-term receivables Long-term receivables Loans received Loans granted Cost of interests Revenues from interests Net purchases (without VAT) Net sales (without VAT) Total

26 26. Other information Other information is excluded. 27. Events after balance sheet date Appointment of the Company The Issuer has appointed another Target Company to execute development projects (Dekpol Pszenna Sp. z o.o. Sp.K.). The purpose of the Issuer is to structure the business. Thanks to such activity, the Issuer wants to achieve greater transparency and efficiency in this segment of its business. This is also a response to the expectations of the market and financial institutions. Obtaining a permit for the construction of the second stage of multi-family housing estate within the framework of the project "Młoda Morena" On July 6, 2017, the Company received the final decision of the permit issued by the President of the City of Gdansk for the construction of a multi-family residential building with a built-in garage in Gdańsk at Dolne Migowo street (2nd stage of the investment of Młoda Morena). Within the second stage of the investment, the Company plans to build 113 flats with a total usable floor area of approximately 5932 square meters. Estimated value of revenues obtained by the Company from the implementation of the second stage of the investment is approximately PLN 36.4 million net. The first premises will be put into operation in the first quarter of 2019, and the completion of the entire phase will be completed in the second quarter of The project will be implemented entirely by the Company, and investment outlays will be financed by the Company's own funds, while partial funding is not excluded. Conclusion of an annex to the cooperation agreement for the construction of the Na Fali estate in Gdynia On 6 July 2017, the Management Board of Dekpol S.A. signed with the company Pozbud T & R S.A. an annex to the cooperation agreement concerning the execution of construction works of an investment consisting of the construction of a Na Fali residential complex in Gdynia which is a complex of five residential buildings. The annex extends the subject of the agreement from the execution of part of the work to the realization under the general contracting the task called "Multifamily Residential Building B1, B2, B3, B4, B5 Kosakowo, Tadeusz Kosciuszko Street - Na fali". Construction works will be made of materials and using machines and equipment provided by the contractor. The flat-rate fee for the execution of the current scope of works has been estimated at PLN 21 million (the value of the original contract amounted to PLN 2 million). In the case of changing the scope of works will it will change also the amount of remuneration. The contractor is obliged to perform the works covered by the contract within the timeframe specified in the schedule, while the performance by the contractor of all obligations under the contract is set for 30 September In the case of any delays in the performance of works or the removal of defects, the contractor will pay the purchaser a contractual penalty of 0.5% of the net remuneration for each day of delay for the first 7 days and then 1.0% of the net remuneration for each subsequent day. In addition, each 26

27 contracting party may require the other party to pay a contractual penalty of 10% of the net remuneration in case of withdrawal from the cause for the other party. The claim as well as the payment of contractual penalties does not deprive the contracting authority of the right to claim damages on a general basis. Under the Na Fali investment, the Company plans to build a total of 220 apartments with a total usable floor area of 10.3 thousand square meters. The project will be completed in the third quarter of 2018, with the first deliveries taking place in the fourth quarter of Estimated net value of the project is approx. PLN 48.8 million. Conclusion of agreement on general contracting services of an investment in Lithuania Management Board of Dekpol S.A. concluded on 12th of July 2017 with the company headquartered in Lithuania an agreement on general contracting services, the purpose of which is the construction on territory of Lithuania of a production plant of an area of over 20 thousands of m2. For execution of a scope of Agreement the Company will receive fixed remuneration in the net amount ranging from 20% - 25% of sales revenues of the Company s Capital Group for the year Execution of a scope of Agreement shall be finalized prior to the end of April of The Agreement will be executed by the Company itself. The Agreement contains clauses concerning contractual penalties payable in case of e.g. default in deadlines resulting from Agreement in the amount equal to 0,1% of remuneration for each started working day. The payment of contractual penalties does not affect the possibility of the Ordering Party for claiming compensation due to fault by the Company in conditions stipulated in this Agreement on general principles. The Ordering Party may terminate the Agreement according to its own discretion anytime, upon the payment to the Company of remuneration for all works performed until the moment of Agreement termination. In addition, the Issuer has established the Company UAB DEK LT Statyba. The aim of the establishment of UAB DEK LT Statyba is the management of future contracts in the General Contractor implemented in Lithuania. Conclusion of the contract for the general execution of the investment On July 21, 2017, the Company concluded with company GLOBAL Sp. z o. o. contract for the implementation of an investment consisting of the construction of a road handling facility in Kopytkowo consisting of i.e. service and commercial buildings and service stations. The contract includes also comprehensive implementation of the investment in accordance with the design documentation, as well as obtaining on behalf of the ordering party an unconditional final decision to authorize its use together with any work and incidental benefits. For the execution of the works, the Company will receive a net remuneration of approximately 10% of sales revenue of the Dekpol Capital Group for According to the agreement, all works will be completed by the end of September The agreement contains provisions on contractual penalties due in the case of i.e. failure to meet deadlines for the implementation of subsequent stages of the contract, the maximum amount of 27

