CEO Letter Management board Supervisory board Shareholders

To Our
Stakeholders

Dear Shareholders, Partners and Clients,

I am sending you Echo Investment’s financial report for 2016. It was a time of significant changes in the functioning of the company as well as a considerable acceleration with regard to projects under construction. The presented financial data show that the Group’s financial standing is stable and the Group is very well prepared for further expansion of its operations.

Nicklas Lindberg
President of the Management Board

Dear Shareholders, Partners and Clients,

I am sending you Echo Investment’s financial report for 2016. It was a time of significant changes in the functioning of the company as well as a considerable acceleration with regard to projects under construction. The presented financial data show that the Group’s financial standing is stable and the Group is very well prepared for further expansion of its operations.

Last year we recorded PLN 605 mln of operational profit, most of which comes from the sales of Q22 and 3 office buildings in regional cities, as well as from revaluation of properties. It is also observed, that the residential part of our business contributes to the results more significant than in 2015, as we have delivered 451 apartments to the clients, which is a 13% increase.

With the strategy of profitable growth adopted last year, Echo Investment is well on its new way. The Company has become a pure developer that builds and sells projects when they are fully leased and constitute an optimal investment product, in order to invest the money generated in subsequent projects. The strategy has also changed the structure of the Group’s assets. Now, it is properties under construction that constitute the main part of the assets. The aim of the Company is the dominant position in each sector we operate in: office, retail and residential,. This is how we continue our journey of being one of the biggest players on Polish real estate market.

Last year we started projects with a combined leasable and sales area of nearly 200,000 sqm i.e. twice as much as in 2015. We completed projects with a combined area of over 160,000 sqm, including our flagship project – the Q22 office building in Warsaw. It was also twice as much as in 2015. Our office leasing department signed leases for almost 100,000 sqm, which constitutes nearly double growth compared to 2015 while the retail team signed leases concerning 79,000 sqm i.e. 30% more compared to the previous year. Nearly all commercial properties under construction have already been contracted by their ultimate buyers - confirming our efficiency and high quality of our projects. Our sales team encouraged clients to buy 925 apartments, which is 56% more compared to the previous year. Those numbers confirm that Echo Investment is on the right way to fulfil the assumptions of the strategy of profitable growth.

More projects involve more work – this is why we have been systematically increasing employment. Echo’s team is very stable and its size has not changed much over last few years. New employees help us to develop next projects and contribute the experience they gained at other places. At the same time, we have introduced new, more effective and easier systems of building site and lease monitoring as well as a transparent remuneration system. Last year we also introduced some changes in our construction department, specifically in the area of ordering and supervising over projects. This strengthens the team, optimises its capacity and positively influence risk and cost control, as well as the quality of the product. In order to strengthen our corporate culture we have also launched the Code of Conduct and Whistleblower Procedure.

Our strategy of profitable growth envisages fast capital rotation and that’s why we have been enlarging our land bank. A considerable part of the plots held by the Group was prepared for the launch of projects last year. Although we have land to serve 2017-2018 and partially 2019 investment program, we are securing the land bank for projects to be developed beyond 2018. In 2016 we purchased properties, which will be used to develop 73,000 sqm of residential and office space. Together with Echo Polska Properties we have acquired a retail and leisure project at 22 Towarowa Street in Warsaw and we are in the process of purchasing another one – Galeria Młociny. We have been systematically finalizing acquisitions of subsequent areas that would enable us to build over 500,000 sqm. These activities secure our investment plan for the next few years.

Our 2016 results were partly generated in line with the business model involving a considerable part of the revenue coming from the lease of commercial properties. 2017 will be the first full reporting period showing the results being generated almost exclusively by our development activities. We believe in the success of the new Echo and this is why we will be regularly sharing our profits with shareholders. I am convinced that it will additionally increase the attractiveness of investment in Echo Investment’s shares.

I encourage you to read our 2016 financial report in detail.

