REDAN SA (11/2018) Information on the dissolution of the impairment loss on shares in Top Secret Sp. with o.o

Management Board of Redan S.A. based in Łódź hereby informs that in connection with the work on the financial statements for 2017, a test was carried out on the impairment of the Issuer's financial assets in the form of shares in the subsidiary Top Secret Sp. z o.o. As a result of the valuation, the value of shares in the subsidiary Top Secret Sp. z o.o. was set at PLN 58.0 million, which enabled a total reversal of the write-down for the total amount of PLN 10.3 million. This process was two-stage. The first part of the write-down in the amount of PLN 2.8 million was reversed in June 2017 after the test as at the balance sheet date on 30/06/2017. The second part of the impairment loss was reversed as at December 31, 2017 in the amount of PLN 7.5 million. Value of shares in Top Secret Sp. z o.o. in historical cost as at the balance sheet date December 31, 2016 was PLN 40.9 million, which, based on the impairment test, was decreased by an impairment loss of PLN 10.3 million, which gave the balance sheet value of shares as at December 31, 2016 in the amount PLN 30.6 million. In 2017, the financial situation of Top Secret Sp. z o. o. was significantly improved, which was reflected in the tests carried out and gave the possibility to withdraw the write-down. After reversing and increasing the capital, Top Secret Sp. z o.o. (about which the Issuer informed in the current report No. 37/2017 of December 2, 2017), the carrying value of shares in this company as at December 31, 2017 is PLN 53.3 million. The reversal of the write-off will be disclosed in a separate in the financial statements of Redan for the financial year ended on 31 December 2017 in financial revenues, thus raising the result before tax by this amount. The solution to this write-off - due to the fact that it concerns shares in a subsidiary - will be excluded as part of the consolidation of the Redan Group's reports and will therefore have no impact on the consolidated financial statements of the Redan Group. Valuation shares in Top Secret Sp. z o.o. was made using the revenue method (DCF), based on the forecast of the management board of this company. This forecast is in line with expectations regarding the fashion results of the Redan Group, which assume a gradual increase in profitability on operations in this segment. The forecast has been prepared for a period of 5 years and assumes in particular: (i) a return to network developmentsale of Top Secret stores; (ii) intensification of activities increasing the average sale per m2; (iii) increase in the trade margin achieved thanks to the increased share in the sale of non-price goods, modification of the offer and reduction of purchase prices taking into account more favorable than originally exchange rate ratios and increased share of duty-free production markets were assumed; (iv) maintaining the current share of running costs of individual distribution channels in their sales revenues, (v) lower dynamics of fixed costs versus changes in sales, as the result of increased efficiency; (vi) organizational changes in the Redan Group related to the transfer from Redan SA to Top Secret Sp. z o.o. full logistics service for the fashion segment, both domestic and foreign; this will happen after implementation in Top Secret Sp. z o.o. the SAP system, which is planned for 2020 (2019 in the previous forecast), will result in the acquisition from Redan SA: - a part of the margin that Redan SA has so far received for logistics services on the fashion market, and on the other hand - the takeover direct logistics costs from Redan SA. This change will not affect the results of the Redan Group fashion segment; - sales to foreign customers.

Source: company website, investor relations, current and periodic reports.

Company information
Company name:Redan SA
Adress: ul. Żniwna 10/14 94-250 Łódź
Phone:+48 42 6177100

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