2138009OP2B1BBLRWG57

ATLAS ESTATES LIMITED

ANNUAL REPORT

FOR THE YEAR ENDED 31 DECEMBER 2021

Atlas Estates Limited

Floor, 1 Le Truchot

St Peter Port

Guernsey GY1 1WD

Company number: 44284

ATLAS ESTATES LIMITED 
 

 
Contents 
 
I.  Introduction 
II.  Financial Highlights 
III.  The Board of Directors’ and Property Manager’s Statements 
 Chairman’s Statement 
 Property Manager’s Review 
 Key Property Portfolio Information 
 Directors - Atlas Estates Limited 
 Directors and Senior Management of the Atlas Management Company Limited, the Property Manager 
 Directors’ Report 
 Remuneration Report 
 Declarations of the Board of Directors 
IV.  Independent Auditors’ Report 
V.  Financial Statements 
 Statement of Comprehensive Income 
 Statement of Financial Position 
 Statement of Changes in Equity 
 Cash flow Statement 
VI.  Statement of Accounting Policies 
VII.  Notes to the Financial Statements 
 Financial risk management 
1.  Financial assets and financial liabilities 
2.  Financial risk factors 
3.  Capital risk management 
4.  Segmental reporting 
 Critical accounting estimates and judgements 
 Administrative expenses 
 Other operating income/ (expenses) 
 Finance income and finance costs – net 
 Earnings per share 
 Investments in subsidiaries 
 Trade and other receivables 
 Cash and cash equivalents 
 Trade and other payables 
 Share capital account 
 Other distributable reserve 
 Related party transactions 
 Post balance sheet events 
 Significant Agreements 
 Other items 
1.  Information about court proceedings 
2.  Financial forecasts 
 Principal subsidiary companies and joint ventures 
                                          

ATLAS ESTATES LIMITED

18. Ultimate Parent Company and Ultimate Controlling Party

ATLAS ESTATES LIMITED

I. Introduction

Atlas Estates Limited (“Atlas”, the “Company” or “AEL”) is a Guernsey incorporated closed-ended investment company

investing in real estate in Central and Eastern European countries (“CEE”). Atlas shares were admitted to trading on 12

February 2008 on the Warsaw Stock Exchange (WSE).

The Company and its subsidiary undertakings (the “Group”) invest mainly in real estate assets in Poland. The Group also

operates in the Romanian and Bulgarian real estate markets.

The Group’s assets are managed by Atlas Management Company Limited (“AMC”, the Property Manager), a company

focused on managing the Group’s property portfolio. AMC provides the Group with a management team with vast

experience and knowledge of real estate investment and development. In particular, AMC can demonstrate a good track

record of investment, development and management of property in CEE markets.

There was no change in the name of reporting entity or other means of identification from end of preceding reporting period.

The ultimate parent company is Revaia Ltd and the ultimate controlling party by a virtue of ownership is Mr Ron Izaki.

ATLAS ESTATES LIMITED

II. Financial Highlights

Selected Financial Items

Year ended

31 December 2021

31 December 2020

€’000

Administrative expenses

(2,473)

(2,940)

Other operating income

17,660

Other operating expenses

(19,987)

Profit from operations

15,187

(22,927)

Finance income

Profit/ (Loss) before taxation

15,113

(23,000)

Profit/ (Loss) for the year

15,113

(23,000)

Net cash outflow from operating activities

(1,183)

(1,345)

Net cash inflow from investing activities

1,043

1,392

Net (decrease)/ increase in cash and cash

equivalents in the year

(140)

Non-current assets

144,100

137,482

Current assets

280

424

Total assets

144,380

137,906

Non-current liabilities

(5,937)

(5,870)

Current liabilities

(3,787)

(12,493)

Total liabilities

(9,724)

(18,363)

Net assets

134,656

119,543

Number of shares outstanding

46,852,014

Profit/ (Loss) per €0.01 ordinary share – basic

(eurocents)

32.3

(49.1)

ATLAS ESTATES LIMITED

III. The Board of Directors’ and Property Manager’s Statements

1. Chairman’s Statement

Dear Shareholders,

I am pleased to announce the audited financial results for Atlas Estates Limited (“Atlas” or “the Company”) and its

subsidiary undertakings (together “the Group”) for the year ended 31 December 2021.

COVID-19 pandemic has spread with alarming speed and bringing economic activity to a near-standstill as countries

imposed tight restrictions on movement to halt the spread of the virus. The International Monetary Fund estimated that the

global economy shrunk by 4.4% in 2020. In 2021 a disrupted recovery trend was noted as the economy started to recover

but still during ongoing pandemic conditions. As the effects of COVID-19 are felt around the world, real estate companies

were also impacted in different ways, largely dependent on region and asset class. This involved also Hilton and Golden

Tulip hotels owned by the Group. The financial consequences were summarized in the Property Manager’s Review.

Below are our main developments:

- On 31 August 2021 the Group concluded the sale agreement of its investment in D.N.B Victoria Tower, as

well as intra group loan at the net sale price of €7.3 million. As of 31 December 2021 the Group received

€1.2 million advance in respect of this transaction, which is to be completed in April 2022;

- On 25 June 2021 the Company’s subsidiary HGC Gretna Investments Sp. z o.o. Sp. J. (“HGC”), which

operate Hilton hotel in Warsaw concluded a loan agreement with Polski Fundusz Rozwoju S.A. (“PFR”), a

Polish joint-stock company owned by Polish State of Treasury, which offers financial instruments for entities

on preferential terms. The loan amounted to PLN 6.9 million (€1.5 million). In accordance with PFR’s decision

concluded in September 2021 the loan was partially waived. The repayable loan amount was decreased by

PLN 5.1 million (€1.1 million). As a result of this decision the Group recognized a finance income of

€1.1 million in the third quarter 2021.

Reported Results

Group results

As of 31 December 2021, the Group has reported basic net assets of €134.7 million.

The increase of basic net asset value by €15.1 million (i.e. 13%) from €119.5 million as at 31 December 2020 is primarily

a result of:

- profit after tax amounting to €13.1 million for the year 2021; and

- €2.0 million upward revaluation of Hilton as of 31 December 2021 (net of tax).

Profit after tax amounts to €13.1 million in 2021 as compared to loss after tax of €5.0 million in 2020. This change was

mainly attributable to:

- the settlement agreement reached between Atlas and Atlas Management Group in April 2021 based on which

previously recorded performance fee amounting to €10.0 million, which remained unpaid, was waived and

credited to the income statement in the second quarter 2021 (further explained in the Remuneration Report);

- the above described finance income resulting from the partial loan decrease (€1.1 million);

- movements in the foreign currency exchange differences from loss of €1.6 million in 2020 to profit of

€0.5 million in 2021, mainly as a result of stabilization of PLN against EUR in 2021.

Company results

The Company reported a profit of €15.1 million as compared to last year loss of €23.0 million. This increase of €38.1 million

was mainly driven by €20.0 million impairment of the carrying value of investments recorded in 2020 as compared to €7.7

million reversal of impairment of the carrying value of investments in 2021. Additionally Atlas and Atlas Management Group

reached above described settlement based on which previously recorded performance fee amounting to €10.0 million,

which remained unpaid, was waived and credited to the income statement in 2021.

The methodology applied by the Company with respect to the impairment review is further disclosed in note 7 of the

financial statements.

Financing, Liquidity and Forecasts

The Group’s forecasts and projections have been prepared taking into account the economic environment and its

challenges and mitigating factors. These forecasts incorporate management’s best estimate of future trading performance,

potential sales of properties and the future financing requirements of the Group.

ATLAS ESTATES LIMITED

While there will always remain some inherent uncertainty within the aforementioned cash flow forecasts, the Directors

have a reasonable expectation that the Company and the Group have adequate resources to continue in operational

existence and to manage its loan facilities for the foreseeable future. Accordingly, the Directors continue to adopt the going

concern basis in preparing the consolidated financial statements for the year ended 31 December 2021, as disclosed in

the Directors’ Report.

Investing Policy

Atlas invests mainly in Poland in a portfolio of real estate assets across a range of property types, where approximately

91% of its assets are located. We actively target Poland, where we believe we have the best capabilities and footprint.

Atlas also operates in the Romanian and Bulgarian real estate markets. Additionally in 2021 the Group also invested part

of its cash reserves in funds and equities.

We may employ leverage to enhance returns on equity. Wherever possible, the Directors intend to seek financing on

a non-recourse, asset by asset basis. The Company has no set limit on its overall level of gearing. However, it is anticipated

that the Company shall employ a gearing ratio of up to 80% of the total value of its interest in income-generating properties

within its property portfolio.

Net Asset Value (“NAV”) and Adjusted Net Asset Value (“Adjusted NAV”)

As of 31 December 2021, NAV per share, as reported in the consolidated financial statements which have been prepared

in accordance with International Financial Reporting Standards (“IFRS”), as adopted by the EU, increased from the level

of €2.6 per share at 31 December 2020 to €2.9 per share at 31 December 2021. The adjusted NAV per share adjusts

basic NAV for unrecognized valuation gains and losses (net of deferred tax) on property portfolio assets not held on a fair

value or revaluation model measurement basis. The increase is mainly attributable to the above-described decrease in net

assets. As of 31 December 2021 and 31 December 2020 the adjusted NAV per share is equal to basic NAV per share

since there was no need to adjust basic net assets value for unrecognized valuations gains and losses (net of deferred

tax) on property portfolio assets not held on a fair value or revaluation model measurement basis.

A valuation of the entire property portfolio is carried out on an annual basis by external and internal experts. Additionally,

on semi-annual basis external valuation of key assets is performed. The internal valuations calculated by the Property

Manager concerned completed development projects in Warsaw and land asset near Gdansk (Kokoszki), which was based

upon recent transactions. The results of internal valuations were not reflected in net assets (except of land asset, which

was reflected since it is classified as investment property) as presented in the consolidated statement of financial position

since these projects are classified as inventory and there is no need to impair these balances.

As of 31 December 2021:

- Jones Lang LaSalle, independent qualified experts were our independent qualified experts who have carried

out the valuation of our properties located in Poland (Atlas Tower and Galeria Platinum Towers), Bulgaria

and Romania.

- Emmerson Evaluation, independent qualified experts were our independent qualified experts who have

carried out the valuation of Hilton hotel in Poland. It should be underlined that the valuation of this property

was reported with degree of uncertainty :

“The Covid 19 pandemic announced by the World Health Organization (WHO) on 2020-03-11, had a strong

impact on global financial markets. Restrictions have been placed on travel and the activities of certain

industries. This is a situation that the real estate market has never encountered before. The valuation is

based on historical data and takes into account the impact of the pandemic on the real estate market, which

was identifiable in the first phase of the phenomenon. Due to the still uncontrollable development of the

pandemic and the recurring restrictions and lock downs, this valuation has been prepared with a high degree

of uncertainty as to the future price development in the real estate market, including commercial real estate,

to which the valued property belongs. A post-pandemic revaluation is recommended to verify the impact of

the current situation on the value of the property.”

ATLAS ESTATES LIMITED

Adjusted net assets

A key indicator of performance is the adjusted net asset value of the Group. The following table sets out the impact on

adjusted NAV per share of the revaluation of land assets that cannot be reflected in the reported balance sheet due to

accounting standards. As of 31 December 2021 the Group did not held any development land assets classified as

inventory.

31 December

2021

31 December

2020

€’000

Book value of Development Land held as Inventory

Fair Value of Development Land held as Inventory

Unrealised fair value adjustment

Deferred tax on unrealised fair value adjustment

Basic net asset value per balance sheet

134,656

119,543

Adjusted net asset value (see the Property Manager’s Review)

134,656

119,543

Number of ordinary shares in issue

46,852,014

Adjusted net asset value per share

€2.9

€2.6

Further analysis of the Company’s NAV is contained in the Property Manager’s Review below.

Corporate Governance

Atlas ensures that the Group applies a robust corporate governance structure, which is vital in the current economic

conditions. This is important, as there is a clear link between high quality corporate governance and Shareholder value

creation. Details are presented in the Directors’ Report. A statement on Atlas compliance with the corporate governance

recommendations and principles contained in Best Practice for WSE listed companies is presented on Atlas’ corporate

website.

Risks and uncertainties

The Board and the Property Manager continually assess and monitor the key risks of the business. The principal risks

and uncertainties that could have a material impact on the Group’s performance are summarised in the Property Manager’s

Review.

Changes in Board of Directors

There were no changes in Board of Directors, except for resignation of Mr Andrew Fox on 24 November 2021 as further

disclosed in the Directors’ Report.