Yours sincerely

Nicklas Lindberg
President of the Management Board

ECHO Investment

The Biggest Polish Developer

Management
board

Nicklas Lindberg
President of the Board, CEO

NICKLAS LINDBERG
President of the Board, CEO

Appointed on 18 April 2016. For last 15 years he has been with Skanska where he worked as President for Skanska Commercial Development Europe (CDE), Skanska’s business unit that develops properties in Central and Eastern Europe and the head of Skanska Property Poland, a unit within Skanska Commercial Development Europe. Prior to that Mr. Lindberg had worked with Residential Development in the Nordics and for Skanska Russia as both CFO and CEO.

Maciej Drozd
Vice President of the Board, CFO
MACIEJ DROZD
Vice President of the Board, CFO

On 16 July 2015 he was appointed the Vice President of the Company’s Board. From 1995 he was involved with Eastbridge Group, initially as the financial director of the group’s operational companies, from July 2009 until June 2015 he was also the CFO and managing partner at the Eastbridge Group. He studied philosophy, mathematics and management at the University of Warsaw, he holds a master’s degree in philosophy and a master’s degree in management, which he earned at the University of Warsaw, Maciej also holds an MBA degree from the University of Illinois.

Piotr Gromniak
Vice-President of the Board, COO 

PIOTR GROMNIAK

Vice-President of the Board, COO 

The President of the Management Board in 2008-2016. A graduate of the Faculty of Civil Engineering at Kielce University of Technology. He started his professional career after finishing his studies in 1990 and gained experience in the construction industry while working as a site engineer, master builder and tendering specialist with EXBUD and Betonchem. In October 1997 he started working for Echo Investment S.A. as a Project Manager, from September 1998 he was the Director of the Implementation Department. In October 2000 Piotr was appointed as a Management Board Member.

Artur Langner
Vice-President of the Board

ARTUR LANGNER

Vice-President of the Board 

Appointed the Vice-President of the Management Board on 27 June 2008. A graduate of the Faculty of Civil Engineering at Kielce University of Technology. After finishing his studies he started working for a construction company where he gained his professional experience by participating in all the stages of project implementation. He started working for Echo Investment in 1998 as a Project Manager. In June 2000 he was appointed Director of Project Preparation followed by the position of Director of the Technical Division. In June 2005 he became a Management Board Member.

Rafał Mazurczak
Member of the Board 

RAFAŁ MAZURCZAK

Member of the Board 

On 15 September 2016 he was appointed the Member of the Board. He started his career as an office project leasing manager in Echo Investment in 2000. In the years 2007 – 2013 he was the leasing director in the office department, where he was responsible for the commercialization of: Park Rozwoju, Malta Office Park, Oxygen, Avatar and Aquarius Business Park, among others. From 2013 he was the director of the office department. He co-created the development strategy of this part of Echo Investment’s business and implemented it. He was responsible for the construction, leasing and marketing of the company’s flagship project – the Q22 skyscraper in Warsaw as well as Park Rozwoju, the O3 Business Park complex in Kraków, A4 Business Park in Katowice, the Tryton office building in Gdańsk as well as West Gate and Nobilis in Wrocław.

Marcin Materny
Member of the Board

MARCIN MATERNY

Member of the Board

On 15 September 2016 he was appointed the Member of the Company’s Board. Marcin Materny has worked in Echo Investment since 1997 and he has climbed all career ladders in the company. He started as a leasing specialist, later he was in charge of a leasing team responsible for 10 shopping centres completed in the years 1998-2000. Next, as the leasing director he coordinated the commercialization and marketing of Pasaż Grunwaldzki, among others. In the years 2007 – 2010 Marcin Materny got involved with Capital Park. On his return to Echo Investment he was responsible for the lease of the shopping centres: Galeria Echo Kielce, Veneda in Łomża, Outlet Park Szczecin, Amber in Kalisz and Olimpia in Bełchatów. From 2014 Marcin Materny was the director of the shopping centre department. He contributed to the company’s strategy in this field and was responsible for its comprehensive development: the preparation of subsequent projects, construction and commercialization of e.g. Libero in Katowice and the revitalization of older shopping malls from the portfolios of Echo Investment and Echo Polska Properties.

