2020 Annual Report Annual
1
Contents
01 That’s us–––––––––––––––––––––––––––––––––––––––––––– 04 02 Financial Highlights–––––––––––––––––––––––––––––––––– 10 03 Key Projects––––––––––––––––––––––––––––––––––––––––– 12 04 Group Overview––––––––––––––––––––––––––––––––––––– 28 05 Countries Overview–––––––––––––––––––––––––––––––––– 34 06 Board of Directors––––––––––––––––––––––––––––––––––– 52 07 Our People––––––––––––––––––––––––––––––––––––––––– 54 08 ESG–––––––––––––––––––––––––––––––––––––––––––––––– 58 09 Business Review––––––––––––––––––––––––––––––––––––– 62 10 How We Managed Our Assets––––––––––––––––––––––––– 66 11 Investment Management––––––––––––––––––––––––––––– 72 12 Financial Review––––––––––––––––––––––––––––––––––––– 74 13 Consolidated Financial Statements––––––––––––––––––––– 80
2 3 01 That’s us 01 That’s us
I think we can all say That’s us That’s 2020 was one of the most challenging years we’ve ever experienced. But as often happens in difficult times, people have become more open to new ideas.
Perhaps one of the most obvious signs of this is the broader faith employers have in their people working from home. What was once considered a prized job benefit is now growing to become a modus operandi of the way we all operate. The only delays were down to supply chain issues. This meant we were able to complete five A new approach to the office? buildings during the year and saw huge success This has unquestionably accelerated a change in terms of commercialisation, despite the in the way we think about workspaces. Offices challenging environment. We also secured 100% are evolving from rows of desks to collaborative funding for all our projects under construction – spaces with productivity-boosting features. And they’re now all covered for full completion. businesses will need more flexibility in terms of usage, size and lease terms. Success across Europe There were other highlights too. In Hungary, Yes, the pandemic has affected occupational we leased over 90% of Agora – and have since activity. Tenants have put off decisions until seen Huawei sign a large deal. And Bratislava saw the future is clearer, and rental levels are under progress on all our projects under construction, pressure as a result. However, we expect to see from Nivy Mall to New Apollo – with the latter a full recovery in the medium term. So, while signing an important global anchor tenant IBM transactional and financial liquidity are under in February of this year. pressure, the long-term fundamentals in the sector remain solid. Varso Tower in Warsaw is now the EU’s tallest structure at 310 m and offers new tenants an Facing up to COVID-19 address in one of the world’s most iconic new Our employees have been our first priority buildings. Elsewhere in the city, one of Forest’s throughout the pandemic. Yet, even as we buildings was smoothly completed, and we’ve embedded new safety and escalation protocols since signed a contract with French home – across both sites and offices – we kept all 11 improvement business Leroy Merlin, who’ll make of our buildings under construction moving it their new 12,358 sq m HQ.
01 smoothly forward.
4 5 01 That’s us 01 That’s us
Our UK colleagues are continuing work on Bloom A bright future Clerkenwell in London. With finance secured, we expect Financially, we are now very well positioned – the occupational market there to take off once the especially after raising €90m by tapping into the restrictions are lifted. Equally, we now have all the permits bond markets in the Czech Republic, Poland and for One Waterloo, – huge congratulations to the team – Slovakia from December to March 2021. and as the market stabilises the demolition phase will begin. The fledgeling One Worship Square project is now ready to Our key 2021 targets now revolve around see more concentrated activity over the coming months too. replenishing our development pipeline, mainly in Germany and Poland, and founding the REIT vehicle, which will hold our completed developments. We also expect our Investment Management business to grow the assets under Things are also moving management, mainly through its flagship forward at speed in Germany. CE REIT fund. Our DSTRCT.Berlin project Although occupational activity last year was is progressing according to Going forward, we’ll continue building our core restricted due to COVID-19, we are already plan and several large leasing development business by focusing on high-quality seeing a gradual return to normal, with leasing deals should be pushed modern workspace products: super-prime core, activity picking up at the beginning of 2021 – through shortly. One of them, well-connected locations crafted with exceptional a strong sign for healthy demand in the future. e-commerce furniture brand, quality and sustainability standards to create home24, take more than healthy, stimulating and modern workspaces. We are also seeing the results of our well- 13,000 sq m in May 2021. established focus on wellbeing and productivity. The function of the workspace will innovatively Clients associate us with people-centrism, and this shift from desks and chairs towards collaborative, gave us a competitive advantage during and after healthy workspaces and supportive environments. the pandemic. Although 2020 saw a net loss of €184 million and our NAV So our strategy, with wellbeing and productivity at as a result declined to €1.514 billion, we confidently expect its heart, will garner positive results. Of course, success depends completely on our to capitalise on our development pipeline across all four people. To that end, we have created a new markets and use new business opportunities to help us get mentoring programme that launches later fully back on track. In fact, the topic of this year. And, following research, we have responsibility and the also adjusted how we set goals and recognise performance – putting more weight on variable overall ESG policy is rewards. The result is that we all are now even Looking forward more invested in the success of HB Reavis. The year brought changes to our business strategy. a pivotal part of our value We discontinued our future development activities in Hungary creation and product Let me finish by thanking all of my colleagues to focus on our projects in London, Berlin, Warsaw and Bratislava. and our partners for their commitment. I’m in development. We have awe of the way they’ve balanced the demands of So, our updated 2025 Group Strategy can be distilled into four areas: home life and work over the last 12 months while incorporated ESG delivering such great performance.
into our development I very much look forward to seeing what we can retain completed projects in a soon- process, making it a key all achieve together – and seeing the progress in to concentrate on our to-be-created separate investment person – when all the restrictions are lifted. four core countries vehicle rather than sell them component in ensuring our products comply Marian Herman with today’s standards. 1 2 We aim to become evolve our roll out the Way We Work (WWW) market leaders in this Workspace as a Service initiative, which helps us efficiently area by securing future- portfolio run projects with clear expectations proof developments.
6 3 4 7 01 That’s us 01 That’s us I’ve been associated with HB Reavis for some 13 years now, but I’ve never been more proud to be part of the company.
Financially, the year was not as rewarding as we hoped. Our clients went through difficult times staying safe and managing employees at a distance. This led to uncertainties that resulted in the demand for leases stagnating, and in some cases longstanding deals were cancelled or
Maarten Hulshoff postponed. Agora, however, was an impressive exception, leasing almost 71,000 sq m.
Overall, we managed to keep construction going despite supply chain disruptions, but increases in the price of materials did lead to a few cases of cost It’s at times of pressure overruns. As a result, we do have a leasing backlog. that the quality of our What is positive, however, people really shines is our impressive through. And over the last This was primarily down to the great strides As for the office developments themselves, we we’ve made with our Workspace as a Service will be even more selective and, what I like to performance in Q1 year, I’ve seen so many (WaaS) strategy. During 2020, we focused further call, laser-beam focused on developing prime on providing advisory services to our clients – properties. Making decisions based on location, 2021. It’s clear that among us manage our enhancing employee satisfaction, productivity, connectivity and sustainability, these will become businesses feel the end is business in a proactive, health and wellbeing on one hand, and raising the best possible environments for our clients and sustainability standards on the other. their employees. in sight and want to make hands-on manner – always In fact, environmental, social and governance Effectively, I expect to see an evolution from ambitious decisions so keeping our clients’ have been at the top of our agenda. Last year being a pure developer recycling our capital they’re best-placed to interests at the forefront saw the introduction of a new strategy and set of by exiting our projects, to a more selective principles that will help to create a further point of and focused developer that creates then holds succeed in the long term. of our minds. difference in the market. onto assets for a long time. In Bratislava, where the company was originally established, we Its ethos is reflected in the work of services will also start to diversify with some residential We’re grateful for all the support and patience Naturally, most clients spent the majority of like Symbiosy and Origameo. These were development opportunities. given from our stakeholders, including our clients, the year dealing with the COVID-19 crisis. already established, but will now become financiers, suppliers and our own staff. Ultimately, this led to some delayed office moves even more important as we look to the future. At the end of 2020, our development portfolio, – a situation compounded by larger companies Increasingly, we will move from hard-core office all located at vital transport crossroads, added There’s no doubting that our staff spent 2020 releasing space and creating a new market for development to an approach centred around up to some 1.1 million sq m. Around 44% of this under pressure, dealing with both work and subleases. However, companies were generally soft and motivational people issues – combining is in London (market value on completion), with family dilemmas. Yet I have been constantly positive about the long-term situation, with stimulating office environments with innovative the most eye-catching scheme at One Waterloo – impressed by their resilience, and want to many enquiring how we can help them improve technologies that create a hybrid form of working next to the UK’s busiest station, handling over 92 complement everyone for coping so well in spite productivity and efficiency. that improves the employee experience. million visitors a year. of the challenges we all faced.
8 9 02 Financial Highlights 02 Financial Highlights
Net Debt Leverage Ratio (%)
2019 32.4
2020 38.2
How we performed The pandemic situation has significantly Return to Shareholders (%) impacted the real estate sector. Leasing activity has recorded its lowest volumes in a decade. 2019 33.3 Deferrals of future rental income linked to our under-construction portfolio has been driving the 2020 fair market values, translating into net revaluation -11.6 gains in 2020 of €28.7m (€519.4m in 2019).
In connection with a depreciation of CEE currencies and FX losses of €110.2m (compared to €22.7m profit in 2019), this resulted in a comprehensive loss of €183.8m Comprehensive Income (€m) (€388.6m in 2019). 2019 Despite the macro situation, the Group managed 388.6 to keep the construction activities going while
Financial Highlights Financial securing debt financing to maintain progress 2020 -183.8 on developments. The balance sheet value has grown to €3,097m (€3,040m in 2019) due to debt deployment, bringing the net debt ratio level to 38.2% (32.4% in 2019), within our targeted range of 35-40%. Revaluation Gain (€m)
2019 541.5
2020 -41.2 (incl. the translation of foreign operations to the presentation currency)
Net Asset Value (adjusted, €m)
2019 1,738.6
2020 1,513.8
02 Note: Data based on internal management reports.
10 11 03 Key Projects 03 Key Projects
One Waterloo
Bloom Clerkenwell
One Worship Square Key Projects Key DSTRCT.Berlin
Varso Place
Forest
New Nivy
Nivy Station
Nivy Tower
Agora Budapest 03
12 13 03 Key Projects 03 Key Projects One This iconic and vibrant multi-purpose destination A publicly accessible Waterloo is located next to Waterloo Station – the busiest in the capital, supporting 180 million 200 m long garden journeys each year. And it will be a prominent scheme influenced by connected themes: the promenade which is neighbourhood, nature and health, sustainability elevated two floors above and future workspace – all underpinned by the user and visitor experience. street level will create
Targeting WELL Platinum with a focus on health a scenic journey from and wellbeing, three acres of outdoor space will be created within One Waterloo to support the the concourse level at office workers and the wider community. Waterloo Station directly into the building.
Location: Waterloo, London Status: Consent Estimated GLA*: 122,510 sq m/1,318,689 sq ft One Waterloo, in the Estimated GDV: €2.443bn/£2.196bn Architects: AHMM heart of the South Bank, Expected Certifications: BREEAM UK New is our largest project Victory Arch Square, the uniquely covered through a ‘Lean, Clean and Green’ innovative Construction Outstanding, WELL Core Platinum, Waterloo Square and ‘The Curve’, a major new building design by specialist Swedish designers WiredScore Platinum in the UK to date. After pedestrianised retail street lined with shops and that maximises efficiency through an all-electric cafés, will transform the public realm. Cascading solution combining integrated heat pumps and 22 Bishopsgate, it’s terraces and gardens for office occupiers will heat recovery. In addition, 98.8% of demolition Note: The estimated GLA/GDV and delivery of provide a choice of outdoor spaces to find the waste is to be diverted from landfills. These the project are subject to the successful closing also the largest office right place to relax and rest. Additionally, an initiatives, among others, will support the building of acquisitions, permitting, construction delivery single build in Central urban sky farm will offer ultra-fresh produce for in achieving BREEAM Outstanding. and commercialisation. the scheme’s occupiers. London’s history. Since our possession of the vacant offices at With aspirations to be one of London’s most Elizabeth House in April 2020 and throughout The 122,510 sq m/1.3 million sq ft redevelopment sustainable developments, the office space will the COVID-19 lockdown, we have provided of what is currently known as Elizabeth House will be fossil fuel free, implementing low carbon ongoing support to the ground floor retailers to be an inclusive, wellbeing-focused environment solutions in all the project stages. We are help the local business community, in particular by for 11,000 workers – from startup and scale-up targeting net zero carbon in operation too with providing free car parking for NHS staff at Guy’s & businesses to larger organisations. over a 35% reduction in energy consumption St Thomas’ Hospital.
14 15 03 Key Projects 03 Key Projects Bloom Clerkenwell
Bloom is ideally positioned within the vibrant Clerkenwell neighbourhood and in close proximity Location: Clerkenwell, London to the City of London. Status: Under construction Expected Delivery: 2021 It’s also situated adjacent to the newly Estimated GLA: 13,274 sq m /142,884 sq ft built Farringdon Station, giving it optimum Estimated GDV: €260m/£234m connectivity. Currently, the station serves Architects: John Robertson Architects overground Thameslink trains as well as District, Expected Certifications: BREEAM UK New Circle and Hammersmith and City Underground Construction Outstanding, WELL Core&Shell Lines. And with the forthcoming opening of the Platinum, WELL Healt-Safety Rating, Elizabeth Line, a quarter of the UK population will WiredScore Platinum soon be within a 45-minute commute. Note: The estimated GLA/GDV and delivery of John Robertson Architects designed the building the project are subject to the successful closing of to meet the highest standards of office wellbeing, acquisitions, permitting, construction delivery and catering to a variety of businesses that truly value commercialisation. the importance of having a well-designed and sustainable workspace where employees can thrive. The design of the building reflects the rich and varied context of Clerkenwell and nearby Its sustainability credentials are enhanced by Hatton Garden, with a unique coloured, glazed its use of a neighbouring district’s heating and terracotta façade. cooling system, Citigen, which removes the need for high carbon energy-producing boilers and One Worship Square Bloom Clerkenwell offers direct access to chillers on-site. London’s Cycle Superhighway along with 243 cycle spaces, a 110 sq m (1,200 sq ft) multi- The building is targeting completion in June 2021, function training studio and more terrace when it will become owner operated. Our new One Worship Square is ideally located in The building’s eye-catching design and blue space than any other office building of its size Ready to Work office space concept will be featured Shoreditch, in the heart of London’s Tech City. façade will create a recognisable local landmark in London– helping to move the working day on the first floor, fully integrated with the Symbiosy It’s only minutes from Old Street, Liverpool Street, with a distinct identity. The 13,000 sq m/138,000 beyond the desk. It’s also connected to the platform. Companies choosing the Ready to Moorgate and Shoreditch High Street Stations sq ft of floor space spread over nine storeys will thriving Clerkenwell neighbourhood through an Work offer will benefit from a tailored approach – together serving 200 million journeys a year. be a mix of high-quality communal, collaborative activated ground floor public retail offering. to workspace design, reduced upfront capital The neighbourhood is also one where creative and flexible spaces to suit the everyday needs expenditure and a flexible approach to leasing. entrepreneurs want to work, and where growing of occupiers and their business activities. The companies want to be. ground floor lobby will open directly onto a new Testament to the quality public square and feature a café and retail spaces. of the building, we are aiming for Bloom Location: Shoreditch, London The project is HB Reavis’ to be among the first Status: Planned first London building buildings in London to Expected Delivery: 2023 Estimated GLA: 12,836 sq m/138,165 sq ft designed for the post- achieve a combination Estimated GDV: €242m/£217m Architects: MAKE Architects COVID-19 world, with of BREEAM Outstanding, Expected Certifications: BREEAM UK New fully integrated office WiredScore Platinum Construction Excellent, WELL Core&Shell Gold, WELL Healt-Safety Rating, WiredScore Platinum and space management and WELL Certified Note: The estimated GLA/GDV and delivery technology powered Platinum ratings. of the project are subject to the successful closing of acquisitions, permitting, construction by Symbiosy. delivery and commercialisation.
16 17 03 Key Projects 03 Key Projects DSTRCT.Berlin
Work. Eat. Meet... repeat. Flexibility, sustainability, technology There’s a new address tailor-made for Berlin’s early in 2020, and we’re applying for DGNB creative and tech-led communities. Multipurpose Gold status – which will prove DSTRCT.Berlin’s and wellbeing create a future-proofed DSTRCT.Berlin is nestled between vibrant sustainability credentials. Friedrichshain and Prenzlauer Berg. 20 million workspace designed for employees first. people travel through a major public transport Beyond the benchmarks, the fact we secured hub yards away. It’s also only a few minutes from a €235m development loan with Helaba proves Alexanderplatz and downtown Berlin. others believe in our vision. The project is now 100% financed. The new building’s modern curves and symbiotic features complement the charm of the former The end of 2020 saw a key construction milestone One Worship Square will be managed using slaughterhouses – the four old halls are being with the ‘topping out’ of the building. With the a native app and in-house concierge teams. carefully reconstructed to create a multifaceted main structure complete, the focus is now on The app will give occupiers access to food destination with a new approach to business. adding the beautiful glass façade and crafting delivery, laundry services and environmental and the interiors. We aim to complete this project in recycling monitoring data. The building will also To help the development integrate with the autumn 2021 and hope to announce occupiers in please socially conscious employees: it will be area as a whole, we’ve taken the lead from our the very near future. net zero carbon in operation and a plastic free neighbours. The nearby Velodrome – the heart workspace. Just as well, the lobby will be a green of Berlin’s cycling scene – inspired us to include heart of the building, featuring biophilic design a cycle garage for over 800 bikes. And there are and digital displays showing environmental and a number of other wellbeing features, including Location: Landsberger Alee, Berlin sustainable indicators. spaces for cultural events and eateries, which Status: Under construction combine with the new offices to create a buzzing, Expected Delivery: 2021 The site was purchased with planning consent, cohesive district. Estimated GLA: 48,535 sq m/522,426 sq ft but we’ve redrawn plans to include more outdoor Estimated GDV: €399m/£358m terrace space as well as cycle storage directly on the A WiredScore Platinum certification reflects Architects: Gewers & Pudewill ground floor. DSTRCT.Berlin’s superior tech capabilities. Expected Certifications: WELL Core&Shell It also received WELL GOLD Precertification Gold, DGNB Gold, WiredScore Platinum Targeting WELL Platinum, the highest certification for wellbeing, the design includes a fitness suite Note: The estimated GLA/GDV and for employees as well as free rentable bikes delivery of the project are subject to the and e-scooters for those dashing to a meeting. successful closing of acquisitions, permitting, One Worship Square will also sit on a new public construction delivery and commercialisation. square, available for employees and the public to use year-round. The aim is to host events there too, from a weekly food market to summer ‘big screen’ days, to create a lively and sociable space in addition to the project’s outdoor terraces.
Its high-quality design reflects the personality and creativity of Shoreditch and London Tech’s City. Designed by MAKE Architects, it’s scheduled for completion in 2023 with plans to start on-site in 2021.
18 19 03 Key Projects 03 Key Projects Varso Place Varso 1 (29,736 sq m/320,285 sq ft) is home to Poland’s first four-star NYX hotel, which boasts Varso Tower combines a total of 331 rooms. For fitness enthusiasts, Varso sustainable design with Place’s health centre and two-storey fitness club are already up and running. energy efficiency as one
Varso 2 (44,264 sq m/476,133 sq ft) has of the country’s greenest welcomed a mix of Polish and international buildings. It scores companies, including Bank Gospodarstwa Krajowego, Cambridge Innovation Center, highly across all safety, Orsted, Nvidia, Workday and act BSWW legal firm and VISA International. energy and comfort benchmarks, which Designed by helped it earn the highest Foster + Partners level of BREEAM and
Varso Tower (69,816 sq m/751,493 sq ft without WELL certifications. the viewing platform) is the centrepiece of this new mixed-use district. Most of the buildings around Varso Place are already clad in a 4 m tall glass curtain wall, which When the roof topped out at 230 metres last year, provides the interiors with an abundance of the building surpassed Warsaw’s Palace of Culture natural light. Construction is set to be completed and Science to become the tallest building in in Q1 2022. When finished, it will be an inviting Poland. And as works continued into Q1 2021, an haven for passers-by, with a tree-filled internal additional 80-metre-tall spire means Varso Tower courtyard and 10-metre high lobby walls covered reached 310 m to become the tallest building in with handmade ceramic mosaics. the European Union.
The three high-rise buildings in central Warsaw that make up Varso Place encompass offices, Location: Chmielna Street, Warsaw a hotel and a shopping arcade, and will soon include Status: Varso 1 and 2 delivered in 2020 a public terrace at the top of Varso Tower with Varso Tower under construction, views over the city. expected delivery in 2022 Estimated GLA: 143,806 sq m/1,547,911 sq ft The nearby Warsaw Central Station with (without the viewing platform and aerial storage) neighbouring Warszawa Srodmiescie and WKD Estimated GDV: €884m/£795m commuter railway support 57 million passenger Architects: journeys each year. Both metro lines and several Foster + Partners, HRA Architekci, Benoy dozen public transport options are within just a Expected Certifications: BREEAM New few minutes’ walk. It’s also next to the city’s most Construction Outstanding, BREEAM popular mall – Zlote Tarasy – which sees more Core&Shell Gold, WELL Health-Safety Rating than 20 million visitors annually. And as well as both lines of Warsaw’s metro, there is excellent Note: The estimated GLA/GDV and delivery access to several dozen public transport options of the project are subject to the successful within just a few minutes’ walk. closing of acquisitions, permitting, construction delivery and commercialisation. Designed by Warsaw-based studio HRA Architekci, the two lower buildings were completed and almost fully leased in 2020.
20 21 03 Key Projects 03 Key Projects Forest New Nivy
The largest construction site in Europe. A campus-style environment, Forest offers around 79,000 sq m/864,000 sq ft of A revitalised brownfield that’s set to become workspace, ground floor retail and restaurant the capital’s vibrant new business district, The certification is opportunities – and a public courtyard filled New Nivy encompasses a number of with 200 trees. Location: Burakowska, Wola district, Warsaw separate developments. further recognition Status: Under construction It’s located between hipster Burakowska Expected Delivery: 2021-2022 At its heart is an inspirational new international of our ability to Street and Arcadia – Warsaw’s largest mall at Estimated GLA: 79,391 sq m/864,560 sq ft bus terminal, Nivy Station. With Twin City – and 117,000 sq m with 18 million visitors each year. Estimated GDV: €292m/£262m WELL Certified Twin City Tower – also creating create people- Warszawa Gdanska metro a train station, with Architects: HRA Architects a new spirit and energy in the heart of Bratislava, centric workspaces 8 million journeys a year, is just a 12-minute Certifications: BREEAM Communities Very Good New Nivy is already thriving. walk away. Expected Certifications: WELL Core&Shell Gold, that enhance BREEAM New Construction Excellent For proof, look no further than the BREEAM Communities certification at the Excellent level local and business Note: The estimated GLA/GDV and delivery of that New Nivy received last year – making it their communities. the project are subject to the successful closing fourth-highest rated development worldwide. of acquisitions, permitting, construction delivery The unique design standard assesses the impact and commercialisation. of developments on their environment with an emphasis on social responsibility.
public courtyard with Perfect for corporate, creative and startup businesses, it will offer the city’s largest floor plate as well as astonishingly flexible office layouts and 200 trees coworking spaces. It’s an approach that helped it become one of The design maximises resources. Rainwater will the country’s greenest offices, with BREEAM be reused to irrigate the landscaping and improve and BREEAM Communities certifications and Forest’s carbon footprint. The roofs also feature WELL Precertification. a community farm, relaxation zones and views of the lush greenery – all of this with the aim of The first buildings are due to be completed in improving the health, wellbeing and productivity Q1 2021, with the 120-metre tall Forest Tower of the people who work there. ready for the beginning of 2022.
22 23 03 Key Projects 03 Key Projects Nivy Station
Location: Mlynske nivy Street, Bratislava A future-proofed destination, 20 million Status: Under construction passengers pass through Nivy Station each year – Expected Delivery: 2021 making it one of the region’s key transport hubs. Estimated GLA: 102,160 sq m/1,099,641 sq ft But it’s the breadth of lifestyle activities offered in Estimated GDV: €345m/£310m one location that elevates its role in the city. Architects: Benoy, Siebert+Talas Certifications: BREEAM Communities Excellent Expected Certifications: BREEAM New The design draws Construction Very Good Nivy Tower inspiration from our Note: The estimated GLA/GDV and years of experience, delivery of the project are subject to the Location: Mlynske nivy Street, Bratislava successful closing of acquisitions, permitting, Delivered: 2020 feedback from clients construction delivery and commercialisation. Architects: Benoy, Siebert+Talas GLA: 32,470 sq m/349,504 sq ft and the latest retail trends. Estimated GDV: €124m/£111m Certifications: BREEAM Communities Excellent Bratislavians now have a new airport-style bus terminal, over 250 retail Expected Certifications: BREEAM New outlets, a fully-fledged gastronomic zone and fresh produce market, Construction Outstanding, WELL Core Gold, and a green roof for exercise and relaxation. All within a dynamically WELL Health-Safety Rating developing business zone. Note: The estimated GLA/GDV and delivery of the project are subject to the successful closing of acquisitions, permitting, construction delivery and commercialisation.
Bratislava’s new 125 m architectural landmark offers innovation, breathtaking views and exceptional flexibility. There’s a direct link to the international Nivy Station travel hub. And smart technologies like the country’s fastest lifts complement signature services like workspace counselling, asset management and flexible leasing to make everyday life simpler.
It’s a stunning space and now officially Slovakia’s tallest office. We hope it will also win both BREEAM and WELL certifications.
24 25 03 Key Projects 03 Key Projects Agora Budapest
Location: Vaci Office Corridor, Budapest Delivered: 2020 Architects: Make Architects, Finta Studio GLA: 71,885 sq m/773,764 sq ft Estimated GDV: €280m/£252m Certifications: BREEAM 2016 New Construction Excellent and Outstanding, BREEAM Communities Very Good Expected Certifications: WELL Core&Shell Gold
Note: The estimated GLA/GDV and delivery of the project are subject to the successful closing of acquisitions, permitting, construction delivery and commercialisation.
World-class architects from London and Hungary have worked together to create this new landmark at one of Budapest’s busiest transport crossroads.
The Arpad Bridge metro station close by is the 2020 saw major tenants start to move into the city’s fourth busiest with 37 million yearly journeys, buildings. In one of the year’s biggest deals, and Volan Bus station adds 2 million more. Raiffeisen Bank now has over 1,300 people spread across Agora Tower in their new headquarters. When completed, Agora will offer a range Their Origameo-inspired workspace is based on of community-led facilities. Inspired by local data-driven designs and will enhance employees’ research, they’re designed to improve the collaboration, productivity and wellbeing. productivity and health of everyone around the buildings and provide a rich combination of bp also moved in during the summer and, services that make everyday life easier. together with their neighbours, are enjoying all the features of this new business district, from the Agora Budapest became the first commercial quality cafés and restaurants to conveniences like building in Hungary to receive preliminary the supermarket and barbershop. BREEAM community certification. Furthermore, Agora Hub and Agora Tower both received BREEAM preliminary certifications – with the Hub matching top performers like Bloomberg’s London HQ and Edge in Amsterdam.
26 27 04 Group Overview United Kingdom
€-7.3m operating profit €620.5m in investment property 36,021 sq m GLA developed 153,540 sq m GLA under preparation 64 professionals
m Germany €2,766.1 €28.2m operating profit €246.5m in investment property in investment property 89,015 sq m GLA under preparation 28 professionals
Poland
€7.8m operating profit €831.2m in investment property 327,140 sq m GLA developed 189,583 sq m GLA under preparation Group Overview Group 1,287,016 sq m 140 professionals developed Czechia
€-0.7m operating profit €70.6m in investment property 160,062 sq m GLA developed 124,834 sq m GLA under preparation Slovakia 22 professionals sq m €-34.8m operating profit 1,144,873 €667.7m in investment property 670,294 sq m GLA developed under preparation 523,799 sq m GLA under preparation 384 professionals incl. HQ based
Luxembourg 5 professionals
Hungary Netherlands 705 3 professionals €14.2m operating profit professionals €329.6m in investment property 93,488 sq m GLA developed Cyprus 64,101 sq m GLA under preparation 3 professionals 56 professionals
Note: Data based on external expert valuations and internal management reports. 04
28 29 04 Group Overview 04 Group Overview
Property under Market value uponcompletion by country development 2020
Portfolio of properties under development 2020
Country No. of projects Planned GLA sq m Market value upon completion €m United Kingdom 5 153,540 3,023.7
Office 5 153,540 3,023.7
Germany 2 89,015 596.3
Office 2 89,015 596.3
Poland 5 189,583 848.0
Office 5 189,583 848.0
Slovakia 14 523,799 1,715.0
Retail 1 102,160 345.1
Residential 1 42,505 152.1
Office 12 379,134 1,217.8
Czech Republic 3 124,834 465.9
Office 3 124,834 465.9
Hungary 3 64,101 253.0 Office 3 64,101 253.0 Planned GLA by country Total 32 1,144,873 6,901.9
Planned GDV by phase
Note: Data based on external expert valuations and internal management reports.
30 31 04 Group Overview 04 Group Overview
Asset management
Managed GLA, of total 363,670 sq m Managed GLA by country
Market value by country €1,263m* Asset management portfolio
Country No. of projects GLA sq m Market value €m* Poland 2 74,000 404.2 Office 2 74,000 404.2
Czech Republic 1 22,741 82.9
Retail (HB Reavis Investment Management) 1 22,741 82.9
Slovakia 7 180,008 500.9
Office 4 93,892 238.2
Office (HB Reavis Investment Management) 3 86,116 262.7
Hungary 3 86,921 274.9
Office 3 86,921 274.9
Total 13 363,670 1,262.9
Note: Data based on external expert valuations and internal management reports.
32 33 05 Countries Overview 05 Countries Overview
United Kingdom
From the CEO
UKSteven Skinner Looking back at 2020, it is hard to focus on much else other than the pandemic. However, we shouldn’t forget that due to the efforts of our exceptional team in the UK, we started the first few months of last year in a solid position with a positive outlook.
HB Reavis UK had successfully completed the leasing programme of 20 Farringdon Street ahead of valuation, with all of the new customers moved in and enjoying the workspace.
In the same building, we had successfully opened our community-focused coworking space
Countries Overview Countries HubHub, which was attracting a wide range of startups, scale-ups and companies wanting to use At Elizabeth House, alongside achieving vacant office space in a new, flexible way. HubHub was possession, we had secured the resolution to exceeding expectations with near full occupancy grant planning consent for what will become one and significant increases in average desk rates of London’s landmark projects. We were working over the year. well through the final parts of the stage 3 design and the development obligations to be able to start works.
We were also continuing to recruit and grow our UK operations.
And with the addition of our One Worship Square project, we had further secured our development pipeline with a strategically-sized and timed project to optimise and transfer our knowledge and learnings from Bloom.
Our major project under construction, Bloom And then COVID-19 came along, turning the world Clerkenwell, was making significant progress – on its head. We are all too familiar with the impact under budget, on programme and fully under it’s had on our sector, our business and each offer (again significantly ahead of valuation) with one of us personally. As the first lockdown in a sustainability-focused financing package agreed. late March arrived, the business adjusted to working remotely. 05
34 35 05 Countries Overview 05 Countries Overview
a Brexit deal now in place and over £50 billion of We were well positioned to do so, after At Bloom Clerkenwell, we faced the difficult Last but not least, I think the biggest achievement capital looking to invest in London, we are already previously adopting flexible working tools and challenge of deciding if it was safe for our works was by each individual member of our team starting to see some yield compression for highly technologies. Our internal collaboration, external to continue. To protect our teams and our supply dealing with all the personal and professional sought after new office buildings. consultant management, planning committees partners, we made the decision to suspend adversity that last year threw at us. I am not sure and discussions, pitches and presentations, and construction for a number of weeks to give time if I can ever find the right words to express this, We will also continue to explore building our supplier relationships all switched to a ‘virtual’ to assess how we could continue to operate but I was just so incredibly impressed and proud UK pipeline and taking advantage of any market setting – and I’m very proud of how our teams safely. Then, following all government guidance of how adaptable and resilient everyone was to distress, but only as and when we can do so in showed both the resilience and adaptability to we reopened the site with new health and safety getting on with it and getting through it – I can’t a financially prudent and sustainable way. ensure a seamless transition during a time of measures in place. thank each and every one of them enough. unprecedented stress. I would like to finish by saying that I have a huge I’m especially proud of how our collaborative amount of optimism for HB Reavis and our future The other parts of our business in the UK were approach to our supply chain allowed us to jointly A special mention here in the UK. The future success of office developers also impacted, and none more so than in the agree to suspend all works on-site in a matter of must go to our site- will rely on businesses that control their own leasing market. During the year, as uncertainty days. The same collaborative approach allowed capital, have a deep understanding of their grew, we saw many potential occupiers adopt us to restart the works in an optimised way. based teams who have customers and can develop best in class assets a ‘wait and see’ approach which led to record We remain on budget and on programme for with great transport connections that have a clear low levels of take up and a near doubling of the practical completion in June 2021, when Bloom continued to turn up focus on individual wellbeing, sustainability, vacancy rate. will be one of the very first buildings globally to on-site every day despite flexibility and technology. target WELL Platinum, BREEAM Outstanding and Unfortunately, this led to both of our prospective WiredScored Platinum. a global pandemic to We continue to be one of the very few developers customers at Bloom deciding against relocating that can meet this brief with the added benefit their offices and agreeing short-term lease re- For our new One Worship Square project, we keep our projects on of having a sustainable competitive advantage gears at their current older buildings. This was effectively assembled a brand-new team and through our fully-integrated model of design, a theme seen throughout the London market, started the project journey remotely. The team track – I salute you. procurement, delivery and operation. Unlike with over 3.5 million sq ft of lease expiries pushed spent the majority of the year working on many of our competitors, this isn’t a reaction out by 2-5 years as occupiers sought optionality. the concept design, focusing on providing Looking forward to 2021 to COVID-19 – we have been operating like However, given the very limited supply of new a sustainable, flexible, people-focused place of We start the first part of 2021 back in a national this for many years and continue to deliver on space, we have yet to see any material impact on work, supported by smart building technology. lock down, but I am filled with cautious optimism. our promise to create remarkable customer rental levels. We now have a Brexit deal secured, the most experiences for everyone that uses our projects. We’re now adding an additional penthouse office recent lockdown appears to have reduced While the overall financial performance of the floor, introducing a communal roof garden along- the number of cases significantly and the UK’s projects was negatively impacted as a result, our side an in-house gym. The development will also vaccination roll out is moving at great speed. With t the established way of teams worked incredibly hard to mitigate any feature our affordable and flexible workspace projections that the majority of the UK population providing workspaces impacts, and we should not let that be forgotten concepts and will be supported by Symbiosy may be vaccinated by the summer, we now have in all the negativity of the year. to provide the very best customer experience. been provided with what will be a permanent and by doing it in an We have now secured vacant possession and are plan to exit lockdown and return back to a more entrepreneurial and In May, we sold preparing to commence construction works in normal way of life. early 2021. creative way, we can 20 Farringdon Street The outlook for the London office market remains At One Waterloo, we have made excellent robust with low levels of supply of the high-quality become the leading office during the period of total progress getting ourselves into the best workspaces we create – there is currently only position for starting major construction works. 3 million sq ft of space under construction and developer in London. lockdown when there We successfully achieved vacant possession and available with over 9 million sq ft of active demand. was almost zero liquidity. concluded our stage 3 design in excess of our So please, do all you can to support each other target net internal area (NIA) and in line with the There will remain a temporary period of supply/ through these difficult months in order to give us At that time it was the cost target. active demand imbalance. We expect this to be the best chance of success in 2021 and beyond. quickly reversed by year-end as our customers largest City of London We have continued to make progress on the are able to plan for the future with more certainty, Hope to see you all soon and stay safe. development obligations, concluding the Asset and when they return to the market, they will be asset to trade. Protection Agreement (APA) with Network Rail and focused on how their workplace will be used in having the agreements with the Secretary of State a more flexible, collaborative and people-focused It emphasised both the appeal and liquidity of the for Transport and TfL substantially agreed. We also way – all of which we are well-placed to provide. high-quality workspaces we develop – especially finished the year with the great news that the S.106 as the completed price was the highest per sq ft (which secures the planning consent) was agreed Capital markets remain supportive too, with £9 for a building in the City. and is now in the process of being signed. billion transacted in 2020, over half of which was transacted in the final quarter of the year. With
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The market buildings on short lease or sublease terms. These Overall, we expect prime rents in 2021 to remain While volumes will clearly be impacted by the The market in London started 2020 with very offices are less appealing to most occupiers given stable. As tenant demand returns, it will continue degree of travel restrictions in place, investors strong fundamentals: historically low availability, the ever-increasing focus we’re clearly seeing to pivot into the best-in-class assets. And beyond are clearly looking through the short-term a committed development pipeline of over 50% on new, high-quality workspaces focused on 2021, we anticipate headline rental recovery occupational market indicators with a clear focus pre-let, a well-balanced and robust customer employee wellbeing and sustainability. before reaching pre-COVID-19 levels by 2023. on acquiring the very highest quality future- demand outlook and both headline and net proofed buildings with the clear ability to meet effective rental values growing. More relevant to us is an analysis of availability Investment volumes totalled £7.5 billion for the their ESG requirements. of new or Grade A space. Here we can clearly year, which was 33% down on 2019 levels and Following Q1, the majority of the year was spent see that the available pipeline for the type of 50% down on the long-term average. Q2 and There continues to be record levels of in varying degrees of COVID-19 restrictions, albeit workspaces our customers want remains limited. Q3 were partially weak with limited liquidity international capital targeting London assets with some initial easing that was quickly reversed There is currently a peak of 2.4 million sq ft under during the first lockdown, resulting in the lowest of this quality, and coupled with the continued after the summer. construction and available for delivery in 2021. quarterly volume figures on record. relative pricing divergence from other European gateway cities such as Paris and Berlin, we Many companies adopted a wait-and-see Looking forward, we can clearly see the COVID-19 However, as a Brexit deal was formalised and have seen prime yields remain stable through approach to their real estate strategy as they impact where schemes are being delayed, with before the new lockdown restrictions post 2020 and have already started to see some adapted to working remotely and then started only 3.1m sq ft of space under construction summer, Q4 saw a large spike in volume with indications of them actually decreasing for certain thinking longer term about how their workspaces and available to be delivered in 2022 and 2023 £4.3 billion transacted – broadly in line with assets. As a result, we anticipate the outlook for would be used. As a result, we saw a total central against the long-term average of 5.8 million sq ft the Q4 long-term average. yields is further compression throughout 2021 London office take up of 5.6 million sq ft, which per annum. and beyond. was about a 56% decline on the long-term average of 12 million sq ft. As a result, we saw the overall vacancy rate rise from 4% to 8.1%, but with the majority of this Of this 5.6 million sq ft, 45% was completed coming from the 95% increase in second-hand Valuation Invest- before March and the first of the lockdowns, space. When looking at Grade A vacancy in HB Reavis Value GLA sq m ERV GDV ment Development UK Change resulting in the remaining quarters seeing some of isolation, the rate has risen only marginally to 2018 2019 2020 2020 the lowest levels of activity ever recorded. 2.9% against the long-term average of 2.6%. Projects under construction 13,274 57.8 151.0 153.6 11.7 260.4 2.6 23.4
Transaction sizes were also significantly reduced Projects in preparation 140,266 246.0 337.4 447.6 122.8 2,763.3 110.2 18.9 in 2020 with only 10 leases signed for over 50,000 It is expected that Total 2020 153,540 303.8 488.4 601.2 134.5 3,023.7 112.8 42.3 sq ft – which is 70% below the long-term average vacancy will peak in 2021 Total Pipeline for 2021 153,540 303.8 488.4 601.2 134.5 3,023.7 112.8 42.3 – and nearly all deals were either concluded or already agreed by the start of the first lockdown. before reducing quickly
The amount of active occupier requirements as transaction volumes remained somewhat more resilient than the take recover swiftly for new Changes in UK Development up figures, with a decrease of around 25% to end 2020 at 5.5 million sq ft compared to 7.7 million workspaces and sublet Property Value (€m) sq ft at the end of 2019. space is withdrawn from 700 This should be seen in a positive light given the market. there remains a commitment from customers 600 81.5 601.2 0.0 601.2 to keep requirements live as well as a large 42.3 -11.0 increase in short-term lease renewals of 3.5 In the context of falling demand and increased 500 488.4 million sq ft, which is essentially deferred and supply, prime rents in Central London have been 400 not cancelled demand. We remain well placed remarkably resilient during 2020, reflecting that to capture demand as and when it returns with where there is customer demand for larger scale, 300 our established strategy of people, planet and high-quality workspaces the choices remain 200 productivity-focused workspaces. somewhat limited. 100
The overall availability of office space has Headline rents declined slightly during the year. 0 increased substantially over the year to just over Net effective rents came under more pressure, 2019 Investment Yield shift Accrued 2020 Completions Pipeline 23 million sq ft – the highest levels seen since with rent-free incentives increasing as tenants profit 2021 2004 with an additional 10.5 million sq ft added either renegotiated previously agreed deal in just 12 months. terms or owners offered more inducements such as deferred lease start dates to secure the few The majority of this space is second hand, only deals available. available in smaller units or in relatively tired Note: Data based on external expert valuations and internal management reports.
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The economy The market Germany’s economy hasn’t been immune to Despite the pandemic, in general, the German the consequences of the COVID-19 pandemic. real estate market proved relatively robust in It affected – in principle – all sectors and put 2020, in terms of both investment and leasing. Germany the economy into a recession comparable with Transactions totalled €59.2 billion, with over half the economic and financial crisis in 2008 and conducted in the top 7 cities: Berlin, Dusseldorf, 2009. GDP declined by 5% after ten years of Frankfurt, Hamburg, Koln, Munich and Stuttgart. continuous growth. Investment yields remained relatively sharp with midterm forecasts set to strengthen even further. However, in comparison to other countries, the results were better than originally expected. The office leasing market was mostly driven by Thanks to the robust flow of government uncertainty among tenants, resulting in slower subsidies on many fronts, the country managed to decisions to move or expand operations. Office stabilise key economic pillars in the second half of take-up in the top 7 cities totalled approx. 2.6 2020. The federal government expects around 3% million sq m compared to 3.9 million sq m in 2019 DE Sedlak Marcel GDP growth in 2021. – a 35.3% decline. From the CEO Well. 2020. What a journey! Nevertheless, the pandemic has had an impact Once again, the highest take up for 2020 was on the German labour market. 14 years of recorded in Berlin, with a better-than-expected Over the course of the year, we organised steady increases in employment ended, with 734,000 sq m total (-28.7% compared to 2019). a couple of very popular bike tours. On these unemployment rising 0.9% to 5.9%. Part-time This still met the 10-year average. tours, the road could suddenly turn surprisingly employees and the self-employed were hit bumpy. Similarly, in our business, after several particularly hard. Germany’s office vacancy rate rose from a historic years of relative stability, we suddenly found low of 2.9% (2019) to 3.5%. – so office space still ourselves in a turbulent environment that heavily On the other hand, the government’s broad remains scarce, especially in Berlin where the impacted our daily operations. programme (Kurzarbeit) helped to keep vacancy rate remains at a low level at 2.4%. a significant part of the economically active I’m happy to say that the Berlin team coped with population employed. With the recovery expected The significant growth of office rent seen in the new challenges extremely well. We continued to start in the second half of 2021 and throughout the last couple of years slowed down in 2020. construction on DSTRCT.Berlin without any 2022, the labour market should return to more However, averages still rose in several cities: interruption. The team even grew – to almost positive dynamics before the end of the year. Berlin 9%, Frankfurt 8% and Munich 7%. 40 professionals. In particular, Berlin’s prime rent reached €41.00 per sq m. Only Frankfurt recorded a higher prime Data sources: level with €45.00 per sq m. GDP Where some saw the Bundesministerium für Wirtschaft und Energie Optimistic signs of recovery as well as GDP current events as https://www.bmwi.de/Redaktion/DE/Pressemitteilun growth are expected to gradually translate into gen/2021/01/20210127-bundeskabinett-beschliesst- positive real estate market dynamics during 2021. a threat to our market, Therefore, we intensified our acquisition activities jahreswirtschaftsbericht-corona-krise-ueberwinden- in Berlin, and should start to see tangible results wirtschaftliche-erholung-unterstuetzen-strukturen-staerken.html we saw an opportunity. in H1 2021. https://www.bmwi.de/Redaktion/DE/Dossier/konjunktur-und- Data sources: If companies are to meet wachstum.html Colliers International City Survey their business targets in More and more, HB Reavis is being recognised in Statistisches Bundesamt Büro- und Investmentmärkte im Überblick 2020/2021 Germany as THE provider of modern workspaces https://www.destatis.de/DE/Presse/Pressekonferenzen/2021/ (Top 7 Cities) the coming years, they’ll driven by wellbeing and technology. BIP2020/statement-bip.pdf?__blob=publicationFile need high quality and Bulwiengesa We look forward to 2021 as the year Labour market https://www.bulwiengesa.de/sites/default/files/bulwiengesa_ healthy workspaces more DSTRCT.Berlin is completed. So let me use this Bundesagentur für Arbeit immobilienindex_pm_2021_dt_0.pdf opportunity to thank everyone in our Berlin team https://www.arbeitsagentur.de/presse/2021-02- https://www.bulwiengesa.de/sites/default/files/ than ever. for their efforts during last year. At the same time, jahresrueckblick-2020 immobilienindex_2021_0.pdf I would like to give huge credit to our growing https://www.arbeitsagentur.de/presse/2021-05-der-arbeitsmarkt- network of business partners for their trust and im-januar-2021 close cooperation. Statistisches Bundesamt https://www.destatis.de/DE/Presse/Pressekonferenzen/2021/ BIP2020/statement-bip.pdf?__blob=publicationFile
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Our performance Our first German project, DSTRCT.Berlin, Our German pipeline is a key focus for the Poland remained our focus for the whole year. company’s strategy – and we’re pleased to The development team, together with our say our efforts led to two exclusive acquisition construction and procurement colleagues, negotiations towards the end of the year. managed to deliver construction and related works according to plan – worth over €50 million. From the CEO Looking back, 2020 The global pandemic brought many unexpected We continued to strengthen DSTRCT.Berlin’s was not lacking situations into the business, and we will be seeing wellbeing philosophy, enhancing the campus its impact over the long term. We’re putting all with unique features such as a large-scale bike business success. our efforts into ensuring we emerge stronger from garage solution, an attractive art concept and this crisis. Peter Pecnik extensive greenery. We continued to build on our solid base and PL developed our team, our portfolio and our HB Reavis is well-positioned to face the On the leasing side – with Matthias Goßmann partner network to support further growth in current crisis given all our Polish projects under as our new Head of Leasing – we built a robust the German market. construction have committed bank financing active pipeline of over 50,000 sq m GLA plus in place. Even in the period of immediate several ongoing leads. These should see further uncertainty over the outbreak of the pandemic progress in Q1 2021. in Poland, we were able to adapt our response, introduce safety procedures on construction sites and in our offices, and continue works with minor delays.
HB Reavis Valuation Value Investment GLA sq m ERV GDV Strong demand for downtown Warsaw offices Development DE Change 2020 2018 2019 2020 meant that most of our new buildings were leased Projects under construction 48,535 87.8 167.5 240.3 14.1 398.5 72.8 42.7 prior to opening, as was the case with our Varso 1 Projects in preparation 40,480 4.2 4.5 6.0 8.6 197.8 1.5 0.0 and Varso 2. However, companies are now taking more time to carefully analyse their office needs. Total 2020 89,015 92.0 172.0 246.3 22.7 596.3 74.3 42.7 Total Pipeline for 2021 89,015 92.0 172.0 246.3 22.7 596.3 74.3 42.7 One of the elements we provide is our Symbiosy The lockdowns platform, which helps to control work environment demonstrated that conditions and room occupancy, as well as office traffic flow and the distance between users. The working from home is pandemic has shown that we were right to make Changes in German Development Property Value (€m) health and wellbeing the focus of our long-term not an ideal response strategy and introduce solutions that are now to every profession or sought after by employers. person. People need The new paradigm accelerated trends in using 300 offices on more flexible terms, all while boosting 250 23.0 8.6 246.3 0.0 246.3 spaces to focus on work, productivity and being compatible with a work 42.7 style that involves greater mobility and remote 200 interact with colleagues work. At HB Reavis, we are well-equipped to 172.0 150 and collaborate in a user- respond with our flexi leasing and coworking offering, providing clients with HubHub and 100 friendly environment. Qubes solutions. 50 With our tenants continuing to move in and The recent sale of Postepu 14 shows how 0 launch their operations in Varso Place in mid- a strategy built on wellbeing, technology, services 2019 Investment Yield shift Accrued 2020 Completions Pipeline 2020, we focused our More by HB Reavis efforts and sustainable design increased the resilience profit 2021 on their work environment safety. These included of our portfolio, even during something as contactless technology, designs that allowed for tumultuous as the COVID-19 pandemic. greater social distancing and smart solutions. I would like to thank each of our employees, clients and business partners for their impressive effort and contributions during the pandemic-hit 2020. Note: Data based on external expert valuations and internal management reports.
