t
el
.
: +48 22
543 16 00
fax: +48 22 543 16 01
e-mail: office@bdo.pl
www.bdo.pl
BDO
spółka
z
ograniczoną
odpowiedzialnością
spółka komandytowa
ul. Postępu 12
02-676 Warszawa
Polska
BDO spółka z ograniczoną odpowiedzialnością spółka komandytowa
, Sąd Rejonowy dla m. st. Warszawy, XIII Wydział Gospodarczy, KRS: 0000729684,
REGON: 141222257, NIP: 108-000-42-12. Wartość wkładu kapitałowego wynosi 10.037.500 zł. Biura BDO w Polsce: Katowice 40-
007,
ul. Uniwersytecka 13, tel.:+48 32 661 06 00, katowice@bdo.pl; Kraków 31-548, al. Pokoju 1, tel.: +48 12 378 69 00, krakow@bdo.pl; Poznań 60-
650,
ul. Piątkowska 165, tel.:+48 61 622 57 00, poznan@bdo.pl; Wrocław 53-332, ul. Powstańców Śląskich 7a, tel.: +48 71 734 28 00, wroclaw@bdo.pl
BDO spółka z ograniczoną odpowiedzialnością spółka komandytowa jest członkiem BDO International Limited, brytyjskiej spółki i częścią
międzynarodowej sieci BDO, złożonej z niezależnych spółek członkowskich.
Independent Auditor’s Report
to the General Meeting and Supervisory Board
of Globe Trade Centre S.A.
Report on the Audit of the Year-end Consolidated Financial Statements
Opinion
We have audited the annual consolidated financial statements of the group, where the parent company
is Globe Trade Centre S.A. located in Warsaw at Komitetu Obrony Robotników 45A (“the Company”)
(“the Group”), which comprise the consolidated statement of financial position as at 31 December
2020, the consolidated income statement, the consolidated statement of comprehensive income,
the consolidated statement of changes in equity and the consolidated statement of cash flows
for the year then ended, as well as notes to the consolidated financial statements including
a description of accounting methods and other explanations (“the consolidated financial statements”).
In our opinion, the accompanying consolidated financial statements:
- give a true and fair view of the Group’s consolidated financial position as at 31 December 2020,
as well as of its consolidated financial result and consolidated cash flows for the year then ended,
in accordance with the applicable International Financial Reporting Standards endorsed
by the European Union, as well as the adopted accounting methods (policies);
- are consistent, in content and in form, with the applicable laws and regulations and with the
Company’s Statute.
The present opinion is consistent with the additional report to the Audit Committee, which we issued
on 22 March 2021.
Basis for Opinion
We conducted our audit in accordance with the International Standards on Auditing adopted
by the National Council of Certified Auditors as National Standards on Auditing (“NSA”)
and in compliance with the Act on Certified Auditors, Audit Firms and on Public Oversight
(“the Certified Auditors Act” – 2020 Journal of Laws, item 1415) and Regulation (EU) No. 537/2014
of 16 April 2014 on specific requirements regarding statutory audit of public interest entities
(“Regulation EU” – OJ L 158). Our responsibilities under those standards are further described
in the “Responsibilities of the Auditor for the Audit of the Consolidated Financial Statements” section
of this report.
We are independent of the Group’s companies in accordance with the International Code of Ethics
for Professional Accountants (including International Independence Standards) of the International
Ethics Standards Board for Accountants (“the IESBA Code”) and adopted by resolutions of the National
Chamber of Certified Auditors, and with other ethical requirements relevant to the audit of financial
statements in Poland. We have fulfilled our other ethical responsibilities in accordance with these
requirements and the IESBA Code. During the audit, the auditor in charge and the audit firm remained
independent of the Company in accordance with the independence requirements laid down
in the Certified Auditors Act and Regulation EU.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
2
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of the most significance
in the audit of the consolidated financial statements for the current reporting period. They include
the most significant assessed types of risks of material misstatements, including assessed types of risks
of material misstatements resulting from fraud. We addressed these matters in the context of our audit
of the consolidated financial statements as a whole and in forming our opinion thereon, and have
summarized our response to these types of risks, and where relevant, presented our key observations
relating to those risks. We do not express a separate opinion on these matters.
1 Valuation of investment property
Investment property amounts to 2,125,128 thousand euro and constitutes more than 85% of total
assets of the Group as at 31 December 2020 (31 December 2019: over 89%). It comprises mainly of two
categories: completed investment property, which are measured at fair value and investment property
under construction, measured either at cost or at fair value, if certain criteria specified in the Group’s
accounting policies are met.