Supervisory
board

Karim Khairallah
Chairman of the Supervisory Board

Karim Khairallah

Chairman of the Supervisory Board

He is the Managing Director at Oaktree Capital Management Limited. He joined Okatree Group in 2005, and became involved with Oaktree’s European Principal Fund. Previously, he worked for General Atlantic Partners for 4 years. His previous professional experience includes working for J.P. Morgan Capital and Lehman Brothers International. Karim Khairallah holds a Bachelor of Science in Economics, which he received from London School of Economics. He received an MBA from INSEAD. At present, Karim Khairallah is a Chairman at Panrico and was a member of managing bodies at Stock Spirits Group (Polmos Lublin), Campofrio Food Group and R&R Ice Cream (Zielona Budka) companies. 

Laurent Luccioni
Vice-President of the Supervisory Board

Laurent Luccioni

Vice-President of the Supervisory Board

Laurent Luccioni is an Executive Vice President and a portfolio manager in the London office heading commercial real estate investments for Europe. Prior to joining PIMCO in 2013, he was the European CEO for MGPA, the Macquarie-backed private equity real estate investment advisory company. Additionally, he worked with Cherokee Investment Partners in London. He has long term expierience in investment and financial services, holds an MBA from Kellogg School of Management at Northwestern University and a doctorate in civil engineering from University of California, Berkeley. 

Maciej Dyjas
Member of the Supervisory Board
Maciej Dyjas
Member of the Supervisory Board
Co-Managing Partner at Griffin Real Estate and Managing Partner at Cornerstone Partners. He holds a degree in mathematics, IT and administration and management, received from universities in Poland and Germany (Warsaw University and Stuttgart University). He studied management psychology and communication in Frankfurt and did various courses in management and HR; Member of the Polish Business Roundtable, German Association in Poland, member of Jan Karski Foundation. Before joining Griffin and Cornerstone, he was a Managing Partner and CEO of Eastbridge Group – a family holding company, which has been investing in multiple markets (CEE, Benelux, US) and diverse industries such as real estate, consumer products, media, retail, education, insurance and biotechnology (i.e. EM&F, Immobel, CDI, Downtown Holding, DTC, Empik). In 1999-2003 he actively participated in ‘Poland to Europe’ programme and a non-profit organization which aimed to support Poland’s membership in the European Union.
Sebastian Zilles
Member of the Supervisory Board

Sebastian Zilles

Member of the Supervisory Board

Mr Zilles is a Vice President and portfolio manager in the London office, focusing on pan-European real estate. He is responsible for sourcing, closing, managing and disposing of real estate and related assets. Prior to joining PIMCO in 2013, he was part of the transaction team of Corestate Capital in London, a Swiss-based investment manager focused on distressed real estate transactions in Europe. Previously, he worked for Morgan Stanley (Argoneo) in Frankfurt. He has several years of investment experience and holds a bachelor's degree from University of Glamorgan and a diploma from University of Munich (AS).

Przemysław Krych
Member of the Supervisory Board

PRZEMYSŁAW KRYCH 

Member of the Supervisory Board

Founder and President of the Board at Griffin Real Estate and managing partner at Cornerstone Partners. Mr. Krych has a many years of experience in management, investment and restructuring. Responsible for the biggest deals in commercial real estate market, including Echo Investment’s acquisition. Under his leadership Griffin has become of the largest and, at the same time, the most active investors, with assets under management valued at about EUR 5 billion.

Prior to starting his own business, he was a Managing Director and Partner at Templeton Direct Advisors as well as a manager at Emerging Europe Private Equity Funds. Earlier, he held upper managerial positions at Bank Handlowy S.A.  in Warsaw (currently Citibank Handlowy). Przemysław Krych was also an assistant in the Faculty of Law at Adam Mickiewicz University in Poznan, where he received a master’s degree in law (with distinction).