Prospects

The Board’s experience in Polish market causes us to believe that the Group should still focus on strengthening as well

as expanding our real estate portfolio in Poland.

Mark Chasey

CHAIRMAN

12 April 2022

ATLAS ESTATES LIMITED

2. Property Manager’s Review

In this review we present the financial and operating results for the year ended 31 December 2021. Atlas Management

Company Limited (“AMC”) is the Property Manager appointed by the Company to oversee the operation and management

of Atlas’ portfolio and advise on new investment opportunities. At 31 December 2021, the Company held a portfolio of

twelve properties comprising six investment properties of which three are income yielding properties, three are held for

capital appreciation, two hotels and four development properties.

Markets and Key Properties

Poland

This is the major market of operation for the Group, with 91% (by value) of the Group’s portfolio located there. The Polish

economy has been one of most resilient economies in Europe. The outbreak of coronavirus in the world and its occurrence

in Poland affected the economic growth of this country. The Russian invasion of Ukraine will have its imminent

consequences for the European economy. Economists say that in Poland inflation will accelerate and interest rates may

rise more than has been expected. The Polish Economic Institute, a government think-tank, predicts that the war in Ukraine

will slow Polish economic growth to 3.5% this year, down from 4.3% estimated earlier.

Hilton Hotel, Warsaw

The Hilton hotel in the Wola district of Warsaw is the Group’s flagship asset. The hotel was continuously performing at a

satisfactory level until the outbreak of COVID-19, as disclosed further in the Property Manager’s Review.

Atlas Tower (former name: Millennium Plaza), Warsaw

The Atlas Tower is a 39,138 sqm office and retail building centrally located in Warsaw with occupancy rate of 81% as of

31 December 2021 (93% as of 31 December 2020). The decrease of occupancy is a result of the termination of an

agreement with a tenant, whose main activity was focused on organizing conferences.

Galeria Platinum Towers

Commercial area on the ground and first floors of Platinum Towers with 1,904 sqm of gallery and 208 parking places

almost fully let to tenants.

Apartamenty przy Krasińskiego

Apartamenty przy Krasińskiego project is a development in the Żoliborz district of Warsaw.

The first stage of this development included 303 apartments as well as parking and amenities and retail facilities. The

construction of the first stage was completed in 2013. The second stage of this successful development project released

123 apartments as well as parking and retail facilities. The construction commenced in November 2015 and was completed

in August 2017. As of 31 December 2021 all apartments and retail units were sold or presold.

Capital Art Apartments

The Capital Art Apartments project in Warsaw is another development in Warsaw close to the city centre. It is a four stage

development with 784 apartments as well as parking and amenities, including retail facilities. As of 31 December 2021 all

apartments from all stages were either sold or presold, whereas 1 retail unit remains available for sale.

Romania

The Group’s portfolio contains three properties in Romania, including the Golden Tulip hotel and two significant land banks

– Voluntari and Solaris. The occupancy rates at the Golden Tulip increased from 18% for the year ended 31 December

2020 to 34% for the year ended 31 December 2021. However, these rates still remain low as the economy continues to

recover from the impact of COVID-19. The Golden Tulip hotel is subject to a sale agreement which is expected to be

completed in April 2022, see note 15 to the consolidated financial statements .

Bulgaria

The Group holds one income yielding property in Bulgaria, the Atlas House, which is a ca. 3,500 sqm office building in

Sofia. The occupancy of this property decreased from 75% as of 31 December 2020 to 62% as of 31 December 2021 due

to the termination of one lease contract.

ATLAS ESTATES LIMITED

Financial Review

The on-going analysis of the economics of the region and the key measures of the sectors in which the Group operates

are vital to ensure it does not become overexposed to, or reliant on, any one particular area. AMC evaluates the risks and

rewards associated with a particular country, sector or asset class, in order to optimise the Company’s return on investment

and therefore the return that the Company is able to deliver to Shareholders over the longer term.

Portfolio valuation

A valuation of the entire property portfolio is carried out on an annual basis as described in the Chairman’s Statement.

Loans

As at 31 December 2021, the Group’s bank debt associated with its portfolio was €67 million (31 December 2020:

€69 million). Loans, valuations and Loan to Value ratios (“LTV”) for those periods in which valuations were undertaken

may be analysed as follows:

Loans

Valuation

LTV*

Loans

Valuation

LTV*

Ratio

31 December 2021

31 December 2020

€ millions

Investment property

30%

32%

Hotels

54%

55%

Total

157

43%

156

44%

*LTV Ratio- Loan to Value Ratio

LTV ratio of investment property slightly decreased to 30% as of 31 December 2021 as compared to 31 December 2020

due to the increase in valuation of Atlas Tower and partial loan repayments.

LTV ratio of hotels decreased from 55% as of 31 December 2020 to 54% as of 31 December 2021 mainly due to partial

loan repayments.

The gearing ratio is 15% (as disclosed in note 1.3. to the consolidated financial statements) based upon net debt as a

percentage of total capital (net debt plus equity attributable to equity holders). The ratio remains at the similar level as

compared to 31 December 2020.

Debt financing

Changes in the year ended 31 December 2021

During year ended 31 December 2021 the Group paid €2.9 million in respect of scheduled partial repayments of several

loans extended to the Group’s projects (Hilton, Atlas Tower, Galeria Platinum Towers, Golden Tulip).

Galeria Platinum Towers project - loan facility extension

On 23 June 2021 Properpol Sp. z o.o. (the Company’s subsidiary) signed an amendment agreement with mBank S.A. to

the facility agreement dated 2 September 2013 based on which the final repayment date of the facility was extended

from 30 June 2021 to 30 December 2022.

New Hilton loan facility

On 25 June 2021 the Company’s subsidiary HGC Gretna Investments Sp. z o.o. Sp. J. (“HGC”), which operate Hilton hotel

in Warsaw concluded a new loan agreement with Polski Fundusz Rozwoju S.A. (“PFR”), a Polish joint-stock company

owned by Polish State of Treasury, which offers financial instruments for entities on preferential terms. The loan provided

by PFR was part of the Poland Government’s aid programme called “Covid Shield” which is an assistance from the State

countering the effects of COVID-19. The amount of the loan extended to HGC was PLN 6.9 million (€1.5 million). The

facility can be used for financing Hilton expenses and must be repaid by 30 September 2024. In accordance with PFR’s

decision concluded in September 2021 the loan was partially waived. The repayable loan amount was decreased by PLN

5.1 million (€1.1 million).

ATLAS ESTATES LIMITED

New Hilton loan facility- undrawn as of 31 December 2021

On 28 December 2021 the Company’s subsidiary HGC Gretna Investments Sp. z o.o. Sp. J. (“HGC”), which operate Hilton

hotel in Warsaw concluded a second loan agreement with Polski Fundusz Rozwoju S.A. (“PFR”). Similar to the loan signed

in June 2021, this loan was part of the Polish government’s assistance to countering the effects of COVID-19. The new

loan amounts to PLN 5.7 million (€1.2 million), can be used for financing Hilton expenses and must be repaid by 31

December 2024. This facility was received on 25 February 2022. In accordance with loan agreement the loan can be

partially waived up to 75% of its amount at the sole discretion of PFR. The decision of the lender concerning the amount

that may be waived will be known before 30 September 2022.

Changes in the year ended 31 December 2020

During 2020 the Group paid €2.6 million in respect of scheduled partial repayments of several loans extended to the

Group’s projects (Hilton, Atlas Tower, Galeria Platinum Towers). As disclosed at page 10 the Group signed several

annexes with the bank financing Golden Tulip based on which loan repayments scheduled in 2020 were suspended until

31 December 2021. Additionally, the loan maturity date was extended from June 2026 till September 2026.

Review of the operational performance and key items in the Consolidated Income Statement

Property

Rental

Development

Properties

Hotel

Operations

Other

Year ended

31 December

2021

31 December

2020

€ millions

Revenue

8.1

7.4

15.5

15.1

Cost of operations

(2.7)

(0.1)

(6.1)

(8.9)

(9.1)

Gross profit

5.4

(0.1)

1.3

6.6

6.0

Administrative expenses

(0.6)

(0.1)

(2.5)

(3.7)

(6.9)

(7.0)

Gross profit less

administrative expenses

4.8

(0.2)

(1.2)

(3.7)

(0.3)

(1.0)

Gross profit %

67%

18%

43%

40%

Gross profit less administrative

expenses %

59%

-16%

-2%

-7%

The financial analysis of the consolidated income statement set out in the table reflects the monitoring of operational

performance by segment as used by management.

Revenues and cost of operations

Total Group revenues increased slightly from €15.1 million for the year ended 31 December 2020 to €15.5 million for the

year ended 31 December 2021 as the hotel operations continued to be significantly impacted by the COVID-19 pandemic

(see below section Financial management, operational management and material risks).The Group’s principal revenue

streams are from its hotel operations, property rental and from the sale of the residential apartments that the Group

develops.

Cost of operations were €8.9 million in 2021 compared to €9.1 million in 2020.

Property Rental

Year ended

31 December

2021

€ millions

Year ended

31 December

2020

€ millions

Total change

2021 v 2020

€ millions

Translation

foreign

exchange gain/

(loss)

€ millions

Operational

change

2021 v 2020

€ millions

Revenue

8.1

7.9

0.2

(0.2)

0.4

Cost of operations

(2.7)

0.1

(0.1)

Gross profit

5.4

5.2

0.2

(0.1)

0.3

Administrative expenses

(0.6)

(0.4)

(0.2)

Gross profit less administrative

expenses

4.8

(0.1)

0.1

Gross profit %

67%

66%

Gross profit less administrative

expenses %

59%

61%

ATLAS ESTATES LIMITED

In 2021 the gross margin realized by the Property Rental segment improved as compared to year ended 31 December

2020, due to stabilization of the negative COVID-19 impact and some minor changes in the portfolio of tenants.

Hotel operations

Year ended

31 December

2021

€ millions

Year ended

31 December

2020

€ millions

Total change

2021 v 2020

€ millions

Translation

foreign

exchange

gain/ (loss)

€ millions

Operational

change

2021 v 2020

€ millions

Revenue

7.4

6.6

0.8

(0.2)

1.0

Cost of operations

(6.1)

(5.9)

(0.2)

0.2

(0.4)

Gross profit

1.3

0.7

0.6

Administrative expenses

(2.5)

(2.4)

(0.1)

Gross profit less administrative expenses

(1.2)

(1.7)

0.5

Gross profit %

18%

11%

Gross profit less administrative expenses %

-16%

-26%

In 2021 the hotel operation improved as compared to 2020, which was heavily impacted by outbreak of COVID-19.

Development Properties

Year ended

31 December

2021

€ millions

Year ended

31 December

2020

€ millions

Total change

2021 v 2020

€ millions

Translation

foreign exchange

gain/ (loss)

€ millions

Operational

change

2021 v 2020

€ millions

Revenue

0.6

(0.6)

Cost of operations

(0.1)

(0.5)

0.4

Gross profit/ (loss)

(0.1)

0.1

(0.2)

Administrative expenses

(0.1)

Gross profit/ (loss) less

administrative expenses

(0.2)

0.1

(0.3)

Gross profit/ (loss) %

17%

Gross profit/ (loss) less

administrative expenses %

17%

Sale of residential units (i.e. apartments, retail units, parking places, storages) developed by the Group are recognised

when the performance obligations have been fulfilled in line with the Group’s accounting policies. The performance

obligations are considered fulfilled when the customer takes control of the property units documented by the signing of the

relevant notarial deed.

As a result, as presented in the table below, in 2020 the Group managed to complete the sale of 2 apartments (in

Apartamenty przy Krasińskiego stage II) and 2 small size retail units (in Capital Art Apartments), whereas in 2021 no sales

were completed.

Apartment sales in Warsaw

CAA

Apartamenty

przy

Krasińskiego

Apartamenty

przy

Krasińskiego

stage I

stage II

stage III&IV

Total apartments for sale

219

300

265

303

123

Sales completions in 2008-2019

218

300

265

303

121

Sales completions in 2020

Total sales completions

218

300

265

303

123

Sales not completed as of 31 December 2021

(only preliminary agreements concluded)

Apartments available for sale as of

31 December 2021

ATLAS ESTATES LIMITED

Administrative expenses

Total administrative expenses increased slightly from €6.9 million in 2020 to €7.1 million in 2021. The most significant cost

amounting to €2.3 million (2020: €2.8 million) is the annual management fee (see note 4.2. to the consolidated financial

statements).