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The economy Gross Take Up Absorption The pandemic and the restrictions imposed to Investment turnover on the property market combat the virus resulted in a marked fall in in Poland totalled €5.6 billion. This was a 30% economic activity in the first half of the year. decline on 2019, but also the third best result ever. Still, quite a few meaningful transactions were The general government deficit is set to postponed and are expected to carry on in 2021.4 deteriorate strongly in 2020 due to the economic downturn and the support measures adopted to These positive signs were underpinned by the mitigate the economic fallout of the pandemic. industrial sector. While gradually growing over Private consumption, the backbone of Poland’s the recent years, the outbreak of the pandemic Gross Demand Evolution in Warsaw (2020) growth in recent years, posted a double-digit accelerated its progress. And despite the trend drop, as social distancing measures and low of postponing transactions, office assets were the 1000,000 50% confidence took their toll.1 second most traded product. 800,000 40% 600,000 30% Real GDP declined by 2.8% in 2020 and With nearly €2 billion transacted, the sector 400,000 20% remained below 2019 levels until the end of represented 36% of the total investments. Prime 200,000 10% 5 2021. Economic growth is expected to resume in office yields in Warsaw were discussed at 4.50%. 0 0% 2021 and 2022 in line with the assumed easing We expect that investment in the office sector will of containment measures and increased foreign start to recover as we go back to our workplaces 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 demand, although the fading away of policy following the roll-out of the vaccination program support could weigh on growth in early 2021.2 in 2021. Investment activity is projected to recover in tandem with reduced uncertainty and increased The Warsaw office market grew by 314,000 sq m domestic and foreign demand. of new supply, including 12 new developments delivered. Some 50% of the capital’s total new Unemployment rose to 6.2% in December 2020 supply is located in the Rondo Daszyńskiego area. from 5.2% in the same month last year. It was the Warsaw reached 5.9m sq m of total office stock highest jobless rate since April of 2018, as the by the end of 20206, with our own Varso 1 and Vacancy Rate Sublets Structure number of unemployed increased by 179,600 to Varso 2 projects among the largest completed 3 a near three-year high of 1.046 million. investments in 2020. 9.9% Office space under construction has significantly The property market +2.2% Despite a strong start in 2020, the year turned out to decreased compared to previous quarters. (to Q4 2019) be a tumultuous year full of seismic shifts in everyday However, it still exceeds 576,000 sq m or norms. The global pandemic caused uncertainty that almost 10% of the actual office stock. There is dominated business and private activities. Poland, an expected scarcity of new product in coming as in many other countries, experienced COVID-19 years. This may further boost the appeal of, and waves and related restrictions that influenced general competition for, space in best-in-class buildings business activities. located outside of the central parts of Warsaw.7 Office tenant activity in Warsaw amounted to almost 602,000 sq m leased in 2020, which is Sublets Overall, the year approx. 276,000 sq m less than in the previous year. Moreover, tenants often decided to extend Real Vacancy rate recorded relatively Vacancy + Sublets their lease for the short term, while waiting for Over 130,000 sq m 12.1% robust outcomes in the a return to normality before making any 8 investment market, long-term commitments. The slowing pace of leasing seen in the Warsaw exceeding expectations 1. https://ec.europa.eu/info/business-economy-euro/economic-performance-and-forecasts/economic-forecasts/autumn-2020- office market, along with the high supply of new economic-forecast_en from the onset of space not yet fully pre-leased resulted in a further 2. https://ec.europa.eu/info/business-economy-euro/economic-performance-and-forecasts/economic-forecasts/autumn-2020- increase in the vacancy rate, which stands at 9.9% economic-forecast_en 3. https://tradingeconomics.com/poland/unemployment-rate?continent=europe the crisis. (up 2.2%). Despite the market situation, asking 4. https://www.jll.pl/en/trends-and-insights/research/cee-investment-market rents on the Warsaw market remain stable.9 5. https://www.jll.pl/en/trends-and-insights/research/cee-investment-market 6. https://content.knightfrank.com/research/1164/documents/en/office-market-in-warsaw-2020-7760.pdf?_c=26/01/2021%2011:00:09 7. https://www.jll.pl/en/trends-and-insights/research/office-market-in-warsaw 8. ibid 9. https://www.cushmanwakefield.com/en/poland/insights/covid-19-impacts-poland-real-estate
Note: Data based on external expert valuations and internal management reports. 44 45 05 Countries Overview 05 Countries Overview
Our performance Despite the challenging times of 2020, we Bank Polska, Bank Pekao, PKO Bank Polski Slovakia delivered 74,000 sq m in two Varso Place and BNP Paribas Bank Polska. We also issued buildings with close to a 100% occupancy rate. a €18.7m tranche of bonds in Poland that mature Proving the commercial health of our assets, in December 2023. we also divested Postepu 14 (34,582 sq m) From the CEO to CA Immo for almost €87m. We continue to work on the construction of It’s natural that I’m not the only one describing Varso Tower (69,816 sq m), which has now been 2020 as a year of challenges. There is no industry Rene Popik In 2020, HB Reavis in Poland signed lease topped out and is planned to be completed or single person who was not affected by the agreements for around 19,000 sq m of space. in Q1 2022. Meanwhile, Forest’s campus-style pandemic. But despite this, we’ve taken many The most notable tenants obtained included buildings (23,702 sq m) have also been topped great steps forward. Leroy Merlin (12,360 sq m) in Forest – one of out and were practically completed in Q1 2021. the largest Warsaw office transactions that year The adjacent 120-metre tall tower (55,689 sq m) SKWe managed to finish the reconstruction of – as well as act BSWW Legal & Tax (2,170 sq m), is gaining a new floor each week and should be Mlynske Nivy Street, a complex task because VISA (1,280 sq m) and Ipsen (950 sq m). We are ready by the beginning of 2022. of crucial project modifications and dynamically continually negotiating with prospective tenants changing restrictions. that are interested in leasing office space in Varso In the reporting year, there were changes to our Tower and Forest. Polish leadership team. Apart from his role as CEO On account of COVID-19, we had to postpone for Poland, Peter Pecnik has become Group CFO the opening of Nivy Station. However, the Early in the 2020, we secured a €162 million loan and a member of the HB Reavis Group Executive situation in fact strengthened our relationships to develop the Forest business campus in Warsaw Board. Maciej Olczyk has also been promoted to with our business partners. We used the from a syndicate of four banks, namely Santander Deputy Country Construction Officer in Poland. additional time to modify some elements of the final project, thanks to which, we look forward to offering a future-proofed project – a real game changer – in August 2021. HB Reavis Valuation Value Investment GLA sq m ERV GDV Development PL 2018 2019 2020 Change 2020 The year also brought a change in perspective for The economy Projects completed 74,000 217.0 389.3 404.2 20.3 435.1 14.9 34.0 offices, where workplaces are no longer seen as Slovakia is one of the most open export-oriented Projects under construction 149,207 214.8 326.6 395.9 36.1 740.7 69.3 88.5 just a space between walls. Now, the focus is on economies, with close ties to the German
Projects in preparation 40,376 9.0 10.3 8.9 7.0 107.3 -1.4 0.0 employees as human beings rather than numbers economy. Although services account for almost in a company’s budget. This has resulted in 66% of GDP, it relies on the automotive and Total 2020 263,583 440.8 726.2 809.0 63.4 1,283.1 82.8 122.5 greater interest in our services, especially Qubes, electronics industries, which dominate exports. Total Pipeline for 2021 189,583 223.8 336.9 404.8 43.1 848.0 67.9 88.5 Origameo and Symbiosy. Our offer of flexibility, effective cooperation and smart technology has In fact, Slovakia is the world’s largest producer made us more attractive to companies looking for of cars per capita, with four manufacturers in the healthy, productive spaces that support wellbeing. west of the country building over one million cars a year. Investors are driven by the availability Changes in Polish Development Property Value (€m) of the cheap and well-educated workforce and Last but not least, government incentives. 900 122.5 -50.9 I’m very proud of the 800 11.1 809.0 -404.2 The outbreak of COVID-19 and the consequent slowdown in production and consumption caused 700 726.2 BREEAM Communities GDP to drop 5.1% in Q1 and 12.1% in Q2, 600 certification at the rebounding partially with a 2.4% drop in Q3. The estimated GDP contraction for 2020 500 Excellent level we amounted to 6.3%. 400 404.8 received for the New Nivy The large volatility in GDP was down to the 300 zone – the first ever in openness of the local economy, which depends 200 heavily on the demand and performance of its Slovakia and one of just main economic partners, mainly Germany. 100 four worldwide. 0 The economy is expected to grow by 7.4% in 2019 Investment Yield shift Accrued 2020 Completions Pipeline 2021 with a revival from the negative effects of profit 2021 It’s proof of our philosophy to build sustainable the pandemic. Actual performance will depend projects within the city district and great on whether there are additional lockdowns and Note: Data based on external expert valuations and internal management reports. motivation for the future. how much demand there is from export partners.
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Unemployment is expected to grow to 8% from Less directly exposed to the pandemic and buoyed a record low of 4.9% in 2019. by strengthening external demand, industrial Our performance production rose 3.6% in October while industrial 2020 was quite a challenging year for us as we With regard to retail leasing, Nivy Station retained The second wave of COVID-19 continues to hamper confidence and volumes of domestic and export were delivering the tallest office building in 3/4 occupancy though the year, with our leasing the economy. The mass testing programmes order books made solid gains in November. Slovakia with more than 32,000 sq m onto the team keeping 99% of signed tenants and also that were implemented in early November only Slovak market and continued to build a new retail acquiring new ones despite the critical situation. brought a temporary drop in infection rates. The market destination with a leasable area of 70,000 sq m. Still, the economy continues to fare better than The changes in global economic activity have not We were also actively managing COVID-19 In 2020, we started the demolition of Apollo I during the first lockdown. Retail sales dipped yet impacted H1 investment volumes in Slovakia. impacts that had a considerable impact on the and excavation works for a new scheme – 1.2% month-on-month in October but stayed Both industrial and office sectors recorded real estate and construction environment. New Apollo*. After more than three years of above pre-pandemic levels. Services turnover relatively average volumes, comparable with the assessment, the New Nivy zone acquired BREEAM fell 0.8%, although November likely saw a much last three years. Yet, Nivy Tower has found its place on the Communities certification at the Excellent level – steeper fall as lockdown restrictions took their toll market. Our unique strategy, anchored by the making it the first certified area in CEE region. on contact-intensive consumption. This is all the We estimate the market traded around €400 Workspace as a Service concept, has been more worrying because these areas had still not million-worth of space, surpassing the first half an unmitigated success and proved its value, 2020 was also a considerable success for recovered from the first wave – accommodation of 2019. This relatively high volume, especially especially with the service portfolio of Origameo our project team on the revitalisation and and food were 23% below pre-pandemic levels. in Q1, is a consequence of slipped deals from and the new workspace option Qubes providing reconstruction of 500 metres of important city the end of 2019. In fact, the number of deals a fully-serviced and flexible option for SME and infrastructure which reopened after two years and Confidence in services dropped sharply by 17% actually decreased – but their average size was corporate project teams. to -28.7% in November, but had reclaimed half of approx. €50 million, in part due to large industrial * The New Apollo project was as of 31.12. 2020 the fall by April 2021. transactions. Nivy Tower has not only become a home for owned by a related party outside of the Group. international companies like Resco and CAPCO, The current owner intends for HB Reavis to Averaged across all sectors, the economy grew Volume-wise, the largest office transaction was but also for startups Akular and Wolt who have develop the project and that the ownership will 11.6% in Q3 compared to 2019. Consumption our sale of Twin City B to one of its investment settled into the HubHub coworking network. be transferred to the Group during 2021. grew by 5.9%, while investment expanded by fund structures. This prime scheme, located in Closed deals for Nivy Tower have reached 9%. Exports grew by 37.2% on the back of strong the CBD, is anchored by Swiss Re with an above 14,000 sq m in total in 2020. external demand. This was reflected in a strong market standard WAULT. Neighbouring Twin City Q3 for industrial production, which rose 31.6%. Tower, mostly leased to Amazon, was acquired by South Korean institutional capital in 2019. HB Reavis Valuation Value Investment Overall, the economy remained 2.8% smaller GLA sq m ERV GDV Development SK 2018 2019 2020 Change 2020 in Q3 relative to pre-pandemic levels, mainly The industrial sector, especially logistics and due to a sharp drop in investment in H1. Oxford warehousing, has been increasing its share of Projects completed 32,470 36.8 107.5 102.6 6.8 124.1 -5.0 6.3 Economics expects capital expenditure to overall investment volumes over recent years. Projects under construction 102,160 120.4 219.7 269.8 22.5 345.1 50.1 60.1 recover fully only once the uncertainty around the The pandemic strengthened this trend. Projects in preparation 421,639 88.8 137.6 142.1 51.7 1,369.9 4.5 5.2 pandemic dissipates. We expect 2021 to see a number of smaller Total 2020 556,269 246.0 464.8 514.5 81.0 1,839.1 49.5 71.6 Industry was set to remain a bright spot during transactions take place, in particular retail parks. Total Pipeline for 2021 523,799 209.2 357.3 411.9 74.2 1,715.0 54.6 65.3 the winter. Following the strong Q3, it rose Anchored by a food retailer and boasting the a further 3.8% month-on-month in October – well right tenant mix and a strategic location, these above pre-pandemic levels – and entered the assets will prove to be resilient, tradeable and latest lockdown with solid momentum. liquid as their KPIs bounce back swiftly following the loosening of pandemic regulations. Changes in Slovak Development Property Value (€m) Unfortunately, consumption was set to drive a fall in Q4 – the contact-intensive services sector was Our expectations are that the second half of the 600 essentially shut down. Consumer confidence year will mostly depend on a few factors such 71.6 -14.2 -7.9 514.5 -102.6 remains subdued and, worryingly, unemployment as the likelihood of another COVID-19 wave, 500 464.8 is expected to rise. macroeconomic data and the economic outlook 400 411.9 for 2021. 300 On the upside, Q3 data Resources: JLL, Cushman & Wakefield 200 proved that consumers 100 are willing to spend their 0 2019 Investment Yield shift Accrued 2020 Completions Pipeline excess funds once the profit 2021 virus is contained. Note: Data based on external expert valuations and internal management reports.
48 49 05 Countries Overview 05 Countries Overview
Challenges for the future The situation created by the virus, which Due to curfew restrictions and social distancing, changed life for all of us, had to be handled we all deal with surrounding working from Hungary with speed and efficiency. Initiating our home. While it might have seemed comfortable breakthrough technologies for personal safety at first, after a few months it turned out to be was therefore essential. stifling. So naturally, it has only strengthened our commitment to providing exceptional Symbiosy’s sensor positioning technology enabled experiences for employees though our offices. From the CEO us to track the path of any employees who tested Using state-of-the-art techniques and solutions, Even though 2020 turned out to be an extremely positive, identifying potentially infected office we continue to put an emphasis on mental and difficult year for everybody, HB Reavis managed environments. Using alert messages on mobiles, physical wellbeing. As soon as the quarantine to provide a working environment filled with Robert Kubinsky we also detected and indicated potential social restrictions are suspended and employees return quality and safety. distancing issues where the lack of distance could to our offices, we will not disappoint them. be a problem. Our workspaces have shown that 2020 also marked the opening of Agora we’re ready to face the challenges of the future. Budapest, Agora Hub – home to companies HUlike bp, B+N Referencia, Nowy Styl and Stada Hungary – and Agora Tower, in which Raiffeisen Bank has established its headquarters with more HB Reavis Valuation Value Investment GLA sq m ERV GDV than 1,300 employees. Development HU 2018 2019 2020 Change 2020 Projects completed 71,249 70.0 216.4 265.5 15.4 280.5 49.1 52.5 The building centre – in one of the capital’s busiest intersections – has already become one Projects in preparation 64,101 35.0 54.2 53.2 14.6 253.0 -1.0 1.0 of the most pleasant spots in the downtown area Total 2020 135,350 105.0 270.6 318.7 30.0 533.5 48.1 53.5 of Budapest due to its friendly atmosphere and Total Pipeline for 2021 64,101 35.0 54.2 53.2 14.6 253.0 -1.0 1.0 people-oriented design. These premium offices include green areas and a variety of services, all designed to nurture employees’ wellbeing.
Three of our Workspace as a Service brands – Our achievements Changes in Hungarian Development Property Symbiosy, More and Origameo – have successfully Feedback from our employees is important to us. launched in Hungary. Now, apart from taking care However, the opinion of the real estate market is Value (€m) of unique needs, HB Reavis actively participates in significant as well. Fortunately, HB Reavis stood its 350 progressing technical development. For example, ground last year. 53.6 -21.2 15.8 318.7 -265.5 in Agora Hub, the workplace environment is 300 supported by the professional data analysing The two newly-opened Agora Budapest buildings, 270.6 250 technology, Symbiosy, which creates a more Agora Tower and Agora Hub, received WELL pleasant office experience, and it is also crucial Certification at the Gold level in the autumn. 200 regarding protection during the pandemic. Thanks to HB Reavis’ people-oriented building 150 standards, the buildings were able to meet stringent standards regarding the areas of clean 100 We’re delighted these air, water, proper lighting, healthy eating, comfort, 50 53.2 fitness and mental health, among others. ambitious plans have 0 finally become reality We maintained our first place in the Property 2019 Investment Yield shift Accrued 2020 Completions Pipeline EU real estate market ranking too. And, as the profit 2021 and, despite the unusual largest workspace provider in the European events of 2020, that we Union, we finished as the top developer in Euromoney’s 2020 real estate market survey – were able to progress in the Mixed, Office/Business, Retail/Shopping and look forward to and Overall subcategories. This is an outstanding achievement for an the future. international workplace provider company which designs, builds and manages office buildings with a focus on wellbeing at work and productivity. Note: Data based on external expert valuations and internal management reports.
50 51 06 Board of Directors 06 Board of Directors
In 2020, the Board of Directors adopted a standardised HB Reavis Holding SA is not required to follow professionals, including experts in the real ESG strategy as a framework covering environmental, the Luxembourg ‘Ten Principles of Corporate estate industry and workspaces. The Executive social and governance areas. Governances’ rules set for listed companies. Management consists of long-term professionals Nevertheless, it has committed to comply with with a proven track record who oversee the The ambition in the field of corporate governance is to develop these requirements as much as possible. As a part running of the Group’s daily operations. an organisational structure, processes and policies that follow the of this, the number of executives and independent principles of transparency, professionalism and accountability. members of the Board of Directors have increased With effect from January 1st, 2021, the Executive since January 1st, 2021. At HB Reavis we believe Board has been renamed the Executive Management that a diversity of opinions is key. and has been enriched by new members. Our Board of Directors consists of dedicated Members of the Executive Board 2020
Members of the Executive Management 2021 As of May 31, 2021.
Marian Herman Peter Pecnik
Board ofBoard Directors CEO Group CFO
Peter Ceresnik Pavel Jonczy Member of the Executive Management Member of the Executive Management
Marian Herman Group CEO Members of the Board of Directors As of May 31, 2021.
Marian Herman Liviu-Constantin Rusu Marija Prechtlein Director Director Independent Director
Peter Pecnik Peter Vazan Ivan Chrenko Director Director Non-Executive Director Martin Miklas CFO Peter Ceresnik Neil Ross Maarten Hulshoff Director Independent Director Non-Executive Director
Pavel Jonczy Melanie Koch Martin Miklas Director Independent Director Non-Executive Director Peter Ceresnik Member of the Executive Board Isabel Schellenberg Erik van Os Director Independent Director 06
52 53 07 Our People 07 Our People
COVID-19 reality The outbreak of the pandemic in the spring of 2020 tested our team’s readiness for unexpected situations and our ability to operate in difficult conditions. From day one of state ordered quarantines across all HB Reavis markets, we were able to switch most of our operations to Our technology platform Symbiosy, with its indoor remote working. positioning functionality, provided ongoing 2020 was unprecedented due monitoring of office density. If an employee Previous investments into a cloud IT infrastructure tested positive for COVID-19, it also enabled to the COVID-19 pandemic and mobile devices for our people enabled us us to track all the contacts at risk and provide
Our People to perform the majority of our business activities employees with tests, disinfect the working space situation. It not only from home. At the same time, special COVID-19 and instruct the relevant employees to go into significantly influenced our task forces in all our offices took immediate quarantine. These measures helped us keep our measures towards the security of our own and 3rd offices safe, and no work-related virus transfers business perspective, but also party employees on construction sites, as well as were reported. those who needed to stay in the office. the way we operate. Ongoing monitoring of the mood within our team showed that people preferred a hybrid work-style of time in the office environment with the flexibility to work from home. This confirms the long-term workplace strategy reflected in our employee benefits and policies that were implemented prior to the outbreak of the pandemic (individual wellbeing, workspace experience and personal flexibility).
People strategy update As part of our Business Strategy 2025, the People strategy is one of its building blocks. The People strategy update brought refreshed aspirations in the following areas:
Our Commitment Our mindsets to our leaders success 07
55 07 Our People 07 Our People Gender composition We revised our Mindsets model that defines Our mindsets our culture and the expected behaviours of our people: passion, entrepreneurship, professionalism, innovativeness, a focus on people and long-term relationships. 55% female 45% male Our commitment is expressed by several Commitment key aspirations: • Alignment of individual/team and company goals to our success • Transparency in measuring our success Years with via individual contribution and company results the Company • Team spirit and drive help us achieve 2-3 years our goals • Balancing autonomy and accountability for our actions • Creating opportunities to utilise our potential and constantly improve our capabilities
0-1 year 1-2 years
Our leaders are accountable for achieving company targets through people. A high Our leaders standard of people leadership is expected and will be continually measured through internal surveys as well as our performance management system.
Our people strategy aspirations have been translated into specific actions and initiatives 5-8 years 15+ that will be carried out and monitored years on an ongoing basis.
3-5 years
Compensation system review employees holding more junior or administrative As part of the business strategy update, we have roles stay on fully fixed compensation. also reviewed our compensation system. Unlike 8-15 years the past couple of years, we have returned back This step will enable our people to participate to a more merit-based philosophy with a broader in our company’s success to a greater extent use of variable components of total target when we surpass our company goals. A variable compensation packages. component structure is linked both to team/ company results as well as individual goals. In practice, we provide variable components to We believe this change aligns our compensation 80% of our employee population (in contrast to system with the entrepreneurial mindset and 30% of employees prior to the change). Only nature of our culture. Note: Data based on external expert valuations and internal management reports.
56 57 08 ESG 08 ESG
Responsible from the very beginning Our ESG pillars We’ve taken innovative approaches to our work ESG before. But we want to continue raising the bar. So we’ve set ourselves new challenges, like reducing our carbon footprint and developing better building performance markers.
In turn, the BREEAM and WELL Building Standard Environmental certifications are key drivers for us: validation of our thinking, methods and solutions. In 2020 With respect to nature Designing alone, we saw New Nivy in Slovakia become Our processes, policies, one of just four projects worldwide to achieve practices and the impact we the BREEAM Communities ‘Excellent’ level. In have on the natural environment, a responsible addition, Bratislava’s Twin City Tower also received applicable to both our buildings WELL Core & Shell Gold Certification. and our company.
future How does our ESG strategy influence our work? Firstly, it’s important to say that everyone – tenants, business partners, suppliers, local neighbourhoods, authorities and employees, as well as ourselves – need to take responsibility We’ve created healthy offices that follow for creating spaces that work for people, responsible principles for over 65,000 people. communities and the planet. Social Now, after 27 years in business, we’ve brought Naturally, our strategy was principally developed together all our learnings and experience to with the people who use our premises every Taking care of people create our ESG strategy, which is inspired by our day in mind. A higher ESG standard reflects Activities affecting both the well-established ESG framework. their values and helps them achieve their internal and external people with responsibility goals. whom we interact, applicable ESG is a set of standards that cover within different project phases environmental, social and governance activities. This has led us to build a formidable breadth and in the company. It considers how a company performs as of internal expertise around environmental a steward of nature, examines how a company responsibility, user-centric design, health and manages its relationships with employees, wellbeing, and community engagement. suppliers, customers and the community, and assesses how a company is governed. A strategy that drills down to the everyday Before 2020, we had been delivering exceptional solutions, but were missing a comprehensive and integrated strategy. A single-minded approach Governance had covered all our responsibility activities, from land acquisition, through design, development, The way we’re directed construction and finally in the asset management Organisational structure, of our buildings. transparency, measures, protocols, procedures and Now, we have a framework set in stone that lays formalised governing bodies, out our ESG priorities and areas of expertise. roles & responsibilities defining One that can be distilled into a set of actions our business nature. and activities that continuously strengthen our proposition to the market. 08
58 59 08 ESG 08 ESG
Our ESG areas and priorities A closer look at our aspirations Under each pillar, we’ve developed a number As we work towards our priorities, we look at the of activities that have a long-lasting impact. needs of our stakeholders. ESG is a crucial aspect Social But we’re always looking forward. In particular, of our work for employees, clients, end users, our environmental priorities concentrate on communities, investors and future generations. carbon reduction and green transport, our social Therefore, our ESG strategy isn’t just about the Client engagement Employee experience priorities focus on people, health and wellbeing, product. It covers a range of activities that are Engage clients with events and activities Provide inspirational projects and activities communities and the employee experience, and performed across our organisation – underpinning throughout the year that upgrade their that stimulate the growth and development of our governance priorities are our mindsets and our entire approach. experience with and in our buildings. our employees. supply chain management. Focus on people Safety Design and create all our projects with people Protect our employees, contractors and all those and their needs in mind. who work for us on construction sites by providing them with the right education about safety and Health and wellbeing securing a safe environment. Environmental Design our buildings in line with wellbeing principles so they enhance health, wellbeing and performance.
Energy performance Communities Improve the way we deliver and operate Engage and support the communities around buildings, helping clients to maximise energy our projects in the cities where we live, work efficiency while they use them. and build.
Carbon reduction Implement low carbon solutions during all project stages, including design, demolition, construction and operation in order to reduce carbon footprints.
Governance
Water consumption Improve water efficiency through innovative Corporate government Speak-up culture building technologies and fittings. Ensure that our business is managed in line with Foster openness and develop a speak-up culture good corporate governance standards. in our company. Waste management Encourage good design and construction Our mindsets Supply change management practices that minimise waste across our value Increase awareness of the importance of Build long-term relationships with our suppliers chain, including building operations. our values/HB Reavis mindsets: passion, based on mutual prosperity and trust. entrepreneurship, professionalism, innovativeness, Green transport long-term relationships and a focus on people. Diversity and inclusion Support green transportation choices by helping Provide fair working conditions and equal the people working in our buildings and our own Business ethics opportunities for everyone throughout the whole employees to use emission-free transportation. Ensure our employees and key business partners employee journey. comply with the principles we stand for as Biodiversity outlined in our Code of Ethics. Create green infrastructure that increases the biodiversity around our projects.
Download the full ESG brochure: https://hbreavis.com/wp-content/uploads/2021/01/ESG_Strategy_HB-Reavis.pdf
60 61 09 Business Review 09 Business Review
Changes in Group Development Property Value (€m) Real estate development is a very complex business. Being an 3,000 international workspace provider 2,500 brings even higher complexity. 2,000 We make life even tougher for 1,500 1,000
ourselves because our mission is 500
to bring remarkable experiences 0 2019 Investment Yield shift Accrued 2020 Completions Pipeline to people through our real profit 2021 estate solutions. Data source: internal management reports.
We aim to set trends in office space solutions. We aspire to always deliver something more Product design matters and distinguishes us in the market than clients and communities expect, something During our history and through the delivery of 961,000 sq m* of leasable office space,
Business Review Business that will differentiate our projects from others. we have accumulated significant knowledge and experience. We understand why We believe this is the right way to create it is so important to talk to clients, identify their needs and wishes and, moreover, greater value for our partners, clients and local incorporate these into our product design process. communities, as well as for our shareholders to achieve their projected growth and desired return. Currently, we have around 140 professionals in our dedicated product design team infusing client experience and technical innovations into our products. Recently we’ve focused on the following areas:
The development landscape Looking at our portfolio, the share of development in our total investment property is 65%. The increase from our targeted 50/50 split was driven by the reallocation of One Waterloo Bringing international expertise into our into our development arm as preparations for projects. We retained the services of construction progress. highly acclaimed architectural studios such as Benoy, Foster+Partners, MAKE Despite the difficult investment market, we also Architects, John Robertson Architects and Testing project design. All of our designs took opportunities to divest assets valued at Allford Hall Monaghan Morris for some of are rigorously assessed, focusing on €325m with an eye on building a strong cash 1our recent flagship projects. potential user experience in terms of position for the near term. daylight quality, interactions between dedicated office space and shared In the reporting year, we focused mainly on 3spaces (primarily on the ground floor and both speeding up and growing the share of roof) and the effects of greenery, fresh air developments in the permit stage as well and thermal control. as making progress with our projects in the Transforming ourselves from a fully construction phase. During 2020, the portfolio integrated but ‘standard’ real estate value of core development property increased by developer into a Workspace as a Service €370.2m*, while properties valued at €772.3m* (WaaS) provider. This move is a perfect Elevating our sustainability standards were completed and handed over to our asset umbrella for our user-centric related activities and design goals to at least BREEAM management arm. such as UX methodology, Origameo, ‘Excellent’. We also aspire to comply 2HubHub, Symbiosy, Qubes and More. with WELL standards as soon as feasible. 09
62 4 63 09 Business Review 09 Business Review
Leasing and marketing completed properties before their transfer to use). development portfolio of our total investment Yet again, we’ve invested significant effort and In terms of the numbers, facing a mix of market In terms of the creation of the net value of the property at around 50%. Due to our divestment resources during the recent year into building challenges that were significantly impacted by the required investment to achieve the value growth, efforts and reallocation of One Waterloo, the our leasing teams across the Group. Over the COVID-19 pandemic, our leasing teams signed office properties contributed €85m* (net of the share of our development portfolio (excluding last couple of years, we’ve grown our marketing contracts for about 50,000 sq m of GLA*, down yield shift). One Waterloo and non-core assets) increased to capability so that we can more effectively offer roughly 65% compared to 2019 (144,000 sq m 75% (2019: 69.5%). these projects to our clients. signed in 2019). Performance of development activities Our strategic plan is to keep our balance sheet These teams consistently and efficiently use the on an even keel with the long-term share of the Group’s know-how that has been accumulated over 27 years.
HB Reavis Valuation Value Investment GLA sq m ERV GDV Development Total 2018 2019 2020 Change 2020 TOP Deals Forest Leroy Merlin 12,358 sq m Retail 102,160 120.4 219.7 269.8 22.5 345.1 50.1 60.0 Agora Tower B+N Referencia Ipari for 2020 3,758 sq m Office 1,177,926 1,111.2 1,959.7 2,253.9 335.9 7,244.4 294.1 271.6 Varso 2 BSWW 2,174 sq m Residential 42,505 0.0 0.0 26.1 0.0 152.1 26.1 3.6 Varso 2 VISA International 1,283 sq m Total Development 2019 1,322,591 1,231.6 2,179.4 2,549.8 358.5 7,741.6 370.3 335.2 Nivy Tower Dobry Mlyn Surany 1,216 sq m Completions 2020 177,719 323.7 713.2 772.3 42.6 839.6 59.0 92.8
Retail 102,160 120.4 219.7 269.8 22.5 345.1 50.1 60.0 Data source: internal management reports. Office 1,000,207 787.5 1,246.5 1,481.6 293.4 6,404.7 235.1 178.7
Residential 42,505 0.0 0.0 26.1 0.0 152.1 26.1 3.6 Leasing Activity according to GLA Total Pipeline for 2021 1,144,872 907.9 1,466.2 1,777.5 315.9 6,901.9 311.3 242.3
180,000 160,000 140,000 120,000 Group development activity, 100,000 moving averages 2016 – 2020 80,000 60,000 400 40,000 350 20,000 300 0 250 200 150 100 50 0
Development portfolio structure As far as segments are concerned, during 2020 Geographically, the structure of our whole our strategic focus on office development development portfolio is continuously shifting was reflected in a 93% share of our towards western countries, where the UK and development portfolio value, while retail and Germany represent 52% of the future value in our residential accounts for 7% based on gross pipeline. At year end 2020, the share of UK assets development value.* represented 44% of the whole portfolio, Poland 12%, Czechia 7%, Slovakia 25%, Hungary 4% and Developments in the office segment continued Germany 9%, all based on the expected gross to achieve growth, adding around €294m of development value.* value and reaching a total of €2,254m* (including *Note: Data based on external expert valuations and internal management reports.
64 65 10 How We Managed Our Assets 10 How We Managed Our Assets
In all aspects of More by HB Reavis, our in-house asset management department, we always look for innovative and practical solutions for our clients. Through property managers we foster the creation of long-term relationships focusing on the best client experience.
We also thoroughly oversee the technical operations with our facility management specialists by focusing on delivering a high quality of service, effective building management that optimises the energy spent, wellbeing and being accessible 24/7 for clients’ requests. The closeness to our clients coupled with our capabilities enabled us to implement immediate actions ensuring the safety of our premises.
2020 was also a milestone thanks to the significant growth of our managed assets. A great accomplishment of all our teams was that we opened the Agora Hub and Agora Tower
How We Managed Our Assets Managed Our We How buildings in Budapest with prime anchor tenants, Raiffeisen Bank and British Petroleum. In the centre of the Warsaw central business district we enlarged our portfolio with Varso 1 and Varso 2, and in Bratislava we opened Nivy Tower, the tallest building in Slovakia. With these additions, we have expanded our portfolio with another 200,000 sq m under our management. 10
66 67 10 How We Managed Our Assets 10 How We Managed Our Assets
Income producing Varso 1 & 2 asset portfolio Warsaw
Combined GLA: 74.0k sq m Varso 1 and Varso 2 benefit from their close 30% location to the core city centre, a shopping centre 33% Hungary 255k sq m GLA and a railway station. The building offer 74k sq m Slovakia of GLA and are currently leased at 89% of their full capacity. ◊54.9 million ERV Income producing assets by country1 (based on ERV) ◊917.3 million FMV
37% 74% Occupancy Poland Agora Tower & HUB Budapest
Combined GLA: 71.3k sq m The practical completion of the Agora Tower and Agora Hub concludes the develipment of the first phase. The Budapest landmark already Nivy Tower accomodates anchor tenants BP and Raiffeisen in an area with BREEAM&WELL certificates. Bratislava
GLA: 32.5k sq m Currently Bratislava’s highest office building, it is the latest completed project in the New Nivy zone. The project is adjacent to Nivy Station Apollo Business which, alongside its location, enhance its transport connectivity. The building is aspiring for BREEAM and WELL certificates. Center III-V Bratislava
Combined GLA: 48.7k sq m Postepu 14 Completed in 2009, the project is one of the first in Slovakia to obrain BREEAM certificates. Warsaw The building offer a variety of service and are occupied at more than 90% of their available area. GLA: 34.5k sq m This sustainable A-class office building with efficient floor plate was completed in 2015 and benefits from great visibility and transport connectivity. The building was sold to CA Immo in 4Q/2020. Source: Company information as of December 2020 1 Including non-core projects Centrum Bottova and Kesmark. Projects under asset management of HB Reavis CE REIF are not included.
68 69 10 How We Managed Our Assets 10 How We Managed Our Assets
A summary of the actions taken by More by HB Reavis in response to COVID-19:
• Intensive daily support and contact with tenants to support overcoming the pandemic (both retail and office)
• A strong focus on the health & safety of our buildings to ensure a safe return to our buildings for tenants such as: disinfection routines with an extra focus on palpable surfaces, social distancing in lifts and common areas, natural ventilation, HVAC disinfection and strict pandemic procedures in case of an identified infected person in the building Divestments: • Contactless and touchless journeys via the Hi.Building application - from the entrance to the building to the office premises In October 2020, HB Reavis sold Postepu 14, which is located in Warsaw, to CA IMMO, a real estate investment • Remote work (home office) service offer to company based in Vienna. The building was almost fully support the employees of our tenants in the leased with high quality tenants such as Astra Zeneca new daily challenges, from concierge and and Samsung. courier services through to online events focusing on mental health and wellbeing The divestment strengthened the position of HB Reavis in Poland as a successful developer, topping up its office The Hi.Building app, a solution integrating the portfolio of 220,000 sq m by another 34,500 sq m. Postepu building’s amenities and systems: 14 was recognised by the new landlord for having the most state-of-the-art technologies and solid tenants • Buildings operated by More by HB Reavis • Our clients can enjoy bike sharing, a reception who, with the assistance of the More by HB Reavis team, provide the most modern digital experience with concierge services and various managed to fulfil their financial obligations in spite of the for building users. The Hi.Building platform experiences delivered by our dedicated COVID-19 impact. The handover process of the property is the one solution that lets people take service teams. Everything is at the client’s went smoothly due to professionally delivered property advantage of all the building’s features fingertips and connected via our Hi.Building and facility management services from May 2015, when the and services. It allows users to access the platform. It’s the easiest way to join yoga use permit was granted. The More by HB Reavis team not building, the parking lot, common areas classes, take part in various medical checks only supervised the building’s operations, but offered wide and lifts directly with their mobile phone. directly in our premises or to mix fresh support during the due diligence and exit processes. It enables the smooth management of smoothies with world class bartenders in visitors, gives people the opportunity to take the comfort of the client’s home via online In May 2020, the divestment of 20 Farringdon Street was advantage of concierge services, bike and streaming platforms. completed. The asset was sold to a Hong Kong consortium, e-scooter sharing, news, special offers and Tenacity Group, which operates in the UK and the Greater vibrant events. • This app serves as the main gateway to the China region. The 8,000 sq m building was fully leased to whole building itself, from parking, elevators a range of companies including The Berkeley Partnership, These value-added services are to be further and building access to visitor management, TMF Group, HubHub coworking and Canon UK. Divesting expanded to Agora, Varso and Nivy Tower, all providing comfortable, easy and secure the asset in the middle of the UK lockdown was a huge supported by the rollout of the Hi.Building app: solutions for our clients and their partners achievement for the business. The More by HB Reavis team to move around our premises. In addition, it worked hard to ensure all rent payments were made within • Within our standards, in addition to property minimises the use of plastic cards. With this a timely manner in order for the sale to progress. and facility management, we offer seamless expansion of our services, we offer clients and exceptional user experiences in all our hospitality combined with innovative assets through a rich set of amenities to solutions. It doesn’t matter if they are at home building occupiers that support personal or in our buildings, our home office package services, work-life integration, wellbeing and keeps our clients connected with a focus a sense of community. This year we decided on wellbeing. Our teams are also here for that all our newly opened projects will offer the most ambitious clients and are able to value-added services for all our clients. customise our portfolio to their needs.
70 71 11 Investment Management 11 Investment Management
Currently, the fund manager manages assets The CE REIF fund has, since its inception in 2011, worth almost €800 million* across three core on average delivered excellent returns of 10% Central European countries (CZ, SK, HU). p.a., of which almost half has been distributed The flagship fund, the HB Reavis CE REIF, in cash to investors. These returns are the fruit follows a core/core+ strategy, investing equity of our diligent focus on maximising returns on behalf of over 250 high-net-worth individuals and enhancing the portfolio’s value through and institutional investors into a portfolio of excellent lease management and hands-on asset prime investment properties with top-tier management. The total assets under management tenants in prime or strategic Slovak and Czech grew to €345 million with an increasing number Republic locations. of investors trusting us to manage their wealth and funds.
The active asset management is provided by an experienced team of professionals from the HB Reavis Group – a unique value proposition that sets us apart from the competition.
Twin City B, Bratislava
Aupark, Hradec Kral Investment Management
HB Reavis’ investment management arm was founded ten years ago and is a key pillar of our strategy. With a heritage in real estate, the team City Business Center II, Bratislava focuses on delivering exceptional long-term returns and superior client service for investors looking for value in European commercial real estate.
The business capitalises on its asset management capabilities and 27-year track record of leasing, asset management capabilities, property City Business Center I, Bratislava management and construction management. We believe that our active asset management, opportunistic trading approach and strategic decision making are the driving force behind the consistent returns we deliver to our investors. * A combination of the HB Reavis Real Estate Investment Fund (with two sub-funds HB Reavis CE REIF and HB Reavis Global REIF) and the
11 HB REAVIS Real Estate Development Fund Twin City C, Bratislava
72 73 12 Financial Review 12 Financial Review
This, together with the advent of another recent robust development programme and support phenomenon in how tenants use space – the our growth, both in an organic manner and coworking platform – means there’s a growing potentially through acquisitions, should the Workspace as a Service features need for more agile debt and equity funding. opportunity come our way.
and the use of analytical Through a combination of divestments and In 2020, dividends paid to our shareholders external financing operations, we accumulated reached 1.4% of NAV, reflecting the challenges workspace data are driving cash at year end 2020 amounting to of the pandemic year, in line with our financial innovations in real estate trends. €192.7 million. This will help us continue our policy guidelines. The ability to collaborate and use spaces flexibly – as well as durability and technological Target Gross Debt to Total Assets at 40% (maximum 45%) advances – are now key and Net Debt to Total Assets at 35% (maximum 40%) with 40% an appropriate mix of non-recourse project debt and requirements for tenants. Group-level debt. Financial Review Financial These changes are forcing real estate players to Initial maturity of project loan financing and issued adopt new business models, or at least new, more 5% bonds to commensurate with the length of our product complex business lines. They also present new of total development cycle. challenges for financial strategies. Our model Group debt addresses all these challenges, and we have also adjusted our financial strategy to support it – while ensuring we maintain a healthy capital structure that gives us access to both new debt and new equity when needed.
Occupancy trends are changing. Increasingly, tenants are looking for greater flexibility, driven Dividend payouts in line with historical levels, primarily by the ever-shifting dynamics of their 4% up to 4% of NAV. of NAV actual business models and new economy sectors. In competitive labour markets, tenants need attractive recruitment and retention packages beyond remuneration and monetary benefits. The actual working environment now plays an increasingly strong role in recruiting top talent. interest-rate Careful risk management aimed primarily at mitigating foreign Given this new reality, the notion of a tenant risk coverimg exchange fluctuations for all known and estimated non-Euro committing to a long-term and inflexible lease exposure 12-months forward, and interest-rate risks covering contract (the most attractive to traditional finance 50–100% 50 – 100% of the total medium to long-term debt exposure, providers and investors) is being challenged. both associated with macroeconomic and property cycles. As a major player in leasing markets, we’re seeing a clear trend towards more occupational flexibility.
Note: Data in the Financial Review section are based on audited consolidated financial statements, external valuations and internal management reports. All valuations in the Business Review are based on external valuations and internal management reports before IFRS adjustments and excluded non- core properties. For segment information related to non-core segment, see Note 6 in the Consolidated Financial Statements. For balances presented in the Segmental Analysis in the Consolidated Financial
12 Statements, see Note 6 of the Consolidated Financial Statements.
74 75 12 Financial Review 12 Financial Review
How we performed €m 2016 2017 2018 2019 2020 Assets 2,112.3 2,294.8 2,349.9 3,040.3 3,097.1 In terms of overall performance, the financial In terms of the operating profit, the Group Cash 316.4 279.1 173.8 122.6 192.7 results of 2020 were strongly driven by a frozen recorded a loss €8.4 million. The Group balance leasing market and more conservative leasing sheet increased to almost €3.1 billion. The Borrowings 683.0 893.0 891.5 1,106.8 1,376.8 assumptions, which were reflected in fair market adjusted net asset value reached €1.514 billion. Net Debt Leverage Ratio 17.4% 26.8% 30.5% 32.4% 38.2% values in general having an impact on future cash Our net debt leverage ratio remained within the flows through longer void and rent-free periods, targeted range of 35-40%, reaching 38.2% (32.4% higher discount rates and so on. in 2019). Group profit decomposition (€m) Obviously, the main driver was a revaluation loss The disposal of subsidiaries impacted our down from €541.5m in 2019 to €41.2m over financials negatively by €16.3m (2019: €3 million). the year (including the translation of foreign Bottom line: we achieved a total comprehensive 100 operations to the presentation currency of €-70m). income of €-183.8 million (2019: €388.6 million). 50 At €27.8m, net operating income from investment 0 property, in line with our expectations, was down -50 slightly (2019: €34.2m). -100 -150 -200
m Taxes €-183.8 Net profit
Other income
Operating costs Operating profit Profit before tax m TOTAL COMPREHENSIVE INCOME Revaluation gain €-113.9 Net rental income Gross oper. income Financial operations NET PROFIT
Total comprehensive income Other comprehensive income Depreciation and amortisation €27.8m Revaluation Gain (€m) €-71.8m NET RENTAL INCOME (Net of yield shift) EBIT 2019 404.1 bn €1.514 2020 26.7 NET ASSET VALUE (incl. the translation of foreign operations to the presentation currency) €-41.2m NET REVALUATION LOSS* Investment Portfolio Yield (%) % €38.2 2019 5.19 % NET DEBT LEVERAGE RATIO €-11.6 2020 5.08 SHAREHOLDERS’ RETURN
Note: Data based on internal management reports. *Note: Including impacts of translation reserve
76 77 12 Financial Review 12 Financial Review
How we divest Revaluation gain* The net revaluation gain on investment During 2020, despite the steep slowdown on the property, including the impact captured by investment markets caused by the pandemic, we the translation of foreign operations to the managed to finalise transactions in the UK, Poland presentation currency), resulted in €-41.2m and Slovakia – successfully completing almost (2019: €541.5m). This represents a significant €325 million of divestments. year-on-year drop driven by the pandemic Income producing assets, primarily driven by emergency and related market lockdowns, higher yielding Slovak assets, were valued at Important transactions include the divestment of leading to leasing activity fallouts and a 5.55% yield at the end of 2020. The average 20 Farringdon Street in London, Postepu 14 in a development progress slowdown. valuation yield of our development properties, Warsaw and Twin City B in Bratislava. These sales now more heavily weighted to UK, Polish and underline the quality of assets we develop as well When adjusted for yield shift, the Group German assets, was also down by 2 basis points as our strong divesting capabilities, even during achieved a €26.7m (2019: €404.1m) net to 4.74%. difficult times. revaluation gain while the yield shift contributed to an overall loss of €67.9m As our strategy in the mid-term is to keep and The real estate industry has long been slow to (2019: €137.4 million). manage our assets longer after they become adopt new trends and technologies. But, similarly mature, the growth potential for our net operating to almost all other industries, COVID-19 has The average investment property portfolio income could be higher in the coming years. accelerated its interest and implementation of yield decreased by 11 basis points to 5.08% new innovations. Over recent years, we have significantly invested as we continued investments in lower-yield How business lines contributed money and time into our Workplace as a Service projects in the UK while divesting CEE assets. In terms of contributions made by our business (WaaS) solutions that are focused on occupier lines to the overall return on shareholders’ equity, flexibility and user wellbeing and productivity. leasing and revaluation drivers impacted both And with our business model transformed and a the development portfolio with a ROE of -12.3% commitment to fusing progressive solutions into (2019: 48.8%) and income producing property our buildings, they are proving to be an attractive with a ROE of 5.9% (2019: 16%). The ROE of our proposition to prospective tenants and investors. non-core portfolio lagged behind with -4% as did the cash at -3.4% at the end of 2020. It’s an approach that’s helping us build long- term relationships with the tenants where we can provide valuable insights and wellbeing solutions focused not only on a safe and healthy workspace environment, but also on effective utilisation and better productivity. The result is higher tenant retention and therefore also increased valuations of our properties.
We maintain close relationships with our investors, a number of which have repeatedly invested their faith and money into our real estate products. Nonetheless, our divestment preferences are also evolving to maximise shareholders’ value and reflect the Group’s strategy.
Now, apart from standard sales, we are also focusing on (i) creating long-term partnerships and joint ventures with the investors who buy our projects and (ii) prolonging the holding period of our assets to drive value creation.
This move will prove to be critical to the realisation of our divestment strategy and to increase the shareholders’ value.