Nebil Senman
Member of the Supervisory Board

Nebil Senman

Member of the Supervisory Board

Co-Managing Partner at Griffin Real Estate. Previously, as a Senior Vice President, he was in charge of German and Polish real estate operations in a real estate fund managed by Oaktree. He spent his 9 years at Oaktree managing real estate investments worth over EUR 1 bln (real estate companies, mortgages, construction and property). Apart from managing investments at Oaktree in Poland in cooperation with Griffin Group, he was responsible for the creation of a German platform for commercial real estate, which merged with a 2-billion-euro-worth listed company – Deutsche Office. He was also responsible for the restructuring and management of the Deutsche Wohnen leading German platform for residential property. Before joining Oaktree he spent 8 years dealing with the real estate and corporate consulting at Ernst & Young Real Estate (previously Arthur Andersen), holding managerial positions. He conducted numerous transactions connected with real estate companies and their portfolios. He created and structured various funds and undertakings for his clients. He is a graduate of universities in Berlin (TU Berlin, EBS), Paris (ESCP-EAP) and London (LSE) and holds an MBA and a degree in civil engineering. He also holds a post-graduate diploma in real estate management. He is a member of the Royal Institution of Chartered Surveyors, MRICS.  

Stefan Kawalec
Member of the Supervisory Board meeting the criteria of independence

Stefan Kawalec

Member of the Supervisory Board meeting the criteria of independence

Stefan Kawalec graduated from the Department of Mathematics, Mechanics and Computer Science at the University of Warsaw in 1979.

In 1989-1994, he worked for the Ministry of Finance, in 1989 - 1991 as General Director and chief economic adviser to the Deputy Prime Minister and Minister of Finance, and from 1991, as deputy minister. While working for the Ministry of Finance, he served in preparing and implementing the stabilisation and transformation programme for Polish economy (the Balcerowicz Plan), led the negotiations and preparation of successive agreements with the International Monetary Fund (1990, 1991, and 1993), managed the restructuring and privatisation of state banks, and in particular the preparation and implementation of an innovative programme for restructuring of bad debts and the law on financial restructuring of enterprises and banks, was responsible for work on the development of new insurance legislation and, on behalf of the Minister of Finance, supervised insurance matters and led the works on creation of a separate State Office for Insurance Supervision. He also headed the preparation of the concept and organisational structure of the debt-for-nature swap with respect to the Polish foreign debt and the establishment of the Eco-Fund Foundation.

In 1994-2002, he was Head of the Advisory Team to the Management of Bank Handlowy w Warszawie and in 1998-2002 - Head of Strategy at Bank Handlowy (from 2000, as part of Citigroup). In 2002-2003, he worked for the Commercial Union Group as Vice-President of the Management Board of Commercial Union Polska, and then as Senior Advisor to the President of the Group in Poland. In 2003-2006, he was Managing Director for Strategy at the PZU Group. Since December 2006, he has been self-employed, running the Stefan Kawalec – Doradztwo Strategiczne (Strategic Consulting) business, and since 2008 - a partner and CEO of the Capital Strategy consulting firm.

He has been an advisor to international institutions, such as the World Bank and the International Monetary Fund, and to government and commercial institutions in several countries in Central and Eastern Europe.

He has served on the supervisory boards of Stocznia Gdańska (Gdansk Shipyard), Bank Pekao (Chairman), Telekomunikacja Polska S.A. (Polish Telecom), Kredyt Bank and Lubelski Węgiel Bogdanka (Vice-Chairman, President of the Strategy Committee and a member of the Nomination and Remuneration Committee).

Our
Shareholders

The total number of shares issued by the Company stands at 412 690 582. The share in the share capital is equivalent to the share in total votes at the General Meeting of Shareholders. Echo Investment S.A. shares have been listed on the Warsaw Stock Exchange since 5 March 1996.

Lisala Sp. z o.o. is an entity directly controlled by the company Echo Partners B.V. And indirectly by the following funds: Oaktree Capital Management, Pacific Investment Management Corporation (PIMCO) and Griffin Real Estate.

Shareholders
Strategy Business Model