28 which may not exceed 10% of the remuneration. In addition, the contracting party will be obliged to pay the contractual penalty to the Issuer in the amount of 10% of the remuneration in the case of withdrawal from the contract by the Company i.e. where the contracting authority is still in arrears to pay the due remuneration for a period exceeding 60 days. In the same amount, the Company will be obliged to pay the contracting party the contractual penalty in case of withdrawal from the contract by the ordering party due to reasons dependent on the Issuer, i.e. due to non-performance or improper performance of obligations by the Company. The parties of the contract are entitled to claim supplementary damages exceeding the amount of reserved contractual penalties. Obtaining a permit for the construction of the third stage of multi-family housing estate as part of the "Młoda Morena" On 2 nd of August 2017, the Company received the final decision issued by President of the City of Gdańsk concerning construction permit for a multi-family residential building along with the built-in garage in Gdańsk at Dolne Migowo Street (3rd stage of the investment Młoda Morena). Within the third stage of the investment, the Company plans to build 48 flats with a total usable floor area of approximately 3111 square meters. Estimated value of revenues obtained by the Company from the implementation of the third stage of the investment amounts approximately net PLN 19 million. The first premises will be put into use in the second quarter of 2019, and the entire stage will be completed in the second quarter of The project will be implemented entirely by the Company, and the investment outlays will be financed with the Company's own funds, however partial funding is not excluded. Obtainment of permit for construction of the 4th stage of multifamily residential buildings within the project Nowe Rokitki On the 1 st of September 2017 the Company received issued by Starosty Office in Tczew, the final permit for construction of the 4th stage of multifamily residential buildings Nowe Rokitki along with necessary technical infrastructure in Rokitki near Tczew. As a part of the 4th stage of the investment, the Company aims to construct 68 flats together with cellars of a total usable floor area of 3982 m2 as well as 85 car parks. Estimated value of the project amounts approximately PLN 14 million. The project will be performed in the 4th quarter of 2018, the first premises will also be handed over for use in the 4th quarter of The project will be performed comprehensively by the Company, and the investment expenditures will be covered with the Company s own funds, however the partial foreign financing is not excluded. Conclusion of agreement on general contracting services with OPUS Investment Sp. z o.o. Sp. k. On the 4 th of September 2017 the Company concluded with OPUS INVESTMENT Sp. z o.o. sp. k. an agreement concerning general contracting of an investment covering construction of the multifamily building, and the land development at the Streets Kamienna Grobla, Śluza and Jałmużnicza in Gdańsk, as well as performance of construction-montage works enabling obtainment of the use permit and acquisition of such permit in the name of the Investor ( Agreement ). For the execution of the Agreement, the Company will receive fixed net remuneration in the amount of approximately 7% of sales revenues of the Dekpol Capital Group for the year 2016 ( Remuneration ). In accordance 28