*Note: Data based on external expert valuations and internal management reports *Note: Including impacts of translation reserve
78 79 Consolidated Financial Statements Consolidated Financial Statements
Auditor’s Report
Consolidated financial statements as at and for the year ended 31 december 2020 Consolidated Financial Statements Financial Consolidated 13
80 81
Contents
Consolidated Statement of Financial Position––––––––––––––––––––––––––––––––––––3 16. Cash and Cash Equivalents–––––––––––––––––––––––––––––––––––––––––––––––––56 Consolidated Statement of Profit or Loss and Other Comprehensive Income–––––––––7 17. Other current assets–––––––––––––––––––––––––––––––––––––––––––––––––––––––56 Consolidated Statement of Changes in Equity––––––––––––––––––––––––––––––––––––8 18. Financial investments––––––––––––––––––––––––––––––––––––––––––––––––––––––57 Consolidated Statement of Cash Flows––––––––––––––––––––––––––––––––––––––––––9 19. Share Capital and Share Premium–––––––––––––––––––––––––––––––––––––––––––57 20. Borrowings –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––58 Notes to the Consolidated Financial Statements 21. Deferred income, Trade and Other Payables––––––––––––––––––––––––––––––––––60 22. Rental and Similar Income from Investment Property–––––––––––––––––––––––––––61 1. The HB REAVIS Group and its Operations–––––––––––––––––––––––––––––––––––––10 23. Direct Operating Expenses arising from Investment Property––––––––––––––––––––61 2. Significant Accounting Policies– –––––––––––––––––––––––––––––––––––––––––––––12 24. Analysis of Revenue by Category––––––––––––––––––––––––––––––––––––––––––––62 3. Critical Accounting Estimates and Judgements in Applying Accounting Policies––––31 25. Employee Benefits––––––––––––––––––––––––––––––––––––––––––––––––––––––––62 4. Adoption of New or Revised Standards and Interpretations––––––––––––––––––––––33 26. Other Operating Income and Expenses––––––––––––––––––––––––––––––––––––––62 5. New Accounting Pronouncements––––––––––––––––––––––––––––––––––––––––––––34 27. Disposals of Subsidiaries–––––––––––––––––––––––––––––––––––––––––––––––––––63 6. Segment Analysis–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––34 28. Income Taxes–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––64 7. Balances and Transactions with Related Parties ––––––––––––––––––––––––––––––––45 29. Foreign exchange gains/(losses)–––––––––––––––––––––––––––––––––––––––––––––65 8. Property, Plant and Equipment–––––––––––––––––––––––––––––––––––––––––––––––47 30. Contingencies, Commitments and Operating Risks––––––––––––––––––––––––––––65 9. Right-of use assets and lease liabilities––––––––––––––––––––––––––––––––––––––––48 31. Financial Risk Management–––––––––––––––––––––––––––––––––––––––––––––––––65 10. Investment Property–––––––––––––––––––––––––––––––––––––––––––––––––––––––50 32. Management of Capital––––––––––––––––––––––––––––––––––––––––––––––––––––72 11. Investments in Joint Ventures–––––––––––––––––––––––––––––––––––––––––––––––51 33. Fair Value Estimation–––––––––––––––––––––––––––––––––––––––––––––––––––––––73 12. Receivables and Loans–––––––––––––––––––––––––––––––––––––––––––––––––––––52 34. Reconciliation of Classes of Financial Instruments with Measurement Categories––78 13. Other Non-Current Assets––––––––––––––––––––––––––––––––––––––––––––––––––52 35. Consolidated Structured Entities––––––––––––––––––––––––––––––––––––––––––––79 14. Trade and Other Receivables–––––––––––––––––––––––––––––––––––––––––––––––53 36. Events after the End of the Reporting Period –––––––––––––––––––––––––––––––––79 15. Non-current Assets Held for Sale––––––––––––––––––––––––––––––––––––––––––––55
1 2 Audit Report Consolidated Statement of Financial Position
3 4 HB Reavis Holding S.A. Audit Report Consolidated Statement of Financial Position at 31 December 2020 Prepared in accordance with International Financial Reporting Standards as adopted by the EU
The accompanying notes on pages 6 to 79 are an integral part of these consolidated financial statements
5 6 HB Reavis Holding S.A. HB Reavis Holding S.A. Audit Report Consolidated Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2020 Consolidated Statement of Changes in Equity for the year ended 31 December 2020 Prepared in accordance with International Financial Reporting Standards as adopted by the EU Consolidated Statement ConsolidatedPrepared Statement in accordance withof ChangesInternational Financialin Equity Reporting Standards as adopted by the EU HB Reavis Holding S.A. of Profit or Loss and Other HB Reavis Holding S.A. Consolidated Statement of Profit or Loss and Other Comprehensive Income for the year Comprehensiveended Income Consolidated Statement of Changes in Equity for the year ended 31 December 2020 31 December 2020 Prepared in accordance with International Financial Reporting Standards as adopted by the EU 3 Prepared in accordance with International Financial Reporting Standards as adopted by the EU 2
In millions of EUR Note 2020 2019 Attributable to owners of the Company Share Share Non- Rental and similar income from investment property 22 50.6 60.6 capital premium Retained Translation Revaluation controlling Total Direct operating expenses arising from investment property 23 (22.8) (26.4) In millions of EUR Note (Note 19) (Note 19) earnings reserve reserve Total Interest equity
Net operating income from investment property 27.8 34.2 Balance at 1 January 2019 - 455.9 831.8 (33.4) 3.8 1,258.1 - 1,258.1
Net revaluation gain on investment property 10 28.7 519.4 Share of profit or (loss) of joint ventures 11 (0.1) (7.7) (Loss)/gain on disposal of investment in associate 18 (7.7) - Profit for the year - - 366.5 - - 366.5 - 366.5 Other comprehensive (Loss)/gain on disposal of subsidiaries 27 (8.6) 3.0 - - - 22.1 - 22.1 - 22.1 Gain on disposal of joint venture 11 - 23.7 income Other operating income 7, 26 8.9 8.7 Revenue from construction contracts 24 25.5 22.8 Total comprehensive income for Construction services (21.9) (19.6) - - 366.5 22.1 - 388.6 - 388.6 Employee benefits 7, 25 (22.8) (25.1) 2019 Depreciation and amortisation (5.7) (5.3) Revaluation of investment in associate 18 - (27.1) Other operating expenses 26 (32.5) (40.2) Distribution to owners 19 - (53.4) - - - (53.4) - (53.4) Other ------0.1 0.1
Operating (loss)/profit (8.4) 486.8
Interest income calculated using the effective interest method 0.5 1.9 Balance at 31 December 2019 - 402.5 1,198.3 (11.3) 3.8 1,593.3 0.1 1,593.4 Interest expense (40.6) (33.3) Foreign exchange (losses)/gains, net 29 (40.3) 0.6 Net gains/(losses) on financial derivatives (14.2) 6.8 Loss for the year - - (113.9) - - (113.9) - (113.9) Other finance income - 0.4 Other comprehensive loss - - - (69.9) - (69.9) - (69.9) Other finance costs (8.9) (6.5)
Total comprehensive loss for Finance costs, net (103.5) (30.1) - - (113.9) (69.9) - (183.8) - (183.8) 2020
(Loss)/Profit before income tax (111.9) 456.7
Distribution to owners 19 - (23.5) - - - (23.5) - (23.5) Current income tax expense 28 (2.1) (7.6) Retained earnings - 441.5 (441.5) - - - - - Deferred income tax benefit/(expense) 28 0.1 (82.6) capitalisation 19
Income tax expense (2.0) (90.2) Balance at 31 December 2020 - 820.5 642.9 (81.2) 3.8 1,386.0 0.1 1,386.1
Net (loss)/profit for the year (113.9) 366.5
Other comprehensive (loss)/income Items that may be reclassified subsequently to profit or loss: Translation of foreign operations to the presentation currency for the year (78.2) 28.8 Translation of foreign operations reclassified to profit or loss upon loss of control of subsidiary or 27 8.3 4.6 repayment of subsidiaries’ capital Translation of foreign operations reclassified to profit or loss upon disposal of joint venture - (11.3)
Total other comprehensive income/(loss) (69.9) 22.1
Total comprehensive (loss)/income for the year (183.8) 388.6
Net (loss)/profit is attributable to: - Owners of the Company (113.9) 366.5 - Non-controlling interest - -
(Loss)/Profit for the year (113.9) 366.5
Total comprehensive (loss)/income is attributable to: - Owners of the Company (183.8) 388.6 - Non-controlling interest - -
Total comprehensive(loss)/ income for the year (183.8) 388.6
The accompanying notes on pages 5 to 65 are an integral part of these consolidated financial statements. The accompanying notes on pages 5 to 65 are an integral part of these consolidated financial statements. The accompanying notes on pages 6 to 79 are an integral part of these consolidated financial statements The accompanying notes on pages 6 to 79 are an integral part of these consolidated financial statements
7 8 HB Reavis Holding S.A. HB Reavis Holding S.A. Audit Report Consolidated Statement of Cash Flows for the year ended 31 December 2020 Notes to Consolidated Financial Statements for the year ended 31 December 2020 Prepared in accordance with International Financial Reporting Standards as adopted by the EU NotesPrepared into accordance the Consolidated with International Financial Financial Reporting Standards as adopted by the EU HB Reavis Holding S.A. Consolidated Statement of Statements Consolidated Statement of Cash Flows for the year ended 31 December 2020 Cash Flows Prepared in accordance with International Financial Reporting Standards as adopted by the EU 4
In millions of EUR Note 2020 2019 1. The HB REAVIS Group in London, UK, aiming to develop a project Cash flows from operating activities and its Operations called Bloom over the course of 2019-2021 with (Loss)/Profit before income tax (111.9) 456.7 expected Gross Development Value of EUR 260
Adjustments for: These consolidated financial statements have million. In February 2020 the Group had secured Depreciation and amortisation 8, 9 5.7 5.3 Revaluation gains on investment property 10 (28.7) (519.4) been prepared in accordance with International another project for the pipeline in London, called Gains less losses on disposals of subsidiaries 27 8.6 (3.0) Financial Reporting Standards as adopted by the Worship square, with planned completion in 2023 Share of loss of joint ventures 11 0.1 7.7 Result on disposal of joint ventures 11 - (23.7) European Union (the “EU”) for the year ended and projected Gross Development Value of EUR Interest income calculated using the effective interest method (0.5) (1.9) 31 December 2020 for HB Reavis Holding S.A. 242 million. Interest expense 40.6 33.3 Revaluation of investment in associate 18 - 27.1 (the “Company”) and its subsidiaries (together Unrealised foreign exchange (gains)/losses 29 39.6 (10.6) referred to as the “Group” or “HB REAVIS With respect to Group’s expansion to Germany, Unrealised (gains)/losses from financial derivatives 18.1 (4.9) Loss on disposal of investment in associate 18 7.7 - Group”). two acquisition opportunities have been secured
in 2018. In Berlin, District project is under Operating cash flows before working capital changes (20.7) (33.4) The Company was incorporated and is domiciled construction since 12/2018, with expected Working capital changes: in Luxembourg. The Company is a public limited delivery by end of 2021; Gross Development Decrease/(increase) in trade and other receivables 54.3 (34.3) Increase/(decrease) in trade and other payables (1.8) 31.3 liability company (société anonyme) and was Value shall reach about EUR 378 million. A land
set up in accordance with the Luxembourg plot in Dresden, Germany, has been added into Cash generated from/(used in) operations 31.8 (36.4) regulations on 20 October 2010. The Company the portfolio in 07/2019, the scheme design is Interest paid (31.8) (28.1) is registered at the Luxembourg Commercial under preparation. Income taxes paid (5.8) (4.4) Register under file R.C.S. Luxembourg no. B
Net cash used in operating activities (5.8) (68.9) 156.287. One project has been delivered in Bratislava, Slovakia, in 2019: Nivy Tower was completed
Cash flows from investing activities HB Reavis Holding S.A. is ultimately controlled by in 12/2019. Agora Tower and Hub projects in
Purchases of property, plant and equipment 8 (2.1) (4.1) Mr. Ivan Chrenko. The Group’s immediate parent Budapest, Hungary, have been completed over Purchases of investment properties including advance payments made 10 (78.3) - Proceeds from sale of joint venture - 56.3 as of the date of issuance of these consolidated the summer 2020 and were handed over to Loans repaid by related parties 7 1.4 - financial statements is Kennesville Holdings Ltd tenants. Construction costs related to investment properties 10 (391.7) (420.9) Contribution to investment in joint venture (0.2) - based in Cyprus. Proceeds from sales of subsidiaries, net of cash disposed of 27 131.5 52.5 Varso I and Varso II buildings in Warsaw, Poland Proceeds from disposal of own use premises and equipment 8 0.3 1.0 Proceeds from sale of financial investments 18 17.5 - Principal activity have been handed over to tenants during the Acquisition of financial investments 18 - (1.7) The HB REAVIS Group is a real estate group first half of 2020. As of the date of preparation Acquisition of intangible assets (1.4) (0.7) Restricted cash 16 (21.9) (1.3) with major portfolio of investment properties of these consolidated financial statements,
in Slovakia, Poland, Hungary, Germany, United construction of Bloom, London, UK, Forest Net cash used in investing activities (344.9) (318.9) Kingdom and the Czech Republic. It is principally Tower and Varso Tower projects, both in Warsaw,
involved in the development of properties for Poland, District, Berlin, Germany, Stanica Nivy in Cash flows from financing activities its own portfolio, in leasing out investment Bratislava, Slovakia are in progress. Proceeds from borrowings 20 539.9 493.2 properties under operating leases, as well Repayment of borrowings 20 (109.1) (98.9) Repayment of lease liabilities 9, 20 (8.4) (5.6) as in asset management and is also active in The Group divested 3 completed schemes Distributions paid to owners 19 (23.5) (53.4) investment management. The Group develops over the course of 2020; Twin City B, Bratislava, and manages investment properties to earn rental Slovakia, 20 Farringdon, in London, UK and Net cash from financing activities 398.9 335.3 income or for capital appreciation. Postepu14, Warsaw, Poland.
Net (decrease) / increase in cash and cash equivalents 48.2 (52.5) Cash and cash equivalents at the beginning of the year 118.5 171.0 In 2017 the Group made its largest acquisition HB Reavis Real Estate Fund structure
in HB Reavis history with acquisition of One HB Reavis Real Estate Investment Fund (the Cash and cash equivalents at the end of the year 166.7 118.5 Waterloo in London, in a prominent South Bank “Fund”) is an umbrella fund incorporated as a
location next to the Waterloo station. In 2019, corporate partnership limited by shares (société Reconciliation of cash and cash equivalents: - Restricted cash 16 26.0 4.1 the project had received a permit enabling en commandite par actions or S.C.A.) under - Cash within non-current assets classified as held for sale 15 - (7.5) development of over 120,000 sqm of office the laws of Luxembourg, which is registered
scheme for the projected Gross Development as an investment company with fixed capital Cash and cash equivalents at the end of the year presented in the statement of financial 16 192.7 115.1 Value of EUR 2.4 billion. Our aim is to commence (société d’investissement à capital fixe) within the position construction of the new scheme in 2022 and meaning of article 461-4 of the law on commercial delivery in 2026-2027, subject to Covid-19 companies of 10 August 1915, as amended (the emergency situation development. The Group 1915 Law) and registered as an undertaking for has also an acquired additional land plot in 2018, collective investment governed by Part II (UCI The accompanying notes on pages 5 to 65 are an integral part of these consolidated financial statements. The accompanying notes on pages 6 to 79 are an integral part of these consolidated financial statements
9 10 HB Reavis Holding S.A. Audit Report Notes to Consolidated Financial Statements for the year ended 31 December 2020 Prepared in accordance with International Financial Reporting Standards as adopted by the EU
Part II) of the 2010 UCI Law, governed by the tier tenants portfolio being located in prime or 31. Valuation of properties of the Group in the Preparation of the consolidated present articles of association and by current strategic locations and soundly built from both less liquid markets necessarily involves an element financial statements Luxembourg laws. The Fund was initially set technical and architectonic point of view. CE REIF of judgement. The critical accounting judgments These consolidated financial statements are up on 25 May 2011 and was registered as an Sub-Fund seeks to enhance value of properties used in valuation of the Group’s investment presented in millions of Euro (“EUR”) rounded to investment company with variable capital until by contracting an excellent lease management properties are described in Note 3. one decimal place, unless otherwise stated. 27 April 2017. The Fund is registered at the in order to maximize property income. The Luxembourg Commercial Register under file Group lost control of the Sub-Fund A in 2017 Registered address and place of business The consolidated financial statements have been R.C.S. Luxembourg B 161.180. Furthermore, the and remaining interest as at 31 December 2020 The Company’s registered address and principal prepared on a going concern basis, applying Fund is in the scope of the Alternative Investment is immaterial to the Group. From 1st Janaury place of business is: the historical cost convention, except for the Fund Management Law of 12 July 2013 (“AIFM 2020 CE REIF Sub-fund Investor shares are listed measurement of investment properties (including Law”) and qualifies as an Alternative Investment on the regulated market of the Luxembourg 21 Rue Glesener those held for sale), financial investment and Fund (“AIF”). Stock Exchange. L-1631 Luxembourg derivatives at fair value. Grand-Duchy of Luxembourg The Fund launched its first Sub-Fund named HB Global REIF Sub-Fund Towards the end of 2019, a new virus causing a Reavis CE REIF (hereafter “Sub-Fund A” or “CE While there are no specific country or real estate As at 31 December 2020 the Group had offices severe acute respiratory syndrome (“COVID-19”) REIF”) in 2011. A second Sub-Fund named HB segment restrictions posed, Global REIF Sub- in Luxembourg, Amsterdam, Bratislava, Warsaw, emerged and infections started to occur around Reavis Global REIF (hereafter “Sub-Fund B” or Fund aims to mainly invest in commercial real Prague, Budapest, London, and Berlin. the globe. Subsequently, on 11 March, 2020, the “Global REIF”) was launched on 15 September estate assets located in the EU countries. The World Health Organisation (“WHO”) declared 2015. The Fund is managed for the account of initial Global REIF Sub-Fund’s portfolio included it a pandemic and national governments have and in the exclusive interest of its shareholders investment properties in prime properties 2. Significant Accounting Policies implemented a range of policies and actions by its general partner HB Reavis Investment only located in Slovakia. The office segment to combat it. As a result, the normal economic Management S.à r.l. (the “Management investments are focused mainly on properties The principal accounting policies applied in activity has almost come to a halt with severe Company”), a limited liability company organised located in business districts of capital and the preparation of these consolidated financial restrictive consequences for the conduct of under the laws of Luxembourg (registration regional cities in the EU countries, but without any statements are described below. The accounting business. number B 161.176) having its registered office specific location restriction. The retail segment policies have been consistently applied to all the at at 1b, rue Jean Piret, L-2350 Luxembourg and investments are aimed to be made in both capital periods presented. Albeit the exact long-term impact of COVID-19 by its AIFM Crestbridge Management Company and regional cities of EU countries. on world economies, different industries and S.A., a licensed with the Luxembourg financial the Group in particular, are not known, the regulator the CSSF. Investments in logistic properties are restricted 2.1 Basis of Preparation management has focused on the following key to attractive and strategic locations in EU areas and stress-tested several scenarios to see CE REIF Sub-Fund countries. In case of “core” investments, Global Statement of compliance how the Group is resilient to negative impact of While there is no specific country or real estate REIF Sub-Fund seeks to maximize the value via These consolidated financial statements have COVID-19: segment restrictions posed, the CE REIF Sub- investing in properties, which in the past proved been prepared in accordance with International Fund aims to mainly invest in the Central to bear characteristics of a prime-commercial Financial Reporting Standards as adopted by • Overall liquidity position and access to European region as Slovakia, the Czech Republic, real estate property which as such implies to the European Union (“IFRS as adopted by the existing and new credit facilities, Poland and Hungary in commercial real estate have a top-tier tenants portfolio being located EU”). The Group applies all IFRS standards and assets. The initial CE REIF Sub-Fund’s portfolio in prime or strategic locations and soundly built interpretations issued by International Accounting • Ability to meet the covenants of the Group’s included investments in prime properties from both technical and architectonic point of Standards Board (hereinafter “IASB”) as adopted debt arrangements, only located in Slovakia. The office segment view. Global REIF Sub-Fund seeks to enhance by the European Union, which were in force as of investments are restricted to A-class properties value of properties by contracting an excellent 31 December 2020. • Declining demand, falling sales and margin located in central business districts of capital cities lease management in order to maximize pressures experienced by Group’s current and in Slovakia, the Czech Republic and Hungary. In property income. Income and cash flow statements future tenants in office segment, retail, co- Poland however, both, capital and regional cities The Group has elected to present a single working and hospitality industry, are eligible for investments in the office segment. The Group is also involved in construction of real ‘statement of profit or loss and other The retail segment investments are aimed to be estate for third parties, including related parties. comprehensive income’ and presents its expenses • Disruptions in domestic and international made in both capital and regional cities in the by nature. The Group reports cash flows from supply chains, logistics and shortage of entire Central European region. Investments in The Group’s strategy is reflected in its cash operating activities using the indirect method. construction workers due to restrictive logistic properties are restricted to attractive flow forecast that is regularly monitored by the Interest received and interest paid are presented measures protecting health, adversely and strategic locations only. CE REIF Sub-Fund Board of Directors, including their assessment of within operating cash flows. The acquisitions impacting construction budgets and progress seeks to maximize the value via investing in appropriateness of preparation of the financial of investment properties are disclosed as cash in construction works. properties, which in the past proved to bear statements on a going concern basis. The cash flows from investing activities because this most characteristics of a prime-commercial real estate flow outlook is further described under the appropriately reflects the Group’s business The Management has performed stress-testing property, which as such implies to have a top- description of management of liquidity in Note activities. based on the business plan covering 18 months
11 12 HB Reavis Holding S.A. Notes to Consolidated Financial Statements for the year ended 31 December 2020 Prepared in accordance with International Financial Reporting Standards as adopted by the EU 8
2 Significant Accounting Policies (Continued)
2.2 Consolidated Financial Statements
Consolidated financial statements. In preparing the consolidated financial statements, the individual financial statements of the consolidated entities are aggregated on a line-by-line basis by adding together the like items of assets, liabilities, equity, income and expenses. Transactions, balances, income and expenses between the consolidated entities are eliminated.
Subsidiaries. Subsidiaries are those investees, including structured entities, that the Group controls because the Group (i) has power to direct relevant activities of the investees that significantly affect their returns, (ii) has exposure, or rights, HB Reavis Holding S.A. to variable returns from its involvement with the investees, and (iii) has the ability to use its power over the investeesAudit to Report Notes to Consolidated Financial Statements for the year ended 31 December 2020 affect the amount of investor’s returns. The existence and effect of substantive rights, including substantive potential voting Prepared in accordance with International Financial Reporting Standards as adopted by the EU rights, are considered when assessing whether the Group has power over another entity. For a right to be substantive, the holder must have practical ability to exercise that right when decisions about the direction of the relevant activities of the investee need to be made. The Group may have power over an investee even when it holds less than majority of voting power in an investee. In such a case, the Group assesses the size of its voting rights relative to the size and dispersion of holdings of the other vote holders to determine if it has de-facto power over the investee. Protective rights of other investors, from the 31 December 2020 to evaluate the for which external market pricing information is such as those that relate to fundamental changes of investee’s activities or apply only in exceptional circumstances, do Thenot prevent entities the included Group from within controlling these an consolidatedinvestee. Subsidiaries financial are consolidated statements from are the as date follows: on which control is Group’s cash-flow and financial position. The not available. Valuation techniques may require transferred to the Group, and are deconsolidated from the date on which control ceases. stress test assumed unavailability of liquid markets assumptions not supported by observable market The entities included within these consolidated financial statements are as follows: with acceptable yields for the Group to sell its data. Refer to Note 33. Percentage ownership investment properties until the end of June interest and voting rights held 2022. Using the same timeframe, the Group 31 31 Number Subsidiaries Functional Country of December December assumed ability to raise additional financing using 2.2. Consolidated Financial Statements currency incorporation 2020 2019 a high value asset with no current leverage and 1 HB Reavis Holding S.A. (Parent Company) EUR Luxembourg N/A N/A ability to continue raising finance under existing Consolidated financial statements 2 HB Reavis DE1 S.à r.l. EUR Luxembourg 100 100 commitments for large projects that are currently In preparing the consolidated financial 3 HB Reavis DE3 S.à r..l EUR Luxembourg 100 100 4 HB Reavis Investment Management S.à r.l. EUR Luxembourg 100 100 fairly late in the development cycle – DSTRCT in statements, the individual financial statements Symbiosy Luxembourg S.a.r.l. (former: HB Reavis Qubes 5 EUR Luxembourg 100 100 Berlin, Bloom in London, Varso Tower and Forrest of the consolidated entities are aggregated on Luxembourg Sarl; former: Evolution Building Technologies S.à r.l.) HB REAVIS REAL ESTATE INVESTMENT FUND (until 27.4.2017 as 6 EUR Luxembourg 100 100 Tower in Warsaw and Stanica Nivy in Bratislava. As a line-by-line basis by adding together the like HB Reavis Real Estate SICAV-SIF) 5 HB Reavis Strategic Innovations Investments S.à r.l. (former THREE of the date of preparation of these consolidated items of assets, liabilities, equity, income and 7 EUR Luxembourg 100 100 House S.à r.l.) financial statements all loan utilisation requests expenses. Transactions, balances, income and 8 HBR CE REIF LUX 3 S.à r.l. EUR Luxembourg 100 100 related to these projects were fully funded by expenses between the consolidated entities are 9 HBR CE REIF LUX 4 S.à r.l. EUR Luxembourg 100 100 10 HubHub Luxembourg S.à r.l. (former Tribazu S.à r.l.) EUR Luxembourg 100 100 the financing banks. In addition to the above, eliminated. 11 ONE House S.à r.l. GBP Luxembourg 100 100 the Group has EUR 438.2 million of undrawn 12 SIXTYFIVE House S.à r.l. GBP Luxembourg 100 100 13 THIRTYFIVE House S.à r.l. GBP Luxembourg 100 100 borrowing facilities as at 31 December 2020 Subsidiaries 14 TWENTY House S.à r.l. 2 GBP Luxembourg - 100 (Note 20). Subsidiaries are those investees, including 15 UBX 2 Objekt Berlin S.à r.l. (former HB Reavis DE2 S.à r.l.) EUR Luxembourg 100 100 FORTYTWO House S.à r. l. 3 (former HB Reavis Finance LUX, S.à 16 GBP Luxembourg 100 100 structured entities, that the Group controls r.l) The stress test for balance sheet position because the Group (i) has power to direct relevant 17 PropCo DE4 S.à r.l. 1 EUR Luxembourg 100 - 18 More Luxembourg S.a.r. l.1 EUR Luxembourg 100 - assumed a significant reduction in valuation of activities of the investees that significantly 19 Qubes Luxembourg S.à r.l.1 EUR Luxembourg 100 - investment properties in both Western and CEE affect their returns, (ii) has exposure, or rights, 20 HBR KI GP S.a r.l. 1 EUR Luxembourg 100 - 21 HB REAVIS GROUP B.V. EUR Netherlands 100 100 markets. The assumed declines in fair market to variable returns from its involvement with 22 Twin City Holding N.V. EUR Netherlands 100 100 values of investment properties would still keep the investees, and (iii) has the ability to use its 23 WATERFIELD Management B.V. EUR Netherlands 100 100 24 HB Reavis RE B.V.1 EUR Netherlands 100 - the LTV covenant at the Group level below the power over the investees to affect the amount 25 FILWOOD HOLDINGS LIMITED 4 EUR Cyprus - 100 threshold triggering default as defined by the of investor’s returns. The existence and effect of 26 HBR FINANCING LIMITED EUR Cyprus 100 100 27 HBR HOLDING LIMITED4 EUR Cyprus - 100 bond prospectuses, which is the strictest of all LTV substantive rights, including substantive potential 28 HBR IM HOLDING LTD EUR Cyprus 100 100 covenants in place. voting rights, are considered when assessing 29 HBR INVESTORS LTD EUR Cyprus 100 100 30 10 Leake Street Ltd 6 GBP UK 100 100 whether the Group has power over another entity. 31 33 CENTRAL LIMITED GBP UK 100 100 The preparation of these consolidated For a right to be substantive, the holder must 32 4th Floor Elizabeth House Limited 6 GBP UK 100 100 33 Elizabeth Property Holdings Ltd 6 GBP UK 100 100 financial statements in conformity with IFRS as have practical ability to exercise that right when 34 Elizabeth Property Nominee (No 1) Ltd 6 GBP UK 100 100 adopted by the EU requires the use of certain decisions about the direction of the relevant 35 Elizabeth Property Nominee (No 2) Ltd 6 GBP UK 100 100 36 Elizabeth Property Nominee (No 3) Ltd 6 GBP UK 100 100 critical accounting estimates. It also requires activities of the investee need to be made. The 37 Elizabeth Property Nominee (No 4) Ltd 6 GBP UK 100 100 management to exercise its judgement in the Group may have power over an investee even 38 HB Reavis Construction UK Ltd. GBP UK 100 100 39 HB Reavis UK Ltd. GBP UK 100 100 process of applying the Group’s accounting when it holds less than majority of voting power 40 HBR Capital Investment LP 6 GBP UK 100 100 policies. Changes in assumptions may have a in an investee. In such a case, the Group assesses 41 HBR FM LTD 6 GBP UK 100 100 42 HubHub UK Ltd 6 GBP UK 100 100 significant impact on the consolidated financial the size of its voting rights relative to the size statements in the period the assumptions and dispersion of holdings of the other vote changed. Management believes that the holders to determine if it has de-facto power underlying assumptions are appropriate. The over the investee. Protective rights of other areas involving higher degree of judgement investors, such as those that relate to fundamental or complexity, or areas where assumptions changes of investee’s activities or apply only in and estimates are significant to the financial exceptional circumstances, do not prevent the statements are disclosed in Note 3. Valuation Group from controlling an investee. Subsidiaries techniques such as discounted cash flows are consolidated from the date on which control is models or models based on recent arm’s length transferred to the Group, and are deconsolidated transactions or consideration of financial data of from the date on which control ceases. the counterparties are used to fair value certain financial instruments or investment properties
13 14 HB Reavis Holding S.A. Audit Report NotesHB Reavis to Consolidated Holding S.A. Financial Statements for the year ended 31 December 2020 HB Reavis Holding S.A. PreparedNotes to in Consolidated accordance with Financial International Statements Financial for Reporting the year Standards ended 31 as Decemberadopted by 2020the EU Notes to Consolidated Financial Statements for the year ended 31 December 2020 Prepared in accordance with International Financial Reporting Standards as adopted by the EU 9 Prepared in accordance with International Financial Reporting Standards as adopted by the EU 10
2 Significant Accounting Policies (Continued) 2 Significant Accounting Policies (Continued)
2.2. Consolidated Financial Statements (Continued) 2.2. Consolidated Financial Statements (Continued) Percentage ownership Percentage ownership
interest and voting rights interest and voting rights held held 31 31 31 31 Number Subsidiaries Functional Country of December December Number Subsidiaries Functional Country of December December currency incorporation 2020 2019 currency incorporation 2020 2019
43 HB REAVIS IM ADVISOR LIMITED EUR Jersey 100 100 Smart City Services s.r.o. (until 4.5.2017 as AUPARK Property 109 EUR Slovakia 100 100 44 AGORA Budapest Kft. (former HB Reavis Project 2 Kft.) HUF Hungary 100 100 Management, s. r. o.) 45 Symbiosy Hungary Kft. HUF Hungary 100 100 110 SPC Property Finance II, s. r. o. 4 EUR Slovakia - 100 46 HB Reavis Construction Hungary Kft. HUF Hungary 100 100 111 SPC Property Finance III, s.r.o. 4 EUR Slovakia - 100 47 HB Reavis Hungary Szolgáltató Kft. HUF Hungary 100 100 112 SPC Property Finance IV, s. r. o. 4 EUR Slovakia - 100 48 HB REAVIS Ingatlanfejlesztési Alap HUF Hungary 100 100 113 SPC Property I, spol. s r.o. EUR Slovakia 100 100 49 HB Reavis Qubes Hungary Kft HUF Hungary 100 100 114 SPC Property III, s. r. o. EUR Slovakia 100 100 50 HubHub Hungary Kft. HUF Hungary 100 100 115 SPV Vištuk s. r. o. 2 EUR Slovakia - 100 51 KM Ingatlanbérbeadási Kft HUF Hungary 100 100 116 Stanica Nivy s.r.o. EUR Slovakia 100 100 52 ALISTON Finance I s. r. o. EUR Slovakia 100 100 117 TC Nivy a. s. EUR Slovakia 100 100 53 ALISTON Finance II s.r.o. EUR Slovakia 100 100 118 HB Reavis Divitiae I s.r.o. (former Tower Nivy a. s.) EUR Slovakia 100 100 54 ALISTON Finance III s. r. o. EUR Slovakia 100 100 119 Twin City III s.r.o. 2 EUR Slovakia - 100 55 ALISTON Finance IV s. r. o. EUR Slovakia 100 100 120 Twin City Infrastructure s. r. o. EUR Slovakia 100 100 56 ALISTON Finance V s.r.o. EUR Slovakia 100 100 121 Twin City V s.r.o. EUR Slovakia 100 100 57 Apollo Business Center III a.s. EUR Slovakia 100 100 122 Twin City VIII s.r.o. EUR Slovakia 100 100 58 Apollo Business Center V a. s. EUR Slovakia 100 100 123 ALISTON Finance VI s. r. o. EUR Slovakia 100 100 59 Apollo Property Management, s.r.o. EUR Slovakia 100 100 124 ANDAREA s.r.o. CZK Czech Rep 100 100 60 Bus Station Services s.r.o. EUR Slovakia 100 100 125 AR Consulting, a.s. CZK Czech Rep 100 100 61 BUXTON INVEST a.s. 2 EUR Slovakia - 100 126 Nová Zvonařka s.r.o. (former AUPARK Brno, spol. s r.o.) CZK Czech Rep 100 100 62 DVL Engineering a.s. EUR Slovakia 100 50 127 AUPARK Hradec Králové - KOMUNIKACE, s.r.o. CZK Czech Rep 100 100 63 Eurovalley, a.s. EUR Slovakia 100 100 128 AUPARK Karviná s.r.o. CZK Czech Rep 100 100 64 Evolution Building Technologies a.s. 4 EUR Slovakia - 100 129 DII Czech s.r.o. CZK Czech Rep 100 100 65 FORUM BC II s. r. o. EUR Slovakia 100 100 130 DNW Czech s.r.o. CZK Czech Rep 100 100 66 FutureNow s. r. o. EUR Slovakia 100 100 131 GALIM s.r.o. CZK Czech Rep 100 100 67 General Property Services, a.s. EUR Slovakia 100 100 132 HB Reavis CZ, a.s. CZK Czech Rep 100 100 68 HB REAVIS Consulting k.s. EUR Slovakia 100 100 133 HB REAVIS DEVELOPMENT CZ, a.s. CZK Czech Rep 100 100 69 HB REAVIS Finance SK II s. r. o. EUR Slovakia 100 100 134 HB Reavis Finance CZ, s.r.o. EUR Czech Rep 100 100 70 HB REAVIS Finance SK III s. r. o. EUR Slovakia 100 100 135 HB Reavis Finance CZ II, s.r.o. 1 EUR Czech Rep 100 - 71 HB REAVIS Finance SK IV s.r.o. EUR Slovakia 100 100 136 HB REAVIS GROUP CZ, s.r.o. CZK Czech Rep 100 100 72 HB REAVIS Finance SK s. r. o. EUR Slovakia 100 100 137 HB Reavis IZ s.r.o. CZK Czech Rep 100 100 73 HB REAVIS Finance SK V s. r. o. EUR Slovakia 100 100 138 HB REAVIS MANAGEMENT CZ spol. s r.o. CZK Czech Rep 100 100 74 HB REAVIS Finance SK VI s.r.o. EUR Slovakia 100 100 139 HB REAVIS PROPERTY MANAGEMENT CZ, s.r.o. CZK Czech Rep 100 100 75 HB REAVIS Finance SK VII s. r. o. EUR Slovakia 100 100 140 HubHub Czech Republic, s.r.o. (former RECLUN s.r.o.) CZK Czech Rep 100 100 HB Reavis Group s.r.o. (until 30.11.2017 as HB REAVIS 141 ISTROCENTRUM CZ, a.s. CZK Czech Rep 100 100 76 EUR Slovakia 100 100 Development s. r. o.) 142 KELOM s.r.o. CZK Czech Rep 100 100 77 HB REAVIS IM Advisor Slovakia s. r. o. EUR Slovakia 100 100 143 MOLDERA, a.s. CZK Czech Rep 100 100 78 HB Reavis Investment Management správ. spol., a.s. EUR Slovakia 100 100 144 Multimodální Cargo MOŠNOV s.r.o. CZK Czech Rep 100 100 79 HB REAVIS MANAGEMENT spol. s r.o. EUR Slovakia 100 100 145 Phibell s.r.o. CZK Czech Rep 100 100 80 HB Reavis Media s.r.o. (former Smart City Link s.r.o.) EUR Slovakia 100 100 146 Brookline Investments sp. Z o.o. PLN Poland 100 100 81 Symbiosy s. r. o. (former HB Reavis Qubes Slovakia s.r.o.) EUR Slovakia 100 100 147 Emmet Investments sp. Z o.o. w likwidacji 4 PLN Poland - 100 82 HB REAVIS Slovakia a. s. EUR Slovakia 100 100 148 HB REAVIS CONSTRUCTION PL Sp. z o. o PLN Poland 100 100 83 HB REM, spol. s r.o. EUR Slovakia 100 100 149 HB Reavis Finance PL 2 Sp. z o.o. PLN Poland 100 100 84 HBR SFA, s. r. o. EUR Slovakia 100 100 150 HB Reavis JV Spółka Akcyjna PLN Poland 100 100 85 HubHub Group s.r.o. EUR Slovakia 100 100 151 HB Reavis Poland Sp. z o.o. PLN Poland 100 100 86 HubHub Slovakia s.r.o. EUR Slovakia 100 100 HB Reavis Qubes Poland Sp. z o.o. (former Polcom Investment 152 PLN Poland 100 100 87 INLOGIS IV s. r. o. EUR Slovakia 100 100 XLVII Sp. z o.o.) 88 INLOGIS LCR a. s. EUR Slovakia 100 100 HubHub Poland Sp. z o.o. (former Polcom Investment XXVI Sp. z 153 PLN Poland 100 100 89 INLOGIS V s. r. o. EUR Slovakia 100 100 o.o.) 90 INLOGIS VII s. r. o. EUR Slovakia 100 100 154 CHM1 Sp. z o. o. PLN Poland 100 100 91 ISTROCENTRUM a. s. EUR Slovakia 100 100 155 CHM2 Sp. z o. o. PLN Poland 100 100 92 Logistické centrum Trnava s.r.o. EUR Slovakia 100 100 156 Konstruktorska BC Sp. z o.o. PLN Poland 100 100 93 LUGO, s.r.o. EUR Slovakia 100 100 157 P14 Sp. z o.o. 2 PLN Poland - 100 94 Nivy Tower s.r.o. EUR Slovakia 100 100 158 Polcom Investment II Sp. z o. o. PLN Poland 100 100 95 Pressburg Urban Projects a. s. EUR Slovakia 100 100 159 Polcom Investment III Sp. z o. o. PLN Poland 100 100 96 Smart City Bridge s. r. o. EUR Slovakia 100 100 160 Polcom Investment VI Sp. z o. o. PLN Poland 100 100 97 Smart City Eko s.r.o. EUR Slovakia 100 100 161 Polcom Investment X sp. z o.o. PLN Poland 100 100 98 Smart City Office I s.r.o. EUR Slovakia 100 100 162 Polcom Investment XI sp. z o.o. PLN Poland 100 100 99 Smart City Office II s.r.o. EUR Slovakia 100 100 163 Polcom Investment XIX Sp. z o.o. 4 PLN Poland - 100 100 Smart City Office III s.r.o. EUR Slovakia 100 100 164 Polcom Investment XL Sp. z o.o. 4 PLN Poland - 100 101 Smart City Office IV s.r.o. EUR Slovakia 100 100 165 Polcom Investment XLI Sp. z o.o. 4 PLN Poland - 100 102 Smart City Office s.r.o. EUR Slovakia 100 100 166 Polcom Investment XLII Sp. z o.o. w likwidacji 4 PLN Poland - 100 103 Smart City Office V s.r.o. EUR Slovakia 100 100 167 Polcom Investment XLIII Sp. z o.o. PLN Poland 100 100 104 Smart City Office VI s.r.o. EUR Slovakia 100 100 168 Polcom Investment XLIX Sp. z o.o. PLN Poland 100 100 105 Smart City Office VII s.r.o. EUR Slovakia 100 100 169 Polcom Investment XVI Sp. z o.o. PLN Poland 100 100 106 Smart City Parking s.r.o. EUR Slovakia 100 100 170 Polcom Investment XVIII Sp. z o.o. PLN Poland 100 100 107 Smart City Petržalka s. r. o. EUR Slovakia 100 100 171 Polcom Investment XXII Sp. z o.o. 4 PLN Poland - 100 108 Smart City s.r.o. (until 10.2.2017 as ALISTON II s. r. o.) EUR Slovakia 90 100
15 16 HB Reavis Holding S.A. Audit Report NotesHB Reavis to Consolidated Holding S.A. Financial Statements for the year ended 31 December 2020 PreparedNotes to in Consolidated accordance with Financial International Statements Financial for Reporting the year Standards ended 31 as Decemberadopted by 2020the EU Prepared in accordance with International Financial Reporting Standards as adopted by the EU 11
2 Significant Accounting Policies (Continued)
2.2. Consolidated Financial Statements (Continued) all of the fair value of the gross assets acquired Intercompany transactions, balances and Percentage ownership interest and voting rights is concentrated in a single identifiable asset or unrealised gains on transactions between group held Functional Country of 31 December 31 December group of similar identifiable assets. companies are eliminated; unrealised losses Number Subsidiaries currency incorporation 2020 2019 are also eliminated unless the cost cannot be
172 Polcom Investment XXIV Sp. z o.o. PLN Poland 100 100 The consideration transferred for the acquiree recovered. The Company and all of its subsidiaries 173 Polcom Investment XXIX Sp. z o.o. PLN Poland 100 100 is measured at the fair value of the assets given use uniform accounting policies consistent with 174 Polcom Investment XXV Sp. z o.o. w likwidacji PLN Poland 100 100 175 Polcom Investment XXVII Sp. z o.o. w likwidacji 4 PLN Poland - 100 up, equity instruments issued and liabilities the Group’s policies. 176 Polcom Investment XXX Sp. z o.o. PLN Poland 100 100 incurred or assumed, including fair value of 177 Polcom Investment XXXIII Sp. z o.o. PLN Poland 100 100 Property Hetman Sp. Z o.o. (former Polcom assets or liabilities from contingent consideration 178 PLN Poland 100 100 Acquisitions of subsidiaries holding Investment XXXIV Sp. z o.o. sp. K) arrangements, but excludes acquisition related 179 PSD Sp. Z o. o. PLN Poland 100 100 investment properties HB Reavis Finance PL 3 Sp. z o.o. (former: Rainford costs such as advisory, legal, valuation and similar The Group may invest in subsidiaries that hold 180 PLN Poland 100 100 Sp. Z.o.o) professional services. properties but do not constitute a business. 181 Rainhill Sp. z o. o. PLN Poland 100 100 182 Elizabeth House GP LLC GBP US 100 100 These transactions are therefore treated as asset 183 Elizabeth House Limited Partnership GBP US 100 100 Transaction costs incurred for issuing equity acquisitions rather than business combinations. 184 HB REAVIS CIC INVESTCO US, LLC EUR US 100 100 185 HB Reavis Construction Germany GmbH EUR Germany 100 100 instruments are deducted from equity; transaction The Group allocates the cost of the acquisition 186 HB Reavis Germany GmbH EUR Germany 100 100 costs incurred for issuing debt are deducted from to the individual identifiable assets and liabilities 187 HB Reavis Verwaltungs GmbH EUR Germany 100 100 188 HubHub Austria GmbH EUR Austria 100 100 its carrying amount and all other transaction costs based on their relative fair values at the date of 1 189 Shoreditch QT Guernsey Limited GBP Guernsey 100 - associated with the acquisition are expensed. acquisition. These transactions do not give rise to Percentage ownership interest and voting rights goodwill. held Functional Country of 31 December 31 December Identifiable assets acquired and liabilities and Number Joint ventures currency incorporation 2020 2019 contingent liabilities assumed in a business Purchases of subsidiaries from parties under 190 PHVH SOLUTIONS II, s. r. o. EUR Slovakia 50 50 combination are measured at their fair values at common control 191 TANGERACO INVESTMENTS LIMITED EUR Cyprus 53.62 50 the acquisition date, irrespective of the extent of Purchases of subsidiaries from parties under 1 Entities established / acquired by the Group during the year ended 31 December 2020 any non-controlling interest. common control are accounted for using 2 Entities disposed of during the year ended 31 December 2020 (refer to Note 27) 3 Entities were part of legal mergers or spin off and subsequently renamed during the year ended 31 December 2020 the predecessor values method. Under this 4 Entities were liquidated during the year ended 31 December 2020 Goodwill is measured by deducting the net method, the consolidated financial statements 5 In January 2017, as a result of sale of controlling share in HB REAVIS CE Real Estate Investment Fund, the Group lost control over HB REAVIS CE Real Estate Investment Fund, a sub-fund of a fully consolidated subsidiary HB Reavis Real Estate Investment Fund. assets of the acquiree from the aggregate of the are presented as if the businesses had been 6 HBR FM LTD, HBR Capital Investment LP, HubHub UK Ltd, 4th Floor Elizabeth House Limited, 10 Leake Street Ltd, Elizabeth Property Nominee (No 1) Ltd, Elizabeth Property Nominee (No 2) Ltd, Elizabeth Property Nominee (No 3) Ltd, Elizabeth Property Nominee (No 4) Ltd and Elizabeth consideration transferred for the acquiree, the consolidated from the beginning of the earliest Property Holdings Ltd, registered in England and Wales, are claiming exemption from the requirements of the UK Companies Act 2006 (the “Act”) relating to the audit of annual accounts under section 479A of the Act. amount of non-controlling interest in the acquiree period presented or, if later, the date when the and fair value of an interest in the acquiree consolidated entities were first brought under held immediately before the acquisition date. common control. The assets and liabilities of the Any negative amount (“negative goodwill”) is subsidiary transferred under common control are recognised in profit or loss, after management at the predecessor entity’s carrying amounts. The reassesses whether it identified all the assets predecessor entity is considered to be the highest Business combinations whose acquisition dates are on or after 1 January acquired and all liabilities and contingent reporting entity in which the subsidiary’s IFRS The acquisition method of accounting is used to 2020 in assessing whether it had acquired a liabilities assumed, and reviews appropriateness financial information was consolidated. Related account for the acquisition of subsidiaries that business or a group of assets. of their measurement. goodwill inherent in the predecessor entity’s represent a business, except those acquired original acquisitions is also recorded in these from parties under common control. A business The acquisition method is used for business Non-controlling interest is that part of the consolidated financial statements. Any difference is defined as an integrated set of activities and combinations when the acquired set of activities net results and of the equity of a subsidiary between the carrying amount of net assets, assets conducted and managed for the purpose and assets meets the definition of a business and attributable to interests which are not owned, including the predecessor entity’s goodwill, and of providing a return to investors or lower control is transferred to the Group, except those directly or indirectly, by the Group. Non- the consideration for the acquisition is accounted costs or other economic benefits directly and acquired from parties under common control. In controlling interest forms a separate component for in these consolidated financial statements as proportionately to policyholders or participants. determining whether a particular set of activities of the Group’s equity. At acquisition date, the an adjustment within equity. A business generally consists of inputs, processes and assets is a business, the Group assesses Group measures non-controlling interest that applied to those inputs, and resulting outputs whether the set of assets and activities acquired represents present ownership interest and entitles Associates that are, or will be, used to generate revenues. If includes, at a minimum, an input and substantive the holder to a proportionate share of net assets Associates are entities over which the Group has goodwill is present in a transferred set of activities process and whether the acquired set has the in the event of liquidation on a transaction by significant influence (directly or indirectly), but not and assets, the transferred set is presumed to be ability to produce outputs. The Group has an transaction basis, either at: (a) fair value, or (b) control, generally accompanying a shareholding a business. option to apply a ‘concentration test’ that permits the non-controlling interest’s proportionate share of between 20 and 50 percent of the voting a simplified assessment of whether an acquired of net assets of the acquiree. Non-controlling rights. Investments in associates are accounted The Group applied Definition of a Business set of activities and assets is not a business. The interests that are not present ownership interests for using the equity method of accounting and (Amendments to IFRS 3) to business combinations optional concentration test is met if substantially are measured at fair value. are initially recognised at cost, and the carrying
17 18 HB Reavis Holding S.A. Audit Report Notes to Consolidated Financial Statements for the year ended 31 December 2020 Prepared in accordance with International Financial Reporting Standards as adopted by the EU
amount is increased or decreased to recognise investment in the joint ventures), the Group does 2.3. Foreign Currency Transactions and dates, in which case income and expense the investor’s share of the profit or loss of the not recognise further losses, unless it has incurred Translation are translated at the rate on the dates of the investee after the date of acquisition. Dividends obligations or made payments on behalf of the transactions); and received from associates reduce the carrying joint ventures. Functional and presentation currency value of the investment in associates. Other post- Items included in the financial statements of each • all resulting exchange differences are acquisition changes in the Group’s share of net Unrealised gains on transactions between the of the Group’s entities are measured using the recognised in other comprehensive income. assets of an associate are recognised as follows: (i) Group and its joint ventures are eliminated to the currency of the primary economic environment the Group’s share of profits or losses of associates extent of the Group’s interest in the joint ventures. in which the entity operates (the ‘functional Loans between Group entities and related is recorded in the consolidated profit or loss for Unrealised losses are also eliminated unless the currency’). The functional currency of all the foreign exchange gains or losses are eliminated the year as the share of results of associates, (ii) transaction provides evidence of an impairment Group’s entities is their local currency, except upon consolidation. However, where the loan the Group’s share of other comprehensive income of the asset transferred. Accounting policies of bonds issuance entities that are considered is between Group entities that have different is recognised in other comprehensive income and the joint ventures have been changed where an extention of the Company and therefore functional currencies, the foreign exchange presented separately, (iii); all other changes in the necessary to ensure consistency with the policies have EUR as their functional currency. The gain or loss cannot be eliminated in full and is Group’s share of the carrying value of net assets adopted by the Group. consolidated financial statements are presented recognized in the consolidated profit or loss, of associates are recognised in profit or loss within in millions of euro (EUR), which is the Group’s unless the loan is not expected to be settled the share of results of associates. Disposals of subsidiaries, associates presentation currency. in the foreseeable future and thus forms part or joint ventures of the net investment in foreign operation. In When an investment in associate or a joint venture When the Group ceases to have control or joint Transactions and balances such a case, the foreign exchange gain or loss is is held by, or is held indirectly through, an entity control, any retained interest in the entity is Foreign currency transactions are translated recognized in other comprehensive (loss)/income. that is a venture capital organisation, or a mutual remeasured to its fair value, with the change in into the functional currency using the exchange fund, unit trust and similar entities including carrying amount recognised in profit or loss. The rates prevailing at the dates of the transactions. Goodwill and fair value adjustments arising on the investment – linked insurance funds, the entity fair value is the initial carrying amount for the Foreign exchange gains and losses resulting from acquisition of a foreign entity are treated as assets may elect to measure that investment at fair value purposes of subsequently accounting for the the settlement of such transactions and from and liabilities of the foreign entity and translated through profit or loss in accordance with IFRS retained interest as an associate, joint venture the translation at year end exchange rates of at the closing rate. Exchange differences arising 9. An entity shall make this election separately or financial asset. In addition, any amounts monetary assets and liabilities denominated in are recognised in other comprehensive for each associate or joint venture, at initial previously recognised in other comprehensive foreign currencies are recognised in profit or loss. (loss)/income. recognition of the associate or joint venture. income in respect of that entity are accounted for as if the Group had directly disposed of Non-monetary items measured at fair value in a When control over a foreign operation is lost, the The Group elected to measure its investment the related assets or liabilities. This may mean foreign currency, including properties or equity previously recognised exchange differences on of non-controlling share in The Cambridge that amounts previously recognised in other investments, are translated using the exchange translation to a different presentation currency Incubator, LLC, a Delaware limited liability comprehensive income are recycled to profit rates at the date when the fair value was are reclassified from other comprehensive income company acquired during 2018 at fair value or loss. determined. Effects of exchange rate changes on to profit or loss for the year as part of the gain through profit or loss. non-monetary items measured at fair value in a or loss on disposal. On partial disposal of a If the ownership interest in a joint venture is foreign currency are recorded as part of the fair subsidiary without loss of control, the related Joint arrangements reduced but joint control is retained, only a value gain or loss. portion of the accumulated currency translation Investments in joint arrangements are classified proportionate share of the amounts previously differences is reclassified to non-controlling as either joint operations or joint ventures recognised in other comprehensive income is Group companies interest within equity. depending on the contractual rights and reclassified to profit or loss, where appropriate. The results and financial position of all the Group obligations of each investor. The Company has entities (none of which has the currency of a assessed the nature of its joint arrangements Purchases and sales of non-controlling interests hyperinflationary economy) that have a functional 2.4. Property, Plant and Equipment and determined them to be joint ventures. The Group applies the economic entity model currency different from the presentation currency Joint ventures are accounted for using the to account for transactions with owners of non- are translated into the presentation currency as All property, plant and equipment items are equity method. controlling interest. Any difference between the follows: carried at cost less accumulated depreciation and purchase consideration and the carrying amount accumulated impairment losses. Under the equity method of accounting, interests of non-controlling interest acquired is recorded • assets and liabilities for each balance sheet in joint ventures are initially recognised at cost as a capital transaction directly in equity. The date are translated at the closing rates at the Cost and adjusted thereafter to recognise the Group’s Group recognises the difference between sales date of that balance sheet; Cost includes expenditure that is directly share of the post-acquisition profits or losses consideration and carrying amount of non- attributable to the acquisition of the items of and movements in other comprehensive income. controlling interest sold as a capital transaction in • income and expenses and movements in property plant and equipment. Subsequent costs When the Group’s share of losses in a joint the statement of changes in equity. equity are translated at average exchange are included in the asset’s carrying amount or venture equals or exceeds its interests in the joint rates (unless this average is not a reasonable recognized as a separate asset, as appropriate, ventures (which includes any long-term interests approximation of the cumulative effect only when it is probable that future economic that, in substance, form part of the Group’s net of the rates prevailing on the transaction benefits associated with the item will flow to the
19 20 HB Reavis Holding S.A. Audit Report Notes to Consolidated Financial Statements for the year ended 31 December 2020 Prepared in accordance with International Financial Reporting Standards as adopted by the EU
Group and the cost of the item can be measured useful life. The residual value of an asset is nil or prices on less active markets or discounted cash derecognised when they have been disposed of reliably. The carrying amount of the replaced its scrap value if the Group expects to use the flow projections. Valuation reports as of the or classified as Assets held for sale. part is derecognized. All other repairs and asset until the end of its physical life. balance sheet date are prepared by independent maintenance are charged to profit or loss during appraisers, who hold a recognized and relevant If an item of property, plant and equipment the financial period in which they are incurred. Land and assets under construction are professional qualification and who have recent becomes an investment property because its use not depreciated. experience in valuation of property of similar has changed, any revaluation gain resulting from Depreciation location and category. Investment property a difference between the carrying amount and The depreciation of property, plant and An asset’s carrying amount is written down that is being redeveloped for continuing use as the fair value of this item at the date of transfer is equipment starts in the month when the property, immediately to its recoverable amount if the investment property or for which the market has recognized in other comprehensive income and plant and equipment is available for use. Property, asset’s carrying amount is greater than its become less active continues to be measured at accumulated in a revaluation reserve in equity, plant and equipment is depreciated in line with estimated recoverable amount (Note 2.8). fair value. until the asset’s disposal when the revaluation the approved depreciation plan using the straight- reserve is reclassified to retained earnings. line method. Monthly depreciation charge is Items that are retired or otherwise disposed of The fair value of investment property reflects, determined as the difference between acquisition are eliminated from the balance sheet, along with among other things, rental income from current If an investment property becomes owner- costs and residual value, divided by estimated the corresponding accumulated depreciation. leases and assumptions about rental income occupied, it is reclassified as property, plant useful life of the property, plant and equipment. Gains and losses on disposals are determined by from future leases in the light of current market and equipment, and its fair value at the date of comparing proceeds with the carrying amount conditions. The fair value also reflects, on a similar reclassification becomes its cost for accounting Each part of an item of property, plant and and are included in operating profit. basis, any cash outflows that could be expected purposes. Property that is being constructed or equipment with a cost that is significant in relation in respect of the property. Some of those developed for future use as investment property to the total cost of the item is depreciated outflows are recognized as a liability, including is classified as investment property and stated at separately. The Group allocates the amount 2.5. Investment Property lease liabilities in respect of land classified as fair value. initially recognized in respect of an item of investment property; others, including contingent property, plant and equipment proportionally to Investment property is property held by the rent payments or future capital expenditure, Where an investment property undergoes a its significant parts and depreciates separately Group to earn rental income or for capital are not recognized in the consolidated financial change in use evidenced by commencement of each such part. appreciation, or both and which is not occupied statements. Transaction costs, such as estimated development with a view to sale, the property is by the Group. Investment property includes agency and legal and accounting fees and transferred to inventories. A property’s deemed Buildings include mainly administrative offices assets under construction for future use as transfer taxes are not deducted for the purposes cost for subsequent accounting as inventories is and premises used by the Group management. investment property. of valuation of investment property in these its fair value at the date of change in use. Equipment, fixtures and fittings include mainly financial statements irrespective whether or not hardware, servers, telephone exchanges, Investment property comprises freehold land, they form part of the described valuations. The Group classifies the investment property remote control equipment, office furniture and freehold commercial properties (retail, office and for the presentation purposes as investment others. Motor vehicles include the Group’s logistics) and leased land plots. Subsequent expenditures are capitalised to the properties in use or vacant and investment passenger cars. asset’s carrying amount only when it is probable properties under development based on the Investment property is initially valued at historical that future economic benefits associated with stage of completion of the individual property Useful lives in years cost including related transaction costs. Costs these expenditures will flow to the Group and construction and progress of leasing space to include the works performed, the costs of staff the cost of the item can be measured reliably. tenants. Consistently with classification for Buildings 30 years directly related to technical supervision and All other repairs and maintenance costs are purposes of segmental analysis (see Note 6), the project management on the basis of time spent expensed to the profit or loss during the financial Group classifies a property as “in use or vacant” Eqipment, fixtures and fittings 4 to 6 years up to the date of completion. period in which they are incurred. When part of from the end of the accounting period in which an investment property is replaced, the carrying legal requirements have been met. The Group Vehicles and other assets 6 to 8 years After initial recognition at cost, the investment amount of the replaced part is derecognised. also presents the value of investment properties property, including property under construction and related income and expenses by following or development for future use as investment The fair value of investment property does types of properties – office, retail, and industrial property, is carried at fair value. Fair value is the not reflect future capital expenditure that will – classified by the prevailing function of the The assets’ residual values and useful lives are price that would be received to sell an asset or improve or enhance the property and does property for its tenants. reviewed, and adjusted if appropriate, at each paid to transfer a liability in an orderly transaction not reflect the related future benefits from this balance sheet date. between market participants at the measurement future expenditure other than those a rational 2.6. Right-of-use-assets date. Fair value is based on transaction prices market participant would take into account when The residual value of an asset is the estimated from active markets, adjusted, if necessary, for any determining the value of the property. The Group leases various offices, equipment, amount that the Group would currently obtain difference in the nature, location or condition of vehicles and land. Rental contracts for offices, from disposal of the asset less the estimated costs the specific asset. Changes in fair values are recorded in profit or equipment and vehicles are typically made for of disposal, if the assets were already of the age loss as “Revaluation gain/(loss) on investment periods of 3 to 10 years, but may have extension and in the conditions expected at the end of their If this information is not available, the Group properties”. Investment properties are options. Rental contracts for land are made for uses alternative valuation methods such as recent
21 22 HB Reavis Holding S.A. Audit Report Notes to Consolidated Financial Statements for the year ended 31 December 2020 Prepared in accordance with International Financial Reporting Standards as adopted by the EU
period of 70 years. Contracts may contain both Other intangible assets intangible assets when the following criteria are grouped at the lowest levels for which there lease and non-lease components. The Group All of the Group’s other intangible assets have are met: are individually identifiable cash flows (cash- allocates the consideration in the contract to the definite useful lives and primarily include generating units). Non-financial assets other than lease and non-lease components based on their externally acquired computer software licences. • it is technically feasible to complete the goodwill that were impaired are reviewed for relative stand-alone prices. software product so that it will be available possible reversal of the impairment at the end of Intangible assets are initially measured at cost. for use; each reporting period. Lease terms are negotiated on an individual basis The cost of intangible assets acquired in a and contain a wide range of different terms and business combination is their fair value at the date • management intends to complete the conditions. The lease agreements do not impose of acquisition. Intangible assets are recognized if software product and use or sell it; 2.9. Financial Instruments any covenants other than the security interests it is probable that the future economic benefits in the leased assets that are held by the lessor. that are attributable to the asset will flow to the • there is an ability to use or sell the Initial recognition Leased assets may not be used as security for Group, and the asset can be measured reliably. software product; Financial instruments at fair value through profit borrowing purposes. After initial recognition, the intangible assets are and loss (“FVTPL”) are initially recorded at fair measured at cost less accumulated amortization • it can be demonstrated how the software value. All other financial instruments are initially Assets arising from a lease are initially measured and any accumulated impairment losses. product will generate probable future recorded at fair value adjusted for transaction on a present value basis. economic benefits; costs. Fair value at initial recognition is best Intangible assets are amortized on the straight- evidenced by the transaction price. Right-of-use assets are measured at cost line basis over their useful lives: • adequate technical, financial and other comprising the following: resources to complete the development Financial assets - classification and subsequent Useful lives in years and to use or sell the software product are measurement – measurement categories • the amount of the initial measurement of available; and The Group classifies financial assets in the lease liability Software and software licences 5 years following measurement categories: FVTPL, fair • the expenditure attributable to the software value through other comprehensive income • any lease payments made at or before the product during its development can be (“FVOCI”) and amortised cost (“AC”). The commencement date less any lease incentives reliably measured. classification and subsequent measurement of received The amortisation of an intangible asset starts in debt financial assets depends on: (i) the Group’s the month when the intangible asset is available Directly attributable costs that are capitalised business model for managing the related assets • any initial direct costs and restoration costs for use. Intangible assets are depreciated in line as part of the software product include the portfolio and (ii) the cash flow characteristics of with the approved depreciation plan using the software development employee costs and the asset. The Group’s financial assets consist of • costs to restore the asset to the conditions straight-line method. Amortisation charge is an appropriate portion of relevant overheads. receivables and loans, trade and other receivables required by lease agreements. determined as the difference between acquisition Other development expenditures that do not and derivatives. Financial assets recognised in costs and residual value, divided by estimated meet these criteria are recognized as an expense the consolidated statement of financial position Right-of-use assets are depreciated over the useful life of the intangible assets. If impaired, as incurred. Development costs previously as trade and other receivables and receivables shorter of the asset’s useful life and the lease term the carrying amount of intangible assets is written recognized as an expense are not recognized as and loans are recognised initially at fair value and on a straight-line basis. If the Group is reasonably down to the higher of value in use and fair value an asset in a subsequent period. subsequently measured at amortised cost less certain to exercise a purchase option, the right- less costs to sell. allowance for expected credit losses (“ECL”). of-use asset is depreciated over the underlying Derivatives are measured at fair value at each asset’s useful life which is disclosed in Note 2.4. Residual value of intangible assets is assumed to 2.8. Impairment of Non-Financial Assets end of the reporting period with changes in value be zero unless (a) there is a commitment by a third recognised in profit or loss. The Group applies the fair value model to party to purchase the asset at the end of its useful Goodwill and intangible assets not yet available right-of-use assets that meet the definition of life, or (b) there is an active market for the asset for use are not subject to amortization and are Financial assets - classification and subsequent investment property in IAS 40. Changes in fair and residual value can be determined by the tested for impairment annually. Assets that measurement – business model values are recognised as revaluation gains or reference to that market and it is probable that are subject to depreciation or amortization The business model reflects how the Group losses in profit or loss. such a market will exist at the end of the asset’s are reviewed for impairment whenever events manages the assets in order to generate cash useful life. or changes in circumstances indicate that the flows – whether the Group’s objective is: (i) solely carrying amount may not be recoverable. An to collect the contractual cash flows from the 2.7. Intangible Assets Costs associated with maintaining computer impairment loss is recognized for the amount assets (“hold to collect contractual cash flows”) software programmes are recognized as an by which the asset’s carrying amount exceeds its or (ii) to collect both the contractual cash flows Goodwill expense as incurred. Development costs that are recoverable amount. and the cash flows arising from the sale of assets See Note 2.2 for the accounting policy on directly attributable to the design and testing (“hold to collect contractual cash flows and goodwill. Goodwill is not amortised but is of identifiable and unique software products The recoverable amount is the higher of an asset’s sell”) or, if neither of (i) and (ii) is applicable, the tested for impairment at the end of each annual controlled by the Group are recognized as fair value less costs to sell or its value in use. For financial assets are classified as part of “other” reporting period. the purposes of assessing impairment, assets business model and measured at FVTPL.