Other operating income and expenses

Other operating income and expenses are items that do not directly relate to the day-to-day activities of the Group. Such

items include: income and expenses for items that are recharged to contractors and other suppliers at cost, and other such

items.

The significant movements in the other operating income (see note 5 to the consolidated financial statements) related to:

- in 2021:

€10.0 million gain on settlement agreement between AEL and AMC (see the Remuneration Report),

€0.464 million profit on partial disposal of Kokoszki land asset in Gdańsk, Poland,

€0.626 million government grants received following COVID-19 outbreak.

- in 2020:

€0.3 million deposit retained after non completion of the sale agreement of asset classified as held for sale,

€0.35 million profit on sale of minority shareholding in Fattal Leonardo Royal Berlin GmbH,

€0.193 million government grants received following COVID-19 outbreak.

The significant movements in 2020 in the other operating expenses related to €0.8 million impairment of property, plant

and equipment (Golden Tulip hotel).

Valuation movement

In 2021 the increase in the market value of the investment properties portfolio was €1.5 million as compared to an increase

of €1.3 million in 2020. The movements relate to change in value of Atlas Tower and Galeria Platinum Tower.

Finance income and costs

Finance income and expenses are items that relate to the financing activities of the Group. Finance costs include mainly:

interests on bank and other external borrowings (and related bank charges), interest on lease obligations, and valuation

losses on interest rate derivatives. Finance income include mainly interest income as well as gains on the valuation of

interest rate derivatives.

Finance income increased significantly from €0.2 million in 2020 to €4.4 million in 2021 mainly as a result of:

- gain on interest rate derivates of €2.6 million recorded in 2021, whereas in 2020 €0.8 million loss was

reported,

- the above described (in the Chairman’s Statement) finance income resulting from the partial loan decrease

(€1.1 million).

Finance expenses incurred in 2021 decreased as compared 2020, mainly due to change in the valuation of interest rate

derivatives, as described above, from a loss in 2020 to a gain 2021.

Foreign exchange

The fluctuations in exchange rates in the underlying currencies of the countries in which the Group operates and owns

assets have resulted in significant foreign exchange differences.

In 2021 the Polish functional currency did not change significantly in relation to the Euro, whereas Romanian currencies

depreciated by 2% respectively as compared to 2020. The movements in value of the functional currencies have resulted

in foreign exchange gain of €0.5 million in the income statement (2020: €1.6 million loss) and €0.4 million gain (2020: €11.9

million loss) in other comprehensive income for the year ended 31 December 2021.

ATLAS ESTATES LIMITED

A summary of exchange rates by country for average and closing rates against the reporting currency as applied in the

financial statements is set out below.

PLN

HUF

RON

BGN

PLN

HUF

RON

BGN

Closing rates

31 December 2021

4.5994

369.00

4.9481

1.95583

31 December 2020

4.6148

365.13

4.8698

1.95583

31 December 2020

4.6148

365.13

4.8694

1.95583

31 December 2019

4.2585

330.52

4.7793

1.95583

% Change

10%

Average rates

Year 2021

4.5674

358.52

4.9204

1.95583

Year 2020

4.4448

351.17

4.8707

1.95583

Year 2020

4.4448

351.17

4.8707

1.95583

Year 2019

4.2980

325.35

4.7773

1.95583

% Change

Net Asset Value

The Group’s property assets are categorised into three classes, when accounted for in accordance with International

Financial Reporting Standards as adopted by the EU. The recognition of changes in value in each category is subject to

different treatment as follows:

• Yielding assets let to paying tenants, including the land on which they will be built or land held for development

of yielding assets – classed as investment properties with valuation movements being recognised in the Income

Statement;

• Property, plant and equipment (“PPE”) operated by the Group to produce income, such as the Hilton hotel are

disclosed as PPE – revaluation movements are taken directly to reserves, net of deferred tax via other

comprehensive income; and

• Property developments, including the land on which they will be built – held as inventory, with no increase in value

recognised in the financial statements unless where an increase represents the reversal of previously recognized

deficit below cost.

The Company sets out below the key measures relating to Net Asset Value (NAV) per share. This includes the NAV per

share per the financial statements and the adjusted NAV per share as defined at IPO and previously disclosed by the

Company.

NAV

NAV per share

NAV

NAV per share

2021

2020

€ millions

€

€ millions

€

Basic NAV

134.7

2.9

119.5

2.6

Development land and valuation increase

Deferred tax

Adjusted NAV (see the Chairman’s

Statement)

134.7

2.9

119.5

2.6

Notes: The number of shares in issue as at 31 December 2021 and 2020 is 46,852,014 (excluding treasury shares).

The Property Manager’s management and performance fees are based on the adjusted NAV.

For the twelve months to 31 December 2021, the fee charged by AMC to the Group was €2.3 million whereas for the twelve

months to 31 December 2020 AMC fee was €2.8 million (for more details please see the Remuneration Report).

Ongoing activities

During 2021, the Company continued to identify ways by which it can generate added value through the active

management of its yielding asset portfolio.

The property portfolio is constantly reviewed to ensure it remains in line with the Company’s stated strategy of creating a

balanced portfolio that will provide future capital growth, the potential to enhance investment value through active and

innovative asset management programmes and the ability to deliver strong development margins.

A key management objective is to monitor operations of hotel activity as well as enhance occupancy of income yielding

assets.

Financial management, operational management and material risks

In continuing to fulfil its obligations to its Shareholders and the markets, together with maintaining its policy of maximum

disclosure and timely reporting, the Group is continually improving and developing its financial management and

ATLAS ESTATES LIMITED

operational infrastructure and capability. Experienced operational teams are in place in each country, where there is

significant activity, otherwise a central operational team and investment committee monitor and control investments and

major operational matters. As such, the management team continually reviews its operating structures to optimise the

efficiency and effectiveness of its network, which is particularly important given the current environment.

Global economic conditions

The Board and the Property Manager closely monitor the effects that the current global economic conditions have on the

business and will continue to take steps to mitigate, as far as possible, any adverse impact that may affect the business.

The Group derives its revenue from activities carried out mainly in the Polish market with Romania and Bulgaria also

contributing, however at a much lower level. The Group’s financial results are therefore contingent on factors such as the

stability of the political systems at the given moment and the macroeconomic data related mainly to the condition of the

Polish but also Romanian and Bulgarian economies, in particular the level of GDP growth, investment spending, levels of

household income, interest rates, foreign exchange rates and inflation rate. Any deterioration to the macroeconomic

conditions in these countries (e.g. arising as a result of the Russian invasion to Ukraine) may expose the Group’s business

to risk, thus affecting its future financial results and prospects for development.

Impact of COVID-19 coronavirus on the Group's operations

As of today, there has been an impact on the business of:

a. Hotel sector

Hilton hotel:

- Following Polish government decision, the hotel was closed in the period from April 2 until May 3, 2020;

- On May 4, 2020 the hotel’s management concluded that closure of the hotel should be extended until the

end of May 2020 (insufficient expected occupancy of the hotel would not cover additional costs associated

with hotel reopening);

- the Board together with Hilton’s management have taken significant actions to decrease the operating

expenses of the hotel, nevertheless some costs were unavoidable and continued to be incurred while the

hotel was closed;

- Following Polish government decision hotels were available to guests on business trips and remain closed

for tourists starting from November 7, 2020 until December 28, 2020. Since December 28, 2020 hotels

were available mainly for medical staff, plane crew members or diplomats;

- In the period from May 8, 2021 until June 24, 2021 hotel could operate with limit of up to 50% capacity;

- Since June 25, 2021 hotel could operate with limit of up to 75% capacity. This limit was reduced further to

30% capacity, but excluded guests who are fully vaccinated.

- Since 1 March 2022, there are no limits imposed, which relate to hotel’s capacity.

- In 2021 the hotel occupancy was 64% higher as compared to 2020.

Golden Tulip hotel:

- was also temporarily closed in April and May 2020;

- In 2021 the hotel occupancy was 95% higher as compared to 2020;

The revenues from the hotel activity amounted to €7.4 million in 2021 as compared to €6.6 million in 2020.

The timing when the hospitality sector will achieve historical results is unknown as it depends on several factors e.g.,

on timing of relaxing the international flights restrictions or restrictions on public gatherings.

In 2020 the Group’s subsidiaries HGC Gretna Investments Sp. z o.o. Sp. j. and D.N.B. - Victoria Towers SRL running

hotel activity benefited from government cash grants amounting to €193 thousand in connection with payroll related

expenditures. In 2021 the Group’s subsidiaries HGC Gretna Investments Sp. z o.o. Sp. j. and D.N.B. - Victoria Towers

SRL running hotel activity benefited from government cash grants amounting to €626 thousand in connection with

payroll related expenditures (more details see note 5 to the consolidated financial statements)

On 25 June 2021 the Company’s subsidiary HGC Gretna Investments Sp. z o.o. Sp. J. (“HGC”), which operate Hilton

hotel in Warsaw concluded a new loan agreement with Polski Fundusz Rozwoju S.A. (“PFR”), a Polish joint-stock

company owned by Polish State of Treasury, which offers financial instruments for entities on preferential terms. The

amount of the loan extended to HGC was PLN 6.9 million (€1.5 million). The facility can be used for financing Hilton

expenses and must be repaid by 30 September 2024. In accordance with PFR’s decision concluded in September

2021 the loan was partially waived. The repayable loan amount was decreased by PLN 5.1 million (€1.1 million).

Details of this loan is above described in the Debt Financing section of the Property Manager’s Review.

ATLAS ESTATES LIMITED

b. Rental income from tenants:

- Following Polish government decision to close the restaurants, fitness clubs, etc. several of the Group’s

tenants suffered financially from these restrictions. As a result, in 2020 the Group offered extended payment

terms or certain rent reliefs to these tenants in return for lease term extensions. In the period from 24 October

2020 till 15 May 2021 customers eating on-site at restaurants was forbidden. It was only possible to provide

services for take-away and delivery. No restrictions were imposed to the office rental activity. At the end of

2020, the Group terminated the lease contract (of 3,026sqm) with tenant involved in organization of

conferences.

The Group was also in contact with the banks financing its projects. As of 31 December 2021 there were no breaches of

the bank covenants in respect all of the Group’s facilities.

Financing and liquidity

Management has experienced strict requirements of the lenders for financing in the CEE region, which has been reflected

in the covenants that are applied to facilities, such as a reduction of loan to value ratio, increasing margins and an increase

in levels of required pre-sales on development projects. The management team see this as a potential risk to the ongoing

development of the Company and as a result are devoting significant resource to the management of banking relationships

and the monitoring of risk in this area.

Cash is managed both at local and head office levels, ensuring that rent collection is prompt, surplus cash is suitably

invested or distributed to other parts of the Group, as necessary, and balances are held in the appropriate currency. Where

possible, the Company will use debt facilities to finance its projects, which the Company will look to secure at appropriate

times and when available, depending on the nature of the asset – yielding or development.

Currency and foreign exchange

Currency and foreign exchange rates exposures are continually monitored. Foreign exchange risk is largely managed at

a local level by matching the currency in which income and expenses are transacted and also the currencies of the

underlying assets and liabilities.

Most of the income from the Group’s investment properties are denominated in Euro and our policy is to arrange debt to

fund these assets in the same currency. Where possible, the Group looks to match the currency of the flow of income and

outgoings. Some expenses are still incurred in local currency and these are planned for in advance. Development of

residential projects has created receipts largely denominated in local currencies and funding facilities are arranged

accordingly. “Free cash” available for distribution within the Group is identified and appropriate translation mechanisms

are put in place.

Conclusions

AMC’s key strategic objective is the maximisation of value for the Company’s Shareholders, which it continues to work

towards. Its teams are very experienced in the active management of investment and development properties and provide

the Company with local market knowledge and expertise. AMC currently focuses its efforts on monitoring the risks posed

by the COVID-19 coronavirus and Russian invasion of Ukraine as well as developing new investment opportunity

connected with new residential project in Warsaw that that will consist of several stages which will release around 560

apartments as well as parking and retail facilities.

Ziv Zviel

Chief Executive Officer

Atlas Management Company Limited

12 April 2022

ATLAS ESTATES LIMITED

3. Key Property Portfolio Information

Location/Property

Description

Company’s

ownership

Poland

Hilton Hotel

First Hilton Hotel in Poland – a 4-star hotel with 314 luxury rooms, large convention

centre, fitness club and spa Holmes Place Premium, casino and retail outlets. Location

close to the central business district in Wola area of Warsaw.