The fair value of the investment property depends in general on external valuations, which take into
account the Company Management’s judgements, assumptions and estimates such as current
and expected future rents, occupancy levels, rent-free periods and expected market yields. Inputs
used to determine the fair value of the Group’s investment property are classified into Levels 2 and 3
of the fair value hierarchy.
The valuations have been performed by third party appraisers. The appraisers were engaged
by the Group to carry out the valuations in accordance with applicable valuation and professional
standards.
We consider valuation of investment property as a key audit matter taking into account the significant
impact on the Group’s financial statements as well as high dependency on estimates and judgements
of the Group’s Management and valuation experts.
Disclosures in the Financial Statements
The disclosures and accounting policies relating to the valuation of investment property,
incl. assumptions made, are presented in notes 7c, 7d, 17 and 36 of the consolidated financial
statements.
Audit Procedures Performed in Response to the Risk
We documented our understanding of the investment valuation process. We also discussed
with the Management current situation in markets where the Group operates in. We engaged our
internal real estate and valuation specialists to verify properties’ valuations performed by the Group.
Our audit procedures included, among others, the following:
- understanding of the process and control systems related to valuation of both investment property
and investment property under construction;
- evaluation of the objectivity and expertise of the external appraisers;
- analysis of the properties selected on a sample basis, including assets that are of the highest value
or those showing significant changes in carrying value;
- review of the valuation reports and applied valuation models for selected properties and assessment
of valuation approach used for determining the carrying value;
- substantive audit procedures to evaluate the accuracy of the property information provided
to the appraisers by the Management, as well as verification of mathematical accuracy
of the valuation models;
- evaluation of the appropriateness of the property related data for selected properties, including
estimates as used by the external appraisers, in particular, comparison of the applied investment
yields to an expected estimated range, including reference to published benchmarks;
- assessment of other assumptions that are not so readily comparable with published benchmarks, such
3
as
Estimated
R
ent
Value,
void
rates
and
periods.
Where
assumptions
were
outside
the
expected
range
or otherwise unusual, and/or valuations showed unexpected movements, we undertook further
investigations and, when necessary, held further discussions with the external appraisers
and the Management;
- analytical review, including the reasonableness of fair value movements in comparison
with expectations built on the knowledge gained during the audit process;
- assessment of the appropriateness and completeness of the disclosures relating to the investment
property valuation presented in notes of the consolidated financial statements.
2 Financing and debt covenants
The outstanding bonds, loans and borrowings amount to 1,261,292 thousand euro and constitute 50.8%
of total assets of the Group as at 31 December 2020 (31 December 2019: 47.8%).
For the majority of loans and bonds, the entities of the Group have to meet certain covenants
specified in the loan and bond agreements.
Covenants’ calculation depends to a large extent on investment property valuations as described
in “Valuation of investment property” point above. These valuations are based on estimates
and assumptions, including expectations of future economic and market developments which may be
uncertain and, therefore, may change in the future. Additionally, the ability of the Group’s entities
to meet debt covenants in the foreseeable future may depend also on events after reporting date,
including effect of the Covid-19 pandemic. Finally, covenants’ calculation results may affect
the Group’s liquidity, as well as current and non-current liabilities presentation.
The availability of adequate financing and the assessment whether the Group will continue to meet its
financial covenants are significant aspects of our audit due to possible impact on the Group’s ability
to continue as a going concern. Therefore, we consider this to be a key audit matter.
Disclosures in the Financial Statements
The disclosures regarding the covenants, loan and bond agreements and amendments are presented in
notes 9, 28 and 37 of the consolidated financial statements. In the notes 4 and 36 the Group presented
its assessment of the going concern assumption, including Covid-19 effects on the Group’s operations,
financial position and performance.
Audit Procedures Performed in Response to the Risk
We documented our understanding of the financing process and the Group’s control systems
on the debt covenants’ compliance and liquidity management. We also documented our understanding
of the Group Management’s calculation process of the debt covenant ratios in accordance
with the loan and bonds agreements.