29 with provisions of the Agreement, completion in performance of the investment shall be followed until 31st of January The Agreement has been concluded under suspensive conditions concerning acquisition by the Investor of final permit for construction, as well as granting to the Investor within the term until 10th of October 2017 of investment financing by the financial institution, unless the Investor will not take advantage of foreign financing and will inform the Issuer about this fact. The Agreement contains provisions concerning contractual penalties payable in case of e.g. delays in execution of the Agreement or deletion of defects. In addition, the Company is obliged to pay contractual penalty in the amount of 10% of Remuneration value in case of withdrawal from the Agreement performed by Investor due to reasons attributable to the Issuer. Maximal value of contractual penalties to be covered by the Issuer has been limited to 20% of Remuneration value, however the Investor may claim for supplementary compensation in the amount of substantive damage. Obtainment of permit for construction of multifamily building within the project Jaworowe Wzgórza On 7 th of September 2017 the Company received issued by President of the City of Gdańsk the final decision transferring on the Company the permit for construction of multifamily residential building along with underground garage in Gdańsk at Świętokrzyska Street. As a part of an investment, the Company aims to construct 27 flats of a total usable floor area of approximately 1400 m2. Estimated value of revenues to be received by the Company from execution of the investment amounts about PLN 6,2 million. Hand-over of the first flats, as well as performance of the whole investment has been scheduled to be completed in the 1st quarter The project will be performed comprehensively by the Company and the investment expenditures will be covered with the Company s own funds, however the partial foreign financing is not excluded Liabilities and conditional assets Specification of liabilities and conditional assets Description Conditional liabilities towards affiliates - guarantees of satisfactory performance of contracts 0 0 Conditional liabilities towards affiliates guarantees and sureties of repayment of financial liabilities 0 0 Other conditional liabilities 0 0 Conditional liabilities towards affiliates 0 0 Granted guarantees of satisfactory performance of contracts - insurance Granted guarantees of satisfactory performance of contracts - banking Granted guarantees and sureties of repayment of financial liabilities 0 0 Court litigations

30 Other conditional liabilities 0 0 Conditional liabilities towards non-affiliates Conditional liabilities Received guarantees of satisfactory performance of contracts from affiliates 0 0 Received guarantees and sureties of repayment of liabilities from affiliates 0 0 Other conditional assets 0 0 Conditional assets from affiliates 0 0 Received guarantees of satisfactory performance of contracts from nonaffiliates - insurance Received guarantees of satisfactory performance of contracts from nonaffiliates - banking Received guarantees and sureties of repayment of liabilities from nonaffiliates 0 0 Conditional receivables - Court litigations 0 0 Other conditional assets from non-affiliates 0 0 Conditional assets from non-affiliates Conditional assets The Group grants also guarantee on performed works. Largely, the responsibility from this title rests on subcontractors. It has also been established a provision for predicted costs of guarantee repairs, which will last the Group. 29. Earnings per share Description Net profit (loss) attributable to shareholders of parent entity Weighted average number of ordinary shares (in thousands) Major earnings per share (in PLN) 0,76 1,11 Net profit (loss) attributable to shareholders of parent entity Weighted diluted average number of ordinary shares (in thousands) Diluted earnings per share (in PLN) 0,76 1,11 Net profit (loss) from continued operations attributable to shareholders of parent entity Weighted average number of ordinary shares (in thousands) Major earnings per share in PLN from continued operations 0,76 1,11 Net profit (loss) from continued operations attributable to shareholders of parent entity Weighted diluted average number of ordinary shares (in thousands) Diluted earnings per share in PLN from continued operations 0,76 1,11 Net profit (loss) from discontinued operations attributable to shareholders of parent entity 0 0 Weighted average number of ordinary shares (in thousands) Major earnings per share in PLN from discontinued operations 0,00 0,00 Net profit (loss) from discontinued operations attributable to shareholders of parent entity 0 0 Weighted diluted average number of ordinary shares (in thousands) Diluted earnings per share in PLN from discontinued operations 0,00 0,00 30