100%

Galeria Platinum

Towers

Commercial area on the ground and first floors Platinum Towers with 1,904 square

meters of gallery and 208 parking places almost fully let to tenants.

100%

Atlas Tower

39,138 square meters of office and retail space in the central business district of

Warsaw.

100%

Romania

Voluntari

86,861 square meters of land in three adjacent plots at the pre-zoning stage, in the

north eastern suburbs of the city, known as Pipera.

100%

Solaris Project

32,000 square meters plot for re-zoning to mixed-use development in a central district

of Bucharest.

100%

Golden Tulip Hotel

4-star 78 room hotel in central Bucharest.

100%

Bulgaria

The Atlas House

Office building in Sofia’s city centre with 3,472 square meters of lettable area.

100%

ATLAS ESTATES LIMITED

4. Directors - Atlas Estates Limited

As of 31 December 2021:

Mark Chasey

Chairman, Non-executive

Director

Mr Chasey graduated with a Bachelor of Commerce degree in 1979 and a Bachelor of

Accountancy degree in 1981, both from the University of the Witwatersrand, South

Africa. Having completed his articles with the accounting firm Pim Goldby in

Johannesburg, Mr Chasey qualified as a member of the South African Institute of

Chartered Accountants in 1984 and was Financial Controller at Femco Electric Motors

Limited in Johannesburg from 1984 to 1988. After establishing his own liquidation

business in Johannesburg in 1989, Mr Chasey joined Ernst and Young Trust Company

(Jersey) Limited in 1997 and then, in 1999, went on to establish Oak Trust (Guernsey)

Limited.

Guy Indig

Non-executive Director

Mr Indig graduated from Bar-Ilan University, Israel, with an LLB in 1990. In 2001 Mr

Indig obtained an MBA from Tel-Aviv University. He also holds a Masters in Finance

from the London Business School. Having practiced law for several years, in 2000 Mr

Indig joined the Beny Steinmetz Group, a sizeable, global private equity group focused

on real estate investments and natural resources. Mr Indig acted as an Investment

Director in BSG's international Real Estate and Private Equity teams. Having completed

a Masters in Finance degree at London Business School in 2005, Mr Indig joined the

Royal Bank of Scotland and worked as a director in RBS' real estate finance division

until 2008, focussing on asset-backed debt financing and investments throughout

continental Europe and the UK. In 2008, Mr Indig was asked to join the Izaki Group as

a Managing Director and he has since been leading the Izaki Group's European Real

Estate and private equity investment activities.

Till 24 November 2021:

Andrew Fox

Non-executive Director

Chairman of Audit Committee

Mr Fox graduated with a Bachelor of Commerce degree in 1999 and a Post Graduate

Diploma in Finance, Banking and Investment Management in 2000, both from the

University of Natal, South Africa. Mr Fox qualified as a member of the Association of

Chartered Certified Accountants in 2003 and was admitted as a Fellow in 2009. Mr Fox

joined Oak Trust (Guernsey) Limited in 2001 and was appointed a Director in 2006.

Registered office

Atlas Estates Limited

3rd Floor, 1 Le Truchot

St Peter Port

Guernsey GY1 1WD

Company number: 44284

ATLAS ESTATES LIMITED

5. Directors and Senior Management of the Atlas Management Company Limited, the Property

Manager

Erez Koren

Non-executive Director

Mr Koren is a Certified Public Accountant in Israel and is a member of the Institute of

Certified Public Accountants in Israel. Mr Koren graduated with a Bachelor in

Economics from Ben-Gurion University, Israel. He then finished academic accounting

studies at the College of Management, Israel.

Mr Koren is serving as the Finance Director of one of IGI group real estate management

company in London. Mr Koren has an extensive international experience and his

previous roles included: Financial Controller of an AIM listed company in London;

Financial Controller of a public traded real estate company registered in the Israeli stock

exchange, having properties in Europe and Israel.

Nicholas Babbé

Non-executive Director

Mr Babbé Graduated with a Bachelor of Arts degree with Honours in 2001 from the

University of the West of England. He subsequently moved into the finance industry

taking positions with HSBC and Investec respectfully and undertook the Society of

Trusts and Estates Practitioners diploma and joined the society as a full member in

2008. Mr Babbé joined Oak Trust (Guernsey) Limited in early 2009 where he is a Trust

Manager and now studying for a BSC degree in Management with Trusts and Estates

with The University of Manchester and Manchester Business School.

Ziv Zviel

Chief Executive Officer

Mr Zviel joined Atlas Management Company Limited in October 2010 as its Chief

Financial Officer. Prior to this and from 2009 Mr Zviel served as Chief Financial Officer

and Treasurer of Deltathree, a telecom company traded in the United States. From

2007 till then he served as VP of Finance of LivePerson, an Internet company publicly

traded in the United States and Tel Aviv stock exchanges. Prior to that, and from 2002,

Mr Zviel served in a number of roles in Magic Software, a global software company

traded in the United States. Before that, and from 2000, Mr Zviel served as an audit

manager in the Tel Aviv office of Ernst & Young.

Mr Zviel holds a first degree in accounting and economics and an MBA in Business

Management, both from the Bar Ilan University in Israel.

On 27 March 2018 Mr Zviel was appointed as Chief Executive Officer.

ATLAS ESTATES LIMITED

6. Directors’ Report

The Directors present their report and the audited financial statements for the twelve months ended 31 December 2021.

Results and dividends

The results for the Company for the year are set out in the statement of comprehensive income and show a profit after tax

attributable to equity shareholders of €15.1 million (2020: €23.0 million loss).

The Company has not declared a dividend for 2021 (2020: €nil).

Activities and review of business

The Company is domiciled in Guernsey as a closed-ended investment company under Guernsey Law.

The principal activity of the Company and the Group is property investment and development throughout Central and

Eastern Europe (“CEE”), together with the management of its properties. The development of the Group’s business and

future prospects, including a description of material risk factors and threats and information on the degree of the Group’s

exposure to such risks or threats, is considered in the Chairman’s Statement and the Property Manager’s Review.

There were no significant changes in the Company’s organisational structure in the year ended

31 December 2021, except as presented in note 17 of the financial statements. There were no changes in the Company’s

organisational structure in the year ended 31 December 2020. A list of the operating subsidiaries of the Company subject

to consolidation is included within note 17 of the financial statements.

Investing Policy

Atlas invests mainly in Poland in a portfolio of real estate assets across a range of property types, where approximately

91% of its assets are located. We actively target Poland, where we believe we have the best capabilities and footprint.

Atlas also operates in the Romanian and Bulgarian real estate markets.

We may employ leverage to enhance returns on equity. Wherever possible, the Directors intend to seek financing on

a non-recourse, asset by asset basis. The Company has no set limit on its overall level of gearing. However, it is anticipated

that the Company shall employ a gearing ratio of up to 80% of the total value of its interest in income-generating properties

within its property portfolio.

Diversification

In order to hedge against risks, the Group maintains a diversified portfolio of real estate investments. Mainly the Group

diversifies the type of investment (e.g., hotels, office, commercial, etc.).

Key performance Indicators

Key performance indicators vary between the different areas of the Group’s business.

The success of developing and selling residential apartments will be measured in terms of the price achieved for each

apartment, the profit margin earned over construction cost and as a proportion of sales and the overall rate of return from

a development. Information on sales is detailed in the Property Manager’s Review.

For yielding assets, the measure of the yield of an asset relative to its cost to the Group is of key importance. Also, the

overall valuation of the portfolio will drive the value to the Company and ultimately the Company’s share price. Details of

total return targets and increases in net asset value per share are included within the Chairman’s Statement and the

Property Manager’s Review.

The key financial risk policies are stated within note 1 to the financial statements.

Going concern

In 2021, Atlas Estates Limited Group has not conducted or intended to conduct any operating activities in the territory of

Ukraine, Belarus and Russia. Thus, Russian invasion of Ukraine that began on February 24, 2022 does not have a material

direct impact on the assumption that the Group will continue as going concern, nor does it constitute an indication of

impairment of the Group's assets. The Russian invasion of Ukraine will have its imminent consequences for the European

economy. Economists say that in Poland inflation will accelerate and interest rates may rise more than has been expected.

The Polish Economic Institute, a government think-tank, predicts that the war in Ukraine will slow Polish economic growth

ATLAS ESTATES LIMITED

to 3.5% this year, down from 4.3% estimated earlier. However at the day of this report the Board of Directors concludes

that any precise determination of the effects of this invasion on the Group is not possible at this moment.

The Directors consider that the outlook presents ongoing challenges in terms of the markets in which the Group operates,

the impact of COVID-19 coronavirus (see the Property Manager’s Review), the effect of fluctuating exchange rates in the

functional currencies of the Group and the availability of bank financing for the Group.

As at 31 December 2021, the Group held land and building assets with a market value of €168 million, compared to external

debt of €67 million (€156 million and €69 million respectively in 2020). Subject to the time lag in realising the value in these

assets in order to generate cash, this “loan to value ratio” gives a strong indication of the Group’s ability to generate

sufficient cash in order to meet its financial obligations as they fall due. Any land and building assets and associated debts,

which are ring-fenced in unique, specific, corporate vehicles, may be subject to repossession by the bank in case of a

default of loan terms, but will not result in additional financial liabilities for the Company or for the Group. There are also

unencumbered assets, which could potentially be leveraged to raise additional finance.

In assessing the going concern basis of preparation of the consolidated financial statements for the year ended 31

December 2021, the Directors have taken into account the fact of ongoing working capital management and noted the

following:

• the Group is in a net current assets position of €24.3m (2020: €30.9m);

• Assets held for sale included in current assets are held at cost and are forecasted to realise cash revenues

in excess of this carrying value in future period. The assets held for sale have a net carrying value of €2.7

million and are in the process of sale for €7.7 million. Till 31 December 2021 the Group received €1.2 million

advance in respect of this transaction, which is to be completed in April 2022,

• ongoing negotiations with the bank financing the projects and the fact that there is sufficient time to agree

and sign the extension to the loans expiring in September and December 2022.

Although the Directors are aware that the management of the liquidity position of the Group is a high priority considering

the impact of COVID-19 coronavirus, the Company underlines that the Group holds significant cash reserves and over the

past years proved their abilities in managing its cash position carefully and will continue to do so.

The Group’s forecasts and projections, which cover a period of not less than 12 months from the date of approval of these

financial statements, have been prepared taking into account the economic environment and its challenges and the

mitigating factors referred to above. These forecasts take into account reasonably possible changes in trading

performance, potential sales of properties, favourable arrangements for the payment timetable for the AMC performance

fee and the future financing of the Group. They show that the Group will have sufficient facilities for its ongoing operations.

While there will always remain some inherent uncertainty within the aforementioned cash flow forecasts, the Directors

have a reasonable expectation that the Company and the Group have adequate resources to continue in operational

existence for the foreseeable future. Accordingly, the Directors continue to adopt the going concern basis in preparing the

consolidated financial statements for the year ended 31 December 2021.

Company website

To provide a portal for investor information and in accordance with the requirements of WSE, the Company maintains

a website accessed at http://www.atlasestates.com.

Auditors

The Directors confirm that as at 12 April 2022:

• So far as they are aware, there is no material relevant information (that is, information needed by the Group’s

auditors, in connection with preparing their report) of which the Group’s auditors are unaware;

• The Directors have taken all the steps that they ought to have taken as Directors in order to make themselves

aware of any relevant audit information and to establish that the Group’s auditors are aware of that information.

On 19 August 2021 during the Annual General Meeting it was resolved that BDO Ireland were to be reappointed as the

auditor of the financial reports of the Company for the year 2021.

The consolidated financial statements of the Group for 2021 and the financial statements of the Company for 2021 were

audited by BDO on the basis of an engagement letter concluded on 16 February 2022. The consolidated financial

statements of the Group for 2020 and the financial statements of the Company for 2020 were audited by BDO LLP and

BDO on the basis of engagement letters dated 13 March 2021 (and subsequently updated on 27 April 2021) and 25 March

2021 respectively and approved by the Board on 28 April 2021.

ATLAS ESTATES LIMITED

The total fees specified in the contract with the audit company, payable or paid for an audit and review of the financial

statements and for other services are presented below:

Audit Company – fees

2021

2020

€’000

Audit of individual and consolidated annual financial statements of the Company

and its subsidiaries

188

Review of interim individual and consolidated financial statements

Tax services

Other compliance services

Total

233

Information about court proceedings

The Company is not aware of any proceedings instigated before a court, a competent arbitration body or

a public administration authority concerning liabilities or receivables of the Company, or its subsidiaries, whose joint value

constitutes at least 15% the Company’s net equity.