Our audit procedures, among others, included:
- analysis of debt covenants’ requirements resulting from the loan and bond agreements, including
the covenant ratios and potential events of default;
- analysis of the Group’s assessment of debt covenants’ compliance and going concern assumption;
- assessment of compliance - estimated by the Group’s Management - with applicable financial
covenants’ requirements by performing recalculation of these covenants as at 31 December 2020
on a sample basis of covenants;
- consideration of the events after the reporting date, including potential impact of the Covid-19
pandemic (i.a. decrease in shopping malls turnover on the future investment property valuations,
which are subject to financing collaterals), on the uncertainty of meeting debt covenants
and the Group liquidity in the foreseeable future and, consequently, the impact of this events
on the going concern assumption assessment;
- analysis of the Group’s stress tests - the cash flow projections based on certain hypothetical
defensive assumptions to assess the reasonableness of the going concern assumption in view
4
of the cur
rent development
s
on the market
;
- assessment of the appropriateness and completeness of the disclosures relating to the covenants,
loan and bond agreements as well as going concern assumption in notes of the consolidated financial
statements.
Other matter
The Group's financial statements for the year ended 31 December 2019 were audited by an auditor
acting on behalf of another audit firm, who expressed an unqualified opinion on those financial
statements on 18 March 2019.
Responsibilities of the Company’s Management and Supervisory Board for the Consolidated
Financial Statements
The Company’s Management is responsible for the preparation of the consolidated financial statements
that give a true and fair view of the Group’s financial position and financial result in accordance
with International Financial Reporting Standards endorsed by the European Union, the adopted
accounting methods (policies), the applicable binding regulations and the Statute. The Company’s
Management is also responsible for such internal controls as it considers necessary to ensure that
the consolidated financial statements are free from material misstatements resulting from fraud
or error.
In preparing the consolidated financial statements the Company’s Management is responsible
for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, any matters
related to going concern and using the going concern basis of accounting, except in situations where
the Management intends to either liquidate the Group or discontinue its operations, or has no realistic
alternative but to do so.
The Company’s Management and members of the Company’s Supervisory Board are required to ensure
that the consolidated financial statements meet the requirements of the Accounting Act
of 29 September 1994 (“the Accounting Act” – 2021 Journal of Laws, item 217). Members
of the Company’s Supervisory Board are responsible for overseeing the financial reporting process.
Responsibilities of the Auditor for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements
as a whole are free from material misstatements due to fraud or error, and to issue an independent
auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but it is
not a guarantee that an audit conducted in accordance with NSA will always detect an existing material
misstatement. Misstatements can arise from fraud or error and are considered material if it could be
reasonably expected that they, individually or in the aggregate, could influence the economic decisions
of users made on the basis of these consolidated financial statements.
The concept of materiality is applied by the auditor at the planning stage and when performing
the audit and evaluating the effect of identified misstatements on the audit and of uncorrected
misstatements, if any, on the financial statements, as well as when formulating the auditor’s opinion.
In view of the above, all of the opinions and statements contained in the auditor’s report are expressed
subject to the qualitative and quantitative level of materiality set in accordance with the applicable
standards on auditing and the auditor’s professional judgement.
The scope of the audit does not include an assurance regarding the Group’s future profitability,
or regarding the effectiveness of the Company’s Management in the handling of the Group’s affairs now
or in the future.
Throughout an audit in accordance with NSA we exercise professional judgement and maintain
professional skepticism, as well as:
- identify and assess the risks of a material misstatement of the consolidated financial statements
resulting from fraud or error, design and perform audit procedures in response to such risks and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk
5
of not detecting a material misstatement resulting from fraud is higher than the risk of not
detecting a material misstatement resulting from error, because fraud may involve collusion,
forgery, deliberate omission, misrepresentation or override of internal controls;
- obtain an understanding of the internal controls relevant to the audit in order to plan our audit
procedures, but not to express an opinion on the effectiveness of the Group’s internal controls;
- evaluate the appropriateness of the accounting policies used and the reasonableness of the
estimates and related disclosures made by the Company’s Management;
- conclude on the appropriateness of the Company Management’s use of the going concern basis of
accounting and, based on the audit evidence obtained, whether material uncertainty exists related
to events or conditions that may cast significant doubt on the Group’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in our
auditor’s report to the related disclosures in the consolidated financial statements or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence
obtained up to the date of our auditor’s report. However, future events or conditions may cause the
Group to cease to continue as a going concern;
- evaluate the overall presentation, structure and contents of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent the
underlying transactions and events in a manner that achieves fair presentation;
- obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group in order to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the Group’s audit
and remain solely responsible for our audit opinion.
We provide the Company’s Audit Committee with information about, among others, the planned scope
and timing of the audit and significant audit findings, including any significant weaknesses of internal
controls that we identify during our audit.