23 24 HB Reavis Holding S.A. Audit Report Notes to Consolidated Financial Statements for the year ended 31 December 2020 Prepared in accordance with International Financial Reporting Standards as adopted by the EU
Business model is determined for a group of The Group measures ECL and recognises Net Financial assets - write-off and the amount of the loss is included in other assets (on a portfolio level) based on all relevant impairment losses on financial and contract assets Financial assets are written-off, in whole or in operating expenses. Any subsequent reversal of evidence about the activities that the Group at each reporting date. The measurement of ECL part, when the Group exhausted all practical an impairment loss is recognised in profit or loss. undertakes to achieve the objective set out for the reflects: (i) an unbiased and probability weighted recovery efforts and has concluded that there portfolio available at the date of the assessment. amount that is determined by evaluating a range is no reasonable expectation of recovery. The Derivative financial instruments Factors considered by the Group in determining of possible outcomes, (ii) time value of money and write-off represents a derecognition event. The Derivative financial instruments are carried at their the business model include the purpose and (iii) all reasonable and supportable information Group may write-off financial assets that are still fair value. All derivative instruments are carried as composition of a portfolio, past experience on that is available without undue cost and effort subject to enforcement activity when the Group assets when fair value is positive and as liabilities how the cash flows for the respective assets were at the end of each reporting period about past seeks to recover amounts that are contractually when fair value is negative. Changes in the fair collected, how risks are assessed and managed events, current conditions and forecasts of future due, however, there is no reasonable expectation value of derivative instruments are included in and how the assets’ performance is assessed. conditions. of recovery. profit or loss for the year. The Group does not Refer to Note 3 for critical judgements applied by apply hedge accounting. the Group in determining the business models for Financial instruments measured at amortised Financial assets – derecognition its financial assets. cost and contract assets are presented in the The Group derecognises financial assets when Recognition of the derivative financial instruments consolidated statement of financial position net (a) the assets are redeemed or the rights to cash takes place when the economic hedging contracts Debt financial assets - Classification and of the allowance for ECL. For loan commitments flows from the assets otherwise expire or (b) are entered into. They are measured initially and subsequent measurement – cash flow and financial guarantees, if any, a separate the Group has transferred the rights to the cash subsequently at fair value; transaction costs are characteristics provision for ECL is recognised as a liability in the flows from the financial assets or entered into a included directly in finance costs. Where the business model is to hold assets consolidated statement of financial position. For qualifying pass-through arrangement whilst (i) to collect contractual cash flows or to hold debt instruments at FVOCI, changes in amortised also transferring substantially all the risks and Certain derivative instruments embedded contractual cash flows and sell, the Group cost, net of allowance for ECL, are recognised in rewards of ownership of the assets or (ii) neither in financial liabilities and other non-financial assesses whether the cash flows represent solely profit or loss and other changes in carrying value transferring nor retaining substantially all the contracts are treated as separate derivative payments of principal and interest (“SPPI”). are recognised in other comprehensive income risks and rewards of ownership but not retaining instruments when their risks and characteristics are Financial assets with embedded derivatives are (“OCI”) as gains less losses on debt instruments control. Control is retained if the counterparty not closely related to those of the host contract. considered in their entirety when determining at FVOCI. does not have the practical ability to sell the asset whether their cash flows are consistent with the in its entirety to an unrelated third party without Financial liabilities – measurement categories SPPI feature. The Group applies a three-stage model for needing to impose additional restrictions on Financial liabilities are classified as subsequently impairment, based on changes in credit quality the sale. measured at amortised cost, except for (i) Where the contractual terms introduce exposure since initial recognition. A financial instrument financial liabilities at FVTPL: this classification is to risk or volatility that is inconsistent with a that is not credit-impaired on initial recognition Cash & cash equivalents applied to derivatives, financial liabilities held basic lending arrangement, the financial asset is classified in Stage 1. Financial assets in Stage Cash and cash equivalents include cash in hand, for trading (e.g. short positions in securities), is classified and measured at FVTPL. The SPPI 1 have their ECL measured at an amount equal deposits held at call with banks and other short- contingent consideration recognised by an assessment is performed on initial recognition of to the portion of lifetime ECL that results from term highly liquid investments with original acquirer in a business combination and other an asset and it is not subsequently reassessed. default events possible within the next 12 months maturities of three months or less. Cash and cash financial liabilities designated as such at initial or until contractual maturity, if shorter (“12 Months equivalents are carried at amortised cost because: recognition and (ii) financial guarantee contracts Financial assets – reclassification ECL”). If the Group identifies a significant increase (i) they are held for collection of contractual cash and loan commitments. Debt financial assets are reclassified only when in credit risk (“SICR”) since initial recognition, flows and those cash flows represent SPPI, and (ii) the business model for managing the portfolio the asset is transferred to Stage 2 and its ECL is they are not designated at FVTPL. Financial liabilities – derecognition as a whole changes. The reclassification has measured based on ECL on a lifetime basis, that Financial liabilities are derecognised when a prospective effect and takes place from the is, up until contractual maturity but considering Trade and other receivables they are extinguished (i.e. when the obligation beginning of the first reporting period that follows expected prepayments, if any (“Lifetime ECL”). Trade and other receivables are recognised specified in the contract is discharged, cancelled after the change in the business model. The entity If the Group determines that a financial asset is initially at fair value and are subsequently or expires). did not change its business model during the credit-impaired, the asset is transferred to Stage carried at amortised costs using the effective current and comparative period and did not make 3 and its ECL is measured as a Lifetime ECL. For interest method. An exchange between the Group and its any reclassifications. financial assets that are purchased or originated original lenders of debt instruments with credit-impaired (“POCI Assets”), the ECL is The Group calculates ECL on trade receivables substantially different terms, as well as substantial Financial assets impairment – credit loss always measured as a Lifetime ECL. Note 31 using a provision matrix estimation technique. modifications of the terms and conditions of allowance for ECL (expected credit losses) provides information about inputs, assumptions The Group uses its historic credit loss experience existing financial liabilities, are accounted for The Group assesses, on a forward-looking basis, and estimation techniques used in measuring adjusted for all reasonable and supportable as an extinguishment of the original financial the ECL for financial instruments measured at ECL, including an explanation of how the Group information that is available without undue liability and the recognition of a new financial amortised cost and FVOCI and for the exposures incorporates forward-looking information in the cost or effort for trade and other receivables to liability. The terms are substantially different if arising from loan commitments, financial ECL models. estimate ECL.The carrying amount of the asset the discounted present value of the cash flows guarantee contracts and for contract assets. is reduced through use of an allowance account, under the new terms, including any fees paid
25 26 HB Reavis Holding S.A. Audit Report Notes to Consolidated Financial Statements for the year ended 31 December 2020 Prepared in accordance with International Financial Reporting Standards as adopted by the EU
net of any fees received and discounted using • fixed payments (including in-substance fixed of 12 months or less. Low-value assets comprise extent that it is probable that future taxable profit the original effective interest rate, is at least 10% payments), less any lease incentives receivable small items of various nature. will be available against which the deductions can different from the discounted present value of be utilised. the remaining cash flows of the original financial • variable lease payment that are based on an Operating lease liability. In addition, other qualitative factors, index or a rate, initially measured using the Where the Group is a lessor in a lease which The carrying value of Group’s investment property such as the currency that the instrument is index or rate as at the commencement date does not transfer substantially all the risks and is assumed to be realised by sale. The capital denominated in, changes in the type of interest rewards incidental to ownership to the lessee (i.e. gains tax rate applied is that which would apply rate, new conversion features attached to the • amounts expected to be payable by the operating lease), lease payments from operating on a direct sale of the property recorded in the instrument and change in loan covenants are also group under residual value guarantees leases are recognised as other income on a consolidated statement of financial position considered. If an exchange of debt instruments straight-line basis. Operating lease receivables are regardless of whether the Group would structure or modification of terms is accounted for as an • the exercise price of a purchase option if the subject to ECL model. The Group calculates ECL the sale via the disposal of the subsidiary holding extinguishment, any costs or fees incurred are Group is reasonably certain to exercise that on operating lease receivables using a provision the asset to which a different tax rate may apply. recognised as part of the gain or loss on the option, and matrix estimation technique. The deferred tax is then calculated based on extinguishment. If the exchange or modification is the respective temporary differences and tax not accounted for as an extinguishment, any costs • payments of penalties for terminating the considerations arising from recovery through sale. or fees incurred adjust the carrying amount of lease, if the lease term reflects the group 2.11. Current and Deferred Income Taxes the liability and are amortised over the remaining exercising that option. Deferred income tax is provided on temporary term of the modified liability. Income taxes have been provided for in the differences arising on investments in subsidiaries, Lease payments to be made under reasonably consolidated financial statements in accordance except where the timing of the reversal of the Modifications of liabilities that do not result in certain extension options are also included in the with applicable legislation enacted or temporary difference is controlled by the Group extinguishment are accounted for as a change measurement of the liability. substantively enacted by the financial position and it is probable that the temporary difference in estimate using a cumulative catch up method, date and on entity by entity basis. The income will not reverse in the foreseeable future. with any gain or loss recognised in profit or loss, The lease payments are discounted using lessee’s tax charge comprises current tax and deferred tax unless the economic substance of the difference incremental borrowing rate, being the rate and is recognised in profit or loss unless it relates Deferred income tax assets and liabilities are in carrying values is attributed to a capital that the individual lessee would have to pay to to transactions that are recognised, in the same offset when there is a legally enforceable right transaction with owners. borrow the funds necessary to obtain an asset of or a different period, directly in equity or in other to offset current tax assets against current tax similar value to the right-of-use asset in a similar comprehensive income. liabilities and when the deferred income tax Loans and borrowings economic environment with similar terms, security assets and liabilities relate to income taxes levied All loans and borrowings are measured at and conditions. To determine the incremental Current tax is the amount expected to be paid by the same taxation authority on either the same amortised cost. Initial recognition is at fair value borrowing rate, the Group uses recent third-party to or recovered from the taxation authorities in taxable entity or different taxable entities where less directly attributable transaction costs. financing received by the individual lessee as respect of taxable profits or losses for the current there is an intention to settle the balances on a After initial recognition, interest-bearing loans a starting point, adjusted to reflect changes in and prior periods. Taxes other than on income are net basis. and borrowings are subsequently measured financing conditions since third party financing recorded within operating expenses. at amortised cost using the effective interest was received. method (see Note 2.15 for the accounting policy Deferred income tax is provided using the balance 2.12. Inventories on Borrowings). The Group is exposed to potential future sheet liability method for tax loss carry forward increases in variable lease payments based on an and temporary differences arising between the tax Inventories represent land expected to be Financial liabilities included in trade and other index or rate, which are not included in the lease bases of assets and liabilities and their carrying developed into residential property in line with payables are recognised initially at fair value and liability until they take effect. When adjustments amounts for financial reporting purposes. In the zoning and other regulatory requirements for subsequently at amortised cost. The fair value of to lease payments based on an index or rate accordance with the initial recognition exemption, the Group’s projects and land held for disposal a non-interest-bearing liability is its discounted take effect, the lease liability is remeasured and deferred taxes are not recorded for temporary in the normal course of business. Inventories repayment amount. If the due date of the liability adjusted against the right-of-use asset. differences on initial recognition of an asset or are presented as current because of the term is less than one year, discounting is omitted as its a liability in a transaction other than a business of the operating cycle, but their carrying impact would be insignificant. Lease payments are allocated between principal combination if the transaction, when initially amount is expected to be recovered after 12 and finance cost. The finance cost is charged recorded, affects neither accounting nor taxable months. Inventories are recorded at the lower to profit or loss over the lease period so as to profit or loss. Deferred tax balances are measured of cost and net realisable value. The cost of produce a constant periodic rate of interest on the at tax rates enacted or substantively enacted inventories comprises the cost of acquisition, 2.10. Lease liabilities remaining balance of the liability for each period. at the end of the respective reporting period and construction and other development costs and are expected to apply to the period when incurred. Net realisable value is the estimated Liabilities arising from a lease are initially Payments associated with short-term leases and the temporary differences will reverse or the tax selling price in the ordinary course of business, measured on a present value basis. Lease all leases of low-value assets are recognised on a losses carry forward will be utilised. Deferred tax less the cost of completion and selling expenses. liabilities include the net present values of the straight-line basis as an expense in profit or loss. assets for deductible temporary differences and following lease payments: Short-term leases are leases with a lease term tax loss carry forwards are recorded only to the
27 28 HB Reavis Holding S.A. Audit Report Notes to Consolidated Financial Statements for the year ended 31 December 2020 Prepared in accordance with International Financial Reporting Standards as adopted by the EU
2.13. Share Capital and Share Premium initially at fair value and subsequently 2.19. Revenue Recognition promised goods or services to the customer and measured at amortised cost using the effective payment by the customer exceeds one year. Ordinary shares are classified as equity. interest method. Revenue is income arising in the course of the As a consequence, the Group does not adjust Incremental costs directly attributable to the issue Group’s ordinary activities. Revenue is recognised any of the transaction prices for the time value of new shares are shown in equity as a deduction, in the amount of transaction price. Transaction of money. net of tax, from the proceeds. Any excess of the 2.17. Provisions for Liabilities and Charges price is the amount of consideration to which fair value of consideration received or receivable the Group expects to be entitled in exchange In addition to development and construction over the par value of shares issued is presented as Provisions for liabilities and charges are for transferring control over promised goods or of investment property the Group is from time a share premium. recognised when the Group has a present legal or services to a customer, excluding the amounts to time engaged in construction of properties constructive obligation as a result of past events, collected on behalf of third parties. under both long‑term and short-term contracts and it is probable that an outflow of resources will with customers. Under the terms of the long- 2.14. Dividends and Other Distributions to be required to settle the obligation, and a reliable • Rental and similar income from term contracts, the Group is usually contractually Owners estimate of the amount can be made. investment property restricted from redirecting the properties to • Construction revenues and another customer and has an enforceable Dividends and other distributions to owners are Provisions are measured at the present value • Other revenues from sale of services. right to payment for work done. Revenue from recognised as a liability and deducted from equity of the expenditures expected to be required construction of properties is therefore recognised (retained earnings or share premium account) at to settle the obligation using a pre-tax rate Rental and similar income from investment over time on a cost‑to‑cost method, i.e. based on the balance sheet date only if they are declared that reflects current market assessments of the property includes rental income from operating the proportion of contract costs incurred for work before or at the end of the reporting period. time value of money and the risks specific to leases, service charges and management charges performed to date relative to the estimated total Dividends or other distributions to owners are the obligation. The increase in the provision from properties. contract costs. Management considers that this disclosed when they are declared after the due to the passage of time is recognised as input method is an appropriate measure of the reporting period but before the consolidated interest expense. Rental income is recognised on a straight-line progress towards complete satisfaction of these financial statements are authorised for issue. basis over the lease term. When the Group performance obligations. In case of short-term Where the Group expects a provision to be provides incentives to its tenants, the cost of contracts with customers the Group performs reimbursed, for example under an insurance incentives is recognised over the lease term, the analysis of agreed conditions and revenue is 2.15. Borrowings contract, the reimbursement is recognised on a straight-line basis, as a reduction of rental recognized either over time or at a point in time as a separate asset but only when the income. This applies to discounted rent periods when the subject of contract is delivered. Borrowings are recognised initially at fair reimbursement is virtually certain. and stepped rents. The resulting receivable is value, net of transaction costs incurred. After recognised within Non-current Assets or trade The Group becomes entitled to invoice customers initial recognition, borrowings are carried at and other receivables depending on expected for construction of properties based on a payment amortised cost using the effective interest 2.18. Uncertain Tax Positions collection pattern. In determining the fair value of schedule. If the services rendered by the method. Any difference between the proceeds the related investment property, the Group does Group exceed the payment, a contract asset is (net of transaction costs) and the redemption The Group’s uncertain tax positions are reassessed not double-count assets; the fair value of such recognised. If the payments exceed the services value is recognised in profit or loss using the by management at every balance sheet date. investment property excludes accrued operating rendered, a contract liability is recognised. It is effective interest method. The Group does not Liabilities are recorded for income tax positions lease income because it is recognised as a presumed that there is no significant financing capitalise interest related to qualifying assets that that are determined by management as more separate asset. The contingent payments under component in construction contracts with are carried at fair value, including investment likely than not to result in additional taxes being lease agreements depending on the agreed level customers as the period between the recognition properties. Accordingly, interest costs on levied if the positions were to be challenged by of sales turnover of tenants are recognized as of revenue under the cost‑to‑cost method and the borrowings are expensed as incurred. the tax authorities. income in the period when earned because the milestone payment is always less than one year. Group is unable to reliably estimate the future Borrowings are classified as current liabilities The assessment is based on the interpretation of sales turnover of tenants in order to be able to Interest income is recognised on a time-proportion unless the Group has an unconditional right to tax laws that have been enacted or substantively recognise such expected contingent rents on a basis using the effective interest method. defer settlement of the liability for at least 12 enacted by the balance sheet date and any known straight-line basis over the lease term. months after the end of the reporting period. court or other rulings on such issues. Liabilities for penalties, interest and taxes other than on income Sales of services and management charges are 2.20. Employee Benefits are recognised based on management’s best recognised in the reporting period in which the 2.16. Trade and Other Payables estimate of the expenditure required to settle the services are rendered. Sales are shown net of VAT Wages, salaries, contributions to the state and obligations at the balance sheet date. and discounts. When the Group is acting as an private pension and social insurance funds, paid Trade payables are accrued when the agent, the commission rather than gross income is annual leave and sick leave, bonuses, and non- counterparty performed its obligations under recorded as revenue. monetary benefits (such as health services and the contract. Trade payables are recognised kindergarten services) are accrued in the year in The Group does not expect to have any contracts where the period between the transfer of the
29 30 HB Reavis Holding S.A. Audit Report Notes to Consolidated Financial Statements for the year ended 31 December 2020 Prepared in accordance with International Financial Reporting Standards as adopted by the EU
which the associated services are rendered by the transaction. Non-current Assets are assets that Valuation of investment properties value of the investment property would be employees of the Group. include amounts expected to be recovered or The fair value estimates of 89.5% of investment EUR 48.3 million lower or EUR 54.5 million collected more than twelve months after the properties (31 December 2019: 89.6%) were higher (2019: EUR 43.8 million lower or Certain senior managers are entitled to obtain end of the reporting period. If reclassification determined by the Group having received EUR 49.1 million higher). payments from the Group’s shareholders based is required, both the current and Non-current valuation advice from international valuation on the net asset value of the Group. As the portions of an asset are reclassified. Held for sale companies which have experience in valuing The principal assumptions made, and the impact obligation was incurred by shareholders and not disposal groups as a whole are measured at the properties of similar location and characteristics. on the aggregate valuations of reasonably by the Group, and is unrelated to the entity’s lower of their carrying amount and fair value less The remaining properties were valued on a basis possible changes in these assumptions are as share price, the Group did not recognise these costs to sell. of broker quotes or management estimates follows for properties in the CEE region: employee benefits as its expenses in profit or loss. (which are based on letter of intent purchase price Liabilities directly associated with disposal groups submitted by prospective bidders). The fair value • Rental charges per square meter and month that will be transferred in the disposal transaction of investment properties is estimated based on have been calculated for each property 2.21. Other Operating Expenses are reclassified and presented separately in the the income capitalisation method, where the value on a basis of actually contracted and statement of financial position. is estimated from the expected future benefits prevailing market rates as estimated by the Expenses include marketing, rental expenses, to be generated by the property in the form of qualified valuers. Should the rental levels legal, accounting, auditing and other professional rental income streams. The method considers increase or decrease by 10% the carrying fees. They are recognised in profit or loss in 2.23. Operating Segments net income generated by existing or comparable value of investment property would be the period in which they are incurred (on an property, capitalised to determine the value for higher or lower by EUR 441.3 million (2019: accruals basis). Operating segments are reported in a manner property which is subject to the valuation. The EUR 483.9 million). consistent with the internal reporting provided principal assumptions underlying the estimation to the chief operating decision-maker. The of the fair value are those related to: the receipt • The income capitalisation rate (yield) across 2.22. Non-current Assets Classified as chief operating decision-maker is the person or of contractual rentals; expected future market the portfolio was assumed to be from 4.30% Held for Sale group that allocates resources to and assesses rentals; void periods; re-letting incentives; to 9.5%, or 5.34% on average (2019: from the performance of the operating segments of maintenance requirements; appropriate 4.25% to 8.5%, or 5.27% on average). Non-current Assets and disposal groups, which an entity. The Group has determined that its discount rates; and in case of properties under Should this capitalisation rate increase / may include both Non-current Assets and Current chief operating decision-maker is the Board of development, future constructions, finance and decrease by 25 basis points, the carrying Assets, are classified in the statement of financial Directors of the Company. letting costs and market developers’ profits. value of the investment property would be position as ‘Non-current Assets held for sale’ if These valuations are regularly compared to actual EUR 83.9 million lower or EUR 92.2 million their carrying amount will be recovered principally market data and actual transactions by the Group higher (2019: EUR 84.8 million lower or through a sale transaction, including loss of 3. Critical Accounting Estimates and those reported by the market. For further EUR 93.3 million higher). control of a subsidiary holding the assets, within and Judgements in Applying details refer to Note 33. twelve months after the end of the reporting Accounting Policies The outbreak of COVID-19, declared by the World period. Assets are reclassified when all of the The principal assumptions made, and the impact Health Organisation as a “Global Pandemic” following conditions are met: (a) the assets are The Group makes estimates and assumptions on the aggregate valuations of reasonably on the 11th March 2020, has continued to available for immediate sale in their present that affect the amounts recognised in the possible changes in these assumptions are as impact many aspects of daily life and the global condition; (b) the Group’s management approved consolidated financial statements. Estimates follows for properties in the Western Europe: economy – with some real estate markets having and initiated an active programme to locate a and judgements are continually evaluated and experienced lower levels of transactional activity buyer; (c) the assets are actively marketed for are based on management’s experience and • Rental charges per square meter and month and liquidity. Travel, movement and operational sale at a reasonable price; (d) the sale is highly other factors, including expectations of future have been calculated for each property restrictions have been implemented by many probable and (e) it is unlikely that significant events that are believed to be reasonable on a basis of actually contracted and countries. In some cases, “lockdowns” have changes to the plan to sell will be made or that under the circumstances. Management also prevailing market rates as estimated by the been applied to varying degrees and to reflect the plan will be withdrawn. Non-current Assets or makes certain judgements, apart from those qualified valuers. Should the rental levels further “waves” of COVID-19; although these disposal groups classified as held for sale in the involving estimations, in the process of applying increase or decrease by 10% the carrying may imply a new stage of the crisis, they are not current period’s statement of financial position are the accounting policies. Judgements that have value of investment property would be unprecedented in the same way as the initial not reclassified or re-presented in the comparative the most significant effect on the amounts higher or lower by EUR 339.9 million (2019: impact. statement of financial position to reflect the recognised in the consolidated financial EUR 308.2 million). classification at the end of the current period. statements and estimates that can cause The pandemic and the measures taken to tackle a significant adjustment to the carrying amount • The income capitalisation rate (yield) across COVID-19 continue to affect economies and real A disposal group is a group of assets (Current of assets and liabilities within the next financial the portfolio was assumed to be 3.45% to estate markets globally. Nevertheless, as at the or Non-current) to be disposed of, by sale year include: 4.50%, or 4.16% on average (2019: from valuation date of 31 December 2020 property or otherwise, together as a group in a single 3.80% to 5.10%, or 4.44% on average). markets are mostly functioning again, with transaction, and liabilities directly associated Should this capitalisation rate increase / transaction volumes and other relevant evidence with those assets that will be transferred in the decrease by 25 basis points, the carrying at levels where an adequate quantum of market
31 32 HB Reavis Holding S.A. Audit Report Notes to Consolidated Financial Statements for the year ended 31 December 2020 Prepared in accordance with International Financial Reporting Standards as adopted by the EU
evidence exists upon which the valuers based • Amendments to IFRS 9, IAS 39 and IFRS 7: • Amendments to IAS 1 Presentation of Financial their opinions of value. Interest Rate Benchmark Reform (issued on Statements and IFRS Practice Statement 2: Lease term 26 September 2019 and effective for annual Disclosure of Accounting policies* (issued on Income taxes In determining the lease term, management periods beginning on or after 1 January 2020) 12 February 2021 and effective for annual The Group is subject to income taxes in different considers all facts and circumstances that create periods beginning on or after 1 January 2023) jurisdictions. Significant estimates are required an economic incentive to exercise an extension • Amendments to IAS 1 and IAS 8: Definition in determining the provision for income taxes, in option, or not exercise a termination option. of Material (issued on 31 October 2018 and • Amendments to IAS 8 Accounting policies, particular in the area of transfer pricing. There are Extension options (or periods after termination effective for annual periods beginning on or Changes in Accounting Estimated and Errors: some transactions and calculations for which the options) are only included in the lease term if the after 1 January 2020) definition of Accounting Estimates* (issued ultimate tax determination is uncertain, therefore lease is reasonably certain to be extended (or on 12 February 2021 and effective for annual tax liability is recognised for exposures deemed not terminated). • Amendments to References to the Conceptual periods beginning on or after 1 January 2023) probable. Where the final tax outcome of these Framework in IFRS Standards (issued on 29 matters is different from the amounts that were For leases of offices, the following factors are March 2018 and effective for annual periods • Amendment to IFRS 16 Leases initially recorded, such differences will impact normally the most relevant: beginning on or after 1 January 2020). Covid 19-Related Rent Concessions* (issued the income tax and deferred tax provisions in the on 28 May 2020 and effective for annual period in which such determination is made. • If there are significant penalties to terminate The above standards and amendments did not periods beginning on or after 1 June 2020) (or not extend), the Group is typically have any material impact on the Group. The calculation of deferred tax on investment reasonably certain to extend (or not • Amendments to IFRS 9, IAS 39, IFRS 7, properties is not based on the fact that they might terminate) the lease. IFRS 4 and IFRS 16 Interest Rate Benchmark be realised through a share deal but through an 5. New Accounting Pronouncements Reform – Phase 2 (issued on 27 August 2020 asset deal. As a result of the Group’s structure, • If any leasehold improvements are expected and effective for annual periods on or after the potential capital gain may be exempted from to have a significant remaining value, the Certain new accounting standards and 1 January 2021) any tax in case of share deal if certain conditions Group is typically reasonably certain to extend interpretations have been published that are not are met and hence the accumulated deferred (or not terminate) the lease. mandatory for reporting period commencing on * These new standards, amendments and tax liabilities may be recognized as a gain 1 January 2020 and have not been early adopted interpretations have not been endorsed by the upon disposal depending on the outcome of Otherwise, the Group considers other factors by the Group: European union yet. negotiations with future buyers. including historical lease durations and the costs and business disruption required to replace the • Amendments to IAS 1 Presentation of Unless otherwise described above, the new Initial recognition of related party transactions leased asset. Financial Statements: Classification of standards and interpretations are not expected In the normal course of business, the Group Liabilities as Current or Non-current and to affect significantly the Group’s consolidated enters into transactions with its related parties. Classification of Liabilities as Current and financial statements. IFRS 9 requires initial recognition of financial 4. Adoption of New or Revised Standards Non-current – Deferral of Effective Date* instruments based on their fair values. Judgement and Interpretations (issued on 23 January 2020 and 15 July 2020 is applied in determining if transactions are priced respectively and effective for annual periods 6. Segment Analysis at market or non-market interest rates, where The Group has applied the following standards beginning on or after 1 January 2023) there is no active market for such transactions. and amendments for the first time for its reporting Operating segments are components that engage The basis for judgement is pricing for similar types period commencing on 1 January 2020: • Amendment to IFRS 3 Business in business activities that may earn revenues of transactions with unrelated parties and effective Combinations* (issued on 14 May 2020 and or incur expenses, whose operating results are interest rate analyses. Terms and conditions of • Amendment to IFRS 3 Business Combinations: effective for annual periods beginning on or regularly reviewed by the chief operating decision related party balances are disclosed in Note 7. Definition of a Business (issued on 22 October after 1 January 2022) maker (CODM) and for which discrete financial 2018 and effective for annual periods information is available. The CODM is the person Expected credit losses (ECL) measurement beginning on or after 1 January 2020). • Amendment to IAS 16 Property, Plant and or group of persons who allocates resources Measurement of ECL is a significant estimate that Business is defined as an integrated set of Equipment* (issued on 14 May 2020 and and assesses the performance for the entity. involves determination methodology, models activities and assets that is capable of being effective for annual periods beginning on or The functions of CODM are performed by the and data inputs. Details of ECL measurement conducted and managed for the purpose of after 1 January 2022) Board of Directors of the Company. methodology are disclosed in Note 31. providing goods or services to customers, generating investment income (such as • Amendment to IAS 37 Provisions, Contingent (a) Description of products and services from In line with IFRS 9 the Group use practical dividends or interest) or generating other Liabilities and Contingent Assets* (issued on which each reportable segment derives its expedient for trade and other receivables and income from ordinary activities. The Group 14 May 2020 and effective for annual periods revenue calculates ECL using a provision matrix based on applied Definition of a Business (Amendments beginning on or after 1 January 2022) The Group is managing its business operations on its historical credit loss experience adjusted for all to IFRS 3) to business combinations whose the basis of the following segments: reasonable and supportable information that is acquisition dates are on or after 1 January • Annual Improvements 2018-2020* (issued on available without undue cost or effort. 2020 in assessing whether it had acquired 14 May 2020 and effective for annual periods a business or a group of assets. beginning on or after 1 January 2022)
33 34 HB Reavis Holding S.A. Audit Report Notes to Consolidated Financial Statements for the year ended 31 December 2020 Prepared in accordance with International Financial Reporting Standards as adopted by the EU
Asset Management – representing management Symbiosy – representing management of (e.g. MWh of electricity spent for electricity of income generating properties (properties in use activities related to the provision of smart building related costs). Transactions of the subsidiaries or vacant) developed by the Group or acquired solutions for tenants of the Group and other third- are allocated to relevant segment based on the with no major development expected. parties, across various geographies. substance of the transactions (e.g. expenses of subsidiary that supply utilities to other subsidiaries Development in Realisation – representing Cash – representing management of entities that are allocated to segment for which the utility was management of activities connected with are set up for concentration of cash for its further purchased) unless it is not possible to allocate construction, marketing and leasing activities. investments and providing loans to other entities them to explicit segment category and they A property is reclassified from Development in within consolidated group. remain unallocated. Realisation to Asset Management at the end of the accounting period in which the property has (b) Factors that management used to identify been commissioned for its intended use and a the reportable segments final building approval has been carried out. This The Group’s segments are strategic business means that the revenues, costs, including the units that focus on different activities of the revaluation gains or losses related to the year Group. They are managed separately because when property reaches the described criteria, each business unit requires different skill sets, are included within Development in Realisation, product and market, procurement and human whereas the completed property is shown on the resource strategies. balance sheet as of the last day of such period as property “in use or vacant” under the Asset Segment financial information reviewed by the Management business. Board of Directors includes rental and similar income from Asset Management business Development in Preparation – representing less directly attributable costs associated with management of activities including acquisition properties that equal to Net Operating Income of land and concept design and permitting until (NOI). The Board of Directors also reviews the the construction commencement. A property is change in fair value of properties. With respect reclassified from Development in Preparation to Development in Preparation segment, the to Development in Realisation at the end of the Board reviews acquisition opportunities and accounting period in which the construction of the submits bids for land and properties and oversees property started. The revenues, costs, including property design, permitting and zoning. With the revaluation gains or losses related to the year respect to Development in Realisation segment, when the construction of the property started, the Board reviews construction budgets and are included within Development in Preparation, actual construction costs and delivery schedules whereas the property is shown on the balance as well as property marketing and letting activities sheet as of the last day of such period as property at the end of the development cycle. With under the Development in Realisation. respect to Investment Management segment, Management reviews opportunities for transfer Investment Management – representing of further subsidiaries into this segment that management of activities related to management would contribute to development and extend of of third party investment in properties managed portfolio offered for external investors. by the Group. (c) Measurement of operating segment profit Non-Core – representing management of land or loss, assets and liabilities bank items designated as Non-Core properties of The Board reviews financial information prepared the Group. based on International Financial Reporting Standards as adopted by the European Union. HUB HUB – representing management of The Board evaluates performance of each activities related to management of Group’s co- segment based on profit before tax and net assets working platform, providing flexible work space value. The Group allocates costs to segments and business events. based on specific identification of entities that belong to particular segments. Direct operating expenses arising from investment property are allocated on a basis of appropriate cost driver
35 36 HB Reavis Holding S.A. Audit Report Notes to Consolidated Financial Statements for the year ended 31 December 2020 Prepared in accordance with International Financial Reporting Standards as adopted by the EU
(d) Information about reportable segment profit or loss, assets and liabilities (d) Information about reportable segment profit or loss, assets and liabilities The segment profit and loss information for the year ended 31 December 2020 is as follows: The segment profit and loss information for the year ended 31 December 2020 is as follows:
- - ) ) ) ) ) - -
) ) 27 28 29
2.6 3.9 0.8 0.2 2.4 2.3 25.5 21.9 12.8 48.6 71.3 (0.1) (0.1) 22.0 22.8 23.8 21.9 33.4 10.8 372.5 372.5 ( ( ( ( 43.0 42.1 305.9 271.4 271.4 299.2 299.2 320.2 320.2 ( ( ( (133.7) (133.7) (130.7) (965.2) (266.8) (149.2) (114.0) 2,159.8 2,159.8
15.8
- - 27.8 ------) - (0.4) (0.4) - -33.1 - - (0.4) (0.4) - - 1.1 - 1.1 - -
- (305.9) - - - ) 6.1 ( - - - 0.6 0.6 0.6 ( 10.8
------(149.2) - - (130.7) ------Table continued on next page next on continued Table Cash Unallocated Unallocated Cash Total
Unallocated Cash Total
y mbios y ------S - - 192.7 (331.6) 1,386.1 ------192.7 127.5 - - - -
------) ) ) ------4.2 4.2 2.5 ( ( ( ------
- - ) ) ------0.3 ------(4.5) - - ) ------(2.5) (2.5) 1.4 (5.3) (63.1) 6.3 0.2 ( ( 20.8 ( -
- - - 3.9 - - - 0.1 6.9 - - - ) ) - - - (0.2) ------) - -
1.2 1.2 (0.1) 3.0 - - 0.8 0.8 4.7 4.7 4.3 4.3 ( ( 6.0 34.2 34.2 14.9 ( ement Non-Core HUB HUB g Investment Mana
- - - (6.0) ------) ) ------5.5 - - - - 13.6 ------0.1 6.9 - - 34.2 ------3.0 3.0 14.4 14.4 (2.0) (2.0) (6.6) (3.0) (3.0) ( ( Investment Investment Investment Preparation Preparation Management Non-Core HUB HUB Symbiosy Management Management Non-Core HUB HUB Symbiosy Cash Unallocated Total Development in Development ------) ------11.2 3.8 1.1
------) ) ) ) - - - - - 0.3 - - - 2.8 - - - 0.4 8.9 8.9 1.6 1.6 35.2 35.2 ( 3.2 3.4 10.7 10.7 13.4 (10.1) (10.1) ( ( (0.2) (0.2) 626.7 626.7 23.8 30.7 ( ( Realisation Realisation Development Development Development Development in Preparation Preparation in in Preparation Preparation in Development in Development ------) ------) ) - - - -
------) ) ------24.9 24.9 21.3 ( 0.2 0.2 6.5 6.5 2.3 2.3 1.1 1.1 7.3 7.7 15.4 35.1 17.8 17.8 15.4 15.4 25.3 39.0 25.2 25.2 (10.4) 14.4 - 3.9 (4.5) - - 28.6 - 16.5 16.5 10.7 439.1 264.0 (0.4) (0.4) (4.0) (4.0) (29.2) (0.2) (0.1) - (1.0) - - (40.6) (6.1) ( ( (0.1) (0.1) ( ( (114.0) (114.0) Asset Asset ement ement g Development Development in Realisation Realisation in Development - - - in Realisation Realisation in Mana - - - 21.3 ------0.6 21.3 ------) - - - - 2.4 344.3 25.8 ------25.8 - 344.3 - 2.4 27.5 27.5 (61.1) 1.1 1.5 (2.8) (5.0) 1.4 (5.3) (111.9) (69.2)
(11.5) (11.5) (34.0) Asset - - ) ) ------
6.5 1.6
299.9 2.5 ( 22 22 23 11 11 2.3 2.3 Note 6.4 0.7 ( ( 410.1 410.1 657.7 657.7 1,387.1 627.1 - 34.2 42.0 - 192.7 138.3 3,097.1 Asset Asset Management
2.4 365.6 97.1 - - - - - 0.6 465.7 465.7 0.6 - - 97.1 - 365.6 - 2.4
Management
(299.0)
10 Note Note y
(265.6) (948.0) (0.4) - - (27.1) - - (469.9) (1,711.0) (1,711.0) (469.9) (948.0) - - (27.1) (0.4) (265.6) - - 269.8 0.8 - - - 0.8 ------33.4 - - -
591.9853.3 672.6 42.0 - - - -
9 9 9 11 11 15 15 20 (254.0) (673.8) (673.8) (254.0) 20 - (37.4) - - - - - 28 28 28 7,20 (4.5) (109.7) (109.7) (4.5) 7,20 - (152.6) - - - - - Note 10,27 10,27 y property 10 - - 71.3 ------71.3 10 - - - property - fee ------2.4 - - on investment propert ) 10
loss y (
R ain/ investment investment g management management of
10 y y investments investments liabilities liabilities Retail Retail Industrial Office current current non-current non-current
Rental income from investment property property income from investment Rental Total Total - current Revaluation Revaluation - - - for sale held as included - Direct operating expenses arising from investment investment from arising expenses operating Direct propert property income investment from operating Net - - - - held sale for property Investment 15 Leasing Leasing - non-current Construction contract costs costs contract Construction divestments Total - Retail - Retail - Retail - Retail - Retail Share of profit or (loss) of joint ventures ventures joint of or (loss) of profit Share Construction costs related to joint ventures ventures joint to related costs Construction - Office - Office - Industrial - Industrial - Industrial - Office - Office - Office - Office - Office properties investment from income charges Service 22 properties investment from charges income Management 22 - Office - third parties expense Interest contracts construction from Revenue 24 Purchases investment to related costs Construction propert Sale of investment propert property investment venture joint of Sale
- Retail - Retail - Industrial expenses/revenues Other
- Industrial - Industrial - Retail - Retail Profit/(loss) before income tax (segment (segment tax income before Profit/(loss) result) - Industrial - Industrial
Investment in joint ventures in joint ventures Investment Investment Investment Construction costs related to construction construction to related costs Construction work HB Reavis Holding S.A. S.A. Holding Reavis HB Notesto Consolidated Financial Statements for the year ended December31 2020 Preparedaccordancein with InternationalFinancial Reporting Standards as adopted theby EU as is 2020 follows: December 31 ended the year for information loss and profit segment The EU of millions In S.A. Holding Reavis HB Notesto Consolidated Financial Statements for the year ended December31 2020 Preparedaccordancein with InternationalFinancial Reporting Standards as adopted theby EU as is 2020 follows: December 31 ended the year for information loss and profit segment The millions EUR of In S.A. Holding Reavis HB Notesto Consolidated Financial Statements for the year ended December31 2020 Preparedaccordancein with InternationalFinancial Reporting Standards as adopted theby EU millions EUR of In Borrowings value asset net Segment 6 Segment Analysis(Continued) (d)Information about reportable segment profitor loss,assets and liabilities 6 Segment Analysis(Continued) (d)Information about reportable segment profitor loss,assets and liabilities (Continued) 6 Segment Analysis(Continued) Thesegment information onsegment assets and liabilities ofas 31 December 2020asis follows: Investment propert Investment
Deferred tax liability liability tax Deferred liabilities unallocated Other Total Total Deferred tax asset assets unallocated Other
Total assets assets Total
37 38 HB Reavis Holding S.A. Audit Report Notes to Consolidated Financial Statements for the year ended 31 December 2020 Prepared in accordance with International Financial Reporting Standards as adopted by the EU
Geographical information. Revenue, expenses and assets analysed by country for the year Geographical information. Liabilities and capital expenditures analysed by country for the year ended 31 December 2020 are as follows: ended 31 December 2020 are as follows:
) ) ) ) - 30 31
2.8 2.8 2.3 2.3 2.4 2.4 0.1 28.7 28.7 87.8 87.8 13.6 13.6 25.5 25.5 71.3 71.3 48.9 48.9 34.2 34.2 21.9 21.9 ( 40.6 192.7 192.7 300.8 300.8 715.4 715.4 372.5 372.5 (22.8) (22.8) (21.9) (21.9) ( (43.0) (43.0) (42.1) 965.2 305.9 ( ( (130.7) (130.7) (121.9) (121.9) (133.7) (133.7) (266.8) (141.3) (141.3) 1,749.2 1,749.2 - - 27.8 ------(111.9) - - - 465.7 ------0.2 0.2 10.8 2,515.8 0.2 0.2 10.8 2,816.6 Other Other countries Unallocated Unallocated countries Total countries Unallocated Unallocated countries Total - - - - ) ) ------1.6 ( 101.7 ( - - - - ) ) ) - - (3.8) - 3.6 3.6 9.3 9.3 26.6 (46.7) 1.2 1.6 ( ( 139.4 (
- ) ) 4.3 9.3 6.7 1.7 5.2 ( ( - ) ) ) - - 265.5 7.6 7.6 7.7 7.7 6.6 6.6 12.1 81.8 ( ( 322.7 (
- - ) 0.7 0.7 135.0 61.7 50.2 43.0 2.1 2.1 0.3 0.3 9.5 9.5 411.3 12.4 36.9 1.0 1.0 141.6 68.4 121.5 43.0 2.7 2.7 60.8 34.8 30.7 14.8 23.3 2.9 ( Czech Czech Czech Czech Republic Poland Poland Republic Hungary UK Germany Republic Poland Poland Republic Hungary UK Germany ------) ) ) ) - 35.3 9.8 9.8 8.3 8.3 0.1 81.9 81.9 10.1 10.1 90.2 90.2 25.6 25.6 ( (2.4) (2.4) (1.5) (2.4) (0.5) (35.1) (0.2) (8.0) (8.0) (5.0) (15.3) (0.6) (13.7) (0.4) 20.7 84.7 681.6 681.6 71.7 837.3 341.4 626.3 247.3 245.3 245.3 681.6 36.4 837.3 75.9 626.3 247.3 (56.9) (56.9) (3.2) (31.2) (9.8) ( ( 535.6 ( (694.3) (125.5) (406.8) (57.5) (106.1) (48.8) (1,711.0) (272.0) -
(148.3) (48.1) (66.4) (0.2)
1,386.1 12.9 (173.4) 608.2156.0 250.7 491.3 16.9 23.5 ------(141.3) (141.3) - - - -
(84.7) - (81.8) - (139.4) - - - (305.9) (305.9) - - - (139.4) - (81.8) - (84.7)
707.2 376.2657.0262.1 898.1 74.4 3,097.1 23.5 98.6
9 9 10 10 (34.1) 31.2 17.2 12.3 (0.1) 2.2 - - 10 10 24 24 11 11 20 10 10 22 8.7 - 1.9 1.0 2.0 ------2.0 1.0 1.9 - 8.7 22 28 ------(130.7) 28 ------15 - (2.9) - (119.0) - - - (2.9) - 15 - 10 10 420.1 419.9 25.9 583.6246.5 53.2 - - 22 22 4.5 7.9 8.4 1.8 11.6 - - - 22 22 0.1 0.1 0.1 0.9 1.6 - - - 15 15 23 23 (6.4) (1.3) (2.7) (0.6) (11.8) - - - 16 16 11 2.3 ------2.3 11 87.8 - - - Note Slovakia Slovakia Note Slovakia Note (8.3) (0.3) (6.6) (6.7) ------(6.7) (6.6) (0.3) (8.3)
(13.6) (27.3) (27.7) (4.3) (8.7) (49.1) (3.0) -
- 2.4 - - - 10.8 0.2 0.8 5.8 10.3 6.1 1.0 13.9 10 - - - - 71.3 - - 10 - - - ) non-cash
g ------includin ( ventures ------
y Revenue, expenses and assets analysed by country for the year ended 31 December 2020 are as follows: follows: as are 2020 December 31 ended year the for country by analysed assets and expenses Revenue, asfollows: are 2020 December 31 ended the year for country by analysed expenditures capital and Liabilities oint j
10,27 y fee oint ventures ventures oint j costs costs under development development under vacant or in use y y venture venture assets assets assets assets liabilities liabilities joint joint es charges charges contract contract g
management management in in s g income income non-current non-current unallocated unallocated unallocated unallocated divestments divestments Revenue from construction contracts contracts construction from Revenue Total assets assets Total Direct operating expenses expenses operating Management Direct properties investment from income operating Net Construction Construction Share of profit or loss of Interest expense expense Interest Investment - current In millions of EUR of EUR millions In char Service gain/(loss) Revaluation propert Investment propert Investment as held-for-sale classified assets Non-current equivalents cash and Cash of EUR millions In Borrowin - non-current value asset Net propert investment of Purchases property to investment related costs Construction Sale of investment propert property investment joint venture of Sale Total Other Other Total non-current assets and assets held for sale sale for assets held and assets non-current Total Other Other assets non-current Total Investment Investment Rental Rental Other Other Deferred income tax liability tax income Deferred - current - current assets non-current with associated directly Liabilities for sale as held classified Other (expenses)/revenues (expenses)/revenues Other tax before Profit/(loss) Leasing - non-current Construction costs related to construction work work to construction related costs Construction Total investments investments Total Construction costs related to related costs Construction Total liabilities liabilities Total HB Reavis Holding S.A. S.A. Holding Reavis HB Notesto Consolidated Financial Statements for the year ended December31 2020 Preparedaccordancein with InternationalFinancial Reporting Standards as adopted theby EU S.A. Holding Reavis HB Notesto Consolidated Financial Statements for the year ended December31 2020 Preparedaccordancein with InternationalFinancial Reporting Standards as adopted theby EU 6 Segment Analysis(Continued) Geographical information. 6 Segment Analysis(Continued) Geographical information.