There are no other material legal cases or disputes that are considered material to the consolidated financial information

that would either require disclosure or provision within the financial information.

Significant Agreements and Capital Commitments

In addition to the Property Management Agreement detailed in the Remuneration Report, the Group did not enter into any

significant agreements in 2021 and 2020.

Details of the bank financing agreements are disclosed above.

There are no other significant agreements that would result in Group’s capital commitments as of 31 December 2021.

Related party transactions

Related party transactions are stated within note 13 of the financial statements.

Credit and loan facilities, guarantees and sureties

Key changes in credit and loan facilities are presented in the Property Manager’s Review.

Guarantees and sureties – changes in 2021

In 2021 the Company did not issue any guarantees or sureties for the benefit of its subsidiaries/ or other parties.

The table below presents a list of guarantees, warranties and other types of security received by the Group from contracting

parties as at 31 December 2021:

Company

Contractor's name

Type of security

Currency

(000)

Atlas Estates (Przasnyska 9) Sp. z o.o.

Kalter sp. z o.o.

Bank guarantee

PLN

1,500

Capital Art Apartments AEP Sp. z o.o. sp.j.

Unibep S.A.

Bank guarantee

PLN

250

Atlas Tower Sp. z o.o.

Several tenants

Bank guarantee

PLN

2,034

Properpol Sp. z o.o.

Jeronimo Martins Polska S.A.

Bank guarantee

EUR

Zielono AEP Sp z o.o.

Unibep S.A.

Bank guarantee

PLN

Mantezja 3 Sp. z o.o.

Holmes Place Poland

Corporate guarantee

PLN

5,035

Mantezja 3 Sp. z o.o.

Holmes Place Poland

Personal guarantee

EUR

531

Mantezja 3 Sp. z o.o.

Casinos Poland Sp. z.o.o.

Bank guarantee

EUR

209

ATLAS ESTATES LIMITED

Guarantees and sureties – changes in 2020

In 2020 the Company did not issue any guarantees or sureties for the benefit of its subsidiaries/ or other parties.

The table below presents a list of guarantees, warranties and other types of security received by the Group from contracting

parties as at 31 December 2020:

Company

Contractor's name

Type of security

Currency

(000)

Atlas Estates (Przasnyska 9) Sp. z o.o.

Kalter sp. z o.o.

Bank guarantee

PLN

1,500

Capital Art Apartments AEP Sp. z o.o. sp.j.

Unibep S.A.

Bank guarantee

PLN

526

Atlas Tower Sp. z o.o.

Several tenants

Bank guarantee

PLN

1,571

Atlas Tower Sp. z o.o.

Modzelewski & Rodek Sp. z o.o.

Bank guarantee

PLN

246

Properpol Sp. z o.o.

Jeronimo Martins Polska S.A.

Bank guarantee

EUR

Zielono AEP Sp z o.o.

Unibep S.A.

Bank guarantee

PLN

Mantezja 3 Sp. z o.o.

Holmes Place Poland

Corporate guarantee

PLN

5,035

Mantezja 3 Sp. z o.o.

Holmes Place Poland

Personal guarantee

EUR

300

Mantezja 3 Sp. z o.o.

Casinos Poland Sp. z.o.o.

Bank guarantee

EUR

Corporate governance review

Indication of corporate governance rules, which the Company adheres to and the place, where the rules are

publicly available

In accordance with the WSE Rules, the Board resolved in January 2008, to the extent practicable and reasonable, to

comply with the majority of the corporate governance rules defined in the Code of Best Practices for WSE Listed

Companies (“Best Practice”). The current and binding text of Best Practices is available at the WSE official website

concerning corporate governance in public companies: https://www.gpw.pl/best-practice, whereas, in 2021, the Company

applied Best Practices in accordance with the version that was in effect in 2021, to which this declaration of the Board

regarding compliance with Corporate Governance Rules refers to. In addition, the Company’s shareholders may find “A

statement on the company's compliance with the corporate governance recommendations and principles contained in Best

Practice for GPW Listed Companies 2021” at the Company’s website www.atlasestates.com, section concerning corporate

governance maintained as part of the investor relations site.

Information on the Company non-compliance with applying Best Practices

The Company’s compliance with certain principles is mainly limited by the differences between Guernsey and Polish legal

systems, procedures and accepted practices.

According to the current status of compliance with the Best Practice, the Company does not apply 3 principles, which are

not applicable:

3.2. and 3.7. - The principle is not applicable due to the size of the Company.

3.10. - The principle is not applicable as the Company does not participate in any of the indices as listed in the

referred principle.

According to the current status of compliance with the Best Practice, the Company does not apply 21 principles:

1.3. - Since the Company’s registered seat is located outside of Poland, and since the corporate laws of the

Company’s home state do not require such business strategies and policies to be implemented and

communicated, especially in the form of any written document, the Company does not possess a business

strategy to which ESG factors could be implemented. In light of the specific situation regarding the Company

domicile, preparation and implementation of additional and complicated internal policies and strategies would be

contrary to the principles of proportionality and adequacy, taking into account the Company’s individual needs,

the size of its business, organizational structure and homogenous type of conducted activity.

1.4. - The Company does not possess a business strategy to which ESG factors could be implemented, nor does

it plan to implement such a business strategy or any other policy, since this is neither required under the

Company’s home country regulations nor justified and needed due to characteristics of the Company business

and its internal organisational structure. Therefore, there is no source based on which such information can be

prepared and shared with the stakeholders.

ATLAS ESTATES LIMITED

1.6. - The principle is not applicable to the Company, since the Company does not participate in any of the above

indices.

1.7. - There is no regulation under the legal provisions of the Company’s home country that would impose such

deadline on the company as to when to answer the investor’s request for information about the company. Also,

no such rule has been introduced internally. The Company however puts its best efforts into making sure that the

responses to investors are provided without undue delays, taking into account the nature of matter to which the

question pertains. Also, in order to provide for equal access to information for all investors, the Company will in

all cases review the scope of made requests, as responding to some of these individual investors may in fact put

them in a privileged position relative to the remaining investors and therefore infringe the rule of equal access, as

explained above.

2.1. and 2.2. - The principle concerning the members of the management and supervisory boards does not apply

directly due to the fact that the Company does not have both a management and a supervisory board. Atlas

Estates Limited as a Guernsey company has only one governing body – the Board of Directors. The principle

also does not apply to the Board of Directors. Atlas Estates Limited Group has not adopted a diversity policy with

respect to the Board of Directors and its key managers, however the process of selection of members of the

Board of Directors and key managers is based on such elements as appropriate education, experience and

expertise, as well as the qualifications and competencies of candidates, and in no way leads to the disqualification

of any candidate due to the above-mentioned elements of a diversity policy. All three members of the Company’s

Board of Directors have been performing their functions for a long time and due to the high level of their expertise

regarding the fields of the Company’s activity, as well as the results achieved under their management, there are

no changes in the Board of Directors as of now. Should such changes be introduced in the future, the Company

will select the new director(s) in accordance with the principles as presented above. As of the moment however,

complying with the referred principle would be disproportionate and inadequate, taking into account the

Company’s individual needs and type of conducted activity. At the same time, Atlas Management Company Group

engages both women and men as its key management personnel, so the rule is generally applied within the

capital group to which the Company belongs.

2.11.6. - The Company has not adopted a diversity policy with respect to the Board of Directors and its key

managers, therefore such information cannot be included in the report.

3.6. - The principle is not applied, for as long as the head of internal audit function is not appointed in the Company,

as per principle 3.3.

4.1. - The Company will not comply with this principal since it is not in a position to provide technical infrastructure

enabling secure participation in general meeting using electronic communication means. This is all more difficult

given the fact that general meetings of the Company are held in Guernsey. However, all the shareholders entitled

to participate in the general meetings can appoint proxies to act on their behalf and vote at the general meetings

according to their instructions.

4.2. - The Articles of Association provide that the Company’s General Meeting shall be held in Guernsey or

elsewhere. The determination of the location of the General Meeting is mainly driven by the need of ensuring

administration assistance in accordance with the Guernsey law. The Company’s administrator is located in

Guernsey and, therefore, the general meetings will be, most likely, held in Guernsey. It is also important to state

that: - Shareholders are not generally restricted from participating in General Meetings, but they may be restricted

from voting in limited circumstances in accordance with Guernsey law and Articles of Association. If, for example,

they fail to comply with the obligation pursuant to Articles of Association to disclose the identity of any person

(other than the registered shareholders) who has an interest in the shares they would be barred from voting; and

- The Chairman of general meeting may interrupt proceedings and adjourn the meeting, which can be reconvened

at a later point. This would not be at the instruction of a shareholder but any request could be submitted to the

Chairman at the meeting who would decide the action to be taken.

4.3. - Atlas Estates Limited does not provide on-line transmissions of general meetings over the Internet. The

reason for this is the fact that all the shareholders entitled to participate in the general meetings can appoint

proxies to act on their behalf and vote at the general meetings according to their instructions. Therefore, in the

opinion of the Company, there is no need to broadcast the general meetings.

4.4. - Atlas Estates Limited is incorporated under Guernsey law and there is no requirement under Guernsey law

to permit media to attend general meetings. Accordingly, many Guernsey based fund administrators (corporate

service providers) have adopted internal policies which do not permit the media to attend general meetings. In

this regard, the internal policies of the Company’s administrator, does not permit media to attend meetings as a

matter of standard practice and as the Company’s administrator co-ordinate the general meetings of the

Company, such policy is adopted by the Company.

4.5. - Atlas Estates Limited is Guernsey company and therefore the rules of the Commercial Companies Code do

not apply, instead the Company applies the Companies (Guernsey) Law. The Board of Directors (the “Board”)

may whenever it thinks fit and shall on the requisition in writing of one or more holders representing not less than

one-tenth of the issued share capital of the Company upon which all calls or other sums then due have been paid

convene an extraordinary General Meeting. If there are not sufficient Directors capable of acting to call a general

meeting, any Director may call a General Meeting. If there is no Director able to act, any two Shareholders may

call a general meeting for the purpose of appointing Directors. The requisition shall be dated and shall state the

object of the meeting and shall be signed by the requisitions and deposited at the Company’s registered office

ATLAS ESTATES LIMITED

and may consist of several documents in like form each signed by one or more of the requisitions. If the Board

does not cause a meeting to be held within twenty-one days from the date of the requisition being so deposited

the requisitions or a majority of them in value may themselves convene the meeting. Any meeting convened by

requisitions shall be convened in the same manner (as nearly as possible) as that in which meetings are convened

by the Board.

4.7. - The principle concerning the members of the management and supervisory boards, do not apply directly

due to the fact that the Company does not have both a management and a supervisory board. Atlas Estates

Limited as a Guernsey company has only one governing body– the Board of Directors.

4.9.2. - Pursuant to Guernsey law there are no further requirements for the Directors to fulfil a declaration

described in this principle, however an information concerning a relationship between prospective Director and

any shareholder is released as part of the information indicated in principle 4.9.1.

4.13. - Pursuant to the Company’s Articles of Association before the issue of any new shares the Company may

by ordinary resolution resolve that all or some of them shall be offered to some or all current shareholders in

proportion to their existing shares. Since the change of the adopted solution would require a change of the

Company’s Articles of Association, the Company believes that introduction of the discussed principal would

require efforts of disproportionate and inadequate size, especially considering the fact that the regulation currently

in force remains in line with all corporate laws applicable to the Company due to its domicile.

5.1. - Pursuant to the Articles of Association, the Company’s directors may take part in the discussion and vote

in certain circumstances provided, however, that such directors disclose their interest. Circumstances in which a

director may vote notwithstanding their interest are presented in the Articles.

5.4. - The terms of acquiring own shares by the Company are regulated by Guernsey law and the Articles of

Association. Pursuant to the Articles of Association,, subject to provisions of law, the Company may purchase all

or any of its own shares of any class whether or not they are redeemable and neither the Company nor the Board

shall be required to select the shares to be purchased rateably or in any other particular manner as between the

holders of the same class or in accordance with the rights as to dividends or capital conferred by any class or

shares. Since the change of the adopted solution would require a change of the Company’s Articles of

Association, the Company believes that introduction of the discussed principle would require efforts of

disproportionate and inadequate size, especially considering the fact that the regulation currently in force remains

in line with all corporate laws applicable to the Company. When deciding on a buyback of own shares the

Company will comply with the applicable corporate laws of Guernsey and laws of Poland to the extent that the

latter apply to foreign issuers of securities listed on regulated market in Poland.