We provide the Company’s Audit Committee with a statement that we have complied with the relevant
ethical requirements relating to independence, and that we will communicate to them all relationships
and other matters that may reasonably be considered to constitute a threat to our independence, and
where applicable, inform them of the related safety measures.
From the matters communicated to the Company’s Audit Committee we determined those matters that
were of the most significance to the audit of the consolidated financial statements for the current
reporting period and were therefore chosen as key audit matters. We describe these matters in our
auditor’s report, unless law or regulations prohibit their public disclosure or when, in exceptional
cases, we find that a given matter should not be presented in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest benefits of
such information.
Other Information, Including Report on Activities
Other information comprises the Report on the Activities of the Group for the financial year ended 31
December 2020 (“the Report on Activities”) along with the representation on the application of
corporate governance, as well as the Annual Report for the financial year ended 31 December 2020
(“Annual Report”) (together “Other Information”).
Responsibilities of the Company’s Management and Supervisory Board
The Company’s Management is responsible for the preparation of Other Information in accordance with
binding regulations.
The Company’s Management and members of its Supervisory Board are required to ensure that the
Report on Activities along with its separate sections meets the requirements of the Accounting Act.
6
Responsibilities of the Auditor
Our opinion on the consolidated financial statements does not cover Other Information. In connection
with our audit of the consolidated financial statements, our responsibility is to read Other Information
and, in doing so, consider whether it is materially inconsistent with the consolidated financial
statements or with our knowledge obtained during the audit, or otherwise appears to be materially
misstated. If based on the work we have performed, we find a material misstatement of Other
Information, we are required to state this fact in our auditor’s report. In accordance
with the requirements of the Certified Auditors Act, it is also our responsibility to issue an opinion
whether the Report on Activities has been prepared in accordance with binding regulations,
and whether it is consistent with the information presented in the financial statements. We are also
required to issue an opinion whether the Company’s representation on application of corporate
governance contains the required information.
We received the Report on the Activities of the Group prior to the issue of the present auditor’s report,
whereas the Annual Report will be available after this date. In the event that we find a material
misstatement in the Annual Report, we are required to communicate this to the Company’s Supervisory
Board.
Opinion on the Report on Activities
Based on the work we have performed during the audit, in our opinion the Report on the Activities
of the Group:
- has been prepared in accordance with Article 49 of the Accounting Act and par. 71
of the Minister’s of Finance Decree of 29 March 2018 on the current and periodic information
reported by the issuers of securities and on the conditions for recognizing as equally valid
the information required by the regulations of a state that is not a member state (the “Current
Information Decree” – 2018 Journal of Laws, item 757);
- is consistent with the information presented in the consolidated financial statements.
Furthermore, based on our knowledge obtained during the audit about the Group and its environment
we have identified no material misstatements in the Report on the Activities of the Group.
Opinion on the corporate governance application representation
In our opinion, the Company’s representation on application of corporate governance contains all
of the information specified in paragraph 70 section 6 par. 5 of the Current Information Decree.
In addition, in our opinion, the information indicated in paragraph 70 section 6 point 5 letters c-f, h
and letter i of the Decree, contained in the representation on application of corporate governance is
consistent with the applicable regulations and with the information contained in the consolidated
financial statements.
Report on Other Legal and Regulatory Requirements
Declaration on the Provision of Non-audit Services
To the best of our knowledge and belief we declare that any non-audit services we have provided
to the Group were consistent with the law and the regulations binding in Poland, and that we have not
provided any non-audit services prohibited by virtue of Article 5 par. 1 of Regulation EU and Article 136
of the of the Certified Auditors Act.
The non-audit services we have provided to the Company and its subsidiaries in the audited period are
listed in the Report on the Activities of the Group.
Appointment of the Auditor
We were appointed as auditors of the Group’s consolidated financial statements in a resolution passed
by the Company’s Supervisory Board on 29 April 2020. We audited the consolidated financial
statements of the Group for the first time.
7
The auditor in charge of the audit resulting in this independent auditor’s report is Krzysztof Maksymik.
BDO spółka z ograniczoną odpowiedzialnością sp.k. with its registered office in Warsaw
entered on the list of audit firms in number 3355
represented by the auditor in charge
Signed with a qualified electronic signature
Krzysztof Maksymik
Certified Auditor No. 11380
Podpisano kwalifikowanym podpisem elektronicznym
Dr. André Helin
Managing Partner of the General Partner
Certified Auditor No. 90004
Warsaw, 22 March 2021