Globe Trade Centre S A : GTC Hungary H1 2023 results

MANAGEMENT BOARD'S REPORT

ON THE ACTIVITIES OF

GTC HUNGARY REAL ESTATE DEVELOPMENT PLTD. GROUP

IN THE SIX-MONTH PERIOD ENDED 30 JUNE

2023

TABLE OF CONTENT
1.	Introduction	3
2.	Selected financial data	6
3.	Key risk factors	7
4.	Presentation of the Group	33
	4.1	General information about the Group	33
	4.2	Main events of the first half of 2023	33
	4.3	Structure of the Group	34
	4.4	The Group's Strategy	34
	4.5	Business overview	35
	4.5.1 Overview of the investment portfolio	35
	4.5.1.1 Overview of income generating portfolio	36
	4.5.1.2 Overview of properties under construction	37
	4.5.1.3 Overview of investment property landbank	37
5.	Operating and financial review	37
	5.1	General factors affecting operating and financial results	37
	5.2	Specific factors affecting financial and operating results	40
	5.3 Statement of financial position	41
	5.3.1 Financial position as of 30 June 2023 compared to 31 December 2022	41
	5.4	Consolidated income statement	42
	5.4.1 Comparison of financial results for the 6-month period ended 30 June 2023 with the
	result for the corresponding period of 2022	42
	5.5	Consolidated cash flow statement	43
	5.5.1 Cash flow analysis	43

All the financial data in this Report is presented in euro and expressed in thousands unless indicated otherwise

2

1. Introduction

The GTC Hungary Real Estate Development Pltd. was registered in Budapest in September 1998. The company is part of GTC Group, a leading real estate investor and developer focusing on Poland and Hungary and capital cities in Eastern and Southern Europe: Belgrade, Bucharest, Zagreb, and Sofia. The GTC Group was established in 1994.

Group's portfolio comprises: (i) completed commercial properties; (ii) commercial properties under construction; (iii) a commercial landbank intended for future development.

GTC GROUP:

Poland,

Hungary,

Belgrade,

Bucharest,

Sofia

and Zagreb

As of 30 June 2023, the book value of the Group's total property portfolio was EUR 648,933. The breakdown of the Group's property portfolio was as follows:

10	199,000	1	landbank for
completed	sq m of	building	future
buildings	GLA	under	development
		construction

The GTC's headquarters are located in Budapest, at 22 Népfürdő.

TERMS AND ABBREVIATIONS

Terms and abbreviations capitalized in this management's board Report shall have the following meanings unless the context indicates otherwise:

the Company	are to GTC Hungary Real Estate Development Pltd.;
or GTC
the Group	are to GTC Hungary Real Estate Development Pltd. and its
or the GTC Hungary	consolidated subsidiaries;
the GTC SA	are to Globe Trade Centre S.A.;
the GTC Group	are to Globe Trade Centre S.A. and its consolidated subsidiaries;
Shares	are to the shares in GTC Hungary Real Estate Development Pltd.,
	fully-owned by Globe Trade Centre S.A.;
Bonds	are to the bonds issued by GTC Hungary Real Estate Development
	Pltd. and introduced to alternative trading market on Xbond and
	marked with the ISIN codes HU0000360102 and HU0000360284;

All the financial data in this Report is presented in euro and expressed in thousands unless indicated otherwise

3

the Report	are to the consolidated annual report prepared according to Act
	CXX of 2001on the Capital Market and Prime Minister Decree no.
	24/2008. (VIII. 15.);

CEE

SEE

Net rentable area, NRA, or net leasable area, NLA

Gross rentable area or gross leasable area, GLA

Total property portfolio

Commercial properties

Occupancy rate

In-place rent

Net loan to value (LTV); net loan-to- value ratio

is to the group of countries that are within the region of Central and Eastern Europe (Poland, Hungary);

is to the group of countries that are within the region of SouthEastern Europe (Bulgaria, Croatia, Romania, and Serbia);

are to the metric of the area of a given property as indicated by the property appraisal experts to prepare the relevant property valuations. With respect to commercial properties, the net leasable (rentable) area is all the office or retail leasable area of a property exclusive of non-leasable space, such as hallways, building foyers, and areas devoted to heating and air conditioning installations, elevators, and other utility areas. The specific methods of calculation of NRA may vary among particular properties, which is due to different methodologies and standards applicable in the various geographic markets on which the Group operates;

are to the amount of the office or retail space available to be rented in completed assets multiplied by add-on-factor. The gross leasable area is the area for which tenants pay rent, and thus the area that produces income for the Group;

is to book value of the Group's property portfolio, including: investment properties (completed, under construction and landbank), residential landbank, assets held for sale, and the rights of use of lands under perpetual usufruct;

is to properties with respect to which GTC Group derives revenue from rent and includes both office and retail properties;

is to average occupancy of the completed assets based on square meters ("sq m") of the gross leasable area;

is to rental income that was in place as of the reporting date. It includes headline rent from premises, income from parking, and other rental income;

are to net debt divided by Gross Asset Value. Net debt is calculated as total financial debt net of cash and cash equivalents and deposits and excluding loans from non-controlling interest and deferred debt issuance costs. Gross Asset Value is investment properties (excluding the right of use under land leases), residential landbank, assets held for sale, financial assets, building for own use, and share on equity investments. Net loan to value provides a general assessment of financial risk undertaken;

All the financial data in this Report is presented in euro and expressed in thousands unless indicated otherwise

4

The average cost of debt; average interest rate

EUR, € or euro

HUF

is calculated as a weighted average interest rate of total debt, as adjusted to reflect the impact of contracted interest rate swaps and cross-currency swaps by the Group;

are to the single currency of the participating Member States in the Third Stage of European Economic and Monetary Union of the Treaty Establishing the European Community, as amended from time to time;

is to the lawful currency of Hungary.

PRESENTATION OF FINANCIAL INFORMATION

Unless indicated otherwise, the financial information presented in this Report was prepared according to the International Financial Reporting Standards ("IFRS") as approved for use in the European Union.

All the financial data in this Report is presented in euro or HUF and expressed in thousands unless indicated otherwise.

Certain financial information in this Report was adjusted by rounding. As a result, certain numerical figures shown as totals in this Report may not be exact arithmetic aggregations of the figures that precede them.

PRESENTATION OF PROPERTY INFORMATION

Information on properties is presented based on the consolidation method of each of the properties. . The occupancy rate given for each of the markets is as of 30 June 2023.

FORWARD-LOOKING STATEMENTS

This Report contains forward-looking statements relating to future expectations regarding the Group's business, financial condition, and results of operations. You can find these statements by looking for words such as "may", "will", "expect", "anticipate", "believe", "estimate", and similar words used in this Report. By their nature, forward-looking statements are subject to numerous assumptions, risks, and uncertainties. Accordingly, actual results may differ materially from those expressed or implied by forward-looking statements. The Group cautions you not to place undue reliance on such statements, which speak only as of this Report's date.

The cautionary statements set out above should be considered in connection with any subsequent written or oral forward-looking statements that the Group or persons acting on its behalf may issue. The Group does not undertake any obligation to review or confirm analysts' expectations or estimates or to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date of this Report.

The Group discloses essential risk factors that could cause its actual results to differ materially from its expectations under Item 3. "Key risk factors", Item 5. "Operating and financial review", and elsewhere in this Report. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on behalf of the Group. When the Group indicates that an event, condition, or circumstance could or would have an adverse effect on

All the financial data in this Report is presented in euro and expressed in thousands unless indicated otherwise

5