5.5. - The Company’s corporate organisation is based on the relevant provisions of the Guernsey laws, which do

not provide for the obligation of having two separate organs for management and control over the company. In

light thereof, the implementation of the discussed principle would require extensive changes in the Company’s

internal structure, which would not only be problematic, but also disproportionate to the aims that the principle is

to realise.

5.6. and 5.7. - Under the Guernsey law no related party transaction requires the consent of the general meeting.

According to the current status of compliance with the Best Practice, the Company applies below listed principles however

the Company added the following comments:

2.3. - This principle is applied subject to a significant modification. The principle cannot be applied fully due to the

fact that the Company does not have both a management and a supervisory board. Atlas Estates Limited as a

Guernsey company has only one governing body – the Board of Directors. This means that the Directors are not

able, taking into account the corporate bodies structure as set out in accordance with the rules of Guernsey laws,

to fulfil the requirement of not having been a member of the Company’s governing body within the last 5 years,

since the differentiation for the executive and nonexecutive directors is not included in the criteria of being

independent referred to in the Act of 11 May 2017 on Auditors, as it is in the Schedule 2 to the Commission

guidance (2005/162/WE) dated 15 February 2005. In the remaining scope, the Company aims to apply this rule

to the fullest possible extent. At the same time, two of the Directors remain independent in light of the requirements

as set out in Schedule 2 to the Commission guidance (2005/162/WE) dated 15 February 2005.

4.11. - The principle concerning the members of the management and supervisory boards, do not apply directly

due to the fact that the Company does not have both a management and supervisory boards. Atlas Estates

Limited as a Guernsey company has only one governing body – the Board of Directors. However members of the

Board of Directors participate in a general meeting as necessary to answer questions asked at the general

meeting.

ATLAS ESTATES LIMITED

Financial statements’ preparation process

DIRECTORS’ RESPONSIBILITIES

Guernsey company law requires that Directors prepare financial statements for each financial period. These must give

a true and fair view of the state of affairs of the Group as at the end of the financial period and of the results of the Group

for that period. In preparing those financial statements, the Directors are required to:

• Select suitable accounting policies and then apply them consistently;

• Make judgements and estimates that are reasonable and prudent;

• Ensure the financial statements comply with IFRS as adopted by the EU; and

• Prepare the financial statements on the going concern basis, unless it is inappropriate to presume that the Group

will continue in business.

The Directors are responsible for ensuring that proper accounting records are maintained, which disclose with reasonable

accuracy the financial position of the Group, and that the financial statements comply with Guernsey Law. They are also

responsible for the system of internal control, for safeguarding the assets of the Group and hence for taking reasonable

steps for the detection and prevention of fraud and other irregularities.

DIVISION OF RESPONSIBILITIES AND COMPETENCES IN THE PREPARATION OF FINANCIAL INFORMATION

The Group aspires to apply high standards of corporate governance in all material areas of its business. The Board and,

where delegated, the Property Manager use a comprehensive system of controls, checks and reporting requirements that

they consider provide the capability to maintain these standards. The systems mentioned are being designed to meet the

requirements of the Company and its business and to assess and manage the opportunities and risks that may arise.

The Group’s reporting department prepares financial statements, interim reports of the Group and the Company under the

supervision of the Property Manager (CFO).

The Group’s reports are drafted by highly qualified team of employees of the controlling and reporting departments on the

basis of accounting information prepared by the financial and accounting department. The preparation process is

supervised by the reporting department’s mid-level management. The financial statements, before they are delivered to

the independent auditor, are verified by Group Financial Reporting Manager, then by the Property Manager (CFO).

INTERNAL CONTROLS

The Directors assume overall responsibility for the Group’s system of internal control designed to safeguard shareholders’

investments and the Group’s assets and for reviewing its effectiveness. The controls are designed to identify and manage

risks faced by the Group and not to totally eliminate the risk of failure to achieve business objectives. To this end internal

controls provide reasonable, but not absolute assurance against material misstatement or loss. The implementation and

operation of such systems has been delegated to the Property Manager and the processes are communicated regularly

to all of their staff who are made aware of the areas for which they are responsible. Such systems include strategic

planning, the appointment of appropriately qualified staff, regular reporting and monitoring of performance and effective

control over capital expenditure and investment.

The Group’s key internal controls are centred on a system of comprehensive reporting on all of its business activities. The

Property Manager staff meets on a monthly basis to review the control systems and to assess the performance and position

of the Group. A separate risk management process is operated that engages the Directors and senior management of the

Company and Property Manager that is aimed at identifying areas of risk faced by the Group and assessing the likely

impact on operating activities. Significant risks that are identified by this process are communicated to the Board with

recommendations for actions to mitigate them. The Group uses independent agents to undertake any specialist analysis,

investigation or action that is needed. The Property Manger reports to the Directors at least annually that they have carried

out a review of the system for internal controls.

The internal financial control department operates on the basis of a clearly defined set of control procedures and a

comprehensive monthly and quarterly reporting structure. Detailed revenue, cash flow and capital forecasts are prepared

for each asset and updated regularly throughout the year and reviewed by the Property Manager and the Board. The

Property Manager agreement sets out clearly defined guidelines for all asset transactions. These require the approval of

the Board of Directors.

The Audit Committee is responsible for reviewing the effectiveness of the system of internal financial control. A review of

these processes is conducted on a regular basis and any significant issues raised by this review are communicated to the

Board for their consideration.

ATLAS ESTATES LIMITED

Substantial shareholding

The Board is aware of the following direct or indirect interest in 5% or more of the Company’s ordinary share capital

(excluding 3,470,000 treasury shares, which have no voting rights). All shares have equal voting rights.

1. Direct shareholders (i.e. shareholders holding the shares for the benefit of other parties)

Significant Shareholders

Number of Shares held

Voting Rights

Euroclear Nominees Limited <EOCO1>

40,329,959

86.08

Atlas International Holdings Limited

6,461,425

13.79

TOTAL

46,791,384

99.87

2. Beneficial shareholders (i.e. shareholders for the benefit of which the above direct shareholders held the shares)

based on the information provided to the Company by these shareholders under the applicable legislation (the

notifications received from shareholders in accordance with Art. 70 with connection to art. 69 of the Act of 29 July

2005 on the Public Offering, Condition Governing the introduction of Financial Instruments to Organized Trading and

Public Companies)

Significant Shareholders

Number of Shares held

Voting Rights

Fragiolig Holdings Limited

37,562,884

80.17

Atlas International Holdings Limited

6,461,425

13.79

TOTAL

44,024,309

93.96

3. The Company’s immediate parent company is Fragiolig Holdings Limited, a company incorporated in Cyprus. The

ultimate parent company is Revaia Ltd, a company incorporated in Israel and the ultimate controlling party by a virtue

of ownership is Mr Ron Izaki.

Indication of the holders of any and all securities which give special control rights along with a description of

these rights

The Company’s share capital is divided into 46,852,014 shares which give equal rights to shareholders. Additionally the

Company holds 3,470,000 treasury shares, which have no voting rights.

Legal or statutory limitations in the exercise of voting rights

Each share gives right to one vote at the General Meeting of the Company as indicated above. Shareholders are not

generally restricted from participating in General Meetings, but they may be restricted from voting in limited circumstances

in accordance with the Companies (Guernsey) Law, 2008, as amended (“the Companies Law”) and Articles of Association.

If, for example, they fail to comply with the obligation pursuant to Articles of Association to disclose the identity of any

person (other than the registered shareholder) who has an interest in the shares they would be barred from voting.

Limitations in the transfer of the ownership rights of the Company's securities

The Articles of Association provide certain limitations with regard to the transfer of the ownership rights to the Company's

shares as stated in article 13 of these Articles. The Directors shall have power to implement such arrangements as they

may, in their absolute discretion, think fit in order for any class of shares to be admitted to settlement by means of The

National Depository for Securities' system.

The Board may, in its absolute discretion and without giving a reason, refuse to register a transfer of any share which is

not fully paid or on which the Company has a lien, provided, in the case of a listed share that this would not prevent dealings

in the share from taking place on an open and proper basis. In addition, the Directors may refuse to register

a transfer in respect of certificated shares if:

(i) it is not fully paid up;

(ii) it is in respect of more than one class of shares;

(iii) it is not delivered for registration to the Company's registered office or such other place as the Board

may decide, accompanied by the certificate for the shares to which it relates and such other evidence

as the Board may reasonably require to prove title of the transferor and the due execution by him of the

ATLAS ESTATES LIMITED

transfer or, if the transfer is executed by some other person on his behalf, the authority of that person to

do so.

The Board may comment in its absolute discretion and, without giving a reason, refuse to register any allotment or transfer

of shares in favour of more than four joint transferees or a child, bankrupt or person of unsound mind.

If the Board refuses to register the transfer of a share they shall, within two months after the date on which the transfer

was lodged with the Company, send notice of the refusal to the transferee. The registration of transfers may be suspended

at such times and for such periods (not exceeding 30 days in any one year) as the Board may decide and either generally

or in respect of a particular class of share provided that the Board may not suspend the registration of transfers of any

participating security without the consent of the operator of the relevant system.

Terms for the appointment and removal of Directors and the description of their powers

Terms of appointment and removal of Directors are presented in the Company’s Articles of Association in articles 23, 24

and 30. The current version of the Company’s articles of Association is available at the Company website:

http://www.atlasestates.pl/en/investor-relations/corporate-governance

POWERS OF THE BOARD OF DIRECTORS

The Management Board exercises all powers in accordance with Guernsey Law and, the Company’s Articles of Association

(especially articles 27 and 28).

AUTHORISATION OF THE BOARD OF DIRECTORS TO MAKE DECISIONS CONCERNING THE ISSUE OF THE

COMPANY'S SHARES

According to the Articles of Association (article 3) the unissued shares within the scope of the authorised capital (pursuant

to a resolution of the General Meeting) are at the disposal of the Board, which has the unconditional authority to allot, grant

options or warrants over, offer or otherwise deal with or dispose of them or rights to subscribe for or convert any security

into shares to such persons on such terms and conditions and at such times as the Board determines but so that no share

shall be allotted at a discount.

AUTHORISATION OF THE BOARD OF DIRECTORS TO MAKE DECISIONS CONCERNING THE REDEMPTION OF

THE COMPANY'S SHARES

The Board has the power to issue redeemable shares pursuant to article 3.1 of the Articles of Association and may redeem

any such shares in accordance with the terms of their issue.

Furthermore, the Board is authorised, on the basis of the article 8.4 of the Articles of Association to adopt a regulations

governing the redemption of those redeemable shares.

Article 3.2(b) of the Articles of Association gives the company the power to buy back shares whether they are redeemable

or not.

Annual General Meeting

The Annual General Meeting is usually scheduled in the period June/July/August. Detailed timing and agenda is

communicated separately in accordance with WSE regulations and the Company’s Articles of Association.

The Board encourages active communication with all of the Company’s shareholders. The Chief Executive Officer of the

Property Manager are the main points of contact for shareholders and they endeavour to respond to enquiries on a timely

basis either verbally or in writing. Provision is made on the Company’s website for enquiries to be made of Directors.

As part of the communication process a series of meetings is held between the Property Manager and significant

shareholders throughout the year. Directors are invited to attend these meetings and are available should shareholders

request their attendance. All shareholders have at least twenty working days’ notice of the Annual General Meeting, at

which questions can be raised.

The rights of the shareholders are subject to Guernsey Law and the Articles of Association of the Company.

Amendment of the Company’s articles of association

The Company’s articles can be altered in accordance with provisions of Part IV of the Companies Law. Any amendment

of the articles of association of the Company may be done by a special resolution of the General Meeting or a written

special resolution of the shareholders.

ATLAS ESTATES LIMITED

A special resolution requires a majority of no less than three-quarters of the votes recorded (including, where there is

a poll, any votes cast by proxy) in order to be passed. In the case of a resolution passed at a General Meeting, notice

specifying the intention to propose the resolution has to have been duly given in accordance with article 18 of the

Company’s articles.

Where the amendment of the Company’s articles will result in the variation of the rights of a class of shares, the consent

in writing of three-quarters of the nominal amount of the issued shares of that class or a special resolution of the holders

of the shares of that class is required.