39 40 HB Reavis Holding S.A. Audit Report Notes to Consolidated Financial Statements for the year ended 31 December 2020 Prepared in accordance with International Financial Reporting Standards as adopted by the EU
(d) Information about reportable segment profit or loss, assets and liabilities (d) Information about reportable segment profit or loss, assets and liabilities The segment profit and loss information for the year ended 31 December 2019 is as follows: The segment profit and loss information for the year ended 31 December 2019 is as follows: -
) ) 34 33
1.0 2.0 2.2 4.1 18.6 18.6 22.8 22.8 7.5 30.6 ( 445.9 (19.6) (19.6) (61.1) (61.1) 68.3 221.4 221.4 302.7 302.7 328.4 328.4 ( (246.6) (246.6) (130.2) (130.2) (192.4) (133.4) (164.1) (728.9) (152.3) 2,150.9 2,150.9
) - 32
5.3 0.3 0.2 0.8 0.1 17.7 13.4 ( (1.0) (1.0) (7.7) (7.7) 507.0 507.0
------
- (376.8) - - - 4.1 2.9 2.9 2.9 2.9 (9.3) (9.3)
(33.3) (33.3) 34.9
(2.9) (2.9) (0.1) (0.1) 213.3 213.3 ------1.4 - - 34.2 ------(0.2) (0.2) - - - (26.1) - (26.1) - (85.1) (85.1) (3.0)
- - (391.9) (1,446.9) - - (164.1) ------(133.4) - - -
------(2.3) (2.3) table continued on next page page next on continued table
------
------115.1 ) ) ------(0.4) - - - - - 3.2 32.3 32.3 17.9 17.9 115.1 (174.5) 1,593.4 ( 11.2 1.8 1.8 2.1 2.1 ( (1.8) (1.8) (3.8) (3.8)
- - 0.7 - - - 0.5 ------
- - (14.4) ------0.8 0.8 5.0 5.0 ------30.6 30.6 36.4 36.4
- - - - (0.2) - - - - - (1.0) - - - 0.1 6.1 - - - - - (0.2) 0.5 - - 511.7 - -
(3.9) (3.9) (0.1) 5.0 - ement Non-Core HUB HUB Cash Unallocated Total g
------Investment Investment - - Mana - - - - - 2.0 2.0 (1.6) (1.6) (27.0)
------ement Non-Core HUB HUB Cash Unallocated Total g 0.3 0.3 0.2 0.4 57.4 57.4 (0.5) Investment Management Non-Core HUB HUB Cash Unallocated Total Investment Mana
- - Preparation Preparation ------) ------0.4 (6.3) (6.3) (5.9) (5.9) ( Development in in Development (7.1) (7.1) 193.9 193.9 200.2 200.2
------0.7 0.7 0.2 0.6 Preparation Preparation 377.4 377.4 (22.5) Development Development in Preparation Preparation in Development in in Development - - (48.3) - - - - (48.3) - - Development
- - in Realisation Realisation in - - - - ) ) - - - - 14.4 14.4 17.5 17.5 (14.4) (14.4) (32.6) (32.6) - - - - -
4.1 - - - - - ) ( 56.6 219.7 840.8 (97.6) (97.6) ( 4.6 0.3 1.4 0.8 (807.2) (807.2) (648.9) (648.9) 1,428.3 1,428.3 0.1 32.2 32.2 89.3 89.3 368.2 57.2 (3.9) (0.3) 5.1 - 512.6 (3.0) 71.7 71.7 27.7 29.1 0.6 0.4 - 0.1 6.1 - -36.3 17.5 64.0 64.0 390.0 57.4 ( (6.9) (7.7) (7.7) Asset ement ement Development in Realisation Realisation in g Realisation Realisation - - - - Development in in Development Mana 0.5 0.5 0.3 0.3 30.9 398.1 7.0 7.0 398.1 0.9 - 30.9 9.0 - 13.4 13.4 (0.5) (0.5) 102.5 102.5 338.7 50.1 (3.5) (27.3) 1.6 (2.3) 456.7 (3.1) Asset Asset ement ement
(328.5) (328.5) (130.2) (130.2) - - - - ) ) - - - - g
(20.1) (0.1) (0.3) (3.9) (0.2) (1.8) - - (26.4) (26.4) - - (1.8) (0.2) (0.1) (20.1) (3.9) (0.3)
18.3 - 0.2 - - - - -18.5
(20.0) (0.1) (0.3) (3.9) - (1.8) - - (1.8) (0.1) (20.0) (3.9) (0.3) - - 12.6 - - - 0.8 - 4.9 0.2 - - - 0.7 - - 5.8 22 22 23 22 22 10 10 11 11 0.9 0.9 2.2 2.2 0.1 0.2 ( ( (3.8) (3.8) Note Note 297.7 297.7 490.1 490.1 790.9 790.9 1,648.0 200.2 - 36.4 32.3 115.1 3,040.3 217.4 563.8 563.8 (70.7) (70.7) Asset Asset Mana (227.1) (227.1) (152.3)
31.4 412.5 7.0 7.0 412.5 465.5 10.8 0.9 - 31.4 - 2.9
Management
24 24 10 10 10,27 (198.3) Note Note
9 9 9
11 11 10 15 20 20 28 28 7,20 7,20 Note Note
ventures - 1.0 - - - - - ventures oint oint j
es income from investment properties properties investment from income es 22 y g
R R es income from investment properties properties investment from es income g
y ement char ement investments investments g Office Office Retail -included asheld for sale - Retail - Industrial - held sale for property Investment 15 Total Total Rental income from investment property property income from investment Rental - current - Office - non-current - current Leasing - non-current Direct operating expenses arising from investment investment from arising expenses operating Direct propert property investment income from operating Net Revaluation gain/(loss) on investment property property investment on gain/(loss) Revaluation - Retail - Industrial
- Retail expenses/revenues Other - Industrial Profit/(loss) before income tax (segment (segment tax income before Profit/(loss) result) - Retail - Industrial - Industrial - Office - - - Industrial - Office Service char Mana - Office - third parties expense Interest contracts construction from Revenue property investment of Purchases investment to related costs Construction property10 Sale of investment property property investment venture joint of Sale Construction contract costs costs contract Construction to related costs Construction
- Office
- Retail - Retail Share of profit or loss of joint ventures ventures of joint or lossof profit Share divestments Total
Investment in joint ventures in joint ventures Investment Investment management fee management Investment Deferred tax asset Other unallocated assets assets unallocated Other assets Total
Construction costs related to construction work construction to related costs Construction 6 follows: as is 2019 December 31 of as Segmentliabilities and Analysis(Continued) assets segment on information segment The HB Reavis Holding S.A. S.A. Holding HB Reavis Notesto Consolidated Financial Statements for the year ended December31 2020 Preparedaccordancein with InternationalFinancial Reporting Standards as adopted theby EU millions EUR of In Borrowings value asset net Segment 6 Segment(Continued) Analysis (d)Information about reportable segment profitor loss,assets and liabilities HB Reavis Holding S.A. S.A. Holding Reavis HB Notesto Consolidated Financial Statements for the year ended December31 2020 Preparedaccordancein with InternationalFinancial Reporting Standards as adopted theby EU as is 2019 follows: December 31 ended the year for information loss and profit segment The EU of millions In S.A. Holding HB Reavis Notesto Consolidated Financial Statements for the year ended December31 2020 Preparedaccordancein with InternationalFinancial Reporting Standards as adopted theby EU as is 2019 follows: December 31 ended the year for information loss and profit segment The EU of millions In 6 Segment Analysis(Continued) (d)Information about reportable segment profitor loss,assets and liabilities (Continued) Investment propert Investment Deferred tax liability liabilities unallocated Other liabilities Total
41 42 HB Reavis Holding S.A. Audit Report Notes to Consolidated Financial Statements for the year ended 31 December 2020 Prepared in accordance with International Financial Reporting Standards as adopted by the EU
Geographical information. Geographical information. Revenue, expenses and assets analysed by country for the year ended 31 December 2019 are as follows: Revenue, expenses and assets analysed by country for the year ended 31 December 2019 are as follows:
) ) ) 35 36
2.2 1.0 5.8 2.0 36.3 36.3 22.8 22.8 18.6 18.6 18.5 18.5 61.2 61.2 (7.5) (7.5) (7.7) (7.7) 19.6 519.4 519.4 445.9 445.9 523.4 523.4 334.3 115.1 115.1 124.6 (68.8) (68.8) ( (33.3) (33.3) (26.4) (26.4) (61.1) (61.1) 192.4 133.4 (177.7) (177.7) ( ( (728.9) (728.9) (246.6) (246.6) (138.2) (138.2) 1,879.5 1,879.5
(130.2) (130.2) ------34.2 - - - - ) ------456.7 - - 4.3 4.3 2,466.3 4.3 4.3 2,800.6 133.4 ( -
- ) ------0.1 ( Other Other countries Unallocated Unallocated countries Total countries Unallocated Unallocated countries Total
- - ) - - - (4.4) - - - - -
y 9.5 9.5 36.4 52.0 (
------) - 1.5 1.5 3.4 6.5 (0.1) 1.5 ( -
) - ) - - 150.8 - - UK German y 0.2 0.2 3.9 3.9 9.7 9.7 12.4 1.2 1.2 0.2 0.2 ( ( ar g
) - - (13.3) ) 6.6 6.6 6.3 6.3 4.1 4.1 13.7 352.4 6.0 6.0 7.6 ( 31.0 ( (130.2)
) - ) - - (7.5) - - 96.9 2.6 2.6 2.4 2.4 4.4 4.4 23.9 2.6 2.6 6.7 2.6 ( ( Czech Czech Czech Republic Poland Poland Republic Hungary UK Germany Republic Poland Hun
) - ) 7.7 7.7 6.8 6.8 7.7 (2.3) (2.3) (1.3) (1.6) (0.6) (1.5) (0.2) 96.0 96.0 16.7 158.0 79.1 84.3 47.4 (24.8) 86.6 86.6 18.8 18.8 18.0 18.0 ( 724.0 724.0 70.6 851.5 286.6 662.6 173.1 27.9 102.4 ( (616.9) (63.2) (317.6) (25.9) (94.6) (52.6) (4.5) (271.6) (1,446.9) (1,446.9) (52.6) (94.6) (25.9) (317.6) (271.6) (4.5) (63.2) (616.9)
(1,593.4) 125.9 130.0 270.4 580.4 557.8 11.8 (142.7) 59.8 ------(138.2) (138.2) - - - - - (452.9) (49.2) (198.3) (24.1) (0.4) (36.5) (1.0) (15.2) (6.0) (9.7) - - 31.1 53.1 90.5 141.4 142.1 7.3 - 465.5 - (13.3) (130.2) (35.0) (198.3) - - - (376.8) -
637.4 70.6 754.6 286.6 511.8 173.1 27.9 742.8 296.3 875.4 675.0 182.6 75.0 3,040.3 64.3 128.9 9 15 (49.6) - (71.5) - (56.6) - - - (56.6) - - (71.5) - (49.6) 15 20 28 - - - - - 24 24 10 10 142.1 11.1 10 10 111.1 27.5 150.1 82.2 99.6 48.9 22 22 1.4 5.8 6.7 1.9 20.5 - - - 22 11.1 0.2 1.7 - 5.5 - - - 1.7 0.2 11.1 22 11 11 (0.2) 10 10 480.0 270.4 747.4 151.0 172.3 58.4 - - 15 11 2.2 ------2.2 - 11 23 23 (0.3) (1.8) (0.1) (5.6) (0.9) (17.7) - - 16 16 22 4.1 1.4 0.3 0.1 (0.1) (0.1) 22 0.1 0.3 1.4 4.1 - - - 124.6 - - - - Note Slovakia Slovakia Note Note Slovakia Slovakia Note
10,27 10,27 (198.3) (35.0) 2.0 - - - - - (0.5) (8.5) (0.5) (1.6) (3.8) (18.4) - - 27.9 4.3 2.5 3.1 8.4 0.8 1.1 13.1 (26.8) (0.9) (22.1) (9.4) (13.6) (7.5) 19.2 -
10 31.1 51.6 90.3 133.8 134.4 4.7 - - y non-cash) 10 ------non-cash)
(including (including ventures 1.0 - - - - - Revenue, expenses and assets analysed by country for the year ended 31 December 2019 are as follows: follows: as are 2019 December 31 ended year the for country by analysed assets and expenses Revenue, asfollows: are 2019 December 31 ended the year for country by analysed expenditures capital and Liabilities oint j
y fee property property venture venture assets assets assets assets liabilities liabilities
R joint joint investment investment es ain charges charges g g
management management in in of s g
income income g non-current non-current unallocated unallocated unallocated unallocated Liabilities directly associated with non-current assets assets non-current with associated directly Liabilities for sale as held classified liabilit tax income Deferred Borrowin Rental Rental Revenue from construction contracts contracts construction from Revenue costs contract Construction - non-current non-current - - current Total investments investments Total Share of profit or loss of joint ventures ventures joint or loss profit of of Share Leasin Other In millions of EU millions In char Service Revaluation development under property or vacant in use property Investment Investment as held-for-sale classified assets Non-current equivalents cash and Cash of EUR millions In - non-current value asset Net Purchases propert to investment related costs Construction property investment of Sale property investment joint venture of Sale Investment Investment Other - current Total divestments divestments Total Management Management Construction costs related to related costs Construction Construction costs related to construction work work to construction related costs Construction Interest expense expense Interest Investment Total liabilities liabilities Total Total non-current assets and assets held for sale sale for assets held and assets non-current Total Total non-current assets assets non-current Total assets Other Total Direct operating expenses expenses operating Direct properties investment from income operating Net Other (expenses)/revenues (expenses)/revenues Other tax before Profit/(loss) 6 6 (Continued) Analysis Segment Geographical information. 6 Segment Analysis(Continued) Geographical information.
HB Reavis Holding S.A. S.A. Holding HB Reavis Notesto Consolidated Financial Statements for the year ended December31 2020 Preparedaccordancein with InternationalFinancial Reporting Standards as adopted theby EU S.A. Holding HB Reavis Notesto Consolidated Financial Statements for the year ended December31 2020 Preparedaccordancein with InternationalFinancial Reporting Standards as adopted theby EU
43 44 HB Reavis Holding S.A. Audit Report Notes to Consolidated Financial Statements for the year ended 31 December 2020 Prepared in accordance with International Financial Reporting Standards as adopted by the EU
HB Reavis Holding S.A. Notes to Consolidated Financial Statements for the year ended 31 December 2020 7. Balances and Transactions with are disclosed in Note 1. Transactions are generally ThePrepared income in accordance and expense with itemsInternational with related Financial parties Reporting for theStandards year as adopted by the EU 38 Related Parties entered into on an arm’s length basis. ended 31 December 2019 are as follows: 7 Balances and Transactions with Related Parties (Continued)
Related parties are defined in IAS 24, Related Key management of the Group consists of 7 The income and expense items with related parties for the year ended 31 December 2019 are as follows: HB Reavis Holding S.A. Party Disclosures. Parties are generally considered senior managers (2019: 7). Short-term bonuses Entities under Key management Notes to Consolidated Financial Statements for the year ended 31 December 2020 to be related if one party has the ability to control fall due wholly within twelve months after the end In millions of EUR common control personnel Joint ventures Total Prepared in accordance with International Financial Reporting Standards as adopted by the EU 37 the other party, is under common control, or of the period in which management rendered the Revenue from services rendered 4.9 - - 4.9 can7 exercise Balances significant and Transactions influence with or Related has joint Parties related services. Revenue from construction contracts 1.4 2.9 0.1 4.4 control over the other party in making financial Rental income 3.2 - 0.2 3.4 Related parties are defined in IAS 24, Related Party Disclosures. Parties are generally considered to be related if one party Rental expenses (1.4) - - (1.4) andhas theoperational ability to control decisions. the other In party, considering is under common each control, orThe can nature exercise of significant the related influence party or relationshipshas joint control Other services (10.2) (1.2) - (11.4) Short-term employee benefits (salaries) - (2.5) - over the other party in making financial and operational decisions. In considering each possible related party relationship, (2.5) possible related party relationship, attention is for those related parties with whom the Group Long-term employee benefits (social security costs) - (0.5) - (0.5) directedattention is to directed the substance to the substance of the of relationship,the relationship, not merelyentered the legal intoform. significantThe Company’s transactions immediate parent or had and Interest income 0.2 - 0.1 0.3 ultimate controlling party are disclosed in Note 1. Transactions are generally entered into on an arm’s length basis. Interest expense (0.6) - 0.2 (0.4) not merely the legal form. The Company’s significant balances outstanding at 31 December Other financial expenses (0.9) - - (0.9) immediateKey management parent of the and Group ultimate consists controlling of 7 senior managersparty (2019:2020 7). Short-termare detailed bonuses below. fall due wholly within twelve months after the end of the period in which management rendered the related services. A shareholder entity has made an undertaking to pay to the senior managers of the Group an amount under a profit sharing The nature of the related party relationships for those related parties with whom the Group entered into significant scheme based on increase in Net Asset Value (adjusted) of the Group. As the amount is payable by the shareholder, and Attransactions 31 December or had significant2020, the balances outstanding outstanding balances at 31 December with related 2020 areparties detailed are below. as follows: Adoes shareholder not constitute entity a share has based made payment an undertaking under IFRS, it has notThe been Group expensed had byno the outstanding Group. The loansamount receivable paid or toaccrued pay towith the respect senior to managers2019 and/or of2020 the are Group not material an in the fromcontext the of membersthe consolidated of the financial Board statements. of Directors The of the compensation of the Board of Directors of the Parent Company amounted to EUR 1.1 million in 2020 (2019: EUR 0.9 At 31 December 2020, the outstanding balances with related parties are as follows: amount under a profit sharing Group as at 31 December 2020 (2019: nil). million).
Entities under Key management In millions of EUR schemeThe Group based had no on outstanding increase inloans Net receivable Asset Value from the membersDistributions of the Board to ownersof Directors paid of by the Group Group in as 2020 at common control personnel Joint ventures Total 31 December 2020 (2019: nil).
(adjusted) of the Group. As the amount is payable and 2019 respectively are described in Note 19. Trade and other receivables (Note 14) 11.0 0.2 - 11.2 ECL allowance for trade receivables to related party (2.3) - - (2.3) byDistributions the shareholder, to owners paidand by Group in 2020 and 2019 respectively are described in Note 19. Other current assets (Note 17) 1.8 - - 1.8 The Group’s investment in joint ventures is Financial assets (Note 12) 0.1 0.5 - 0.6 The Group’s investment in joint ventures is described in Note 11. Trade and other payables current (Note 21) (4.8) - - (4.8) does not constitute a share based payment under described in Note 11. Trade and other payables non - current (Note 21) (15.1) - - (15.1) IFRS,8 it has Property, not been Plant andexpensed Equipment by the Group. The
amount paid or Movements in the carrying amount of property, plant and equipment were as follows: The income and expense items with related parties for the year ended 31 December 2020 are as follows: Capital work in Entities under Key management Joint ventures and accrued with respect to 2019 and/or 2020 are In millions of EUR progress common control personnel associates Total not material in the context of the consolidatedLand and Machinery, Vehicles and including
financialIn millions of statements.EUR The compensationbuildings of equipment other assets advances (CIP) Total Revenue from services rendered 4.7 - - 4.7 4.5 Revenue from construction contracts 7.1 0.6 12.2 theNet bookBoard value of asDirectors at 1 January of 2019the Parent Company6.4 0.2 0.4 2.3 9.3 Rental income 2.8 - 0.1 2.9 Rental expenses (5.3) - - (5.3) amounted to EUR 1.1 million in 2020 (2019:
Other services (2.5) (0.5) - (3.0) EURAdditions 0.9 million). 0.4 0.1 0.2 3.4 4.1 Short-term employee benefits (salaries) - (2.0) - (2.0) Transfers 0.7 1.1 - (1.8) - Long-term employee benefits (social security costs) - (0.4) - (0.4) Disposals (0.9) (0.1) - - (1.0) Interest income 0.2 - - 0.2 Transfer to assets held for sale (4.8) - - - (4.8) Other financial expenses (0.2) - - (0.2) Transfer to right-of-use assets - - (0.3) - (0.3)
Depreciation charge (1.3) (1.2) - - (2.5)
At 31 December 2019, the outstanding balances with related parties are as follows: Net book value as at 31 December 2019 0.5 0.1 0.3 3.9 4.8
Entities under Key management In millions of EUR common control personnel Joint ventures Total Additions - 0.1 - 2.0 2.1 Transfers 0.1 2.1 0.6 (2.8) - Trade and other receivables (Note 14) 10.8 1.7 0.2 12.7 Disposals (0.1) - (0.2) - (0.3) ECL allowance for trade receivables to related party (2.9) - - (2.9) Depreciation charge - (1.7) (0.3) - (2.0) Other current assets (Note 17) 1.3 - - 1.3 0.1 0.5 - Financial assets (Note 12) 0.6 1.4 - - Loans (Note 14) 1.4 Net book value as at 31 December 2020 0.5 0.6 0.4 3.1 4.6 (1.4) - - ECL allowance for loans to related party (Note 14) (1.4) Trade and other payables current (Note 21) (3.7) (0.8) - (4.5) Trade and other payables non - current (Note 21) (13.1) - - (13.1) Other payables non-current (Note 21) (0.6) - - (0.6) At 31 December 2020, property, plant and equipment carried at EUR nil million (at 31 December 2019: EUR nil million) has been pledged to third parties as collateral with respect to borrowings.
45 46
HB Reavis Holding S.A. Notes to Consolidated Financial Statements for the year ended 31 December 2020 Prepared in accordance with International Financial Reporting Standards as adopted by the EU 38
7 Balances and Transactions with Related Parties (Continued)
The income and expense items with related parties for the year ended 31 December 2019 are as follows: Entities under Key management In millions of EUR common control personnel Joint ventures Total
Revenue from services rendered 4.9 - - 4.9 Revenue from construction contracts 1.4 2.9 0.1 4.4 Rental income 3.2 - 0.2 3.4 Rental expenses (1.4) - - (1.4) Other services (10.2) (1.2) - (11.4) Short-term employee benefits (salaries) - (2.5) - (2.5) Long-term employee benefits (social security costs) - (0.5) - (0.5) Interest income 0.2 - 0.1 0.3 Interest expense (0.6) - 0.2 (0.4) Other financial expenses (0.9) - - (0.9)
A shareholder entity has made an undertaking to pay to the senior managers of the Group an amount under a profit sharing scheme based on increase in Net Asset Value (adjusted) of the Group. As the amount is payable by the shareholder, and does not constitute a share based payment under IFRS, it has not been expensed by the Group. The amount paid or accrued with respect to 2019 and/or 2020 are not material in the context of the consolidated financial statements. The HBcompensation Reavis Holding of theS.A. Board of Directors of the Parent Company amounted to EUR 1.1 million in 2020 (2019: EUR 0.9 Audit Report Notesmillion). to Consolidated Financial Statements for the year ended 31 December 2020 Prepared in accordance with International Financial Reporting Standards as adopted by the EU The Group had no outstanding loans receivable from the members of the Board of Directors of the Group as at 31 December 2020 (2019: nil).
Distributions to owners paid by Group in 2020 and 2019 respectively are described in Note 19. HB Reavis Holding S.A.
8. Property, Plant and Equipment Notes9. Right-of to Consolidated use assets Financial and Statements lease liabilities for the year ended 31 December 2020 The Group’s investment in joint ventures is described in Note 11. Prepared in accordance with International Financial Reporting Standards as adopted by the EU 39 Movements in the carrying amount of property, plant and equipment were as follows: Leases are recognised as a right-of-use asset and under an operating lease or otherwise meet 8 Property, Plant and Equipment 9 Right-of use assets and lease liabilities a corresponding liability from the date when the definition of investment property are presented Movements in the carrying amount of property, plant and equipment were as follows: Leasesleased are asset recognised becomes as a availableright-of-use for asset use and by a thecorresponding withinliability frominvestment the date whenproperties the leased rather asset than becomes Capital work in availableGroup. Right-of-usefor use by the assetsGroup. thatRight-of-use are subleased assets that are subleasedseparately under in an the operating statement lease of or financialotherwise meetposition. progress definition of investment property are presented within investment properties rather than separately in the statement of Land and Machinery, Vehicles and including financial position. In millions of EUR buildings equipment other assets advances (CIP) Total Movements in right-of-use assets analysed by classes of underlying items are as follows: Movements in right-of-use assets analysed by classes of underlying items are as follows: Net book value as at 1 January 2019 6.4 0.2 0.4 2.3 9.3
Vehicles Capital work in Additions 0.4 0.1 0.2 3.4 4.1 Land and Machinery, and other progress including Transfers 0.7 1.1 - (1.8) - In millions of EUR buildings equipment assets advances (CIP) Total Disposals (0.9) (0.1) - - (1.0) Transfer to assets held for sale (4.8) - - - (4.8) Carrying amount at 1 January 2019 upon 7.1 - 2.0 - 9.1 Transfer to right-of-use assets - - (0.3) - (0.3) adoption of IFRS 16 Depreciation charge (1.3) (1.2) - - (2.5)
Additions 8.4 - - - 8.4 Net book value as at 31 December 2019 0.5 0.1 0.3 3.9 4.8 Disposals (1.0) - - - (1.0) Depreciation charge (1.9) - (0.5) - (2.4)
Additions - 0.1 - 2.0 2.1 Transfers 0.1 2.1 0.6 (2.8) - Carrying amount at 31 December 2019 12.6 - 1.5 - 14.1 Disposals (0.1) - (0.2) - (0.3) Depreciation charge - (1.7) (0.3) - (2.0) Year ended 31 December 2020 Additions 2.1 - - - 2.1 Net book value as at 31 December 2020 0.5 0.6 0.4 3.1 4.6 Disposals - - - - - Depreciation charge (2.7) - (0.6) - (3.3)
At 31 December 2020, property, plant and equipment carried at EUR nil million (at 31 December 2019: EUR nil million) has been pledged to third parties as collateral with respect to borrowings. Carrying amount at 31 December 2020 12.0 - 0.9 - 12.9
At 31 December 2020, property, plant and equipment carried at EUR nil million (at 31 December 2019: EUR nil million) has been pledged to third parties as collateral with respect to borrowings. The Group recognised lease liabilities as follows:
In millions of EUR 31 December 2020 31 December 2019
Lease liabilities: Current** 42.1 7.5 Non-current 43.0 68.8
Total lease liabilities 85.1 76.3
The Group has included EUR 50.4 million right-of-use assets in investment properties as of 31 December 2020 (at 31 December 2019: EUR 39.7 million) – see Note 10.
AsThe at Group31 December has included 2019, current EUR lease 50.4 liabilities million of right- EUR 0.3 millionchýba and non-current prvá hviezdička lease liabilities of EUR 4.7 million associatedof-use assets with Postepuin investment property propertieshave been classified as of 31 as Non-current assets held for sale. December 2020 (at 31 December 2019: EUR 39.7 **Current lease liabilities include: **Current lease liabilities include: million) EUR – 31.1 see million Note liability 10. (equivalent of GBP 28.0 million) that the Group has agreed to pay in return for becoming a leasehold owner of the premises at Farringdon West, London, UK,• whichEUR is 31.1 payable million upon liability the completion (equivalent of the project of GBP As atin 31Q3 December2021, and 2019, current lease liabilities 28.0 million) that the Group has agreed to of EUR the liabilities0.3 million associated and Non-current with right-of-use lease assets liabilities presented in the abovepay table,in return and for becoming a leasehold owner the liabilities associated with right-of-use assets classified as investment property. of EUR 4.7 million associated with Postepu of the premises at Farringdon West, London, property have been classified as Non-current UK, which is payable upon the completion of Assets held for sale. the project in Q3 2021, and
• the liabilities associated with right-of-use assets presented in the above table, and
• the liabilities associated with right-of-use assets classified as investment property.
47 48
HB Reavis Holding S.A. Notes to Consolidated Financial Statements for the year ended 31 December 2020 Prepared in accordance with International Financial Reporting Standards as adopted by the EU 40
9 Right-of use assets and lease liabilities (Continued)
The statement of profit or loss shows the following amounts relating to leases:
In millions of EUR Note 31 December 2020 31 December 2019
Depreciation of right-of-use asset Land and buildings 2.7 1.9 Vehicles and other assets 0.6 0.5
Total depreciation of right-of-use asset 3.3 2.4
Other (income)/expense related to Leases Revaluation (gain) / loss on investment property 10 4.8 (0.5) Interest expense 2.3 1.8
Expenses relating to short-term leases and to leases of low-value assets that are not shown as short-term leases were EUR nil (31 December 2019: nil).
Total cash outflow for leases in 2020 was EUR 8.4 million (31 December 2019: EUR 5.6 million).
Extension and termination options are included in a number of property and equipment leases across the Group. As at 31 December 2020, potential future cash outflows of EUR 18.0 million (at 31 December 2019: EUR 17.7 million) (undiscounted) have not been included in the lease liability because it is not reasonably certain that the leases will be extended (or not terminated). The lease term is reassessed if an option is actually exercised (or not exercised) or the Group becomes obliged to exercise (or not exercise) it. The assessment of reasonable certainty is only revised if a significant event or a significant change in circumstances occurs, which affects this assessment, and that is within the control of the Group. During the current reporting year, the financial effect of revising lease terms to reflect the effect of exercising HB Reavis Holding S.A. extension and termination options was nil (at 31 December 2019: EUR 1.0 million decrease in recognised lease liabilitiesAudit Report Notes to Consolidated Financial Statements for the year ended 31 December 2020 and right-of-use assets). Prepared in accordance with International Financial Reporting Standards as adopted by the EU The Group leases certain landplots in Poland which are presented within Investment property as at 31 December 2020 and 31 December 2019. Under an agreement with the local government unit in Poland the right to use the landplot is HB Reavis Holding S.A. transferred to the Group in exchange for remuneration in the form of fees that are subject to indexation. The lease liability Notes to Consolidated Financial Statements for the year ended 31 December 2020 is based on the current level of the fees at 31 December 2020. The Group remeasures the lease liability to reflect ThePrepared statement in accordance of profit with or International loss shows Financialthe following Reporting amounts Standards relating as adopted to leases: by the EU 40 10.changes Investment to the lease Property payments when necessary.
9 Right-of use assets and lease liabilities (Continued) 10 Investment Property
The statement of profit or loss shows the following amounts relating to leases: Year ended 31 December 2020 Year ended 31 December 2019 Under In use or Under In use or In millions of EUR Note 31 December 2020 31 December 2019 development vacant Total development vacant Total In millions of EUR Owned Leased Owned Leased Owned Leased Owned Leased Depreciation of right-of-use asset Land and buildings 2.7 1.9 Fair value at 1 January 1,857.8 22.5 505.4 17.2 2,402.9 1,034.5 9.1 622.8 - 1,666.4 Vehicles and other assets 0.6 0.5 Right-of-use assets recognised on 1 January 2019 due to IFRS 16 ------11.7 - 19.2 30.9 Total depreciation of right-of-use asset 3.3 2.4 adoption Right-of-use-asset acquired during the - - - 15.5 15.5 - 1.7 - 2.4 4.1 year Other (income)/expense related to Leases Acquisitions of investment property 71.3 - - - 71.3 - - - - - Subsequent expenditure on Revaluation (gain) / loss on investment property 10 4.8 (0.5) 369.4 - 3.1 - 372.5 407.2 - 34.6 - 441.8 Interest expense 2.3 1.8 investment property Transfers from in use to under 337.3 - (337.3) ------development* Transfers from under development to Expenses relating to short-term leases and to leases of low-value assets that are not shown as short-term leases were (502.0) (6.2) 502.0 6.2 - (5.3) - 5.3 - - in use EUR nil (31 December 2019: nil). Transfers to disposal groups classified (299.2) - - - (299.2) - - (228.4) (4.9) (233.3) as held for sale (Note 15) Total cash outflow for leases in 2020 was EUR 8.4 million (31 December 2019: EUR 5.6 million). Disposals (1.0) - (1.5) - (2.5) (34.7) - (23.5) - (58.2) Fair value gains/(losses) – properties Expenses relating to short-term leases and to certainty is only revised if a significant event or (8.1) - - - (8.1) - - - - - Extension and termination options are included in a number of property and equipment leases across the Group. As at 31 completed during the year** leasesDecember of low-value2020, potential assets future that cash are notoutflows shown of asEUR 18.0 amillion significant (at 31 Decemberchange in 2019:circumstances EUR 17.7 million)occurs, Fair value gains/(losses)** 16.3 (0.2) 25.3 (4.6) 36.8 447.4 - 71.5 0.5 519.4 Effect of translation to presentation short-term(undiscounted) leases have werenot been EUR included nil (31 in December the lease liability becausewhich it is affectsnot reasonably this assessment, certain that theand leases that iswill within be (108.7) - (15.9) - (124.6) 8.7 - 23.1 - 31.8 extended (or not terminated). The lease term is reassessed if an option is actually exercised (or not exercised) or the Group currency** 2019: nil). the control of the Group. During the current becomes obliged to exercise (or not exercise) it. The assessment of reasonable certainty is only revised if a significant reporting year, the financial effect of revising lease event or a significant change in circumstances occurs, which affects this assessment, and that is within the control of the Fair value at 31 December 1,733.1 16.1 681.1 34.3 2,464.6 1,857.8 22.5 505.4 17.2 2,402.9 TotalGroup. cash During outflow the current for leasesreporting in year, 2020 the wasfinancial effect of revisingterms tolease reflect terms theto reflect effect the of effectexercising of exercising extension EURextension 8.4 millionand termination (31 December options was 2019: nil (at 31 December 2019: EURand 1.0termination million decrease options in recognised was nil (at lease 31 liabilities December and right-of-use assets). EUR 5.6 million). 2019: EUR 1.0 million decrease in recognised The Group leases certain landplots in Poland which are presentedlease within liabilities Investment and property right-of-use as at 31 Decemberassets). 2020 Extensionand 31 December and termination 2019. Under optionsan agreement are includedwith the local government unit in Poland the right to use the landplot is * One Waterloo premises in London have been With the exception of the United Kingdom, this transferred to the Group in exchange for remuneration in the form of fees that are subject to indexation. The lease liability inis abased number on the of current property level and of the equipment fees at 31 Decemberleases 2020. TheThe Group remeasures leases certain the lease landplots liability in to Poland reflect vacated and prepared for development of office appreciation in value is partly attributable to the acrosschanges the to theGroup. lease As payments at 31 December when necessary. 2020, which are presented within Investment property scheme. Therefore, investment property of fact that most rental contracts are concluded potential future cash outflows of EUR 18.0 as at 31 December 2020 and 31 December 2019. EUR 337.3 related to One Waterloo has been in EUR, and, based on experience from other 10 Investment Property million (at 31 December 2019: EUR 17.7 million) Under an agreement with the local government transferred from in use to under development emerging markets, only a more severe local (undiscounted) have not been includedYear endedin 31 Decemberunit 2020 in Poland theYear right ended to 31 use December the landplot 2019 category as at 1 January 2020. Subsequent currency depreciation would necessitate the the lease liability because it is not reasonablyUnder In use or is transferred toUnder the Group inIn exchangeuse or for movements in its fair value during the year 2020 lessor to provide rent concessions in order to certain that the leases will be extendeddevelopment (or not vacant remunerationTotal development in the form of feesvacant that areTotal subject have been recorded in under development reflect the devalued local currency exchange In millions of EUR Owned Leased Owned Leased Owned Leased Owned Leased terminated). The lease term is reassessed if an to indexation. The lease liability is based on the category. rates. The effects of 2020 depreciation of the optionFair value is at actually 1 January exercised (or 1,857.8not exercised) 22.5 505.4 17.2current 2,402.9 level 1,034.5 of the fees 9.1 at 31 622.8 December - 1,666.4 2020. local functional currencies compared to EUR is
orRight-of-use the Group assets becomes recognised obliged on to exercise (or The Group remeasures the lease liability to reflect ** As of 31 December 2020, the investment presented above as effect of translation from 1 January 2019 due to IFRS 16 ------11.7 - 19.2 30.9 notadoption exercise) it. The assessment of reasonable changes to the lease payments when necessary. property portfolio of the Group with fair value of functional to presentation currency. Right-of-use-asset acquired during the - - - 15.5 15.5 - 1.7 - 2.4 4.1 EUR 1,552.7 million or 63.0% of total investment year Acquisitions of investment property 71.3 - - - 71.3 - - - - - property of the Group as of that date (2019: EUR The Group classified certain leases as investment Subsequent expenditure on 369.4 - 3.1 - 372.5 407.2 - 34.6 - 441.8 1,608.5 or 66.9% of total investment property properties. The carrying value of such investment investment property Transfers from in use to under of the Group) - see also Note 6 Segmental property as of 31 December 2020 was 337.3 - (337.3) ------development* Analysis – Geographical Information, was based EUR 50.4 million (2019: EUR 39.7 million). Transfers from under development to (502.0) (6.2) 502.0 6.2 - (5.3) - 5.3 - - in use in the United Kingdom, Poland, Hungary and Transfers to disposal groups classified (299.2) - - - (299.2) - - (228.4) (4.9) (233.3) the Czech Republic. The functional currency At 31 December 2020, investment properties as held for sale (Note 15) Disposals (1.0) - (1.5) - (2.5) (34.7) - (23.5) - (58.2) of the Group’s subsidiaries which own such carried at EUR 1,835.6 million (at 31 December Fair value gains/(losses) – properties (8.1) - - - (8.1) - - - - - investment properties is GBP, PLN, HUF and CZK, 2019: EUR 1,786.9 million) have been pledged completed during the year** Fair value gains/(losses)** 16.3 (0.2) 25.3 (4.6) 36.8 447.4 - 71.5 0.5 519.4 respectively. The appreciation in fair value of to third parties as collateral with respect to Effect of translation to presentation (108.7) - (15.9) - (124.6) 8.7 - 23.1 - 31.8 these properties expressed in the local functional borrowings. currency** currencies is presented above as a fair value gain.