Structure and membership of the Company’s Board

In the period 1 January 2020 – 24 November 2021 the Board of Directors comprised the non-executive Chairman and two

further non-executive Directors. There is a clear separation of the role of the Directors and the Property Manager, governed

by the Property Management Agreement that was entered into on 24 February 2006. The Board identifies the majority of

its non-executive Directors, i.e. Mr Andrew Fox (till 24 November 2021) and Mr Mark Chasey as independent Directors

and Mr Guy Indig as non-independent Director. The Directors provide strategic management and act as the final decision

makers for all investment/divestment decisions. The executive and day to day management is provided by the Property

Manager whose role and responsibilities are clearly defined in the Property Management Agreement. On 24 November

2021 Mr Andrew Fox resigned from the Board of Directors.

The Board meets formally at least four times a year and regular contact is made between the Board and the Property

Manager in the intervening periods.

A formal schedule of matters reserved specifically for the Board’s decision is approved and reviewed on an ongoing basis

by the Board. Such matters include, but are not limited to:

• developing Group strategy and monitoring the progress towards objectives set for management;

• reviewing the Company’s capital, operating and management structures;

• setting the system of internal and financial controls and accounting policies;

• communicating the aims and objectives of the Company to shareholders; and

• ensuring that the Group has effective risk management procedures in operation at all times.

A formal schedule of matters reserved for the Board of the Property Manager is also approved and reviewed on an ongoing

basis by the Board.

All members of the Board have access to the advice and services of Maitland Fund Services (“Company’s Administrator”)

and full and timely access to all relevant information in an appropriate form and of sufficient quality to enable them to

discharge their duties and responsibilities. Guidance is provided to Directors on obtaining independent professional advice

when necessary and the Company maintains a comprehensive directors’ and officers’ liability insurance policy.

Appointments to the Board are subject to a formal process of selection involving the Board as a whole. The Directors are

appointed for indefinite terms and a third of the Board retire by rotation each year. Directors’ terms of appointment provide

for prior approval of the Board for the acceptance of any outside appointments. In the event of a request for approval the

Director in question is asked to confirm and demonstrate that they can continue to commit sufficient time to the fulfilment

of their duties.

Directors and Directors’ share interests

The non-executive Directors who served during the year are detailed in table below. No Director had any direct interest in

the share capital of the Company or any of its subsidiaries during the year or the preceding year.

Non-executive Directors

Mr Andrew Fox

Appointed 16 June 2010

Resigned 24 November 2021

Mr Mark Chasey

Appointed 16 June 2010

Mr Guy Indig

Appointed 16 June 2010

Biographical details for all current Directors are set out in Directors – Atlas Estates Limited.

The Board is of the view that non-executive appointments for a fixed term would be inappropriate for each of the non-

executive Directors due to the nature of the management of the Company. The Articles of the Company do provide for the

retirement by rotation of a third of the Board each year.

The Remuneration Report contains details of Directors’ remuneration, terms of their appointment and those of the Property

Manager. No other Director had, during the accounting year or in the period to 12 April 2022, any material beneficial interest

in any significant contract in the Group’s business.

ATLAS ESTATES LIMITED

BOARD COMMITTEES

The Audit Committee comprises the whole of the Board and is chaired by Mr Andrew Fox. It meets at least two times

a year to review the interim and year-end financial statements prior to their submission to the Board and to review the

appointment of the independent auditors and the scope, performance and remuneration of services provided by them.

Procedures are in place for the approval of non-audit services provided by the Company’s auditors. The auditors will not

be awarded non-audit work unless the Company is satisfied, through enquiry, that the provision of such services would

not prejudice the independence and objectivity of the auditor.

The entire Board also forms the Investment Committee in order to appraise and approve or reject investment proposals

made by the Property Manager. The Investment Committee meets as and when required.

The Company has not formed a separate Remuneration or Nominations Committee as the Property Management

Agreement provides for the remuneration of the Manager and the Board as a whole considers any further appointments.

Attendance at meetings

Board of Directors

Audit Committee

Meetings

No. of meetings in the year

Mr Andrew Fox (till 24 November 2021)

Mr Mark Chasey

Mr Guy Indig

No Investment Committee meetings were held in the year because all discussions and decisions related to investment

proposals were made during the Board meetings.

PROPERTY MANAGER

The Property Manager has also undertaken to maintain the highest standards of corporate governance in line with the

direction set by the Board. Where delegated, the Property Manager has continued to put in place a comprehensive system

of controls, checks and reporting requirements that they feel provides the ability to maintain these standards.

The Property Manager has a board (“PM board”) comprising of two non-executive directors. Additionally it employs Chief

Executive Officer who on daily basis are engaged in the management of the Group. A formal schedule of matters reserved

for the decision of the PM board, derived from the role and responsibilities set out in the Agreement has been approved

and is reviewed on an ongoing basis.

The PM board collectively approves the appointment of senior management within the Property Manager, details of which

are then reported to the Company.

The Board of Directors assessment of risk control, compliance, and management systems

The Board of Directors has a positive opinion on the Company’s and Group’s existing risk control, compliance and risk

management systems as being appropriate for the size of the Group and the complexity of its operations. The Board has

no reservations concerning the correctness of its compliance systems introduced and operating in the Group, nor regarding

the risk management system which is of particular importance to the Company and the Group.

Assessment of the Company’s compliance with disclosure obligations

In the disclosure policy, providing investors with confidential, current, and periodic information, the Management Board

takes the current requirements of the law into account. In the opinion of the Board of Directors, in 2021, the Company

properly performed its disclosure obligations arising out of the provisions of the law and the Best Practices of the WSE

Listed Companies.

The Company’s policies regarding sponsoring and charitable activities

The Company does not pursue sponsorship, charity or other similar activities.

Mark Chasey Guy Indig

Chairman Director

12 April 2022

ATLAS ESTATES LIMITED

7. Remuneration Report

The Directors present their report (the ‘Report’) on their remuneration, the fees payable to the Property Manager as well

as details of payments to directors of subsidiary companies where the services are rendered or procured by external

entities that has been prepared in a manner consistent with commonly accepted practice.

1) Non-executive Directors

All non-executive Directors have specific terms of appointment that include their membership of the Audit Committee and

the fee payable to them for their services. Their remuneration is determined by the Board in accordance with the Articles

of Association of the Company. Such fees are reviewed annually with regard to a Director’s performance and those fees

paid to non-executive Directors of similar companies.

Details of the terms of appointment for those who served as non-executive Directors during the year are:

Non-executive Directors’ service contracts

Appointment Date

Resignation Date

Term

Notice Period

Mr Andrew Fox

16 June 2010

24 November 2021

Indefinite

30 days

Mr Mark Chasey

16 June 2010

Indefinite

30 days

Mr Guy Indig

16 June 2010

Indefinite

3 months

Directors’ remuneration

The total amounts for Directors’ remuneration were as follows:

Directors’ emoluments – representing fees only

2021

Non-executive Directors

€

Mr Andrew Fox (GBP17,500)

21,000

Mr Mark Chasey (GBP17,500)

21,000

Mr Guy Indig (GBP20,000)

23,000

Total

65,000

Directors’ emoluments – representing fees only

2020

Non-executive Directors

€

Mr Andrew Fox (GBP17,500)

20,000

Mr Mark Chasey (GBP17,500)

20,000

Mr Guy Indig (GBP20,000)

22,000

Total

62,000

2) Property Manager fees

Management fee

In consideration of the services to be provided by AMC, AMC receives an annual management fee of 2% of the previous

year’s closing adjusted NAV (less any un-invested net proceeds of the IPO or any subsequent equity capital raising). In

consideration of the services provided, AMC charged a management fee amounting to €2.3 million for the year ended

31 December 2021 (2020: €2.8 million). However as described in note 30 to the consolidated financial statements, on 4

March 2022 AEL and AMC reached a settlement based on which this fee was reduced to € 345 thousand.

In addition, AMC is entitled to be reimbursed by the Company for all costs and expenses incurred by it in the performance

of its obligations under the Property Management Agreement (not including its own internal operating costs).

Performance fee

On signing the Property Management Agreement, the Company and AMC agreed upon performance related fee that

motivates the Property Manager and align their interests with the performance and growth of the Atlas business and the

long term enhancement of shareholder value. The Property Management agreement provides for a formal process of

performance evaluation that is based on the collective performance of the Property Manager rather than on standalone

companies’ performance. These performance criteria are based on financial measures assessed over the life of the

Property Management Agreement. Procedures are in place to review the approach and resources applied by the Property

Manager and its performance throughout the year.

In addition to the management fee, AMC is entitled to a performance fee payable if the Total Shareholder Return (means

the sum of the growth in adjusted NAV per ordinary share plus an amount equal to the aggregate dividends or other

distributions per ordinary share declared or paid in respect of such accounting period expressed as a percentage of the

adjusted NAV per ordinary share at the end of the previous accounting period) in any year exceeds 12 per cent (adjusted

ATLAS ESTATES LIMITED

to make up for any prior years where the Total Shareholder Return was negative – the “Hurdle Rate”). Once this threshold

is exceeded, AMC is entitled to receive a fee equal to 25% of the amount by which the Total Shareholder Return for the

relevant financial period exceeds the Hurdle Rate for such period multiplied by the previous year’s closing adjusted NAV

after the deduction of any dividends declared or to be declared but not yet paid in respect of that period.

One third of any performance fee payable to AMC under the agreement may, at the option of the Company, be paid in the

form of new Ordinary Shares issued to AMC at a price equal to the average closing price of the Company’s shares for the

45 days prior to the date of issue of such shares.

AMC’s performance fee accrual in respect of the financial year ended 31 December 2021 is nil (2020: €nil million).

In early 2020 the Board of Directors of the Company (the Board) conducted a review of the Property Management

Agreement (“PMA”) and in particular the means by which performance fee is calculated. Of primary concern to the Board

were the following issues:

- the drafting of the clauses and definitions in the PMA with regards to the calculation of performance fee are not concise

and ambiguity can lead to multiple interpretations and thus differing calculations;

- the lack of a properly constructed high-water mark mechanism has led to performance fees being paid multiple times on

NAV gains in the same bracket, i.e. performance fees have been paid or accrued on certain gains in NAV, but due to

subsequent reductions in NAV in a following period, upon the NAV increasing again in the next period, performance fees

have been paid or accrued again on the same NAV increase for which performance fees have been paid previously;

- performance fee calculations appear to be disproportionate to the intention of the PMA which is to set a 12% hurdle rate.

Having concluded its review, and taken external legal advice on the interpretation of the PMA, the Board was of the view

that it does not agree with the interpretation which has been taken previously in respect of performance fee calculations

and it disputed the amounts which have been paid or accrued.

Performance fees prior to 2019

Past Performance Fees which have accrued, and remained unpaid as of 31 December 2020 amounted to €10.8 million.

On 21 April 2021 AEL and AMC have agreed to decrease this balance by €10.0 million.

Performance fee in respect of 2019 and 2020

On 8 April 2020 AEL and AMC have agreed that no performance fee will be due for 2019. On the basis of the above, the

Board was in a position to approve the financial statements of the Company and the consolidated financial statements of

the Group for the year ending December 2019, without accruing for a performance fee for 2019 and at the same time the

Board agreed with AMC that for the purpose of the calculation of the performance fee for the year 2020 the opening NAV

per share at the beginning of the period is NAV per share as of 31 December 2018. Since NAV per share as of 31 December

2020 decreased as compared to 31 December 2018 AMC was not entitled to any performance fee in respect of 2020 and

2019.

Performance fee in respect of 2021

On 4 March 2022 AEL and AMC have confirmed that no performance fee will be due for 2021, as a result no performance

fee was accrued as of 31 December 2021.

Term and Termination

The Property Management Agreement was to run for an initial seven year term from 24

February 2006. Since the Company

did not serve notice to Property Manager by 28 August 2012, the Agreement continues indefinitely after

24 February 2013. Currently the Agreement may be terminated on 12 months’ notice by either party.

The agreement may be terminated at any time for reasons of material breach by either party not remedied within

a 90 day period (21 days if the breach relates to non-payment of sums due to the Property Manager) or on the insolvency

of either party. The Company may also terminate the Agreement in the event that any of the AMC Shareholders sells (other

than to certain categories of intra-group permitted transferees) more than 49 percent of their respective shareholdings in

AMC as at the date of Admission or in the event that the AMC Shareholders (or their permitted transferees) between them

cease to own collectively at least 75 percent of the issued share capital of AMC. The Company also has the right to

terminate the agreement in the event that it becomes tax resident in the United Kingdom for any reason. Upon termination

of this Agreement, the Manager shall be entitled to receive all fees and other moneys accrued to it (and unpaid) and a

performance fee.