Fair value at 31 December 1,733.1 16.1 681.1 34.3 2,464.6 1,857.8 22.5 505.4 17.2 2,402.9
49 50 HB Reavis Holding S.A. Notes to Consolidated Financial Statements for the year ended 31 December 2020 Prepared in accordance with International Financial Reporting Standards as adopted by the EU 41
10 Investment Property (Continued)
* One Waterloo premises in London have been vacated and prepared for development of office scheme. Therefore, investment property of EUR 337.3 related to One Waterloo has been transferred from in use to under development category as at 1 January 2020. Subsequent movements in its fair value during the year 2020 have been recorded in under developmentHB Reavis Holding category. S.A. Notes to Consolidated Financial Statements for the year ended 31 December 2020 **Prepared As of 31 in December accordance 2020, with the International investment property Financial portfolio Reporting of the StandardsGroup with asfair adopted value of EURby the 1,552.7 EU million or 63.0% 41 of total investment property of the Group as of that date (2019: EUR 1,608.5 or 66.9% of total investment property of the Group)10 - Investmentsee also Note Property 6 Segmental (Continued) Analysis – Geographical Information, was based in the United Kingdom, Poland, Hungary and the Czech Republic. The functional currency of the Group’s subsidiaries which own such investment properties* One Waterloo is GBP, premises PLN, HUF in Londonand CZK, have respectively. been vacated The appreciationand prepared in forfair developmentvalue of these of properties office scheme. expressed Therefore, in the localinvestment functional property currencies of EUR 337.3is presented related toabove One Waterlooas a fair has value been gain. transferred With the from exception in use to of under the developmentUnited Kingdom, category this HBappreciationas Reavisat 1 January Holding in value S.A.2020. is Subsequentpartly attributable movements to the factin its that fair most value rental during contracts the year are 2020 concluded have beenin EUR, recorded and, basedin under on Audit Report Notesexperiencedevelopment to Consolidated from category. other Financial emerging Statements markets, foronly the a yearmore ended severe 31 local December currency 2020 depreciation would necessitate the lessor to Preparedprovide rentin accordance concessions with in International order to reflect Financial the devalued Reporting local Standards currency as adoptedexchange by rates. the EU The effects of 2020 depreciation of** Asthe of local 31 December functional 2020, currencies the investment compared property to EUR portfolio is presented of the Group above with as fair effect value of of translationEUR 1,552.7 from million functional or 63.0% to presentationof total investment currency. property of the Group as of that date (2019: EUR 1,608.5 or 66.9% of total investment property of the Group) - see also Note 6 Segmental Analysis – Geographical Information, was based in the United Kingdom, Poland, HB Reavis Holding S.A. TheHungary Group and classified the Czech certain Republic. leases Theas investment functional properties.currency of The the carrying Group’s value subsidiaries of such investmentwhich own propertysuch investment as of 31 Notes to Consolidated Financial Statements for the year ended 31 December 2020 December 2020 was EUR 50.4 million (2019: EUR 39.7 million). Valuationsproperties is obtainedGBP, PLN, forHUF investment and CZK, respectively. properties The appreciationbinding in fair offers, value ofresults these propertiesof prospective expressed purchaser in the Prepared in accordance with International Financial Reporting Standards as adopted by the EU 42 local functional currencies is presented above as a fair value gain. With the exception of the United Kingdom, this 12. Receivables and Loans At 31 December 2020, investment properties carried at EUR 1,835.6 million (at 31 December 2019: EUR 1,786.9 million) wereappreciation adjusted in value for theis partly purpose attributable of the to financialthe fact that most rentaldue contractsdiligence are and concluded other factors.in EUR, and,Reconciliation based on have been pledged to third parties as collateral with respect to borrowings. 12 Receivables and Loans experience from other emerging markets, only a more severe local currency depreciation would necessitate the lessor to statements to avoid double-counting of assets between the valuations obtained and the adjusted provide rent concessions in order to reflect the devalued local currency exchange rates. The effects of 2020 depreciation In millions of EUR Note 31 December 2020 31 December 2019 orValuations liabilities obtained that are for investmentrecognised properties as separate were adjusted for thevaluation purpose of included the financial in thestatements financial to avoid statements double- is of the local functional currencies compared to EUR is presented above as effect of translation from functional to counting of assets or liabilities that are recognised as separate assets and liabilities and with respect to non-binding offers, Lease incentives receivables (a) 6.0 2.7 assetspresentation and currency.liabilities and with respect to non- as follows: results of prospective purchaser due diligence and other factors. Reconciliation between the valuations obtained and the LoansHB Reavis to related Holding parties S.A. – non-current (Note 7) (b) 0.6 0.6 LoansNotes to to third Consolidated parties Financial Statements for the year ended 31 December 2020 0.2 0.3 adjustedThe Group valuation classified included certain in leases the financial as investment statements properties. is as follows: The carrying value of such investment property as of 31 Prepared in accordance with International Financial Reporting Standards as adopted by the EU 42 December 2020 was EUR 50.4 million (2019: EUR 39.7 million). Total receivables and loans 6.8 3.6 AtIn millions31 December of EUR 2020, investment properties carried at EUR 1,835.6 millionNote (at 3131 December December 20202019: EUR31 December 1,786.9 million) 2019 12 Receivables and Loans
have been pledged to third parties as collateral with respect to borrowings. In millions of EUR Note 31 December 2020 31 December 2019 Valuations obtained 2,729.9 2,693.6
Valuations obtained for investment properties were adjusted for the purpose of the financial statements to avoid double- LeaseDescription incentives and receivables analysis by credit quality of receivables and loans is as follows:(a) 6.0 2.7 countingAdd: rig ofht-o assetsf-use assets or liabilities classified that as are investment recognised propert asy separate assets and liabilities and with respect 41.3 to non-binding offers35.5 , DescriptionLoans to related and parties analysis – non-current by credit(Note 7) quality of impaired.(b) They are not secured 0.6 and they 0.6are due Less: lease incentive receivables 12(a) (5.9) (2.5) (a) Lease incentive receivables of EUR 6.0 million (31 December 2019: EUR 2.7 million) represent cost of incentives results of prospective purchaser due diligence and other factors. Reconciliation between the valuations obtained and the receivablesLoans to third p artiesand loans is as follows: from a wide variety of tenants 0.2 and the Group0.3 has Less: transfers to disposal groups classified as held for sale 15 (300.7) (250.0) recognised over the lease term, on a straight-line basis – see Note 2.10 and 2.19. These receivables are neither past adjustedLess: transfers valuation to disposal included groups in the classified financial as statements held for sale is in as previous follows: yea r 15 - (73.7) due nor impaired. They are not secured and they are due fromthe a wide ability variety to ofevict tenants non-paying and the Group tenants. has the ability Total receivablesto evict non-paying and loans tenants. 6.8 3.6 (a) Lease incentive receivables of EUR 6.0 million FairIn millions value ofat EU31R December Note 31 December2,464.6 2020 31 December2,402.9 2019 (31 (b) December The Group 2019:has provided EUR 2.7 loans million) to its representrelated parties amounting(b) The to EURGroup 0.6 has million provided as of 31 loans December to its 2020 (31 December 2019: EUR 0.6 million). Valuations obtained 2,729.9 2,693.6 costDescription of incentives and analysis recognised by credit quality over ofthe receivables lease and loans isrelated as follows: parties amounting to EUR 0.6 million term, on a straight-line basis – see Note 2.10 and as of 31 December 2020 (31 December 2019: 11Add: Investments right-of-use assetsin Joint classified Ventures as investment property 41.3 35.5 (a)13 Other Lease Non-Current incentive receivables Assets of EUR 6.0 million (31 December 2019: EUR 2.7 million) represent cost of incentives Less: lease incentive receivables 12(a) (5.9) (2.5) 2.19.In millionsrecognised These of EU Rreceivables over the lease are term, neither on a straight-linepast due norbasis – see NoteEUR 2.10 Note0.6 and million). 312.19. December These receivables2020 31 Decemberare neither 2019 past InLess: 2014, transfers the Group to disposal entered groups into aclassified joint venture as held in for Poland sale with 51% economic15 interest in West(300.7) Station Investment. In(250.0) due nor impaired. They are not secured and they are due from a wide variety of tenants and the Group has the ability Less: transfers to disposal groups classified as held for sale in previous year 15 - (73.7) to evict non-paying tenants. 2015, the Group increased its economic interest in the joint venture to 71%. Other non-current assets (a) 11.4 6.0 The 11. Group Investments sold shares inin two Joint (2) joint Ventures ventures during the year ended 31 December 2019: West Station Investment Sp. z (b) The Group has provided loans to its related parties amounting to EUR 0.6 million as of 31 December 2020 o. o. and West Station Investment 2 Sp. z o.o. with net gain on disposal of EUR 23.7 million. Fair value at 31 December 2,464.6 2,402.9 Total other(31 December non-current 2019: assets EUR 0.6 million). 11.4 6.0 In 2014, the Group entered into a joint venture The Group sold shares in two (2) joint ventures The following amounts represent the assets, liabilities, revenue and results of the joint ventures: 13. Other Non-Current Assets in Poland with 51% economic interest in West during the year ended 31 December 2019: West 13 Other Non-Current Assets Station11 Investments Investment. in Joint In 2015,Ventures the Group increased 2020 Station Investment Sp. z o. 2019o. and West Station West Station Other Joint West Station Other Joint In (a) millions As at of 31EU RDecember 2020, EUR 8.3 million related to projects in HungaryNote and 31 DecemberEUR 1.4 million 2020 related 31 December to projects 2019 in its economicR interest in the joint venture to 71%. Investment 2 Sp. z o.o. with net gain on disposal InIn 2014,millions the of EUGroup entered into a joint venture inInvestment Poland with 1-2 51% economicVentures interest in InvestmentWest Station 1-2 Investment. V Inentures Poland. The remaining balance consists of many non-material items. As at 31 December 2019, EUR 1.8 million Other relatednon-current to projects assets in Hungary and EUR 1.6 million related to projects(a )in Poland. The remaining11.4 balance consists6.0 of 2015, the Group increased its economic interest in the joint ventureof to EUR71%. 23.7 million. Revenue - 0.5 5.8 0.5 many non-material items. The(Loss)/Profit Group soldand totalshares comprehensive in two (2) joint income ventures during the year ended 31 December 2019: West Station Investment Sp. z - (0.1) (10.4) (0.5) o.for o. the and yea Westr Station Investment 2 Sp. z o.o. with net gain on disposal of EUR 23.7 million. Total other non-current assets 11.4 6.0 The following amounts represent the assets, liabilities, revenue and results of the joint ventures: 14 Trade and Other Receivables The following amounts represent the assets, liabilities, revenue and results of the joint ventures: In millions of EUR Note 31 December 2020 31 December 2019 Current assets - 0.1 - 0.4 2020 2019 (a) As at 31 December 2020, EUR 8.3 million related to projects in Hungary and EUR 1.4 million related to projects in Non-current assets - 7.3 - 7.5 Trade receivables 12.3 14.5 West Station Other Joint West Station Other Joint Poland. The remaining balance consists of many non-material items. As at 31 December 2019, EUR 1.8 million Current liabilities - (3.2) - (3.4) Trade receivables and advances to joint ventures 7 - 0.2 InNon-current millions of liabilitiesEUR Investment 1-2- Ventures- Investment 1-2- Ventures(0.1) related to projects in Hungary and EUR 1.6 million related to projects in Poland. The remaining balance consists of Derivatives(a) As at and 31 other December financial assets 2020, EUR 8.3 million As at 31 December 2019,2.3 EUR 1.8 million8.2 related Accruedmany rental non-material income items. 0.6 0.7 Revenue - 0.5 5.8 0.5 related to projects in Hungary and EUR 1.4 million to projects in Hungary and EUR 1.6 million related (Loss)/Profit and total comprehensive income Unbilled receivables from service charges 2.1 3.5 Net assets of the investee - (0.1)4.2 (10.4) - (0.5)4.4 for the year relatedOther14 Trade financial to and projects receivables Other Receivablesin Poland. The remaining to projects in Poland. The5.9 remaining balance11.5
Trade and other receivables from related parties 7 11.2 12.5 Share of other venturers - (1.9) - (2.2) balanceIn millions ofconsists EUR of many non-material items. consistsNote of many 31 December non-material 2020 31 items. December 2019 Less expected credit loss allowance for trade receivables (4.9) (5.5)
Current assets - 0.1 - 0.4 Loans to related parties (a) - 1.4 Trade receivables 12.3 14.5 Non-current assets - 7.3 - 7.5 Less expected credit loss allowance for loans to related parties 7 - (1.4) Investments in joint ventures - 2.3 - 2.2 Trade receivables and advances to joint ventures 7 - 0.2 Current liabilities - (3.2) - (3.4) Derivatives and other financial assets 2.3 8.2 Non-current liabilities - - - (0.1) Accrued rental income 0.6 0.7 Total financial assets / receivables 29.5 45.6 Unbilled receivables from service charges 2.1 3.5
Other financial receivables 5.9 11.5 Net assets of the investee - 4.2 - 4.4 Trade and other receivables from related parties 7 11.2 12.5 VAT receivable 16.3 26.5 PrepaymentsLess expected credit loss allowance for trade receivables (4.9)5.6 (5.5)6.0 Share of other venturers - (1.9) - (2.2) Loans to related parties (a) - 1.4 Current income tax refund receivable 1.9 - Less expected credit loss allowance for loans to related parties 7 - (1.4)
Investments in joint ventures - 2.3 - 2.2 Total trade and other receivables 53.3 78.1 Total financial assets / receivables 29.5 45.6
V(a)AT receivable The loan was repaid in 2020. Loans are provided under the following conditions – interest16.3 rate 8.16% in 2019.26.5 Prepayments 5.6 6.0 Current income tax refund receivable 1.9 -
Total trade and other receivables 53.3 78.1
(a) The loan was repaid in 2020. Loans are provided under the following conditions – interest rate 8.16% in 2019.
51 52
HB Reavis Holding S.A. Notes to Consolidated Financial Statements for the year ended 31 December 2020 Prepared in accordance with International Financial Reporting Standards as adopted by the EU 42
12 Receivables and Loans In millions of EUR Note 31 December 2020 31 December 2019 HB Reavis Holding S.A. Lease incentives receivables (a) 6.0 2.7 Loans to related parties – non-current (Note 7) (b) 0.6 0.6 Notes to Consolidated Financial Statements for the year ended 31 December 2020 Loans to third parties 0.2 0.3 Prepared in accordance with International Financial Reporting Standards as adopted by the EU 43
14 Trade and Other receivables (Continued) Total receivables and loans 6.8 3.6
The expected credit loss allowance for trade and other receivables is determined according to provision matrix presented
in the table below. Description and analysis by credit quality of receivables and loans is as follows: 31 December 2020 31 December 2019 (a) Lease incentive receivables of EUR 6.0 million (31 December 2019: EUR 2.7 million) represent cost of incentives Gross Gross recognised over the lease term, on a straight-line basis – see Note 2.10 and 2.19. These receivables are neither past carrying Net carrying carrying Net carrying due nor impaired. They are not secured and they are due from a wide variety of tenants and the Group has the ability In thousands of EUR Loss rate amount ECL amount Loss rate amount ECL amount to evict non-paying tenants. Trade and other receivables (b) The Group has provided loans to its related parties amounting to EUR 0.6 million as of 31 December 2020 - current 0.25% 13.2 - 13.2 0.0% 24.9 - 24.9 (31 December 2019: EUR 0.6 million). - less than 30 days overdue 2.5% 5.0 (0.1) 4.9 2.5% 3.9 (0.1) 3.8 - 30 to 90 days overdue 5.0% 3.8 (0.2) 3.6 5.0% 1.8 (0.1) 1.7 13 Other Non-Current Assets - 91 to 180 days overdue 10.0% 1.6 (0.2) 1.4 10.0% 1.2 (0.1) 1.1 - 181 to 360 days overdue 15.0% 3.0 (0.5) 2.5 15.0% 4.5 (0.7) 3.8 In millions of EUR Note 31 December 2020 31 December 2019 - over 360 days overdue 70.0% 5.5 (3.9) 1.6 70.0% 6.6 (4.5) 2.1
Other non-current assets (a) 11.4 6.0 Total 32.1 (4.9) 27.2 42.9 (5.5) 37.4
HBTotal Reavis other Holding non-current S.A. assets 11.4 6.0 Loans to related parties - - - 1.4 (1.4) Audit - Report Notes to Consolidated Financial Statements for the year ended 31 December 2020 Derivatives / other at fair value 2.3 8.2 Prepared in accordance with International Financial Reporting Standards as adopted by the EU
(a) As at 31 December 2020, EUR 8.3 million related to projects in Hungary and EUR 1.4 million related to projects in TheTotal primary financial assetsfactor that the Group considers in The29.5 carrying amount of each class of trade45.6 and Poland. The remaining balance consists of many non-material items. As at 31 December 2019, EUR 1.8 million determining whether a receivable is impaired is other receivables approximated their fair value. related to projects in Hungary and EUR 1.6 million related to projects in Poland. The remaining balance consists of its overdue status. As a result, the Group presents many non-material items. 14. Trade and Other Receivables aboveThe primary an ageing factor that analysis the Group of tradeconsiders and in other. determining whetherThe a receivablefollowing is table impaired explains is its overdue the changes status. As in a 14 Trade and Other Receivables Certainresult, the trade Group receivables presents above are an secured ageing analysis by either of trade and theother. credit Certain loss trade allowance receivables for are trade secured and by other either bankbank guaranteeguarantee or ordeposit. deposit. The unsecuredThe unsecured trade receivables trade are receivablesfrom a wide variety under of simplifiedtenants and theECL Group model has betweenthe In millions of EUR Note 31 December 2020 31 December 2019 ability to evict non-paying tenants. receivables are from a wide variety of tenants the beginning and the end of the annual financial Trade receivables 12.3 14.5 The carrying amount of each class of trade and other receivables approximated their fair value. Trade receivables and advances to joint ventures 7 - 0.2 and the Group has the ability to evict reporting period: Derivatives and other financial assets 2.3 8.2 non-paying tenants. Accrued rental income 0.6 0.7 The following table explains the changes in the credit loss allowance for trade and other receivables under simplified ECL Unbilled receivables from service charges 2.1 3.5 model between the beginning and the end of the annual financial reporting period: Other financial receivables 5.9 11.5 Trade and other receivables from related parties 7 11.2 12.5 In millions of EUR 2020 2019 Less expected credit loss allowance for trade receivables (4.9) (5.5) Loans to related parties (a) - 1.4 Expected credit loss allowance at 1 January 6.9 5.0 Less expected credit loss allowance for loans to related parties 7 - (1.4) Expected credit loss (release)/charge to profit or loss for the year (1.1) 2.8
Total financial assets / receivables 29.5 45.6 Write-offs (0.9) (0.9)
VAT receivable 16.3 26.5 Expected credit loss allowance at 31 December 4.9 6.9 Prepayments 5.6 6.0 Current income tax refund receivable 1.9 -
Receivables subject to credit enhancements are as follows at 31 December: Total trade and other receivables 53.3 78.1
In millions of EUR 31 December 2020 31 December 2019
(a) The loan was repaid in 2020. Loans are provided under the following conditions – interest rate 8.16% in 2019. Trade receivables collateralised by: - bank guarantees 0.2 0.7 (a) The loan was repaid in 2020. Loans are provided under the following - tenant deposits 2.7 0.9
conditions – interest rate 8.16% in 2019. HB Reavis Holding S.A. Total 2.9 1.6 Notes to Consolidated Financial Statements for the year ended 31 December 2020 Prepared in accordance with International Financial Reporting Standards as adopted by the EU 43 The financial effect of collateral is presented by disclosing collateral or credit enhancement values separately for (i) those 14 Trade and Other receivables (Continued) receivables where collateral and other credit enhancements are equal to or exceed carrying value of the receivable (“over- The expected credit loss allowance for trade and other receivables is determined according to provision The financial effect of collateral is presented by collateralised assets”) and (ii) those receivables collateralised assets”) and (ii) those receivables where collateral and other credit enhancements are less than the carrying matrixThe expected presented credit lossin the allowance table below.for trade and other receivables is determined according to provision matrix presented disclosing collateral or credit enhancement values where collateral and other credit enhancements value of the receivable (“under-collateralised assets”). in the table below. separately for (i) those receivables where collateral are less than the carrying value of the receivable
31 December 2020 31 December 2019 andHB Reavis other Holdingcredit enhancements S.A. are equal to or (“under-collateralised assets”). Gross Gross exceedHBNotes Reavis to carryingConsolidated Holding value S.A. Financial of the receivableStatements for(“over- the year ended 31 December 2020 carrying Net carrying carrying Net carrying NotesPrepared to Consolidated in accordance Financial with International Statements Financial for the yearReporting ended Standards 31 December as adopted 2020 by the EU 44 In thousands of EUR Loss rate amount ECL amount Loss rate amount ECL amount Prepared in accordance with International Financial Reporting Standards as adopted by the EU 44 14 Trade and Other receivables (Continued) Trade and other receivables Financial14 Trade effectand Other of collateralreceivables at (Continued) 31 December 2020 is as follows: - current 0.25% 13.2 - 13.2 0.0% 24.9 - 24.9 Financial effect of collateral at 31 December 2020 is as follows: - less than 30 days overdue 2.5% 5.0 (0.1) 4.9 2.5% 3.9 (0.1) 3.8 Financial effect of collateral at 31 December 2020 is as follows: - 30 to 90 days overdue 5.0% 3.8 (0.2) 3.6 5.0% 1.8 (0.1) 1.7 - 91 to 180 days overdue 10.0% 1.6 (0.2) 1.4 10.0% 1.2 (0.1) 1.1 Over-collateralised Assets Under-collateralised Assets - 181 to 360 days overdue 15.0% 3.0 (0.5) 2.5 15.0% 4.5 (0.7) 3.8 Carrying valueOver-collateralised of the Assets Carrying Under-collateralisedvalue of the Assets - over 360 days overdue 70.0% 5.5 (3.9) 1.6 70.0% 6.6 (4.5) 2.1 In millions of EUR Carryingassets value of the Fair value of collateral Carryingassets value of the Fair value of collateral
In millions of EUR assets Fair value of collateral assets Fair value of collateral Trade and other receivables 0.7 10.3 9.5 2.2 Total 32.1 (4.9) 27.2 42.9 (5.5) 37.4 Trade and other receivables 0.7 10.3 9.5 2.2
Loans to related parties - - - 1.4 (1.4) -
Derivatives / other at fair value 2.3 8.2 FinancialFinancial effect effect of collateralof collateral at 31 Decemberat 31 December 2019 is as 2019 follows: is as follows:
Financial effect of collateral at 31 December 2019 is as follows:
Total financial assets 29.5 45.6 Over-collateralised Assets Under-collateralised Assets
Carrying valueOver-collateralised of the Assets Carrying Under-collateralisedvalue of the Assets In millions of EUR Carryingassets value of the Fair value of collateral Carryingassets value of the Fair value of collateral
In millions of EUR assets Fair value of collateral assets Fair value of collateral The primary factor that the Group considers in determining whether a receivable is impaired is its overdue status. As a Trade and other receivables 0.2 5.8 9.0 0.8 result, the Group presents above an ageing analysis of trade and other. Certain trade receivables are secured by either Trade and other receivables 0.2 5.8 9.0 0.8
bank guarantee or deposit. The unsecured trade receivables are from a wide variety of tenants and the Group has the ability to evict non-paying tenants. Collateral will be utilized to settle any receivables in case of customer’s default. Collateral will be utilized to settle any receivables in case of customer’s default. The carrying amount of each class of trade and other receivables approximated their fair value. Collateral The Group haswill pledged be utilized the receivables to settle of any EUR receivables 4.1 million as in collateral case of for customer’s the borrowings default. as at 31 December 2020 (2019: TheEUR Group 1.0 million). has pledged the receivables of EUR 4.1 million as collateral for the borrowings as at 31 December 2020 (2019: The following table explains the changes in the credit loss allowance for trade and other receivables under simplified ECL EUR 1.0 million). model between the beginning and the end of the annual financial reporting period: The15 Non-currentGroup has Assetspledged Held the for receivables Sale of EUR 4.1 million as collateral for the borrowings
15 Non-current Assets Held for Sale In millions of EUR 2020 2019 as at 31 December 2020 (2019: EUR 1.0 million). Major classes of assets classified as held for sale: Expected credit loss allowance at 1 January 6.9 5.0 Major classes of assets classified as held for sale: 53 In millions of EUR 31 December 2020 31 December 2019 54 Expected credit loss (release)/charge to profit or loss for the year (1.1) 2.8 In millions of EUR 31 December 2020 31 December 2019 Property, plant and equipment - 4.8 Write-offs (0.9) (0.9) PropertInvestmenty, plant property and equipment 299.2- 302.74.8 InvestmentTrade and other property receivables 299.21.6 302.719.3 CashTrade and and cash other equivalents receivables 1.6- 19.37.5 Expected credit loss allowance at 31 December 4.9 6.9 Cash and cash equivalents - 7.5
Total assets classified as held for sale 300.8 334.3 Total assets classified as held for sale 300.8 334.3 Receivables subject to credit enhancements are as follows at 31 December: As of 31 December 2020, the Group classified assets and liabilities of two (2) subsidiaries (Phibell s.r.o., HB REAVIS REAL In millions of EUR 31 December 2020 31 December 2019 AsESTATE of 31 December DEVELOPMENT 2020, the FUND Group) as classified held for assetssale. and liabilities of two (2) subsidiaries (Phibell s.r.o., HB REAVIS REAL ESTATE DEVELOPMENT FUND) as held for sale. Trade receivables collateralised by: As of 31 December 2019, the Group classified assets and liabilities of four (4) subsidiaries (P14 Sp. z o.o., Twin City III s. - bank guarantees 0.2 0.7 Asr. o., of SPV 31 December Vištuk s. r.2019, o., TWENTY the Group House classified S.à r.l.) assets as held and for liabilities sale. of four (4) subsidiaries (P14 Sp. z o.o., Twin City III s. - tenant deposits 2.7 0.9 r. o., SPV Vištuk s. r. o., TWENTY House S.à r.l.) as held for sale.
The investment properties are valued annually on 31 December at fair value, with the benefit of advice by an independent,
professionally qualified valuation expert who has recent experience in valuing similar properties in similar locations. The Total 2.9 1.6 The investment properties are valued annually on 31 December at fair value, with the benefit of advice by an independent, professionallymethods and significant qualified valuation assumptions expert applied who hasin determining recent experience the fair valuein valuing are described similar properties in Notes in3 andsimilar 33. locations. The methods and significant assumptions applied in determining the fair value are described in Notes 3 and 33. Major classes of liabilities directly associated with assets classified as held for sale: The financial effect of collateral is presented by disclosing collateral or credit enhancement values separately for (i) those Major classes of liabilities directly associated with assets classified as held for sale: receivables where collateral and other credit enhancements are equal to or exceed carrying value of the receivable (“over- In millions of EUR 31 December 2020 31 December 2019 collateralised assets”) and (ii) those receivables where collateral and other credit enhancements are less than the carrying In millions of EUR 31 December 2020 31 December 2019 value of the receivable (“under-collateralised assets”). Deferred income tax liability 7.9 16.0 BorrowinDeferred gincomes tax liability 114.07.9 152.316.0 TradeBorrowin andgs other payables 114.0- 152.34.4 TradeLease andliabilities other lon payablesg-term - 4.44.7 Lease liabilities lonshort-termg-term - 4.70.3 Lease liabilities short-term - 0.3
Total liabilities directly associated with assets classified as held for sale 121.9 177.7 Total liabilities directly associated with assets classified as held for sale 121.9 177.7
At 31 December 2020, investment properties held for sale carried at EUR 299.2 million (at 31 December 2019: EUR 302.7 Atmillion), 31 December property, 2020, plant investmentand equipment properties of EUR held nil formillion sale (atcarried 31 December at EUR 299.2 2019: million EUR (at4.8 31 million) December and the 2019: receivables EUR 302.7 of million),EUR 1.6 property, million (at plant 31 December and equipment 2019: of EUR EUR 19.3 nil millionmillion) (at have 31 Decemberbeen pledged 2019: to thirdEUR parties 4.8 million) as collateral and the withreceivables respect ofto EURborrowings. 1.6 million (at 31 December 2019: EUR 19.3 million) have been pledged to third parties as collateral with respect to borrowings.
HB Reavis Holding S.A. Notes to Consolidated Financial Statements for the year ended 31 December 2020 Prepared in accordance with International Financial Reporting Standards as adopted by the EU 44
14 Trade and Other receivables (Continued) Financial effect of collateral at 31 December 2020 is as follows: HB Reavis Holding S.A. Notes to Consolidated Financial Statements for the year ended 31 December 2020 Over-collateralised Assets Under-collateralised Assets Prepared in accordance withCarrying International value of the Financial Reporting StandardsCarrying as adopted value of bythe the EU 44 In millions of EUR assets Fair value of collateral assets Fair value of collateral 14 Trade and Other receivables (Continued) Trade and other receivables 0.7 10.3 9.5 2.2 Financial effect of collateral at 31 December 2020 is as follows:
Over-collateralised Assets Under-collateralised Assets Financial effect of collateral atCarrying 31 December value of 2019the is as follows: Carrying value of the In millions of EUR assets Fair value of collateral assets Fair value of collateral
Trade and other receivables Over-collateralised0.7 Assets 10.3 Under-collateralised9.5 Assets 2.2 Carrying value of the Carrying value of the In millions of EUR assets Fair value of collateral assets Fair value of collateral
Trade and other receivables 0.2 5.8 9.0 0.8 HB Reavis Holding S.A. Financial effect of collateral at 31 December 2019 is as follows: Notes to Consolidated Financial Statements for the year ended 31 December 2020 HB Reavis Holding S.A. Prepared in accordance with International Financial Reporting Standards as adopted by the EU Audit 45 Report Notes to Consolidated Financial Statements for the year ended 31 December 2020 PreparedCollateral in will accordance be utilized with to Internationalsettle any receivablesOver-collateralised Financial Reporting in case Assets of Standards customer’s as adopteddefault. by theUnder-collateralised EU Assets Carrying value of the Carrying value of the 15 Non–current Assets Held for Sale (Continued)
In millions of EUR assets Fair value of collateral assets Fair value of collateral HB Reavis Holding S.A. The Group has pledged the receivables of EUR 4.1 million as collateral for the borrowings as at 31 December 2020 (2019: FourNotes (P14 to Consolidated Sp. z o.o., Twin Financial City III s.Statements r. o., SPV Vištukfor the s. year r. o., ended TWENTY 31 December House S.à 2020 r.l.) out of four subsidiaries classified TradeEUR 1.0and million).other receivables 0.2 5.8 9.0 0.8 heldPrepared for sale in asaccordance at 31 December with International 2019 were sold Financial during yearReporting 2020 (Note Standards 27). as adopted by the EU 45
15.15 Non-currentNon-current Assets Assets Held for Held Sale for Sale 16.1615 Non–current CashCash and and Cash Assets Cash Equivalents Held Equivalents for Sale (Continued)
MajorCollateral classes will be ofutilized assets to settleclassified any receivables as held infor case sale: of customer’s default. Major classes of assets classified as held for sale: Four (P14 Sp. z o.o., Twin City III s. r. o., SPV Vištuk s. r. o., TWENTY House S.à r.l.) out of four subsidiaries classified InHB millions Reavis of EUHoldingR S.A. 31 December 2020 31 December 2019 held for sale as at 31 December 2019 were sold during year 2020 (Note 27). The Group has pledged the receivables of EUR 4.1 million as collateral for the borrowings as at 31 December 2020 (2019: Notes to Consolidated Financial Statements for the year ended 31 December 2020 In millions of EUR 31 December 2020 31 December 2019 Cash at bank and in hand 192.7 115.1 EUR 1.0 million). Prepared in accordance with International Financial Reporting Standards as adopted by the EU 45 16 Cash and Cash Equivalents Property, plant and equipment - 4.8 Investment15 Non-current property Assets Held for Sale 299.2 302.7 15 Non–current Assets Held for Sale (Continued) InTotal millions cash of and EU Rcash equivalents 31 December192.7 2020 31 December 115.12019 Trade and other receivables 1.6 19.3
Cash and cash equivalents - 7.5 Four (P14 Sp. z o.o., Twin City III s. r. o., SPV Vištuk s. r. o., TWENTY House S.à r.l.) out of four subsidiaries classified Major classes of assets classified as held for sale: CashAt 31 at December bank and in 2020, hand cash and cash equivalents were available for the Group’s use, except192.7 for restricted cash 115.1in the held for sale as at 31 December 2019 were sold during year 2020 (Note 27). amount of EUR 26.0 million (2019: EUR 4.1 million). In millions of EUR 31 December 2020 31 December 2019 At 31 December 2020, cash and cash equivalents The table below discloses the credit quality of Total assets classified as held for sale 300.8 334.3 T16otal Cashcash and cash Cash equivalents Equivalents 192.7 115.1 wereThe table available below disclosesfor the Group’s the credit use, quality except of cash for and cash equivalentscash and balances cash equivalents based on credit balances risk grades based at 31on Property, plant and equipment - 4.8 December 2020. Refer to Note 31 for the description of the Group’s credit risk grading system. Investment property 299.2 302.7 restricted cash in the amount of EUR 26.0 million credit risk grades at 31 December 2020. Refer to In At millions31 December of EUR 2020, cash and cash equivalents were available for the Group’s31 use,December except 2020 for restricted 31 December cash 2019in the TradeAs of 31and December other receivables 2020, the Group classified assets and liabilities of two (2) subsidiaries (Phibell 1.6s.r.o., HB REAVIS REAL19.3 (2019:amountIn millions EURof ofEUR EUR 4.1 26.0 million). million (2019: EUR 4.1 million). Note 31 for 31the December description 2020 of 31 the December Group’s 2019 credit CashESTATE and cashDEVELOPMENT equivalents FUND) as held for sale. - 7.5 Cash at bank and in hand 192.7 115.1 As of 31 December 2020, the Group classified The investment properties are valued annually risk grading system. -The Excellent table below discloses the credit quality of cash and cash equivalents balances based 106.0on credit risk grades 86.1at 31 As of 31 December 2019, the Group classified assets and liabilities of four (4) subsidiaries (P14 Sp. z o.o., Twin City III s. assets and liabilities of two (2) subsidiaries (Phibell on 31 December at fair value, with the benefit of -December Good 2020. Refer to Note 31 for the description of the Group’s credit risk grading system. 86.6 28.7 Totalr. o., SPVassets Vištuk classified s. r. o.,as TWENTYheld for sale House S.à r.l.) as held for sale. 300.8 334.3 Total cash and cash equivalents 192.7 115.1 s.r.o., HB REAVIS REAL ESTATE DEVELOPMENT advice by an independent, professionally qualified - Satisfactory 0.1 0.3
In millions of EUR 31 December 2020 31 December 2019 FUND) The investment as held properties for sale. are valued annually on 31 December at fairvaluation value, with expert the benefit who ofhas advice recent by an experience independent, in At 31 December 2020, cash and cash equivalents were available for the Group’s use, except for restricted cash in the As of 31 December 2020, the Group classified assets and liabilities of two (2) subsidiaries (Phibell s.r.o., HB REAVIS REAL professionally qualified valuation expert who has recent experiencevaluing in valuing similar similar properties properties in in similar similar locations. locations. The Total-amount Excellent cash of andEUR cash 26.0 equivalents million (2019: EUR 4.1 million). 106.0192.7 115.186.1 ESTATE DEVELOPMENT FUND) as held for sale. Asmethods of 31 and December significant 2019,assumptions the Group applied classified in determining the fairThe value methods are described and insignificant Notes 3 and assumptions33. applied - Good 86.6 28.7 -The Satisfactor table belowy discloses the credit quality of cash and cash equivalents balances based on0.1 credit risk grades at0.3 31 assetsMajorAs of 31classes and December liabilities of liabilities 2019, of directlythe four Group (4)associated classifiedsubsidiaries with assets assets (P14 and classified liabilitiesin asof determining heldfour (4)for subsidiariessale: the fair (P14 value Sp. z areo.o., describedTwin City III ins. DecemberThe Company 2020. classifies Refer to banks Note based31 for theon ratingsdescription as follows: of the Group’s credit risk grading system. Sp. r. o., z SPV o.o., Vištuk Twin s. City r. o., IIITWENTY s. r. o., House SPV VištukS.à r.l.) s.as r.held o., for sale. Notes 3 and 33. In millions of EUR 31 December 2020 31 December 2019 Total- InBanks millions cash rated ofand EURExcellent: cash equivalents Rating by Moody’s A1, A2, A3 or rating by Fitch A+, A, A- 31 December 192.72020 31 December 115.12019 TWENTY House S.à r.l.) as held for sale. The investment properties are valued annually on 31 December at fair value, with the benefit of advice by an independent, - Banks rated Good: Rating by Moody’s Baa1, Baa2, Baa3 or Fitch BBB+, BBB, BBB- professionallyDeferred income qualified tax liability valuation expert who has recent experience in valuing similar properties7.9 in similar locations. 16.0The - ExcellentBanks rated Satisfactory: Rating by Moody’s Ba1, Ba2, Ba3 or Fitch BB+, BB, BB- 106.0 86.1 methodsBorrowing sand significant assumptions applied in determining the fair value are described in Notes114.0 3 and 33. 152.3 -The Good Company classifies banks based on ratings as follows: 86.6 28.7 Trade and other payables - 4.4 -The Satisfactor carryingy amounts of cash and cash equivalents as of 31 December 2020 and 31 December 20190.1 are not substantially0.3 MajorMajorLease liabilitiesclasses classes lonof ofliabilitiesg-term liabilities directly directly associated associated with assets with classified assets as classified held for sale: as held for sale:- 4.7 The-different Banks Company rated from Excellent: their classifies fair Rating value. by banksMoody’sThe maximum basedA1, A2, A3 onexposure orratings rating byto Fitchcredit A+, Therisk A, A- relatingcarrying to amountscash and cashof cash equivalents and cash is limited Lease liabilities short-term - 0.3 - Banks rated Good: Rating by Moody’s Baa1, Baa2, Baa3 or Fitch BBB+, BBB, BBB- asto thefollows: carrying value of cash and cash equivalents. equivalents as of 31 December 2020 and In millions of EUR 31 December 2020 31 December 2019 Total- Banks cash rated and Satisfactory: cash equivalents Rating by Moody’s Ba1, Ba2, Ba3 or Fitch BB+, BB, BB- 192.7 115.1 - Banks rated Excellent: Rating by Moody’s A1, 31 December 2019 are not substantially different
Total liabilities directly associated with assets classified as held for sale 121.9 177.7 17 Other current assets Deferred income tax liability 7.9 16.0 A2,The A3carrying or rating amounts by of Fitch cash andA+, cash A, A- equivalents as of 31 Decemberfrom 2020 their and fair 31 value. December The 2019 maximum are not substantially exposure to Borrowings 114.0 152.3 Thedifferent Company from theirclassifies fair value.banks basedThe maximum on ratings exposure as follows: to credit risk relating to cash and cash equivalents is limited - InBanks millions rated of EUR Good: Rating by Moody’s Baa1, creditNote risk relating 31 December to cash 2020 and 31 cash December equivalents 2019 Trade and other payables - 4.4 to the carrying value of cash and cash equivalents. AtLease 31 Decemberliabilities lon 2020,g-term investment properties held for sale carried at EUR 299.2 million (at 31 December- 2019: EUR 302.74.7 Baa2, Baa3 or Fitch BBB+, BBB, BBB- is limited to the carrying value of cash and Prepa- Banksyments rated toExcellent: trustee Rating by Moody’s A1, A2, A3 or rating by Fitch A+, A, A- (a) 7.9 22.6 million),Lease liabilities property, short-term plant and equipment of EUR nil million (at 31 December 2019: EUR 4.8 million) -and the receivables0.3 of - Banks rated Good: Rating by Moody’s Baa1, Baa2, Baa3 or Fitch BBB+, BBB, BBB- -Money17 Banks Other market rated current fund Satisfactory: investment assets Rating by Moody’s Ba1, cash equivalents. - 5.1 EUR 1.6 million (at 31 December 2019: EUR 19.3 million) have been pledged to third parties as collateral with respect to - Banks rated Satisfactory: Rating by Moody’s Ba1, Ba2, Ba3 or Fitch BB+, BB, BB- borrowings. Ba2,Downpa Ba3yment or for Fitch investment BB+, propert BB, yBB- 7.0 - A dvances paid 4.6 6.4 Total liabilities directly associated with assets classified as held for sale 121.9 177.7 In millions of EUR Note 31 December 2020 31 December 2019 OtherThe carrying Current Assetsamounts of cash and cash equivalents as of 31 December 2020 and 31 December12.9 2019 are not substantially10.7
Otherdifferent Current from Assets their fromfair relatedvalue. partiesThe maximum exposure to credit risk relating to cash and cash1.8 equivalents is limited1.3 Prepayments to trustee (a) 7.9 22.6 to the carrying value of cash and cash equivalents. At 31 December 2020, investment properties held for sale carried at EUR 299.2 million (at 31 December 2019: EUR 302.7 Money market fund investment - 5.1 Downpayment for investment property 7.0 - million), property, plant and equipment of EUR nil million (at 31 December 2019: EUR 4.8 million) and the receivables of Total other current assets 34.2 46.1 At EUR 31 1.6 December million (at 31 2020, December investment 2019: EUR properties 19.3 million) have beenFour pledged (P14 toSp. third z o.o.,parties Twin as collateral City III withs. r. respecto., SPV to 17.A17dvances OtherOther paid current current assets assets 4.6 6.4 Other Current Assets 12.9 10.7 heldborrowings. for sale carried at EUR 299.2 million (at 31 Vištuk s. r. o., TWENTY House S.à r.l.) out of OtherIn millions Current of EUAssetsR from related parties Note 31 December 20201.8 31 December 20191.3 December 2019: EUR 302.7 million), property, four subsidiaries classified held for sale as at (a) As at 31 December 2020 EUR 7.9 million (at 31 December 2019: EUR 22.6 million) represent prepayments plant and equipment of EUR nil million (at 31 December 2019 were sold during year 2020 Prepayments toto trustee trustee of Hungarian Real Estate Development Fund. (a) 7.9 22.6 MoneyTotal othermarket current fund investment assets 34.2- 46.15.1 31 December 2019: EUR 4.8 million) and the (Note 27). Downpa18 Financialyment for investments investment propert y 7.0 - receivables of EUR 1.6 million (at 31 December A dvances paid 4.6 6.4 Other(a) Current Assets As at 31 December 2020 EUR 7.9 million (at 31 December 2019: EUR 22.6 million)12.9 represent prepayments10.7 In millions of EUR Note 31 December 2020 31 December 2019 2019: EUR 19.3 million) have been pledged Other Current Assets from related parties 1.8 1.3 to trustee of Hungarian Real Estate Development Fund. to third parties as collateral with respect Investment in The Cambridge Incubator, LLC (a) - 27.2
to borrowings. 18Investment Financial in HB investments REAVIS CE Real Estate Investment Fund - 0.2 Total other current assets 34.2 46.1
In millions of EUR Total financial investments Note 31 December 2020- 31 December 201927.4
Investment(a) in The As Cambridat 31 Decemberge Incubator, 2020 LLC EUR 7.9 million (at 31 December 2019:(a) EUR 22.6 million) represent - prepayments27.2 Investment in HBto REAVIStrustee ofCE Hungarian Real Estate Real Investment Estate Fund Development Fund. - 0.2 (a) As at 31 December 2020 EUR 7.9 million (at 31 December 2019: EUR 22.6 million) represent18 Financial prepayments investments to trustee of Hungarian Real Estate Development Fund. Total financial investments - 27.4
In millions of EUR Note 31 December 2020 31 December 2019
Investment in The Cambridge Incubator, LLC (a) - 27.2 Investment in HB REAVIS CE Real Estate Investment Fund - 0.2
Total financial investments - 27.4
55 56
HB Reavis Holding S.A. Notes to Consolidated Financial Statements for the year ended 31 December 2020 Prepared in accordance with International Financial Reporting Standards as adopted by the EU 45
15 Non–current Assets Held for Sale (Continued)
Four (P14 Sp. z o.o., Twin City III s. r. o., SPV Vištuk s. r. o., TWENTY House S.à r.l.) out of four subsidiaries classified held for sale as at 31 December 2019 were sold during year 2020 (Note 27).
16 Cash and Cash Equivalents
In millions of EUR 31 December 2020 31 December 2019 HB Reavis Holding S.A. Notes to Consolidated Financial Statements for the year ended 31 December 2020 Cash at bank and in hand 192.7 115.1 Prepared in accordance with International Financial Reporting Standards as adopted by the EU 46
18 Financial investments (Continued) Total cash and cash equivalents 192.7 115.1 (a) In December 2020, the Group sold a non-controlling share in The Cambridge Incubator, LLC, a Delaware limited liability At 31 December 2020, cash and cash equivalents were available for the Group’s use, except for restricted cash in the company for a cash consideration of EUR 17.5 million. The Group reported net loss on disposal of EUR 7.7 million as amount of EUR 26.0 million (2019: EUR 4.1 million). at 31 December 2020.
The table below discloses the credit quality of cash and cash equivalents balances based on credit risk grades at 31 19 Share Capital and Share Premium December 2020. Refer to Note 31 for the description of the Group’s credit risk grading system.
Ordinary shares Share premium Total In millions of EUR 31 December 2020 31 December 2019 Number of shares in EUR in EUR in EUR
- Excellent 106.0 86.1 At 1 January 2019 30,000 30,000 455,852,721 455,882,721 - Good 86.6 28.7 At 31 December 2019 30,000 30,000 402,465,609 402,495,609 - Satisfactory 0.1 0.3 At 31 December 2020 30,000 30,000 820,472,758 820,502,758
Total cash and cash equivalents 192.7 115.1 The total authorised number of ordinary shares is 30,000 shares with a par value of EUR 1 per share. All issued ordinary shares are fully paid. Each ordinary share carries one vote. 12,500 shares were issued on 20 October 2010 and additional The Company classifies banks based on ratings as follows: 17,500 shares were issued on 4 September 2018 due to change of legal form of the company from a private limited liability company into a public limited liability company.
- Banks rated Excellent: Rating by Moody’s A1, A2, A3 or rating by Fitch A+, A, A- In 2020, the sole shareholder resolves to capitalise retained earnings in the amount of EUR 441.5 million to Share premium - Banks rated Good: Rating by Moody’s Baa1, Baa2, Baa3 or Fitch BBB+, BBB, BBB- without issuing new shares. - Banks rated Satisfactory: Rating by Moody’s Ba1, Ba2, Ba3 or Fitch BB+, BB, BB-
The terms of external borrowings drawn by the Group impose limitations on the ability of the subsidiaries to pay distributions The carrying amounts of cash and cash equivalents as of 31 December 2020 and 31 December 2019 are not substantially to owners. different from their fair value. The maximum exposure to credit risk relating to cash and cash equivalents is limited to the carrying value of cash and cash equivalents. Distributions to owners declared and paid during the year were as follows: 17 Other current assets In millions of EUR, except dividends per share amount Note 2020 2019
In millions of EUR Note 31 December 2020 31 December 2019 Distributions to owners payable at 1 January 21 - -
Prepayments to trustee (a) 7.9 22.6 Distributions declared during the year (from share premium) 23.5 53.4 Money market fund investment - 5.1 Distributions paid during the year (23.5) (53.4) Downpayment for investment property 7.0 - Advances paid 4.6 6.4
Other Current Assets 12.9 10.7 Distributions to owners payable at 31 December 21 - - Other Current Assets from related parties 1.8 1.3
HB Reavis Holding S.A. Audit Report
Notes to Consolidated Financial Statements for the year ended 31 December 2020 Amount per share declared during the year in EUR 782.3 1,778.8 PreparedTotal other in accordance current assets with International Financial Reporting Standards as adopted by the EU 34.2 46.1
20. Borrowings
(a) As at 31 December 2020 EUR 7.9 million (at 31 December 2019: EUR 22.6 million) represent prepayments 20 Borrowings to trustee of Hungarian Real Estate Development Fund. In millions of EUR Note 31 December 2020 31 December 2019 18. Financial investments 18 Financial investments Non-current Bank borrowings 686.1 381.8 In millions of EUR Note 31 December 2020 31 December 2019 Issued bonds (a) 279.1 347.1
Investment in The Cambridge Incubator, LLC (a) - 27.2 Investment in HB REAVIS CE Real Estate Investment Fund - 0.2 Total non-current borrowings 965.2 728.9
Total financial investments - 27.4 Current Bank borrowings 172.6 148.4 Issued bonds (a) 94.2 44.0
HB Reavis Holding S.A. (a) In December 2020, the Group sold a non-controlling share in The Cambridge Incubator, Total current borrowings 266.8 192.4 Notes to Consolidated Financial Statements for the year ended 31 December 2020 LLC,Prepared a Delaware in accordance limited with liability International company Financial for a Reporting cash consideration Standards as of adopted EUR 17.5 by the million. EU The 46 Group reported net loss on disposal of EUR 7.7 million as at 31 December 2020. Total borrowings 1,232.0 921.3 18 Financial investments (Continued)
(a) In December 2020, the Group sold a non-controlling share in The Cambridge Incubator, LLC, a Delaware limited liability company for a cash consideration of EUR 17.5 million. The Group reported net loss on disposal of EUR 7.7 million as a. The bonds represent following debt instruments: HB atReavis 31 December Holding 2020.S.A. 19. Notes Share to Consolidated Capital Financialand Share Statements Premium for the year ended 31 December 2020 19Prepared Share in Capital accordance and Share with PremiumInternational Financial Reporting Standards as adopted by the EU 46 i. CZK denominated bonds in the amount CZK 1,250 million (EUR 47.6 million), which were 18 Financial investments (Continued) issued in Prague in March 2016 with maturity March 2021, bearing an interest of 6M Ordinary shares Share premium Total Number of shares in EUR in EUR in EUR PRIBOR + 4% p.a.; (a) In December 2020, the Group sold a non-controlling share in The Cambridge Incubator, LLC, a Delaware limited liability ii. PLN denominated bonds in the amount PLN 100 million (EUR 21.9 million), which were At 1 company January for 2019 a cash consideration of EUR 17.530,000 million. The Group reported30,000 net loss 455,852,721on disposal of EUR 7.7455,882,721 million as At 31at December 31 December 2019 2020. 30,000 30,000 402,465,609 402,495,609 issued in Warsaw in October 2016 with maturity April 2021, bearing an interest of 6M A t 31 December 2020 30,000 30,000 820,472,758 820,502,758 WIBOR + 4.40% p.a.; 19 Share Capital and Share Premium iii. EUR denominated bonds in the amount EUR 25 million, which were issued in Bratislava in
December 2016 with maturity December 2021, bearing an interest of 3.50% p.a.; The total authorised number of ordinary shares is 30,000 sharesOrdinary with a shares par value of ShareEUR 1 premium per share. All issued ordinaryTotal shares are fully paid. Each ordinary shareNumber carries of oneshares vote. 12,500 sharesin EUR were issued on 20 inOctober EUR 2010 and additionalin EUR iv. EUR denominated bonds in the amount EUR 12 million, which were issued in Bratislava in 17,500 shares were issued on 4 September 2018 due to change of legal form of the company from a private limited liability The total authorised number of ordinary shares is In 2020, the sole shareholder resolves to March 2017 with maturity March 2022, bearing an interest of 3.50% p.a.; Acompanyt 1 Januar intoy a 2019 public limited liability company. 30,000 30,000 455,852,721 455,882,721 30,000A t 31 December shares 2019 with a par value of EUR 1 per30,000 share. capitalise30,000 retained 402,465,609 earnings in the amount402,495,609 of EUR v. EUR denominated bonds in the amount EUR 20 million, which were issued in Bratislava in AllAInt 2020,31 issued December the ordinarysole 2020 shareholder shares resolves are fully to capitalise paid. Each 30,000retained earnings441.5 in the30,000 millionamount ofto EUR Share 820,472,758 441.5 premium million to withoutShare820,502,758 premium issuing June 2017 with maturity June 2022, bearing an interest of 3.35% p.a.; without issuing new shares. ordinary share carries one vote. 12,500 shares new shares. vi. PLN denominated bonds in the amount PLN 220 million (EUR 48.3 million), which were wereThe termstotal issued authorised of external on 20 number borrowings October of ordinary drawn2010 byandshares the additionalGroup is 30,000 impose shares limitations with a onpar the value ability of ofEUR the 1subsidiaries per share. Allto pay issued distributions ordinary issued in Warsaw in July 2017 with maturity January 2022, bearing an interest of 6M 17,500sharesto owners. are shares fully paid. were Each issued ordinary on share4 September carries one 2018 vote. 12,500 Theshares terms were issuedof external on 20 Octoberborrowings 2010 and drawn additional by the WIBOR + 4.20% p.a.; 17,500 shares were issued on 4 September 2018 due to change of legal form of the company from a private limited liability dueDistributionscompany to change into to a ownerspublic of legal limited declared form liability and of company.paidthe duringcompany the year from were as follows:Group impose limitations on the ability of the vii. EUR denominated bonds in the amount EUR 45 million, which were issued in Bratislava in a private limited liability company into a public subsidiaries to pay distributions to owners. September 2017 with maturity September 2027, bearing an interest of 4.45% p.a.; In 2020, the sole shareholder resolves to capitalise retained earnings in the amount of EUR 441.5 million to Share premium limitedIn millions liability of EUR, exceptcompany. dividends per share amount Note 2020 2019 viii. EUR denominated bonds in the amount EUR 31 million, which were issued in Bratislava in without issuing new shares. D istributions to owners payable at 1 January 21 - - November 2017 with maturity November 2023, bearing an interest of 3.25% p.a.; The terms of external borrowings drawn by the Group impose limitations on the ability of the subsidiaries to pay distributions ix. EUR denominated bonds in the amount EUR 15 million, which were issued in Bratislava in Dtoistributions owners. declared during the year (from share premium) 23.5 53.4 DistributionsDistributions paid toduring owners the year declared and paid during the year were as follows: (23.5) (53.4) February 2019 with maturity February 2028, bearing an interest of 3.25% p.a.. Distributions to owners declared and paid during the year were as follows: x. EUR denominated bonds in the amount EUR 30 million, which were issued in Bratislava in
Distributions to owners payable at 31 December 21 - - July 2019 with maturity July 2026, bearing an interest of 2.75% p.a.. In millions of EUR, except dividends per share amount Note 2020 2019 xi. EUR denominated bonds in the amount EUR 20 million, which were issued in Bratislava in
Distributions to owners payable at 1 January 21 - - Amount per share declared during the year in EUR 782.3 1,778.8 September 2019 with maturity September 2025, bearing an interest of 3.25% p.a..
Distributions declared during the year (from share premium) 23.5 53.4 xii. EUR denominated bonds in the amount EUR 25 million, which were issued in Bratislava in D istributions paid during the year (23.5) (53.4) November 2019 with maturity November 2025, bearing an interest of 3.25% p.a.. 20 Borrowings xiii. EUR denominated bonds in the amount EUR 15 million, which were issued in Bratislava in IDnistributions millions of EU toR owners payable at 31 December Note21 31 December 2020- 31 December 2019- September 2020 with maturity September 2024 , bearing an interest of 3.35% p.a.. xiv. EUR denominated bonds in the amount EUR 5 million, which were issued in Bratislava in Non-current ABankmount borrowings per share declared during the year in EUR 686.1782.3 1,778.8381.8 December 2020 with maturity December 2024 , bearing an interest of 3.35% p.a.. Issued bonds (a) 279.1 347.1 xv. PLN denominated bonds in the amount PLN 85 million (EUR 18.6million), which were
20 Borrowings issued in Warsaw in December 2020 with maturity December 2023, bearing an interest of Total non-current borrowings 965.2 728.9 5.0% p.a..
In millions of EUR Note 31 December 2020 31 December 2019 Current The Group’s borrowings are denominated in EUR, GBP, PLN or CZK. Non-currentBank borrowings 172.6 148.4 BankIssued borrowings bonds (a) 686.194.2 381.844.0 Issued bonds (a) 279.1 347.1
57 Total current borrowings 266.8 192.4 58 Total non-current borrowings 965.2 728.9
Total borrowings 1,232.0 921.3 Current Bank borrowings 172.6 148.4 Issued bonds (a) 94.2 44.0
Total current borrowings 266.8 192.4
Total borrowings 1,232.0 921.3
HB Reavis Holding S.A. Audit Report Notes to Consolidated Financial Statements for the year ended 31 December 2020 PreparedHB Reavis in accordance Holding S.A. with International Financial Reporting Standards as adopted by the EU HB Reavis Holding S.A. HBNotes Reavis to Consolidated Holding S.A. Financial Statements for the year ended 31 December 2020 AssumptionsNotes to Consolidated used in Financial determining Statements fair value for the of year borrowings ended 31 areDecember described 2020 in Note 33. Prepared in accordance with International Financial Reporting Standards as adopted by the EU 48 Prepared in accordance with International Financial Reporting Standards as adopted by the EU 49 Notes to Consolidated Financial Statements for the year ended 31 December 2020 The carrying values of current borrowings approximate their fair values. The fair value of lease Prepared in accordance with International Financial Reporting Standards as adopted by the EU 48 20 Borrowings (Continued) liabilities20 Borrowings would be (Continued) affected by lease extension and termination options and it is thus not The20 table Borrowings below (Continued)sets out an analysis of our debt and the movements in our debt. disclosed as allowed by IFRS 7 paragraph 29. The table below sets out an analysis of our debt and the movements in our debt. The debt items are those that are reported The debt items are those that are reported as financing in the statement of cash flows. Assumptions used in determining fair value of borrowings are described in Note 33. The carrying values of current Theas financing table below in the sets statement out an analysis of cash of flows. our debt and the movements in our debt. The debt items are those that are reported borrowings approximate their fair values. The fair value of lease liabilities would be affected by lease extension and as financing in the statement of cash flows. Thetermination Group options has the and following it is thus not undrawn disclosed borrowingas allowed by facilities: IFRS 7 paragraph 29. Bank Lease The Group has the following undrawn borrowing facilities: In millions of EUR borrowings Bonds liabilities Total HB Reavis Holding S.A. Bank Lease In millions of EUR 31 December 2020 31 December 2019 In millions of EUR borrowings Bonds liabilities Total Notes to Consolidated Financial Statements for the year ended 31 December 2020 Borrowings and lease liabilities as presented in the Statement of financial 387.3 329.0 31.3 747.6 Prepared in accordance with International Financial Reporting Standards as adopted by the EU 49 position as at 1 January 2019 Availability: Borrowings and lease liabilities as presented in the Statement of financial - Expiring within one year 29.3 0.8 387.3 329.0 31.3 747.6 positionBorrowings as andat 1 leaseJanuary liabilities 2019 under liabilities directly associated with non- -20 Expiring beyond Borrowings one year (Continued) 408.9 470.6 143.9 - - 143.9 current assets classified as held for sale as at 1 January 2019 (Note 15) Borrowings and lease liabilities under liabilities directly associated with non- 143.9 - - 143.9 current assets classified as held for sale as at 1 January 2019 (Note 15) Assumptions used in determining fair value of borrowings are described in Note 33. The carrying values of current Total borrowings and lease liabilities as at 1 January 2019 531.2 329.0 31.3 891.5 borrowingsTotal undrawn approximate facilities their fair values. The fair value of lease liabilities would be affected438.2 by lease extension471.4 and termination options and it is thus not disclosed as allowed by IFRS 7 paragraph 29. Total borrowings and lease liabilities as at 1 January 2019 531.2 329.0 31.3 891.5 The Group has the following undrawn borrowing facilities: Cash flows Investment properties (Note 10), property, plant and equipment (Note 8) and receivables (Note 14) are pledged as collateral Proceeds from new drawdowns 405.3 90.0 - 495.3 Infor millions borrowings of EU Rof EUR 838.9 million (2019: EUR 480.0 million). 31 December 2020 31 December 2019 CashRepayments flows (68.9) (30.0) (5.6) (104.5) Investment properties (Note 10), property, plant financial statements for issue, the Group was in Proceeds from new drawdowns 405.3 90.0 - 495.3
Repayments (68.9) (30.0) (5.6) (104.5) andAvailability: equipment (Note 8) and receivables (Note 14) compliance with all loan agreement terms and Non-cash changes The loan agreements with third party creditors are governed by terms and conditions which include maximum loan to value - Expiring within one year 29.3 0.8 Recognition of lease liabilities upon adoption of IFRS 16 as at 1.1.2019 - - 39.7 39.9 areratios pledged ranging from as collateral 50% to 70% for (2019: borrowings 65% to 75%) of EURand minimum nodebt terms service of coverage the loans ratios were ranging renegotiated from 1.00 to due1.20 Non-cash changes - Expiring beyond one year 408.9 470.6 New leases - - 12.5 12.5 (2019: 1.10 to 1.20). During 2020 and up to the date of authorisation of these consolidated financial statements for issue, Recognition of lease liabilities upon adoption of IFRS 16 as at 1.1.2019 - - 39.7 39.9 838.9 million (2019: EUR 480.0 million). to defaults or breaches. After 31 December Foreign exchange adjustments 0.1 (1.4) 2.5 1.0 the Group was in compliance with all loan agreement terms and no terms of the loans were renegotiated due to defaults New leases - - 12.5 Non-cash movement due to loss of control in a subsidiary (Note 27) (187.9) - - (187.9)12.5 2020 and up to date of authorization of these Foreign exchange adjustments 0.1 (1.4) 2.5 orTotal breaches. undrawn After facilities 31 December 2020 and up to date of authorization of these consolidated financial438.2 statements, the 471.4Group Change in accrued interest 1.3 2.1 1.8 1.05.2 Non-cash movement due to loss of control in a subsidiary (Note 27) (187.9) - - Therepaid loan the loansagreements of EUR 49.8 with million third including party creditorsEUR 47.8 million are of repaidconsolidated bonds and financialdrawn EUR statements,147.2 million of the new loansGroup Change in amortised transaction costs (2.1) - - (187.9)(2.1) Change in accrued interest 1.3 2.1 1.8 5.2 including EUR 77.0 million of new bond issue (Note 36). Effect of translation to presentation currency 3.5 1.4 - 4.9 governed by terms and conditions which include repaid the loans of EUR 49.8 million including Change in amortised transaction costs (2.1) - - (2.1) Non-cash movement due to derecognition of a lease - - (1.0) (1.0) Investment properties (Note 10), property, plant and equipment (Note 8) and receivables (Note 14) are pledged as collateral Effect of translation to presentation currency 3.5 1.4 - 4.9 maximum loan to value ratios ranging from 50% EUR 47.8 million of repaid bonds and drawn for21 borrowings Deferred income,of EUR 838.9 Trade million and Other (2019: Payables EUR 480.0 million). Non-cash movement due to derecognition of a lease - - (1.0) (1.0) to 70% (2019: 65% to 75%) and minimum debt EUR 147.2 million of new loans including Borrowings and lease liabilities as presented in the statement of financial 530.2 391.1 76.3 997.6 TheIn millions loan agreements of EUR with third party creditors are governed by terms andNote conditions 31 Decemberwhich include 2020 maximum 31 December loan to 2019value position as at 31 December 2019 service coverage ratios ranging from 1.00 to EUR 77.0 million of new bond issue (Note 36). Borrowings and lease liabilities as presented in the statement of financial ratios ranging from 50% to 70% (2019: 65% to 75%) and minimum debt service coverage ratios ranging from 1.00 to 1.20 530.2 391.1 76.3 997.6 positionBorrowings as andat 31 lease December liabilities 2019 under liabilities directly associated with non- 1.20(2019:Non –(2019:current 1.10 to 1.101.20). to During 1.20). 2020 During and up 2020 to the and date up of authorisation to of these consolidated financial statements for issue, 152.3 - 5.0 157.3 current assets classified as held for sale as at 31 December 2019 (Note 15) thetheLon Groupdateg-term of waspa yauthorisationables in compliance (Note 7) withof these all loan consolidated agreement terms and no terms of the loans were renegotiated 31.9 due to defaults25.2 Borrowings and lease liabilities under liabilities directly associated with non- 152.3 - 5.0 157.3 or breaches. After 31 December 2020 and up to date of authorization of these consolidated financial statements, the Group current assets classified as held for sale as at 31 December 2019 (Note 15)
Total borrowings and lease liabilities as at 31 December 2019 682.5 391.1 81.3 1,154.9 repaidTotal non-currentthe loans of paEURyables 49.8 million including EUR 47.8 million of repaid bonds and drawn EUR 31.9 147.2 million of new loans25.2 including EUR 77.0 million of new bond issue (Note 36). TotalCash borrowingsflows and lease liabilities as at 31 December 2019 682.5 391.1 81.3 1,154.9 Proceeds from new drawdowns 500.8 38.2 - 539.0 21. Deferred income, Trade and Other Payables Cash flows Repayments (61.1) (48.0) (8.4) (117.5) 21Current Deferred income, Trade and Other Payables Proceeds from new drawdowns 500.8 38.2 - 539.0 Trade payables (Note 7) 15.6 10.9 Repayments (61.1) (48.0) (8.4) (117.5) Non-cash changes LiabilitiesIn millions for of EURconstruction of investment properties Note 31 December 202045.6 31 December 201964.8
New leases - - 17.6 17.6 Accrued liabilities 12.3 14.5 Non-cash changes Foreign exchange adjustments 21.2 - (0.9) 20.3 DerivativeNon–current financial instruments 6.3 1.2 New leases - - 17.6 17.6 Non-cash movement due to loss of control in a subsidiary (Note 27) (158.7) - (5.0) (163.7) OtherLong-term payables payables (Note 7) 31.9 7.7 25.26.2 Foreign exchange adjustments 21.2 - (0.9) 20.3 Change in accrued interest 7.7 (1.0) 2.1 8.8 Refund liability 8.6 6.0 Non-cash movement due to loss of control in a subsidiary (Note 27) (158.7) - (5.0) Change in amortised transaction costs 0.9 - - (163.70.9) Change in accrued interest 7.7 (1.0) 2.1 Effect of translation to presentation currency (20.6) (7.0) (1.6) (29.2)8.8 Change in amortised transaction costs 0.9 - - 0.9 Total non-current payables 31.9 25.2 Total current financial payables 96.1 103.6 Effect of translation to presentation currency (20.6) (7.0) (1.6) (29.2)
Borrowings and lease liabilities as presented in the Statement of financial 858.7 373.3 85.1 1,317.1 Current position as at 31 December 2020 Borrowings and lease liabilities as presented in the Statement of financial TradeItems thatpayables are not (Note financial 7) instruments: 15.6 10.9 858.7 373.3 85.1 1,317.1 position as at 31 December 2020 DeferredLiabilities rentalfor construction income of investment properties 45.67.8 64.84.5 Borrowings and lease liabilities under liabilities directly associated with non- Contract liability 2.0 2.0 114.0 - - 114.0 Accrued liabilities 12.3 14.5 current assets classified as held for sale as at 31 December 2020 (Note 15) Accrued employee benefit costs 2.5 1.0 Borrowings and lease liabilities under liabilities directly associated with non- Derivative financial instruments 6.3 1.2 114.0 - - 114.0 Other pataxesyables pay able 7.70.6 6.20.1 current assets classified as held for sale as at 31 December 2020 (Note 15) VAT payable 0.1 - Total borrowings and lease liabilities as at 31 December 2020 972.7 373.3 85.1 1,431.1 Refund liability 8.6 6.0 Prepa yments 0.3 - Total borrowings and lease liabilities as at 31 December 2020 972.7 373.3 85.1 1,431.1
The carrying amounts and fair values of the non-current borrowings are set out below: Total current financial payables 96.1 103.6 Total deferred income, current trade and other payables 109.4 111.2 The carrying amounts and fair values of the non-current borrowings are set out below: The carrying amounts and fair values of Carrying the Non-current amounts at 31 borrowings December are set Fair out values below: at 31 December Items that are not financial instruments: TheDeferred fair value rental of income trade payables, finance lease liabilities, liabilities for construction of investment property,7.8 accrued liabilities,4.5 Carrying amounts at 31 December Fair values at 31 December In millions of EUR 2020 2019 2020 2019 dividendsContract liability payable, other trade payables to related parties and of other liabilities is not significantly2.0 different from their2.0 carryingAccrued amount. employee benefit costs 2.5 1.0 In millions of EUR 2020 2019 2020 2019 Other taxes payable 0.6 0.1 Bank borrowings 686.1 381.8 676.1 393.1 VAT payable 0.1 -
Issued bonds 279.1 347.1 283.2 353.9 Prepayments 0.3 - Bank borrowings 686.1 381.8 676.1 393.1
Issued bonds 279.1 347.1 283.2 353.9
Non-current borrowings 965.2 728.9 959.3 747.0 Total deferred income, current trade and other payables 109.4 111.2
Non-current borrowings 965.2 728.9 959.3 747.0
The fair value of trade payables, finance lease liabilities, liabilities for construction of investment property, accrued liabilities,
Thedividends fair value payable, of tradeother trade payables, payables finance to related lease parties liabilities, and of other liabilities liabilities for isconstruction not significantly of different from their
investmentcarrying amount. property, accrued liabilities, dividends payable, other trade payables to related parties and of other liabilities is not significantly different from their carrying amount.
59 60
HB Reavis Holding S.A. Audit Report Notes to Consolidated Financial Statements for the year ended 31 December 2020 Prepared in accordance with International Financial Reporting Standards as adopted by the EU
HB Reavis Holding S.A. HB Reavis Holding S.A. Notes to Consolidated Financial Statements for the year ended 31 December 2020 Notes to Consolidated Financial Statements for the year ended 31 December 2020 Prepared in accordance with International Financial Reporting Standards as adopted by the EU 50 Prepared in accordance with International Financial Reporting Standards as adopted by the EU 51 22. Rental and Similar Income from Investment Property 24. Analysis of Revenue by Category HB Reavis Holding S.A. 22 Rental and Similar Income from Investment Property 24 Analysis of Revenue by Category Notes to Consolidated Financial Statements for the year ended 31 December 2020 Prepared in accordance with International Financial Reporting Standards as adopted by the EU 50 In millions of EUR 2020 2019 InHB millions Reavis of EURHolding S.A. Note 2020 2019 Notes to Consolidated Financial Statements for the year ended 31 December 2020 Rental22 Rental income and Similar Income from Investment Property Rental income 22 34.2 36.3 Prepared in accordance with International Financial Reporting Standards as adopted by the EU 51 Office 26.2 28.8 Service charges 22 13.6 18.5 In Retailmillions of EUR 20201.1 20191.4 Management charges income 22 2.8 5.8 HB HubHub Reavis Holding S.A. 6.9 6.1 24 Analysis of Revenue by Category Rental income Notes to Consolidated Financial Statements for the year ended 31 December 2020 HB Reavis Holding S.A. Service Office charges 26.2 28.850 TotalIn millions Rental of EURand similar income from investment property Note 202050.6 201960.6 Prepared in accordance with International Financial Reporting Standards as adopted by the EU Notes to Consolidated Financial Statements for the year ended 31 December 2020 OfficeRetail 12.81.1 17.71.4 Prepared in accordance with International Financial Reporting Standards as adopted by the EU 51 22 RetailHubHub Rental and Similar Income from Investment Property 0.86.9 0.86.1 Rental income 22 34.2 36.3 ServiceServices char renderedges 2622 13.67.1 18.56.9 ManagementService charg chargeses OtherMana24 Analysis g ement char ofg Revenuees income by Category 2622 1.82.8 1.85.8 In millions of EUR 2020 2019 Office 12.82.3 17.74.6
Retail 0.20.8 0.30.8 In millions of EUR Rental income Note 2020 2019 Industrial - 0.2 Total RentalOther operating and similar income income from investment property 50.68.9 60.68.7 Office 26.2 28.8 Management HubHub charges 0.3 0.7 Retail 1.1 1.4 Rental income 22 34.2 36.3 Office 2.3 4.6 HubHub 6.9 6.1 Service charges 22 13.6 18.5 Retail 0.2 0.3 ServicesRevenue rendered from construction contracts 26 25.57.1 22.86.9 Management charges income 22 2.8 5.8 Total Industrial rental and similar income from investment properties 50.6- 60.60.2 Other 26 1.8 1.8 Service charges HubHub 0.3 0.7 Office 12.8 17.7 Total Rentalrevenue and and similar other income from investment property 85.050.6 92.160.6 Retail 0.8 0.8 Where the Group is the lessor, the future minimum lease payments receivable under operating leases over the lease term Total Other operating income 8.9 8.7 Total rental and similar income from investment properties 50.6 60.6 Managementare as follows charges at 31 December 2020: Where Office the Group is the lessor, the future minimum lease payments receivable under2.3 operating 4.6 ServicesAs at 31 rendered December 2020, the Group has completed all contracts for construction26 of properties. 7.1 6.9 Retail 0.2 0.3 OtherRevenue from construction contracts 26 25.5 1.8 22.81.8 leasesIn millions over of EU theR lease term are as follows at 31 December 2020: 2020 2019 As at 31 December 2020, the Group has completed all contracts for construction of properties. Where Industrial the Group is the lessor, the future minimum lease payments receivable under operating leases- over the lease term0.2 25 Employee Benefits are HubHub as follows at 31 December 2020: 0.3 0.7 Not later than 1 year 25.4 23.2 TotalIn millions Otherrevenue of operatingEU andR other income income 202085.08.9 201992.18.7 Later than 1 year and not later than 2 years 34.7 34.1 In millions of EUR 2020 2019 Later than 2 years and not later than 3 years 38.7 45.8 Total rental and similar income from investment properties 50.6 60.6 Wages and salaries (including social and health insurance) 21.7 23.8 Later than 3 years and not later than 4 years 38.8 47.8 Revenue from construction contracts 25.5 22.8 Not later than 1 year 25.4 23.2 25.PensionAs at Employee 31 costs December – defined 2020,Benefits contribution the Group plans has completed all contracts for construction of properties. 1.1 1.3 Later than 4 years and not later than 5 years 36.2 45.9 Later than 1 year and not later than 2 years 34.7 34.1 Later than 5 years 177.4 240.7 Later than 2 years and not later than 3 years 38.7 45.8 Where the Group is the lessor, the future minimum lease payments receivable under operating leases over the lease term Total25 Employee revenue and Benefits other income 85.0 92.1 Later than 3 years and not later than 4 years 38.8 47.8 Total employee benefits 22.8 25.1 are as follows at 31 December 2020: LaterTotal thanoperating 4 year leases and notpayments later than receivable 5 years 351.236.2 437.545.9 In millions of EUR 2020 2019 Later than 5 years 177.4 240.7 In millions of EUR 2020 2019 AsWa gates 31 and December salaries (includin 2020, gthe social Group and hashealth completed insurance )all contracts for construction of properties. 21.7 23.8 The Group had 665 employees in the core real estate operations of the Group (on full time equivalent basis) as at 31 Pension costs – defined contribution plans 1.1 1.3 Not later than 1 year 25.4 23.2 December 2020 (2019: 762 employees). The average number of employees in 2020 was 724 (2019: 763). Total operating lease payments receivable 351.2 437.5 25 Employee Benefits LaterThe Group’s than 1 year rental and incomenot later includesthan 2 years performance income depending on sales revenue of retail 34.7units leased by its tenants.34.1 Later than 2 years and not later than 3 years 38.7 45.8 26 Other Operating Income and Expenses These amounts are not included in the above payments receivable as the Group is unable to estimate them with sufficient TotalIn millions emplo of yEUeeR benefits 202022.8 201925.1 Later than 3 years and not later than 4 years 38.8 47.8 certainty. Total variable lease payments receivable recognised as income in 2020 under the Group’s operating leases were Other operating expenses comprised the following: LaterEUR than0.1 million4 years (2019:and not EUR later than0.1 million).5 years 36.2 45.9 Wages and salaries (including social and health insurance) 21.7 23.8 LaterThe Group’s than 5 years rental income includes performance income depending on sales revenue of retail177.4 units leased by its tenants.240.7 The Group’s rental income includes performance certainty. Total variable lease payments receivable PensionThe Group costs had – defined 665 employees contribution plansin the core real estate operations of the Group (on full time equivalent1.1 basis) as at1.3 31 These amounts are not included in the above payments receivable as the Group is unable to estimate them with sufficient In millions of EUR 2020 2019 December 2020 (2019: 762 employees). The average number of employees in 2020 was 724 (2019: 763). incomecertainty.23 Direct dependingTotal Operating variable Expenses onlease sales payments arisingrevenue receivable from of Investmentretail recognised units Property as incomerecognised in 2020 underas income the Group’s in 2020 operating under leases the wereGroup’s The Group had 665 employees in the core real estate operations of the Group (on full time Total operating lease payments receivable 351.2 437.5 Services 18.5 27.1 leasedInEUR millions 0.1 by millionof EUitsR tenants. (2019: EUR These 0.1 million). amounts are not operating leases were EUR2020 0.1 million (2019:2019 equivalentTotal employ eebasis) benefits as at 31 December 2020 (2019: 762 employees). The average22.8 number of 25.1 Rental26 Other expense Operating Income and Expenses 1.5 0.6 included in the above payments receivable as the EUR 0.1 million). employeesCost of sold inventories in 2020 was 724 (2019: 763). 0.8 2.0 Direct operating expenses arising from investment property that generate rental 23 Direct Operating Expenses arising from Investment Property AOtherudit fees operating expenses comprised the following: 1.0 0.8 Groupincome: is unable to estimate them with sufficient Material The Group consumption had 665 employees in the core real estate operations of the Group (on full time equivalent0.6 basis) as at1.2 31 MaterialsIn millions consumed of EUR 20201.0 20191.0 The Group’s rental income includes performance income depending on sales revenue of retail units leased by its tenants. EnerInDecember millionsgy costs of 2020 EUR (2019: 762 employees). The average number of employees in 2020 was 724 2020(2019:0.4 763). 20190.2 Repairs and maintenance services 1.5 1.2 These amounts are not included in the above payments receivable as the Group is unable to estimate them with sufficient Net impairment losses on financial and contract assets 1.1 0.8 UtilitiesDirect operating costs expenses arising from investment property that generate rental 12.1 6.2 certainty. Total variable lease payments receivable recognised as income in 2020 under the Group’s operating leases were OtherServices taxes 18.51.2 27.12.1 Servicesincome: relating to investment property 6.4 16.7 26 Other Operating Income and Expenses EUR 0.1 million (2019: EUR 0.1 million). OtheRentalr expense 7.41.5 5.40.6 23.MaterialsReal estateDirect consumed tax Operating Expenses arising from Investment Property 1.00.4 1.00.6 26. Other Operating Income and Expenses CostOther of operating sold inventories expenses comprised the following: 0.8 2.0 RepairsOther costs and maintenance services 1.51.4 1.20.7 Audit fees 1.0 0.8 Utilities23 Direct costs Operating Expenses arising from Investment Property 12.1 6.2 MaterialInTotal millions other consumption of operatin EUR g expenses 202032.50.6 201940.21.2 Services relating to investment property 6.4 16.7 In millions of EUR 2020 2019 Ener gy costs 0.4 0.2 RealTotal estate tax 22.80.4 26.40.6 NetServices impairment losses on financial and contract assets 18.51.1 27.10.8 Other costs 1.4 0.7 Direct operating expenses arising from investment property that generate rental RentalOther taxes expense 1.51.2 0.62.1 Othe r 7.4 5.4 income: Cost of sold inventories 0.8 2.0
TotalMaterials consumed 22.81.0 26.41.0 Audit fees 1.0 0.8
Repairs and maintenance services 1.5 1.2 Material consumption 0.6 1.2 Utilities costs 12.1 6.2 EnerTotalgy other costs operatin g expenses 32.50.4 40.20.2 Services relating to investment property 6.4 16.7 Net impairment losses on financial and contract assets 1.1 0.8 Real estate tax 0.4 0.6 Other taxes 1.2 2.1 Other costs 1.4 0.7 Other 7.4 5.4
Total 22.8 26.4 Total other operating expenses 32.5 40.2
61 62
HB Reavis Holding S.A. Audit Report Notes to Consolidated Financial Statements for the year ended 31 December 2020 Prepared in accordance with International Financial Reporting Standards as adopted by the EU
HB Reavis Holding S.A. HB Reavis Holding S.A. Notes to Consolidated Financial Statements for the year ended 31 December 2020 Notes to Consolidated Financial Statements for the year ended 31 December 2020 Prepared in accordance with International Financial Reporting Standards as adopted by the EU 52 Prepared in accordance with International Financial Reporting Standards as adopted by the EU 53 HB Reavis Holding S.A. The following table summarizes audit fees incurred by the parent entity and its subsidiaries, 28.Notes Income to Consolidated Taxes Financial Statements for the year ended 31 December 2020 26 Other Operating Income and Expenses (Continued) 28 Income Taxes billed by the principal approved audit firm, PricewaterhouseCoopers, Société coopérative, Prepared in accordance with International Financial Reporting Standards as adopted by the EU 53 HB Reavis Holding S.A. LuxembourgThe following table and summarizes other network audit fees firms incurred of the by theprincipal parent entityapproved and its subsidiaries,audit firm billedfor the by theaudit principal of IncomeIncome tax tax expense expense comprises comprises the following: the following: Notes to Consolidated Financial Statements for the year ended 31 December 2020 28 Income Taxes theseapproved consolidated audit firm, PricewaterhouseCoopers, financial statements: Société coopérative, Luxembourg and other network firms of the principal Prepared in accordance with International Financial Reporting Standards as adopted by the EU 52 In millions of EUR approved audit firm for the audit of these consolidated financial statements: Income tax expense comprises the following: 2020 2019
26 Other Operating Income and Expenses (Continued)Fees billed by CurrentHB Reavis tax Holding S.A. (2.1) (7.6) PricewaterhouseCoopers, Fees billed by other Total DeferredInNotes millions to tax ofConsolidated EUR Financial Statements for the year ended 31 December 2020 20200.1 (82.6)2019 The following table summarizes audit fees incurred byLuxembour the parentg entity andnetwork its subsidiaries, firms billed by the principal Prepared in accordance with International Financial Reporting Standards as adopted by the EU 53 approvedIn millions ofaudit EUR firm, PricewaterhouseCoopers, Société2020 coopérative,2019 Luxembourg2020 and other2019 network firms2020 of the principal2019 Current tax (2.1) (7.6) Deferred tax 0.1 (82.6) approved audit firm for the audit of these consolidated financial statements: Income28 Income tax credit/ Taxes(expense ) for the year (2.0) (90.2) Audit fees 0.1 0.1 0.4 0.4 0.5 0.5 Audit-related fees Fees- billed by- - - - - Income tax expense comprises the following: Tax fees ------PricewaterhouseCoopers, Fees billed by other Total IncomeReconciliation tax credit/ between(expense the) for expected the year and the actual taxation charge is provided below. (2.0) (90.2) Other fees ------Luxembourg network firms In millions of EUR 2020 2019 In millions of EUR 2020 2019 2020 2019 2020 2019 ReconciliationIn millions of EUR between the expected and the actual taxation charge is provided2020 below. 2019
CurrentReconciliation tax between the expected and the actual taxation charge is provided below. (2.1) (7.6) ATotaludit feesaudit fees 0.1 0.1 0.4 0.4 0.5 0.5 Deferred tax 0.1 (82.6) Profit before income tax (111.9) 456.7 Audit-related fees ------In millions of EUR 2020 2019 Tax fees ------
Other fees ------ProfitIncome before tax credit/ income(expense tax ) for the year (111.9)(2.0) 456.7(90.2) Other operating income comprised the following: Theoretical tax charge at applicable rate 18.43% (2019: 19.29%) 20.6 (88.1)
In millions of EUR 2020 2019 Tax effect of items which are not deductible or assessable for taxation purposes: Total audit fees 0.1 0.1 0.4 0.4 0.5 0.5 TheoreticalReconciliation- (Loss)/Income tax char between notg esubject at applicable the to expectedtaxation rate 18.43% and the (2019: actual 19.29% taxation) charge is provided below. (3.0)20.6 (88.13.7)
Sales of services 7.1 6.9 - Non-temporary taxable items (15.5) (0.3) Sales of inventories 0.4 1.2 TaxIn- millionsChange effect ofin itemsEUestimateR which of priorare not period deductible income or taxes assessable for taxation purposes: 20200.8 2019(0.3) - (Loss)/IncomeUnrecognised deferrednot subject tax to assets taxation from tax losses carried-forward (3.0)(4.9) (5.73.7) Other operatingoperating income income comprised the following: 1.4 0.6 Profit- Non-temporaryUtilisation before of income previousl taxable taxy itemsunreco gnised tax loss carry-forwards (111.9)(15.5)- 456.7(0.3)0.5 In millions of EUR 2020 2019 - Change in estimate of prior period income taxes 0.8 (0.3) - Unrecognised deferred tax assets from tax losses carried-forward (4.9) (5.7) Total other operating income 8.9 8.7 Sales of services 7.1 6.9 TheoreticalIncome- Utilisation tax tax credit/(expense)of charpreviouslge aty applicable unreco forg thenised rate year tax18.43% loss carr(2019:y-forwards 19.29% ) (2.0)20.6- (90.2)(88.10.5)
Sales of inventories 0.4 1.2
Other operating income 1.4 0.6 Tax effect of items which are not deductible or assessable for taxation purposes: 27 Disposals of Subsidiaries Income- (Loss)/Income tax credit/(expense) not subject to for taxation the year (2.0)(3.0) (90.2)3.7 The Group uses 18.43% (2019: 19.29%) as the applicable tax rate to calculate its theoretical tax charge which is calculated 27. Disposals of Subsidiaries as- Non-temporary a weighted average taxable ofitems the rates applicable in the Slovak Republic of 21% (2019: 21%), the (15.5)Czech Republic and Poland(0.3) The Group sold shares in five (5) subsidiaries during year 2020: Twin City III s. r. o., SPV Vištuk s. r. o, TWENTY House - Change in estimate of prior period income taxes 0.8 (0.3) Total other operating income 8.9 8.7 of 19% (2019: 19%), Hungary of 9% (2019: 9%), Germany of 16% (2019:16%) and the UK of 19% (2019: 20%) where S.à r.l., P14 Sp. z o.o which were classified as Non-current assets held for sale as of 31 December 2019 and BUXTON The- Unreco Groupgnised uses deferred 18.43% tax (2019: assets 19.29%) from tax aslosses the carried-forwardapplicable tax rate to calculate its theoretical tax( 4.9charge) which is calculated(5.7) majority of the Group’s operations are located. The INVEST Group a.s.. sold shares in five (5) subsidiaries Buda Project Kft., TC Tower A1 s. r. o., Twin City as- Utilisation a weighted of previousl averagey ofunreco the ratesgnised applicable tax loss carr iny -forwardsthe Slovak Republic of 21% (2019: 21%), the Czech- Republic and Poland0.5
of 19% (2019: 19%), Hungary of 9% (2019: 9%), Germany of 16% (2019:16%) and the UK of 19% (2019: 20%) where during year 2020: Twin City III s. r. o., SPV Vištuk IV s. r. o., out of which HB REAVIS Buda Project TheDifferences Group between uses 18.43% IFRS and (2019: applicable 19.29%) statutory as the taxation regulationsDifferences give rise between to temporary IFRS differences and applicable between statutorythe 27The DisposalsGroup sold ofshares Subsidiaries in six (6) subsidiaries during year 2019: Temster, s.r.o., Radlická ATA s.r.o., Radlice Real Estate, majority of the Group’s operations are located. s.s.r.o. r. o, and TWENTY HB REAVIS House Buda S.à Project r.l., Kft.,P14 TC Sp. Tower z o.o A1 s. r. o., TwinKft., City TCIV s. Tower r. o., out A1 of s.which r. o. HB and REAVIS Twin BudaCity IVProject s. r. o. applicableIncomecarrying tax amount credit/(expense) tax rateof assets to calculate for and the liabilitiesyear its theoretical for financial tax reporting purposestaxation andregulations their tax bases.give(2.0) rise The to tax temporary effect (90.2)of the The Group sold shares in five (5) subsidiaries during year 2020: Twin City III s. r. o., SPV Vištuk s. r. o, TWENTY House Kft., TC Tower A1 s. r. o. and Twin City IV s. r. o. were classified as Non-current assets held for sale as of 31 December movements in these temporary differences is detailed below. whichS.à r.l., wereP14 Sp. classified z o.o which as were Non-current classified as assets Non-current held assetswere held forclassified sale as of as31 DecemberNon-current 2019 assets and BUXTON held for sale chargeDifferences which between is calculated IFRS and asapplicable a weighted statutory average taxation regulationsdifferences give rise between to temporary the differencescarrying amount between ofthe assets 2018. forINVEST sale a.s..as of 31 December 2019 and BUXTON as of 31 December 2018. ofcarrying the rates amount applicable of assets inand the liabilities Slovak for Republic financial ofreporting purposesand liabilities and their for taxfinancial bases. Thereporting tax effect purposes of the and The Group uses 18.43% (2019: 19.29%) asDivest- the applicableTransfer tax rate to calculate its theoretical Divest- taxTransfer charge which is calculated movements in these temporary differences(Charged)/ mentis detailed to below. (Charged)/ ment to INVEST a.s.. 21% as a weighted(2019: 21%),average the of theCzech rates Republicapplicable inand the PolandSlovak Republic their of 21% tax (2019: bases. 21%), The the tax Czech effect Republic of the and movements Poland The Groupassets soldand sharesliabilities in ofsix subsidiaries (6) subsidiaries disposed during of, year the sale2019: proceeds Temster, and s.r.o., the Radlická gain on disposalATA s.r.o., comprised: Radlice Real Estate, of 19% (2019: 19%), Hungary1 ofcredited 9% (2019: to of9%), assetsGermany Currency of 16% (2019:16%)credited and to the ofUK ofassets 19% (2019:Currency 20%) where The assets and liabilities of subsidiaries disposed of 19% (2019: 19%),January Hungary profit of or 9% Divest-subsi- (2019:Transferheld 9%), for translation in 31 these Dec temporaryprofit or Divest-subsi- differencesTransferheld for translation is detailed 31 Dec below. s.r.o. and HB REAVIS Buda Project Kft., TC Tower A1 s. r. o., Twin City IV s. r. o., out of which HB REAVIS Buda Project majority of the Group’s operations are located. TheKft., TCGroup Tower sold A1 s. shares r. o. and in Twin six (6)City subsidiaries IV s. r. o. were classified asof, Non-current the sale assetsproceeds held forand sale the as gainof 31 Decemberon disposal GermanyIn millions of of EUR 16% (2019:16%)2019 (Charged)/ lossand the diariesment UK ofsaleto difference 2019 (Charged)/loss diariesment saleto difference 2020 In millions of EUR 31 December 2020 31 December 2019 1 credited to of assets Currency credited to of assets Currency 2018. during year 2019: Temster, s.r.o., Radlická ATA comprised: 19%DifferencesTax effect (2019: of between 20%) where IFRSJanuary and majority applicableprofit or of subsi-thestatutory Group’sheld taxation for translation regulations 31 Dec give profit rise orto temporarysubsi- held differences for translation between 31 Dec the Investment property in use 305.9 231.0 carryingdeductible/(taxable)In millions amount of EUR of assets2019 and liabilitiesloss diariesfor financial sale reporting difference purposes 2019 andloss their diariestax bases. sale The differencetax effect of2020 the s.r.o.,Property, Radlice plant and Real equipment Estate, s.r.o. and HB REAVIS 4.4 15.6 operations are located. movementstemporary differences in these temporary differences is detailed below. TheDeferred assets tax andasset/ liabilities(liability) of subsidiaries disposed of, the sale proceeds and the gain on disposal(17.4 comprised:) (15.1) Tax effect of Borrowings (158.7) (187.9) deductible/(taxable)Investment properties (71.9) (84.3) 7.7 16.3 - (132.2) (4.9) 1.4 7.9 - (127.8) Trade and other payables – long term (5.3) (0.6) Divest- Transfer Divest- Transfer In millions of EUR 31 December 2020 31 December 2019 temporaryUnrealized foreigndifferences Trade and other payables – short term (13.3) (2.6) - (Charged)/- ment - to - - - (Charged)/- ment - to - - - exchange (gains)/losses 1 credited to of assets Currency credited to of assets Currency InvestmentCash and cash propert equivalentsy in use 305.92.7 231.060.0 TaxInvestment losses carriedproperties January(71.9) profit(84.3) or subsi-7.7 held16.3 for translation - 31(132.2) Dec profit(4.9) or subsi-1.4 held 7.9for translation - 31(127.8) Dec Property,Other working plant capitaland equipment 16.24.4 15.65.5 3.5 2.4 - (4.1) - 1.8 4.9 - - - 6.7 UnrealizedforwardIn millions offoreign EUR 2019 loss diaries sale difference 2019 loss diaries sale difference 2020 Deferred tax asset/(liability) (17.4) (15.1) ------Property,exchange plant (gains)/losses and Borrowings (158.7) (187.9) Tax losses carried 0.9 (0.1) - 0.9 - 1.7 - - - - 1.7 Net assets value 134.5 105.9 Taxequipment effect of 3.5 2.4 - (4.1) - 1.8 4.9 - - - 6.7 Trade and other payables – long term (5.3) (0.6) forward Othedeductible/(taxable)r - (0.6) - - - (0.6) 0.1 - - - (0.5) TradeGain/(loss) and other on divestments payables – of short subsidiaries term (13.3)(8.6) (2.6)3.0 Property, plant and temporary differences Cash and cash equivalents 2.7 60.0 0.9 (0.1) - 0.9 - 1.7 - - - - 1.7 Foreign currency translation differences transferred from other comprehensive income equipment Otherupon workingloss of control capital 16.28.3 5.54.6 Other (0.6) - - - 0.1 - - - NetInvestment deferred properties tax (71.9)- (84.3) 7.7 16.3 - (132.2)(0.6) (4.9) 1.4 7.9 - (127.8)(0.5) (67.5) (82.6) 7.7 13.1 - (129.3) 0.1 1.4 7.9 - (119.9) Unrealized(liability) foreign ------NetProceeds assets from value sale of subsidiaries 134.5134.2 105.9113.5 exchange (gains)/losses NetTax deferredlosses carried tax (67.5)3.5 (82.6)2.4 7.7 - (4.1) 13.1 - (129.3)1.8 0.14.9 1.4- 7.9 - - (119.9)6.7 Gain/(loss)Less cash inon subsidiaries divestments at of the subsidiaries date of transaction (8.6)(2.7) (60.03.0) Inforward the(liabilit context y) of the Group’s current structure, tax losses and current tax assets of different Group companies may not be ForeignLess receivable currency from translation sale of differencessubsidiary transferred from other comprehensive income - (1.0) Property, plant and offset against current tax liabilities0.9 and(0.1) taxable - profits0.9 of other Group - companies.1.7 Accordingly,- - taxes - may accrue - even1.7 upon loss of control 8.3 4.6 equipment where there is a consolidated tax loss. Therefore, deferred tax assets and liabilities are offset only when they relate to the InOthe ther context of the Group’s current- structure,(0.6) tax- losses - and current - tax(0.6 assets) of 0.1different Group- companies - may - not(0.5 be) Cash sale proceeds 131.5 52.5 same taxable entity. offset against current tax liabilities and taxable profits of other Group companies. Accordingly, taxes may accrue even Proceeds from sale of subsidiaries 134.2 113.5 where there is a consolidated tax loss. Therefore, deferred tax assets and liabilities are offset only when they relate to the The Group expects that substantially all of the deferred tax liability will crystallise after more than 12 months from the Less cash in subsidiaries at the date of transaction (2.7) (60.0) sameNet deferred taxable tax entity. balance sheet date. (67.5) (82.6) 7.7 13.1 - (129.3) 0.1 1.4 7.9 - (119.9) Less receivable from sale of subsidiary - (1.0) (liability)
The Group expects that substantially all of the deferred tax liability will crystallise after more than 12 months from the
Cash sale proceeds 131.5 52.5 balance sheet date. In the context of the Group’s current structure, tax losses and current tax assets of different Group companies may not be offset against current tax liabilities and taxable profits of other Group companies. Accordingly, taxes may accrue even
where there is a consolidated tax loss. Therefore, deferred tax assets and liabilities are offset only when they relate to the 63 64 same taxable entity.
The Group expects that substantially all of the deferred tax liability will crystallise after more than 12 months from the balance sheet date.
HB Reavis Holding S.A. Audit Report Notes to Consolidated Financial Statements for the year ended 31 December 2020 Prepared in accordance with International Financial Reporting Standards as adopted by the EU
In the context of the Group’s current structure, tax deferred tax assets and liabilities are offset only The Group’s maximum exposure to credit risk revolving basis and subject to an annual review. losses and current tax assets of different Group when they relate to the same taxable entity. represents the carrying value of its financial companies may not be offset against current assets in the consolidated statement of financial Management has additional policies in place to tax liabilities and taxable profits of other Group The Group expects that substantially all of the position. secure trade receivables from rental business. The companies. Accordingly, taxes may accrue even deferred tax liability will crystallise after more than Group uses system of required bank guarantees where there is a consolidated tax loss. Therefore, 12 months from the balance sheet date. The Group has no significant off-balance sheet or financial deposits to secure its receivables from exposures to credit risk as it did not issue financial rental business based on the rating of tenant. guarantees nor loan commitments to other HB Reavis Holding S.A. Notes to Consolidated Financial Statements for the year ended 31 December 2020 parties. The Group structures the levels of credit The Group’s management reviews ageing analysis 29.Prepared Foreign in accordance exchange with Internationalgains/(losses) Financial Reporting Standards as adopted by the EU 54 risk it undertakes by placing limits on the amount of outstanding trade receivables and follows up of risk accepted in relation to counterparties on past due balances. Management therefore 29 Foreign exchange gains/(losses) or groups of counterparties. Limits on the considers it appropriate to provide ageing and In millions of EUR 2020 2019 level of credit risk are approved regularly by other information about credit risk as disclosed in HB Reavis Holding S.A. Bank borrowings – unrealised (21.2) 1.3 Management.Notes to Consolidated Such risks Financial are monitoredStatements foron thea year endedNote 31 December 14. 2020 Inter-company loans to foreign operations that do not form part of net investment – (19.0) 0.8 unrealised HBPrepared Reavis in Holding accordance S.A. with International Financial Reporting Standards as adopted by the EU 55 Lease liabilities 0.9 - Notes to Consolidated Financial Statements for the year ended 31 December 2020 Trade and other receivables and payables – realised during period (0.7) (10.0) 31Prepared Financial in accordanceRisk Management with International (Continued) Financial Reporting Standards as adopted by the EU 55 Trade and other receivables and payables – unrealised (0.3) 8.5 Financial instruments subject to offsetting, enforceable master netting and similar arrangements31Financial Financial instruments Risk are Management as subject follows to (Continued) atoffsetting, 31 December enforceable 2020: master netting and similar arrangements are as follows at 31 December 2020: Foreign exchange (losses)/gains (40.3) 0.6 Financial instruments subject to offsetting, enforceable master netting and similar arrangements are as follows at 31 December 2020: Amounts subject to master netting and similar arrangements not set off in the statement of financial 30 Contingencies, Commitments and Operating Risks Amounts subject to master netting position and similar arrangements not set Tax legislation. Tax and customs legislation in countries where the Group operates is subject to varying interpretations, Gross amounts Gross amounts Net amount after off in the statement of financial and changes, which can occur frequently. Management’s interpretation of such legislation as applied to the transactions before offsetting in set off in the offsetting in the position the statement of statement of statement of Financial Cash collateral Net amount and activity of the Group may be challenged by the relevant authorities. The Group includes holding companies Gross amounts Gross amounts Net amount after income and funding will be sufficient to cover this financial position financial position financial position instruments received of exposure 30.incorporated Contingencies, in various jurisdictions. Commitments The tax liabilities and of the Group are determined on the assumption that these holding before offsetting in set off in the offsetting in the In millions of EUR a) b) c) = a) - b) d) e) c) - d) - e) and any similar such commitments. the statement of statement of statement of Financial Cash collateral Net amount Operatingcompanies are Risksnot subject to profits tax in other countries. This interpretation of relevant legislation may be challenged but financial position financial position financial position instruments received of exposure the impact of any such challenge cannot be reliably estimated currently; however, it may be significant to the financial InAssets millions of EUR a) b) c) = a) - b) d) e) c) - d) - e) position and/or the overall operations of the Group. Refer also to Note 3. Trade receivables 2.9 - 2.9 0.2 2.7 -
Tax legislation Assets
TaxCapital and expenditure customs legislation commitments. in countries Contractual where obligations to purchase,31. Financial construct Risk or develop Management investment properties TradeLiabilities receivables 2.9 - 2.9 0.2 2.7 - Cash collateral thetotalled Group EUR operates271.5 million is atsubject 31 December to varying 2020 (31 December 2019: EUR 372.0 million); this exposure will be partially received presented Liabilities 2.7 - 2.7 2.7 - - financed by external loans (committed lines: EUR 438.2 million). The Group believes that future net income and funding within trade and interpretations, and changes, which can occur The risk management function within the Group Cash collateral will be sufficient to cover this and any similar such commitments. other payables received presented frequently. Management’s interpretation of such is carried out in respect of financial risks: credit 2.7 - 2.7 2.7 - - within trade and legislation31 Financial as Risk applied Management to the transactions and risk, market risk (including changes in foreign other payables activity of the Group may be challenged by the currency exchange rates, interest rate and price relevantThe risk management authorities. function The Group within the includes Group is holding carried out in respectrisk), of liquidity financial risks:risks, credit operational risk, market risks risk and(including legal Financial instruments subject to offsetting, enforceable master netting and similar arrangements are as follows at changes in foreign currency exchange rates, interest rate and price risk), liquidity risks, operational risks and legal risks. 31 December 2019: companies incorporated in various jurisdictions. risks. The primary objectives of the financial Financial instruments subject to offsetting, enforceable master netting and similar The primary objectives of the financial risk management function are to establish risk limits, and then ensure that exposure Financial instruments subject to offsetting, enforceable master netting and similar arrangements are as follows at Theto risks tax stays liabilities within ofthese the limits. Group The are operational determined and legal risk managementrisk management functions function are intended are toto ensureestablish proper risk arrangements31 December 2019: are as follows at 31 December 2019: Amounts subject to master netting onfunctioning the assumption of internal policies that these and procedures holding companiesto minimise operational limits, and andlegal thenrisks. ensure that exposure to risks and similar arrangements not set off in the statement of financial Amounts subject to master netting are not subject to profits tax in other countries. stays within these limits. The operational and position (i) Credit risk and similar arrangements not set This interpretation of relevant legislation may be legal risk management functions are intended Gross amounts Gross amounts Net amount after off in the statement of financial The Group takes on exposure to credit risk, which is the risk that one party to a financial instrument will cause a financial before offsetting in set off in the offsetting in the position challenged but the impact of any such challenge to ensure proper functioning of internal policies the statement of statement of statement of Financial Cash collateral Net amount loss for the other party by failing to discharge an obligation. Exposure to credit risk arises as a result of the Group’s rental Gross amounts Gross amounts Net amount after financial position financial position financial position instruments received of exposure cannotincome onbe credit reliably terms estimated and other transactions currently; however,with counterparties it andgiving procedures rise to financial to minimiseassets. The operational Group’s maximum and before offsetting in set off in the offsetting in the In millions of EUR a) b) c) = a) - b) d) e) c) - d) - e) exposure to credit risk represents the carrying value of its financial assets in the consolidated statement of financial the statement of statement of statement of Financial Cash collateral Net amount may be significant to the financial position and/or legal risks. position. financial position financial position financial position instruments received of exposure
the overall operations of the Group. Refer also to AInssets millions of EUR a) b) c) = a) - b) d) e) c) - d) - e) Trade receivables 1.6 - 1.6 0.7 0.9 -
NoteThe Group 3. has no significant off-balance sheet exposures to credit(i) risk Credit as it didrisk not issue financial guarantees nor loan Assets commitments to other parties. The Group structures the levels of credit risk it undertakes by placing limits on the amount Liabilities Trade receivables 1.6 - 1.6 0.7 0.9 - Cash collateral of risk accepted in relation to counterparties or groups of counterparties. Limits on the level of credit risk are approved The Group takes on exposure to credit risk, which received presented Capitalregularly byexpenditure Management. commitments Such risks are monitored on a revolving basis and subject to an annual review. Liabilities 0.9 - 0.9 0.9 - - within trade and Contractual obligations to purchase, construct or is the risk that one party to a financial instrument Cash collateral other payables received presented developManagement investment has additional properties policies intotalled place to EURsecure 271.5 trade receivableswill cause from arental financial business. loss The for Group the otheruses systemparty by 0.9 - 0.9 0.9 - - within trade and millionof required at 31bank December guarantees 2020or financial (31 December deposits to 2019:secure its receivablesfailing to dischargefrom rental businessan obligation. based on Exposure the rating to of tenant. other payables EUR 372.0 million); this exposure will be partially credit risk arises as a result of the Group’s rental According to the general terms and conditions of contracts with its customers, the Group requires either a cash collateral financedThe Group’s bymanagement external loans reviews (committed ageing analysis lines: of outstanding EUR tradeincome receivables on credit and termsfollows andup on other past due transactions balances. or bank guarantee in favour of the Group to ensure its receivables are collectible. The amount guaranteed by cash collateral Management therefore considers it appropriate to provide ageing and other information about credit risk as disclosed in 438.2 million). The Group believes that future net with counterparties giving rise to financial assets. Accordingor a bank guarantee to the general is assessed terms and by conditionsthe Group annually.of contracts The with Group its customers, has a right theof set-off Group of requires any balances either aoverdue cash collateral against Note 14. orthe bank collateral guarantee or amount in favour drawn of the under Group a bank to ensure guarantee. its receivables are collectible. The amount guaranteed by cash collateral or a bank guarantee is assessed by the Group annually. The Group has a right of set-off of any balances overdue against theThe collateral amounts orin columnsamount drawn (d) and under (e) in a the bank above guarantee. table are limited to the exposure reported in column (c) for each individual 65 instrument in order not to understate the ultimate net exposure. 66 The amounts in columns (d) and (e) in the above table are limited to the exposure reported in column (c) for each individual Creditinstrument risks in concentrationsorder not to understate the ultimate net exposure.
AsCredit for the risks banks concentrations and financial institutions, Group has relationships only with those banks that have high independent rating assessment. The Group’s bank deposits are held with 30 banks (2019: 31 banks) but 93.8% (2019: 82.7%) of cash Asbalances for the asbanks of 31 and December financial institutions,2020 are held Group with has 10 relationships (2019: 10) major only with banks. those The banks Group’s that have management high independent considers rating the assessment.concentration Theof credit Group’s risk withbank respect deposits to arecash held balances with 30 with banks banks (2019: as acceptable. 31 banks) The but analysis93.8% (2019: by credit 82.7%) quality of (bankcash balancesrating) is providedas of 31 inDecember Note 16. 2020 are held with 10 (2019: 10) major banks. The Group’s management considers the Asconcentration at 31 December of credit 2020, risk thewith Group respect receivables to cash balances from joint with ventures banks asamounted acceptable. to nil The EUR analysis (2019: byEUR credit 0.2 qualitymillion). (bank The Group’srating) is management provided in Note considers 16. the concentration of credit risk with respect to receivables balances to joint ventures. As at 31 December 2020, the Group receivables from joint ventures amounted to nil EUR (2019: EUR 0.2 million). The Group’s management considers the concentration of credit risk with respect to receivables balances to joint ventures.
HB Reavis Holding S.A. Audit Report Notes to Consolidated Financial Statements for the year ended 31 December 2020 Prepared in accordance with International Financial Reporting Standards as adopted by the EU
According to the general terms and conditions of contracts with its customers, the Group requires either The level of ECL that is recognised in these Forward-looking information incorporated in a cash collateral or bank guarantee in favour of the Group to ensure its receivables are collectible. The consolidated financial statements depends on the ECL models amount guaranteed by cash collateral or a bank guarantee is assessed by the Group annually. The Group whether the credit risk of the debtor has increased The assessment of SICR and the calculation of has a right of set-off of any balances overdue against the collateral or amount drawn under a bank significantly since initial recognition. This is a ECLs both incorporate supportable forward- guarantee. three-stage model for ECL measurement. A looking information. The Group identified certain financial instrument that is not credit-impaired key economic variables that correlate with The amounts in columns (d) and (e) in the above table are limited to the exposure reported in column (c) on initial recognition and its credit risk has not developments in credit risk and ECLs. 31 for each individual instrument in order not to understate the ultimate net exposure. increased significantly since initial recognition Financial Risk Management (Continued) has a credit loss allowance based on 12-month ECLs (Stage 1). If a SICR since initial recognition Cash flow forecasts are provided by the Board is identified, the financial instrument is moved of Directors and provide the best estimate of Credit risks concentrations there is a significant increase in credit risk (SICR). to Stage 2 but is not yet deemed to be credit- the expected macro-economic development As for the banks and financial institutions, Group 12-month ECL represents a portion of lifetime impaired and the loss allowance is based on over the next year. The Group has considered has relationships only with those banks that have ECLs that result from default events on a financial lifetime ECLs. If a financial instrument is credit- this information, and based on the fact that high independent rating assessment. The Group’s instrument that are possible within 12 months impaired, the financial instrument is moved most of the financial assets are current, this did bank deposits are held with 30 banks (2019: 31 after the reporting period, or remaining lifetime to Stage 3 and loss allowance is based on not have significant impact on the consolidated banks) but 93.8% (2019: 82.7%) of cash balances period of the financial instrument if it is less than lifetime ECLs. financial statements. as of 31 December 2020 are held with 10 (2019: a year. 10) major banks. The Group’s management If there is evidence that the SICR criteria are no As with any economic forecast, the projections considers the concentration of credit risk The ECLs that are estimated by management longer met, the instrument is transferred back and likelihoods of occurrence are subject to a with respect to cash balances with banks as for the purposes of these financial statements to Stage 1. If an exposure has been transferred high degree of inherent uncertainty, and therefore acceptable. The analysis by credit quality (bank are point-in-time estimates, rather than through- to Stage 2 based on a qualitative indicator, the the actual outcomes may be significantly different rating) is provided in Note 16. the-cycle estimates that are commonly used for Group monitors whether that indicator continues to those projected. The Group considers these regulatory purposes. The estimates consider to exist or has changed. forecasts to represent its best estimate of the As at 31 December 2020, the Group receivables forward looking information, that is, ECLs reflect possible outcomes. The Group regularly reviews from joint ventures amounted to nil EUR (2019: probability weighted development of key The Group has two approaches for ECL its methodology and assumptions to reduce any EUR 0.2 million). The Group’s management macroeconomic variables that have an impact on measurement: (i) assessment on an individual difference between the estimates and the actual considers the concentration of credit risk with credit risk. basis and (ii) assessment on a portfolio basis. loss of credit. respect to receivables balances to joint ventures. The Group performs an assessment on a Significant increase in credit risk (SICR) portfolio basis for trade receivables. The Group Expected credit loss (ECL) measurement The assessment whether or not there has been performs an assessment on an individual basis (ii) Market risk The Group uses expected credit loss (“ECL”) a significant increase in credit risk (“SICR”) for all receivables overdue more than 365 days measurement, which reflects the probability- since initial recognition is performed on an taking into consideration the fact whether the The Group takes on exposure to market risks. weighted estimate of the present value of future individual basis and on a portfolio basis. For receivable under the review is secured by a bank Market risks arise from open positions in expected credit losses. The Group applies a other receivables and other financial assets, guarantee/cash deposit or not. Generally, the (a) foreign currencies, (b) interest bearing assets simplified approach to trade receivables, unbilled SICR is assessed either on a portfolio basis or an bank guarantee is deemed to provide a sufficient and liabilities and (c) equity investments, all receivables from service charges and accrued individual basis, depending on the existence of assurance that the receivable will not become of which are exposed to general and specific rental income (“trade receivables”) under IFRS 9 scoring models. The criteria used to identify an illiquid and therefore provisions for receivables market movements. (including related party receivables), i.e. measures SICR are monitored and reviewed periodically for secured by a bank guarantee are not created. ECL using lifetime expected loss. The Group appropriateness by the Group’s Management. Currency risk uses for the calculation of lifetime expected loss When assessment is performed on a portfolio Due to continuous international expansion, by applying a provision matrix that takes into The Group considers other receivables and other basis, the Group determines the staging of the Management acknowledges elevated exposure account the ageing of trade receivables and financial assets to have experienced an SICR exposures and measures the loss allowance on a of the Group to foreign exchange risk arising trade receivables ultimately written off. Expected when one or more of the following quantitative, collective basis. The Group analyses its exposures from various currency exposures, primarily with credit losses are modelled over receivables qualitative or backstop criteria have been met: by segments determined on the basis of shared respect to Czech Koruna, Polish Zloty, British lifetime period. credit risk characteristics. The key shared credit Pound and Hungarian Forint. Foreign exchange • 30 days past due; characteristics considered are: financial instrument risk arises from future commercial transactions Management models Lifetime ECL, that is, type, type of customer, date of initial recognition and recognised assets and liabilities denominated losses that result from all possible default • the Group regularly monitors debtors with and remaining term to maturity. The different in currency that is not the entity’s functional events over the remaining lifetime period of increased credit risk and considers such segments also reflect differences in credit risk currency. Therefore, internal objectives, policies the financial instrument. As for loans to other portfolios to have a SICR. parameters. The appropriateness of groupings and processes for its management have been set. parties, 12-month ECL is recognised unless is monitored and reviewed on a periodic basis Management has set up a policy to require Group by Management. companies to manage their foreign exchange risk
67 68 HB Reavis Holding S.A. Notes to Consolidated Financial Statements for the year ended 31 December 2020 Prepared in accordance with International Financial Reporting Standards as adopted by the EU 57
31 Financial Risk Management (Continued)
Cash flow forecasts are provided by the Board of Directors and provide the best estimate of the expected macro-economic development over the next year. The Group has considered this information, and based on the fact that most of the financial assets are current, this did not have significant impact on the consolidated financial statements. HB Reavis Holding S.A. Audit Report NotesAs with to Consolidatedany economic Financial forecast, Statements the projections for the yearand endedlikelihoods 31 December of occurrence 2020 are subject to a high degree of inherent Prepareduncertainty, in accordance and therefore with the International actual outcomes Financial may Reporting be significantly Standards different as adopted to those by the projected. EU The Group considers these forecasts to represent its best estimate of the possible outcomes. The Group regularly reviews its methodology and assumptions to reduce any difference between the estimates and the actual loss of credit.
(ii) Market risk exposureThe Group withtakes the on Groupexposure treasury. to market To managerisks. Market risks ariseconstant, from openprofit positions for the inyear (a) foreignwould currencies,have been such as interest rate swaps or interest rate caps in the Group’s interest rate exposure on a dynamic their(b) interest foreign bearing exchange assets and risk liabilities arising and from (c) equity future investments, EURall of which38.2 aremillion exposed higher to general (2019: and EUR specific 45.8 market million relationHB Reavis to Holding the relevant S.A. borrowings. basis. Various scenarios are simulated, taking into commercialmovements. transactions and recognised assets higher). Equity, after allowing for the tax effects, Notes to Consolidated Financial Statements for the year endedconsideration 31 December 2020 refinancing, renewal of existing Prepared in accordance with International Financial Reporting Standards as adopted by the EU 58 andCurrency liabilities, risk. Due entities to continuous in the Groupinternational use forwardexpansion, Managementwould ac haveknowledges been EURelevated 30.2 exposure million of higher the Group (2019: These provisions are taken into consideration positions and alternative financing sources. Based contracts,to foreign exchange transacted risk arisingwith the from help various of Groupcurrency exposures,EUR primarily 36.2 with million respect higher). to Czech Koruna, Polish Zloty, by31 the Group’s Financial management Risk Management when (Continued) pursuing its on these scenarios, the Group calculates the treasury.British Pound As aand result, Hungarian the GroupForint. Foreignhas invested exchange into risk arises from future commercial transactions and recognised interest rate hedging policy. Trade and other impact on profit and loss of a defined interest rate assets and liabilities denominated in currency that is not the entity’s functional currency. Therefore, internal objectives, Had the interest rates on the Group’s variable interest rate loans (generally the third-party borrowings) been by one tenth hedgingpolicies and instruments, processes for mostlyits management forwards, have that been are set. set Management Interest has rateset up risk a policy to require Group companies receivableshigher than they and have Trade been and throughout other payablesthe year ended are 31 Decembershift. 2020 The with scenarios all other variables are run constant, only for profit liabilities before that upto manage to minimize their foreign foreign exchange exchange risk exposure losses. with the Group treasury.The Group To manage takes their on exposureforeign exchange to the risk effects arising of interesttax for the free year and would with have a term been oflower less by than approximately one EUR 1.0represent million (2019: the majorEUR 1.1 interest-bearing million lower). Equity, positions. after from future commercial transactions and recognised assets and liabilities,fluctuations entities in in the the prevailingGroup use levelsforward contracts,of market year,allowing so forit isthe assumed tax effects, that would there have is been no lowerinterest by approximately rate The EUR simulation 0.8 million (2019:is done lower on bya monthlyEUR 0.8 million). basis to transacted with the help of Group treasury. As a result, the Group has invested into hedging instruments, mostly forwards, Hadthat are the set foreign up to minimize exchange foreign rates exchange been losses. by one interest rates on its financial position and cash riskIn addition associated to certain with borrowings these financial with fixed assetsinterest andrate, the Group’sverify policy that is tothe actively maximum manage potential the interest loss rate is on within its tenth lower than they have been throughout the flows. The Group’s interest rate risk arises from liabilities.variable interest borrowings in selected cases. To manage this, thethe Group limits enters set intoby management.various hedging instruments such yearHad theended foreign 31 exchange December rates 2020 been bywith one all tenth other lower than theylong-term have been borrowings.throughout the Borrowingsyear ended 31 issued December at as interest rate swaps or interest rate caps in relation to the relevant borrowings. 2020 with all other variables constant, profit for the year would have been approximately EUR 38.2 million lower (2019: variablesEUR 45.8 millionconstant, lower). profit Equity, for after the allowing year wouldfor the taxhave effects, variablewould have rates been expose EUR 30.2 the million Group lower to (2019: cash flowEUR TheThese Group’s provisions interest are taken rate into risk consideration is monitored by the by Group’s the managementTrade receivables when pursuing and its interestpayables rate (otherhedging than policy. tenant been36.2 million approximately lower). Had theEUR foreign 38.2 exchangemillion lower rates been(2019: by one tenthinterest higher rate than risk they which have isbeen partially throughout offset the by year Group’sTrade and management other receivables on and a monthlyTrade and basis. other payables The are interestdeposits) free and are with interest-free a term of less and than have one year, settlement so it is EURended 45.8 31 December million lower). 2020 with Equity, all other after variables allowing constant, profit forcash the held year wouldat variable have been rates. EUR The 38.2 table million below higher interestassumed ratethat thererisk policyis no interest is approved rate risk associated quarterly with by these financialdates assetswithin and one liabilities. year. (2019: EUR 45.8 million higher). Equity, after allowing for the tax effects, would have been EUR 30.2 million higher (2019: forEUR the 36.2 tax million effects, higher). would have been EUR 30.2 summarises the Group’s exposure to interest rate theThe BoardGroup’s of interest Directors. rate risk Management is monitored by analysesthe Group’s management on a monthly basis. The interest rate risk policy is million lower (2019: EUR 36.2 million lower). Had risks. The table presents the aggregated amounts approved quarterly by the Board of Directors. Management analyses the Group’s interest rate exposure on a dynamic theInterest foreign rate exchangerisk. The Group rates takes been on byexposure one tenth to the effects ofof fluctuations the Group’s in the financial prevailing levelsassets of andmarket liabilities interest at basis. Various scenarios are simulated, taking into consideration refinancing, renewal of existing positions and alternative rates on its financial position and cash flows. The Group’s interest rate risk arises from long-term borrowings. Borrowings financing sources. Based on these scenarios, the Group calculates the impact on profit and loss of a defined interest rate higherissued at than variable they rates have expose been the throughout Group to cash the flow year interest ratecarrying risk which amounts, is partially categorised offset by cash by held the at earliervariable of shift. The scenarios are run only for liabilities that represent the major interest-bearing positions. The simulation is done endedrates. The 31 table December below summarises 2020 with the allGroup’s other exposure variables to interest contractual rate risks. The interest table presents repricing the aggregated or maturity amounts dates. (iii)on a Liquiditymonthly basis risk to verify that the maximum potential loss is within the limits set by management. of the Group’s financial assets and liabilities at carrying amounts, categorised by the earlier of contractual interest repricing or maturity dates. Trade receivables and payables (other than tenant deposits) are interest-free and have settlement dates within one year. Liquidity risk is defined as the risk that an entity sheet because the carrying amount is based on Less than Over will encounter difficulty in meeting obligations discounted cash flows. In millions of EUR 12 months 12 months Total (iii) Liquidity risk associated with financial liabilities. When the amount payable is not fixed, the 31 December 2020 TheLiquidity table risk below is defined shows as the liabilities risk that atan 31entity December will encounter difficultyamount in meetingdisclosed obligations is determined associated by with reference financial Total monetary financial assets 256.4 0.8 257.2 liabilities. Total monetary financial liabilities (405.0) (1,040.1) (1,445.1) 2020 by their remaining contractual maturity. to the conditions existing at the end of the The table below shows liabilities at 31 December 2020 by their remaining contractual maturity. The amounts disclosed in Thethe maturityamounts table disclosed are the contractual in the maturity undiscounted table cash flows. Suchrespective undiscounted reporting cash period.flows differ Foreign from the currency amount Net interest sensitivity gap at 31 December 2020 (148.6) (1.039.3) (1,187.9) areincluded the contractualin the consolidated undiscounted balance sheet cash because flows. the carrying amountpayments is based are on translated discounted usingcash flows. the spot exchange
Such undiscounted cash flows differ from the rate at the balance sheet date. 31 December 2019 amountWhen the included amount payable in the is consolidated not fixed, the amount balance disclosed is determined by reference to the conditions existing at the Total monetary financial assets 206.8 0.9 207.7 end of the respective reporting period. Foreign currency payments are translated using the spot exchange rate at the Total monetary financial liabilities (303.5) (822.9) (1,156.4) balance sheet date.
The maturity analysis of financial liabilities as at 31 December 2020 is as follows: Net interest sensitivity gap at 31 December 2019 (96.7) (822.0) (948.7) The maturity analysis of financial liabilities as at 31 December 2020 is as follows:
Demand and less Had the interest rates on the Group’s variable interest rate loans (generally the third-party borrowings) been by one tenth In millions of EUR than 12 months From 1 to 2 years From 2 to 5 years Over 5 years Total lower than they have been throughout the year ended 31 December 2020 with all other variables constant, profit before tax for the year would have been higher by approximately EUR 1.0 million (2019: EUR 1.1 million higher). Equity, after Liabilities Had the interest rates on the Group’s variable interest rate loans (generally the third-party Borrowings (principal 260.0 271.7 386.4 314.7 1,232.8 borrowings)allowing for the been tax effects, by one would tenth have lower been thanhigher they by approximately have been EURthroughout 0.8 million the higher year (2019: ended higher 31 by EUR 0.8 repayments) million). Borrowings (future interest 34.5 25.5 48.0 23.5 131.5 December 2020 with all other variables constant, profit before tax for the year would have been payments) higher by approximately EUR 1.0 million (2019: EUR 1.1 million higher). Equity, after allowing for Financial payables - current 89.8 - - - 89.8 (Note 21) the tax effects, would have been higher by approximately EUR 0.8 million higher (2019: higher Future lease payments 42.0 10.7 20.3 56.3 129.3 by EUR 0.8 million). (Note 9) Derivatives and other financial instruments (Note 6.3 - - - 6.3 21) Had the interest rates on the Group’s variable approximately EUR 0.8 million (2019: lower by
interest rate loans (generally the third-party EUR 0.8 million). Total future payments, borrowings) been by one tenth higher than including future principal 432.6 307.9 454.7 394.5 1,589.7 and interest payments they have been throughout the year ended 31 In addition to certain borrowings with fixed December 2020 with all other variables constant, interest rate, the Group’s policy is to actively profit before tax for the year would have been manage the interest rate on its variable interest lower by approximately EUR 1.0 million (2019: borrowings in selected cases. To manage this, the EUR 1.1 million lower). Equity, after allowing Group enters into various hedging instruments for the tax effects, would have been lower by
69 70
HB Reavis Holding S.A. Notes to Consolidated Financial Statements for the year ended 31 December 2020 Prepared in accordance with International Financial Reporting Standards as adopted by the EU 59
31 Financial Risk Management (Continued)
The maturity analysis of financial liabilities as at 31 December 2019 is as follows: HB Reavis Holding S.A. Demand and less InNotes millions to ofConsolidated EUR Financialthan 12 Statements months From for the1 to year 2 years ended From 31 2December to 5 years 2020 Over 5 years Total Prepared in accordance with International Financial Reporting Standards as adopted by the EU 59 Liabilities Borrowings31 Financial (principal Risk Management (Continued) 187.0 107.2 325.4 301.4 921.0 repayments) Borrowings (future interest The maturity analysis of financial liabilities28.2 as at 31 December24.8 2019 is as follows:50.1 27.5 130.6 payments) Demand and less Financial payables - current In millions of EUR than 12 months102.4 From 1 to 2 years- From 2 to 5 years- Over 5 years- 102.4Total (Note 21)
Lease liabilities – principal Liabilities 7.5 7.6 47.9 69.0 132.1 (Note 9) Borrowings (principal Lease liabilities – future 187.0 107.2 325.4 301.4 921.0 repayments) 1.8 1.6 3.8 50.7 57.9 interest payments Borrowings (future interest Derivatives and other 28.2 24.8 50.1 27.5 130.6 payments) financial instruments (Note 1.2 - - - HB Reavis Holding S.A. Financial payables - current Audit1.2 Report 21) 102.4 - - - 102.4 Notes to Consolidated Financial Statements for the year ended 31 December 2020 (Note 21) Prepared in accordance with International Financial Reporting Standards as adopted by the EU Lease liabilities – principal HB Reavis Holding S.A. 7.5 7.6 47.9 69.0 132.1 (Note 9) Notes to Consolidated Financial Statements for the year ended 31 December 2020 LeaseTotal future liabilities payments, – future 1.8 1.6 3.8 50.7 57.9 Prepared in accordance with International Financial Reporting Standards as adopted by the EU 59 interestincluding pa yfuturements principal 328.1 141.2 427.2 448.6 1,345.2 Derivativesand interest and pa yotherments 31 Financial Risk Management (Continued) financial instruments (Note 1.2 - - - 1.2 The maturity analysis of financial liabilities as at 31 December 2019 is as follows: 32.21) Management of Capital The maturity analysis of financial liabilities as at 31 December 2019 is as follows: On an ongoing basis the Board of Directors reviews a rolling cash flow forecast prepared on a consolidated basis. As of the date of preparation of these financial statements and based on our funding capacity the Board has considered cash Demand and less The Group’s objectives when managing capital reduce the cost of capital. In order to maintain or In millions of EUR than 12 months From 1 to 2 years From 2 to 5 years Over 5 years Total Totalflow scenarios, future payments, including a stress case, and concluded that it is appropriate to use the going concern assumption in areincludingpreparation to safeguard future of the principal financial the Group’s statements ability 328.1(see to also continue Note 2). 141.2 adjust the427.2 capital structure,448.6 the Group1,345.2 may adjust and interest payments Liabilities as a going concern in order to provide returns for the amount of dividends paid to shareholders, Borrowings (principal 187.0 107.2 325.4 301.4 921.0 32 Management of Capital repayments) shareholders and benefits for other stakeholders return capital to shareholders, issue new shares or Borrowings (future interest On an ongoing basis the Board of Directors reviews a rolling cash flow forecast prepared on a consolidated basis. As of 28.2 24.8 50.1 27.5 130.6 and to maintain an optimal capital structure to sell assets to reduce debt. payments) theThe date Group’s of preparation objectives whenof these managing financial capital statements are to safeguardand based the on Group’sour funding ability capacity to continue the Board as a going has consideredconcern in ordercash Financial payables - current to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to 102.4 - - - 102.4 flow scenarios, including a stress case, and concluded that it is appropriate to use the going concern assumption in (Note 21) preparationreduce the cost of the of capital.financial In statements order to maintain (see also or adjustNote 2). the capital structure, the Group may adjust the amount of dividends Lease liabilities – principal paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. 7.5 7.6 47.9 69.0 132.1 (Note 9) Consistent with other companies in the industry, the Group monitors capital on the Net Asset Lease liabilities – future 32 Management of Capital 1.8 1.6 3.8 50.7 57.9 ValueConsistent (adjusted) with other basis. companies The Groupin the industry, calculates the Group the Netmonitors Asset capital Value on (adjusted)the Net Asset on Value the (adjusted)following basis. basis: The interest payments Group calculates the Net Asset Value (adjusted) on the following basis: Derivatives and other The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order financial instruments (Note 1.2 - - - 1.2 to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to 21) In millions of EUR Note 31 December 2020 31 December 2019 reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. Equity attributable to the owners of HB Reavis Holding S.A. 1,386.0 1,593.3 Total future payments, including future principal 328.1 141.2 427.2 448.6 1,345.2 AConsistentdjusted for with other companies in the industry, the Group monitors capital on the Net Asset Value (adjusted) basis. The and interest payments AGroupdd: Deferred calculates income the tax Net net Asset (includin Valueg joint (adjusted) ventures )on the following basis: 15, 28 127.8 145.3
In millions of EUR Note 31 December 2020 31 December 2019 Net Asset Value (adjusted) as monitored by management 1,513.8 1,738.6 On an ongoing basis the Board of Directors reviews a rolling cash flow forecast prepared on a consolidated basis. As of the date of preparation of these financial statements and based on our funding capacity the Board has considered cash Equity attributable to the owners of HB Reavis Holding S.A. 1,386.0 1,593.3 On an ongoing basis the Board of Directors considered cash flow scenarios, including a stress flow scenarios, including a stress case, and concluded that it is appropriate to use the going concern assumption in reviews a rolling cash flow forecast prepared case, and concluded that it is appropriate to use AThedjusted Group for also manages the net debt leverage ratio. This ratio is defined as a ratio between interest bearing liabilities preparation of the financial statements (see also Note 2). Afromdd: thirdDeferred parties income less tax Cash net ( includinand Groupg joint total ventures assets.) During 2020, the Group’s15, 28 strategy was to127.8 steer the net debt leverage145.3 on a consolidated basis. As of the date of the going concern assumption in preparation of Theratio Groupup to 40% also (2019: manages up to 35%). the As net is showndebt leveragein the table below, belowthe Group’s the ratiotargeted was below level the as targeted at 31 Decemberlevel as at 31 preparation32 Management of these of Capital financial statements and the financial statements (see also Note 2). ratio.December This 2020 ratio and is atdefined the end of as 2019. a ratio The Groupbetween management believe2020 that and this at position the end places of 2019. the Group The conservatively Group Netin their Asset pursuit Value of (adjusted) new development as monitored opportunities. by management 1,513.8 1,738.6 basedHB Reavis on ourHolding funding S.A. capacity the Board has interest bearing liabilities from third parties management believe that this position places The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order Notes to Consolidated Financial Statements for the year ended 31 December 2020 to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to lessIn millions Cash of andEUR Group total assets. During 2020, the Group conservatively31 December 2020 in their 31 December pursuit 2019 of new 59 reducePrepared the in cost accordance of capital. Inwith order International to maintain Financialor adjust the Reporting capital structure, Standards the asGroup adopted may adjust by the the EU amount of dividends theThe Group’sGroup also strategy manages was the tonet steer debt leveragethe net ratio.debt This ratio isdevelopment defined as a ratio opportunities. between interest bearing liabilities paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. Bankfrom borrowinthird partiesgs and less finance Cash leases* and Group less cash total includin assets.g those During classified 2020, asthe Group’s strategy was to steer the net debt leverage 31 Financial Risk Management (Continued) leverageheld for sale ratio up to 40% (2019: up to 35%). As is 1,184.1 984.2 ratio up to 40% (2019: up to 35%). As is shown in the table below, the Group’s ratio was below the targeted level as at 31 Total assets 3,097.1 3,040.3 TheConsistent maturity with analysisother companies of financial in the industry, liabilities the Groupas at 31monitors December capital 2019 on the is Net as Asset follows: Value (adjusted) basis. The shownDecember in 2020the table and at below,the end ofthe 2019. Group’s The Group ratio management was believe that this position places the Group conservatively The maturity analysis of financial liabilities as at 31 December 2019 is as follows: Group calculates the Net Asset Value (adjusted) on the following basis: in their pursuit of new development opportunities. Demand and less Net debt leverage ratio 38.23% 32.37% In millions of EUR than 12 months From 1 to 2 years From 2 to 5 years Over 5 years Total In millions of EUR Note 31 December 2020 31 December 2019 In millions of EUR 31 December 2020 31 December 2019
Bank borrowings and finance leases* less cash including those classified as LiabilitiesEquity attributable to the owners of HB Reavis Holding S.A. 1,386.0 1,593.3 Borrowings (principal *held Of forthe sale total lease liability recognised as at 31 December 2020, EUR 30.8 million represents1,184.1 finance lease liabilities984.2 as 187.0 107.2 325.4 301.4 921.0 repayments) Total assets 3,097.1 3,040.3 Adjusted for defined by IAS 17 (31 December 2019: EUR 33.2 million). Borrowings (future interest Add: Deferred income tax net (including joint28.2 ventures ) 24.8 15, 2850.1 127.827.5 130.6145.3 payments)
Financial payables - current Net debt leverage ratio 38.23% 32.37% 102.4 - - - 102.4 (Note 21) Net Asset Value (adjusted) as monitored by management 1,513.8 1,738.6 Lease liabilities – principal 7.5 7.6 47.9 69.0 132.1 (Note 9) * Of the total lease liability recognised as at 31 December 2020, EUR 30.8 million represents finance lease liabilities as Lease liabilities – future * Of the total lease liability recognised as at 31 December 2020, EUR 30.8 million represents 1.8 1.6 3.8 50.7 57.9 interestThe Group payments also manages the net debt leverage ratio. This ratio is defined as a ratio between interest bearing liabilities financedefined by lease IAS 17 liabilities (31 December as defined 2019: EUR by 33.2 IAS million). 17 (31 December 2019: EUR 33.2 million). Derivativesfrom third partiesand other less Cash and Group total assets. During 2020, the Group’s strategy was to steer the net debt leverage financialratio up instrumentsto 40% (2019: (Note up to 35%). As is shown1.2 in the table below,- the Group’s ratio- was below the targeted- level as at1.2 31 21)December 2020 and at the end of 2019. The Group management believe that this position places the Group conservatively in their pursuit of new development opportunities.
Total future payments, In millions of EUR 31 December 2020 31 December 2019 including future principal 328.1 141.2 427.2 448.6 1,345.2 Bankand interest borrowin pagsy mentsand finance leases* less cash including those classified as held for sale 1,184.1 984.2 Total assets 3,097.1 3,040.3 On an ongoing basis the Board of Directors reviews a rolling cash flow forecast prepared on a consolidated basis. As of
the date of preparation of these financial statements and based on our funding capacity the Board has considered cash OnNetflow debt anscenarios, ongoing leverage including ratio basis thea stress Board case, of andDirectors concluded that it is consideredappropriate to cash use flowthe going38.23% scenarios, concern including assumption32.37% a in stress
preparation of the financial statements (see also Note 2). reviews a rolling cash flow forecast prepared case, and concluded that it is appropriate to use on a consolidated basis. As of the date of the going concern assumption in preparation of 32* Of Managementthe total lease of liability Capital recognised as at 31 December 2020, EUR 30.8 million represents finance lease liabilities as preparationdefined by IAS of 17 these (31 December financial 2019: statements EUR 33.2 andmillion). the financial statements (see also Note 2). basedThe Group’s on our objectives funding when capacity managing the capital Board are has to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
Consistent with other companies in the industry, the Group monitors capital on the Net Asset Value (adjusted) basis. The Group calculates the Net Asset Value (adjusted) on the following basis: 71 72 In millions of EUR Note 31 December 2020 31 December 2019
Equity attributable to the owners of HB Reavis Holding S.A. 1,386.0 1,593.3
Adjusted for Add: Deferred income tax net (including joint ventures) 15, 28 127.8 145.3
Net Asset Value (adjusted) as monitored by management 1,513.8 1,738.6
The Group also manages the net debt leverage ratio. This ratio is defined as a ratio between interest bearing liabilities from third parties less Cash and Group total assets. During 2020, the Group’s strategy was to steer the net debt leverage ratio up to 40% (2019: up to 35%). As is shown in the table below, the Group’s ratio was below the targeted level as at 31 December 2020 and at the end of 2019. The Group management believe that this position places the Group conservatively in their pursuit of new development opportunities.
In millions of EUR 31 December 2020 31 December 2019
Bank borrowings and finance leases* less cash including those classified as held for sale 1,184.1 984.2 Total assets 3,097.1 3,040.3
Net debt leverage ratio 38.23% 32.37%
* Of the total lease liability recognised as at 31 December 2020, EUR 30.8 million represents finance lease liabilities as defined by IAS 17 (31 December 2019: EUR 33.2 million).
HB Reavis Holding S.A. Audit Report Notes to Consolidated Financial Statements for the year ended 31 December 2020 Prepared in accordance with International Financial Reporting Standards as adopted by the EU
33. Fair Value Estimation Quantitative information about fair value measurements using unobservable inputs:
IFRS 13 requires the use of valuation techniques • Quoted prices (unadjusted) in active markets for which sufficient data is available, maximising for identical assets or liabilities (Level 1).
- - - - -
the use of observable inputs and minimising the • Inputs other than quoted prices included 61 82.0 82.0 7.3% 7.3% 7.0% 7.0% 7.3% 7.3%
use of unobservable inputs. The degree of detail within level 1 that are observable for the asset 192.3 6.85% 6.85% 5.75% 5.75% 5.40% 5.40% Range of the disclosure depends on the observability of or liability, either directly (that is, as prices) 189-200
the inputs used. or indirectly (that is, derived from prices) 2019 31 Dec HB Reavis Holding S.A. Notes to Consolidated Financial Statements for the year ended 31 December(Level 2). 2020 ForPrepared this purpose, in accordance IFRS with 13 establishesInternational aFinancial fair Reporting• Standards Inputs asfor adopted the asset by theor liabilityEU that are not60
- - value hierarchy that classifies the inputs into based on observable market data (that is, - -
33 Fair Value Estimation 212 185 93.0 9.5% 9.5%
three levels: unobservable inputs) (Level 3). 30.16 58.02 7.85% 7.85% 5.75% 5.75% 7.85% 6.85% 6.85% 7.85% 5.63% 5.63% Range 185-193 185-193 IFRS 13 requires the use of valuation techniques for which sufficient data is available, maximising the use of observable 245-289
inputs and minimising the use of unobservable inputs. The degree of detail of the disclosure depends on the observability 2020 Dec 31 of the inputs used. – 4.65% 4.44%
i)For Investment this purpose, IFRS properties 13 establishes a fair value hierarchy that classifies the inputs into three levels: - Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1). - Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that The is,following as prices) tableor indirectly presents (that is,the derived Group’s from investment prices) (Level properties 2). that are measured at fair value: - Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3).
i) Investment properties
The following table presents the Group’s investment properties that are measured at fair value:
In millions of EUR Level 1 Level 2 Level 3 Total
Investment property – valuations obtained at 31 - - 2,729.9 2,729.9 December 2020 (Note 10) Investment property – valuations obtained at 31 - - 2,693.6 2,693.6 December 2019 (Note 10)
e annual rent in EUR per sqm sqm per in EUR rent e annual
g
Capitalised net revenues less cost to cost less revenues net Capitalised completion rate Discount p.a. value terminal for rate Capitalisation Average annual rent in EUR per sqm sqm per in EUR rent annual Average Avera sqm per EUR in annual Average sqm per in EUR rent annual Average rate Capitalisation
Level 3 investment properties are fair valued using discounted cash flow method, yield method, residual method, value terminal for rate Capitalisation rate Capitalization rate Capitalisation sqm per in EUR rent annual Average value terminal for rate Capitalisation
Input
- - Levelcomparative 3 investment method and properties fair value areat acquisition/divestment fair valued using discounted(cost) for assets cash which flow were method, either acquired/held yield method, for sale ) 9.7 9.7 0.2 0.2 - 9.7 9.7 79.0 79.0 88.5 88.5 p.a. rate Discount 16.0 16.0 close to the balance sheet date or where reliable comparable information is unavailable and management used its 88.7 residualjudgement method, and experience comparative to assess methodthe fair value. and The fair valuation value at techniques acquisition/divestment for level 3 are further (cost) described for assets in Note 3. 118.8
which were either acquired/held for sale close to the balance sheet date or where reliable Fair value comparable information is unavailable and management used its judgement and experience to 2019 Dec 31
assess the fair value. The valuation techniques for level 3 are further described in Note 3. of EUR millions in (
- ) 9.4 9.4 0.1 0.1 9.4 9.4 26.1 26.1 102.6 102.6 404.2 404.2 112.4 112.4 241.1 213.8 404.3 Fair value value Fair 31 202031 Dec in millions of of EUR millions in (
aluation technique method Residual
V
ment ment g Office Asset Management and Investment Management Se Slovakia Office flow cash Discounted Total Poland Total Hungary Office Total method Direct capitalisation Office method Direct capitalisation Office Office flow cash Discounted method Direct capitalization Office Office cost At
33 FairValue Estimation (Continued) inputs: unobservable using value measurements fair about information Quantitative HB Reavis Holding S.A. S.A. Holding HB Reavis Notesto Consolidated Financial Statements for the year ended December31 2020 Preparedaccordancein with InternationalFinancial Reporting Standards as adopted theby EU
73 74
HB Reavis Holding S.A. Audit Report Notes to Consolidated Financial Statements for the year ended 31 December 2020 Prepared in accordance with International Financial Reporting Standards as adopted by the EU
Quantitative information about fair value measurements using unobservable inputs: Quantitative information about fair value measurements using unobservable inputs:
62 63 59.3 59.3 47.6 47.6 4.5% 4.5% 5.8% 5.8% 146.6 146.6 160.4 160.4 274.8 304.4 304.4 133.5 133.5 4.75% 4.75% 879.45 879.45 4.5% - 5.5% - 5.5% 4.5% 4.26% - 4.3% - 4.3% 4.26% 5.45% - 6.5% - 6.5% 5.45% 4.25% - 6.25% 4.25% e 31 Dec Dec 2019 e 31 e 31 Dec 2019 g g
-
- - - 4.5% - - - 2.2 2.2 31.4 31.4 4.5% 4.5% 112.2 157.1 388.1 388.1 6.32% 6.32% 1,210.7 1,025.0 -1,096.0 959.0 –
4.3% - 6.25% - 6.25% 4.3% 4.35% - 4.5% - 4.5% 4.35% 4.79% - 5.65% e 31 Dec 2020 Dec e 31 Ran 5.75% - 6.25% - 6.25% 5.75% e 31 Dec 2020 Ran 828.0 828.0 g g Ran Ran necessarily equal to the current passing rent) of the the of rent) passing current the to equal necessarily echnology and other income divided by square meters of lettable lettable of meters square by divided income other and echnology
e annual rent in EUR per sqm sqm per in EUR rent e annual g
Capitalised net revenues less cost to completion completion to less cost revenues net Capitalised Capitalisation rate Input Capitalised net revenues less cost to to less cost revenues net Capitalised Completion Capitalisation rate Average annual rent rent per in EUR annual sqm Average Capitalisation rate Capitalised net revenues less cost to to less cost revenues net Capitalised Completion Capitalisation rate Capitalised net revenues less cost to completion to completion cost less revenues net Capitalised Capitalised net revenues less cost to completion to completion cost less revenues net Capitalised rate Capitalisation Input Capitalised net revenues less cost to completion to completion cost less revenues net Capitalised rate Capitalisation Capitalisation rate rate Capitalisation Capitalisation rate Capitalisation
) - - - ) 1.0 1.0 - 1.0 1.0 - 9.7 9.7 - 14.0 14.0 land of sqm per EUR in Price 57.4 58.4 58.4 151.0 151.0 326.6 326.6 730.9 151.0 389.3 389.3 146.3 146.3 Avera 219.7 219.7 493.3 493.3 229.1 229.1 448.8 805.5 Fair value value Fair Fair value
31 Dec 2019 Dec 31 31 Dec 2019 Dec 31 in millions of millions in EUR in millions of of EUR millions in ( (
- - ) - - ) 1.0 1.0 1.0 1.0 0.2 0.2 61.1 61.1 60.1 60.1 12.4 12.4 17.6 17.6 17.6 337.3 337.3 17.6
583.6 583.6 395.9 395.9 409.3 583.6 269.8 115.8 385.8 672.4 Fair value Fair value
31 Dec 2020 Dec 31 31 202031 Dec
)
) in millions of of EUR millions in in millions of of EUR millions in ( ( Continued (
Continued ( ement g
Direct capitalisation method method capitalisation Direct At cost At cost At Residual Method Method Residual Residual value Residual
Valuation technique Residual method method Residual Residual Method Method Residual method Comparative cost At Residual method method Residual Direct capitalisation method method capitalisation Direct At cost At
Valuation Technique Technique Valuation
ement and Investment Mana Investment and ement ment g g
Poland
Retail Retail
Office Czech Republic United Kingdom Kingdom United Office
Office
Office Office Segment Office Office Total Total for se and preparation in in realisation Development Slovakia Office, Office/Retail Residual Method Office Total Segment preparation in and realisation in Development Office Total Office Office Office Total United Kingdom Total
Asset Mana Asset 33 FairValue Estimation (Continued) 33 FairValue Estimation (Continued) property, including rental income from office and retail space but including ancillary income from storage, parking, signage, t signage, parking, storage, from income ancillary including but space retail and office from income rental including property, office, retailandstorage space. HB Reavis Holding S.A. S.A. Holding HB Reavis Notesto Consolidated Financial Statements for the year ended December31 2020 Preparedaccordancein with InternationalFinancial Reporting Standards as adopted theby EU (not space each of rent market open the i.e. (EMRV) Value Rental Market Estimated the includes provided rent annual average The S.A. Holding HB Reavis Notesto Consolidated Financial Statements for the year ended December31 2020 Preparedaccordancein with InternationalFinancial Reporting Standards as adopted theby EU
75 76 HB Reavis Holding S.A. Audit Report Notes to Consolidated Financial Statements for the year ended 31 December 2020 Prepared in accordance with International Financial Reporting Standards as adopted by the EU
Quantitative information about fair value measurements using unobservable inputs: Sensitivity of measurement to variance of evidenced by the transaction price or an active significant unobservable inputs quoted market price. The estimated fair values A decrease in the estimated annual rent will of financial instruments have been determined decrease the fair value. An increase in the by the Group using available market information,
64 discount rates and the capitalisation rates (used where it exists, and appropriate valuation 61.4 61.4 6.0% 6.0% 3.5% 3.5% 226.1 226.1 114.2 114.2 for terminal value of DCF and for the direct methodologies as described below. However, 5.25% 5.25% 5.25% 5.25% 2,847.2 2,847.2
– capitalisation method) will decrease the fair value. judgement is necessarily required to interpret
4.7 4.7 market data to determine the estimated fair value. e 31 Dec Dec 2019 e 31 g There are interrelationships between these rates as they are partially determined by market Financial assets carried at amortised cost
- - - rate conditions. Please refer to Note 3 for the The fair value of floating rate instruments is 34.0 34.0 6.0% 6.0%
216.0 216.0 121.0 quantitative sensitivity analysis. normally their carrying amount. The estimated 5.57% 5.57% 5.75% 5.75% 2,673.0 2,673.0 fair value of fixed interest rate instruments is based on estimated future cash flows expected 3.45% - 4.25% 3.45% e 31 Dec 2020 Dec e 31 Ran Valuation process g The valuations of the properties are performed to be received discounted at current interest rates Ran twice a year on the basis of valuation reports for new instruments with similar credit risk and prepared by independent and qualified valuers. remaining maturity. Discount rates used depend on credit risk of the counterparty. These reports are based on both: Liabilities carried at amortised cost • information provided by the company such Considering that most borrowings have variable as current rents, terms and conditions of rate of interest and that own credit risk of the
lease agreements, service charges, capital Group did not materially change, the amortised expenditure, etc. This information is derived cost carrying value approximates fair value. The from the company’s financial and property fair value of liabilities repayable on demand or management systems and is subject to the after a notice period (“demandable liabilities”)
company’s overall control environment. is estimated as the amount payable on demand, discounted from the first date that the amount • assumptions and valuation models used by could be required to be paid. The discount rate Input Capitalised net revenues less cost to completion completion to less cost revenues net Capitalised rate Capitalisation Average annual rent in EUR per sqm sqm per EUR in rent annual Average rate p.a. Discount terminal value for rate Capitalisation completion to less cost revenues net Capitalised rate Capitalisation
) the valuers – the assumptions are typically was 3.19% p.a. (2019: 2.37% p.a.). Refer to Note 4.8 4.8 - 7.4 7.4 - 54.2 54.2 56.1 56.1 15.6 15.6 - 33.1 33.1 sqm per in EUR Price market related, such as yields and discount 20 for the estimated fair values of borrowings (for 167.5 270.6 172.3 216.4 1,832.0 1,832.0 rates. These are based on their professional current borrowings Level 2 inputs are used, for Fair value value Fair
31 201931 Dec judgment and market observation. Generally, Non-current borrowings Level 3 inputs are used). for income producing assets a DCF and direct Carrying amounts of trade and other payables in millions of of EUR millions in ( capitalisation methods are used, for assets approximate fair values.
under construction residual method is used ) 0.2 0.2 1.4 1.4 53.2 53.2 52.6 52.6 36.8 36.8 14.4 14.4 and comparative methodology is used for Financial derivatives 318.7 318.7 246.2 246.4 265.5 265.5
2,004.9 2,004.9 non-core and land bank assets. The fair values of derivatives are based on Fair value
31 Dec 2020 31 Dec counterparty bank quotes and are considered
) The information provided to the valuers - and level 2 valuations. The fair value was estimated in millions of EUR millions in ( the assumptions and the valuation models used using the discounted cash flows technique. by the valuers - are reviewed by the controlling Continued ( department and the Group Chief Financial Officer (‘CFO’). This includes a review of fair value 34. Reconciliation of Classes of Financial movements over the period. Instruments with Measurement Categories
For the purposes of measurement, IFRS 9 Residual method method Residual At cost At Comparative method method Comparative Discounted cash flow cash flow Discounted method Residual At cost At
Valuation Technique At cost At ii) Financial Instruments “Financial Instruments” classifies financial assets into the following categories: (a) financial assets Fair value of a financial instrument is the price that at FVTPL; (b) debt instruments at FVOCI, (c) would be received to sell the financial instrument equity instruments at FVOCI and (c) financial
y in an orderly transaction between market assets at AC. Financial assets at FVTPL have
istics participants at the measurement date and is best two sub-categories: (i) assets mandatorily g Germany
Hungar Office Segment preparation in and realisation in Development Office Total Office Office Total for segment Total None - core Lo Retail HubHub for segment Total
33 FairValue Estimation (Continued) HB Reavis Holding S.A. S.A. Holding HB Reavis Notesto Consolidated Financial Statements for the year ended December31 2020 Preparedaccordancein with InternationalFinancial Reporting Standards as adopted theby EU
77 78 HB Reavis Holding S.A. Audit Report Notes to Consolidated Financial Statements for the year ended 31 December 2020 Prepared in accordance with International Financial Reporting Standards as adopted by the EU
measured at FVTPL, and (ii) assets designated 36. Events after the End of the as such upon initial recognition or subsequently. Reporting Period In addition, finance lease receivables form a separate category. In March 2021, the Group completed the sale of shares in TANGERACO INVESTMENTS LIMITED All of the Group’s financial assets belong to classified as an investment in joint venture as the category financial assets at amortised cost of 31 December 2020. Carrying value of the except for financial derivatives that are classified investment in joint venture was EUR 2.3 million as as financial assets at FVTPL. All of the Group’s of 31 December 2020. financial liabilities are carried at amortised cost except for financial derivatives that are classified After 31 December 2020 and up to date of as financial liabilities at FVTPL (Note 20). authorization of these consolidated financial statements, the Group repaid the loans of EUR 2 million and drawn EUR 70.2 million of new loans. 35. Consolidated Structured Entities The Group also issued new tranches of bonds in the amount of EUR 77 million and repaid the The Group issued 2 tranches of bonds through bonds of EUR 47.8 million. HB Reavis Finance PL 2 Sp. z o.o., 1 tranche of bonds through HB Reavis Finance PL 3 Sp. On 16 April 2021 the Group disposed of 100% z o.o. both incorporated in Poland, 4 tranches of shares in Phibell s.r.o. for a consideration of bonds through HB REAVIS Finance SK III s. r. o., EUR 33.5m. 1 tranche of bonds through HB REAVIS Finance SK IV s. r. o., 3 tranches of bonds through HB There were no other material events, which REAVIS Finance SK V s. r. o., 1 tranche of bonds occurred after the end of the reporting period through HB REAVIS Finance SK VI s. r. o., 2 which have a bearing on the understanding of tranches of bonds through HB REAVIS Finance SK these consolidated financial statements. VII s. r. o. all seven incorporated in Slovakia and 1 tranche of bonds through HB Reavis Finance CZ, s.r.o., incorporated in Czech Republic. These entities were consolidated as they are wholly owned by the Group, they were specifically set up for the purposes of the Group, and the Group has exposure to substantially all risks and rewards through ownership and outstanding guarantees of the entities’ obligations. The Group guarantees all obligations of these entities represented by the bonds issued amounting to PLN 405 million, EUR 243 million and CZK 1.250 billion (Note 20).
79 80