ATLAS ESTATES LIMITED

3) Members of the subsidiaries’ Management Boards

The following entities serve as members of the subsidiaries’ Management Board in addition to the Property Manger

mentioned above:

− ETM Corporate Services B.V., Krijnburg B.V. (representing Dutch subsidiaries) appointed for indefinite period with 6

weeks’ notice period at the fixed fee of €80,500 (plus VAT- the fee also includes administration services provided to

the subsidiaries);

− TMF Curacao N.V (representing Atlas Estates Antilles B.V.) appointed for indefinite period with 3 months’ notice period

at the fixed annual fee of USD1,500;

− Altea Management S.A. (representing Luxembourg subsidiaries) appointed for indefinite period with 3 months’ notice

period at the fixed annual fee of €6,000 (plus VAT);

− Cyproman Services Limited (representing Fernwood Limited) appointed for indefinite period with no notice period at

the fixed annual fee of €1,400 (plus VAT).

Mark Chasey Guy Indig

Chairman Director

12 April 2022

ATLAS ESTATES LIMITED

8. Declarations of the Board of Directors

Declaration concerning accounting policies

The Board of Directors of Atlas Estates Limited confirms that, to the best of its knowledge, the annual financial statements

together with comparative figures have been prepared in accordance with applicable accounting standards and give a true

and fair view of the state of affairs and the financial result of the Company for the period.

The Directors’ and Property Manger’s Reports in this annual report give a true and fair view of the situation on the reporting

date and of the developments during the financial year, and include a description of the major risks and uncertainties.

Declaration concerning election of the Company’s auditor for the annual audit of the financial statement

The Company’s auditor has been elected according to applicable rules. The audit firm and its chartered accountants

engaged in the audit of the financial statements of Atlas Estates Limited meet the objectives to present an objective and

independent report in accordance with applicable rules and professional standards.

Other obligatory declaration

Since the Company is incorporated outside European Union it is not Public Interests Entity as defined by Regulation (EU)

No 537/2014 of the European Parliament and of the Council dated 16 April 2014 as well as Act of 11 May 2017 on statutory

auditors, audit firms and on public oversight. As a result the Company is not obliged to comply with:

- the requirements regarding rules of the appointment, composition and functioning of the audit committees, and

- the mandatory rotation of the audit firm and statutory auditor and the mandatory period of grace

as imposed by the above mentioned regulations.

Mark Chasey

Chairman

Guy Indig

Director

12 April 2022

ATLAS ESTATES LIMITED

IV. Independent Auditors’ Report

INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDERS OF ATLAS ESTATES LIMITED

Opinion

We have audited the financial statements of Atlas Estates Limited (the “Company”) for the year ended 31 December 2021

which comprises the Statement of Comprehensive Income, the Statement of Financial Position, the Statement of Changes

in Equity, the Cash Flow Statement, the Statement of Accounting Policies and notes to the financial statements. The

financial framework that has been adopted in the preparation of the financial statements is applicable law, including

Commission Delegated Regulation 2018/815 regarding the single electronic reporting format (ESEF) and International

Financial Reporting Standards as adopted by the European Union.

In our opinion, the financial statements

• give a true and fair view of the financial position of the Company as at 31 December 2021, and of its financial

performance and its cash flows for the year then ended;

• have been properly prepared in accordance with International Financial Reporting Standards as adopted by the

European Union; and

• have been properly prepared in accordance with the requirements of the Companies (Guernsey) Law, 2008.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs) as issued by the International

Auditing and Assurance Standards Board (IAASB) and applicable law. Our responsibilities under those standards are

further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are

independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial

statements, including the Financial Reporting Council’s Ethical Standards as required by Crown Dependencies’ Audit

Rules and Guidance and we have fulfilled our other ethical responsibilities in accordance with these requirements. We

believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the

financial statements of the current period and include the most significant assessed risks of material misstatement (whether

or not due to fraud) that we identified, including those which had the greatest effect on: the overall audit strategy, the

allocation of resources in the audit, and directing the efforts of the engagement team. These matters were addressed in

the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide

a separate opinion on these matters.

Key Audit Matter - Carrying value of investments in subsidiaries

The company accounting policy for determining the carrying value of investments in subsidiaries is set out in note 2. As

detailed in note 7 the Company has material investments in its subsidiary undertakings, stated at cost less impairment.

The investments in subsidiaries are subject to annual review for impairment. Following impairment charges in previous

periods the company’s investments in subsidiaries are currently carried at recoverable value as this is lower than cost.

The recoverable value of the investment in subsidiaries is considered to be the adjusted net asset value of the subsidiaries.

The subsidiaries’ hotels and investment property are carried at fair value and contribute 71% to the subsidiaries gross

assets. Management engage an external property valuer to value 99% of subsidiaries hotel and investment property

portfolio.

As a result of the above:

• the company’s net assets are the same as the group’s adjusted net asset value.

• the carrying value of the company’s investments in subsidiaries are sensitive to movements in the subsidiaries

property valuations.

As disclosed in Note 7 to the financial statements, as required by RICS, the valuer of the subsidiaries’ hotel has included

a paragraph in their report that explains that as a result of the impact of the outbreak of the Novel Coronavirus (COVID 19)

on the market, less certainty, and a higher degree of caution, should be attached to the valuation than would normally be

the case.

ATLAS ESTATES LIMITED

Related Disclosures

Refer to the following notes accompanying the financial statements:

• Statement of Accounting Policies

• Note 2 - Critical accounting estimates and judgements; and

• Note 7 – Investments in subsidiaries

Audit Response

Our audit work included, but was not restricted to, the following:

• We inspected that the calculation of the carrying value of investments has been agreed to the adjusted net asset

value of the underlying investees and that the amount has been included in the financial statements; and

• We considered the conclusions highlighted by the external valuer in regards to the certainty of the valuation and

the impact this would have on our audit opinion.

Key Observations

Based on the work carried out we consider the judgements made by management in assessing the carrying value of

investments in subsidiaries to be reasonable

Other information

The Directors are responsible for the other information. The other information comprises the information included in the

annual report other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements

does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,

consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained

in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that

there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in

this regard.

Other Companies (Guernsey) Law, 2008 reporting

We have nothing to report in respect of the following matters where the Companies (Guernsey) Law, 2008 requires us to

report to you if, in our opinion:

• proper accounting records have not been kept by the Company; or

• the financial statements are not in agreement with the accounting records; or

• we have failed to obtain all the information and explanations which, to the best of our knowledge and belief, are

necessary for the purposes of our audit.

Opinion on other matters prescribed by the regulations of the Warsaw Stock Exchange

In our opinion, the information contained in the Directors’ Report on the Company’s activities complies with the

requirements of the regulations of the Warsaw Stock Exchange issuers and is consistent with the information presented in

the accompanying financial statements.

Based on our knowledge obtained during the audit about the Company and its environment we have identified no material

misstatements in the Directors’ Report on the Company’s activities.

The Parent Company’s Management Board and members of its Audit Committee are responsible for the preparation of a

declaration on the application of corporate governance in accordance with regulations of the Warsaw Stock Exchange.

In connection with our audit of the financial statements it was our responsibility to read the declaration on the application

of corporate governance, constituting a separate section of the Directors’ Report on the Company’s activities.

In our opinion, the declaration on the application of corporate governance contains the information specified in paragraph

70 section 6 point 5 of the Minister’s of Finance Decree of 28 March 2018 on the current and periodic information provided

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 (2018 Journal of Laws, item 757 with subsequent amendments).

Information provided in paragraph 70 section 6 point 5 letters c-f, h and i of the Regulation contained in the statement on

the application of corporate governance are in accordance with the applicable regulations and information contained in the

annual financial statements.

ATLAS ESTATES LIMITED

Responsibilities of the Directors for the financial statements

As explained more fully in the Directors responsibilities statement, the Directors are responsible for the preparation of the

financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors

determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether

due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Company’s ability to continue as a

going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting

unless the Directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to

do so.

Auditors’ responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material

misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable

assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always

detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,

individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on

the basis of these financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism

throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error,

design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and

appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from

fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,

misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are

appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the

Company’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and

related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on

the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast

significant doubt on the Company’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 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

Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and

whether the 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 Company to express an opinion on the financial statements. We are responsible for the direction,

supervision and performance of the audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of

the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our

audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements

regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought

to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most

significance in the audit of the financial statements of the current period and are therefore the key audit matters. We

describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or

when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the

adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such

communication.

ATLAS ESTATES LIMITED

Use of our report

This report is made solely to the Company’s members, as a body, in accordance with section 262 of the Companies

(Guernsey) Law, 2008. Our audit work has been undertaken so that we might state to the Company’s members those

matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by

law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a

body, for our audit work, for this report, or for the opinions we have formed.

Stewart Dunne

For and on behalf of BDO, Recognised Auditor

Dublin, Ireland

12 April 2022

ATLAS ESTATES LIMITED

V. Financial Statements

1. Statement of Comprehensive Income

For the year ended 31 December 2021

2021

2020

€’000

Notes

Revenues

Cost of operations

Gross profit

Administrative expenses

(2,473)

(2,940)

Other operating income

17,660

Other operating expenses

(19,987)

Profit/ (Loss) from operations

15,187

(22,927)

Finance income

Finance costs

(69)

(76)

Other (losses) and gains – foreign exchange

(6)

Profit/ (Loss) before taxation

15,113

(23,000)

Tax expense

Profit/ (Loss) for the year

15,113

(23,000)

Total comprehensive income/ (loss) for the year

15,113

(23,000)

Profit/ (Loss) per €0.01 ordinary share - basic (eurocents)

32.3

(49.1)

Profit/ (Loss) per €0.01 ordinary share - diluted (eurocents)

32.3

(49.1)

All amounts relate to continuing operations.

ATLAS ESTATES LIMITED

2. Statement of Financial Position

As at 31 December 2021

2021

2020

€’000

Notes

ASSETS

Non-current assets

Investment in subsidiaries

144,002

137,392

Loans receivable from subsidiaries

144,100

137,482

Current assets

Trade and other receivables

Cash and cash equivalents

277

417

280

424

TOTAL ASSETS

144,380

137,906

Non-current liabilities

Other payables

(5,937)

(5,870)

(5,937)

(5,870)

Current liabilities

Trade and other payables

(3,787)

(12,493)

(3,787)

(12,493)

TOTAL LIABILITIES

(9,724)

(18,363)

NET ASSETS

134,656

119,543

EQUITY

Share capital account

6,268

Other distributable reserve

194,817

Accumulated loss

(66,429)

(81,542)

TOTAL EQUITY

134,656

119,543

The notes form part of these financial statements. The financial statements were approved by the Board of Directors on

12 April 2022 and signed on its behalf by:

Mark Chasey Guy Indig

Chairman Director

12 April 2022

ATLAS ESTATES LIMITED

3. Statement of Changes in Equity

Year ended 31 December 2021

Share capital

account

Other

reserves

Accumulated

loss

Total

€’000

As at 1 January 2020

6,268

194,817

(58,542)

142,543

Total comprehensive income for the year

(23,000)

As at 31 December 2020

6,268

194,817

(81,542)

119,543

Total comprehensive loss for the year

15,113

As at 31 December 2021

6,268

194,817

(66,429)

134,656

ATLAS ESTATES LIMITED

4. Cash flow Statement

Year ended 31 December 2021

Year ended

Notes

31 December 2021

31 December 2020

€’000

Profit/ (Loss) for the year

15,113

(23,000)

Adjustments for:

Finance costs

Finance income

(1)

(Reversal of impairment)/ Impairment on investments

(7,660)

19,987

Write off of trade and other payables

(10,000)

(2,481)

(2,940)

Changes in working capital

Increase in trade and other receivables

(3)

Increase/ (Decrease) in trade and other payables

1,294

1,598

Net cash used in operating activities

(1,183)

(1,345)

Investing activities

New loans advanced to subsidiaries

13c

(7)

(8)

Income from subsidiary

1,050

1,400

Net cash from investing activities

1,043

1,392

Net (decrease)/ increase in cash and cash equivalents in

the year as a result of cashflows

(140)

Net (decrease)/ increase in cash and cash equivalents in the

year

(140)

Cash and cash equivalents at the beginning of the year

417

370

Cash and cash equivalents at the end of the year

277

417

Cash and cash equivalents

Cash at bank and in hand

277

417

277

417

ATLAS ESTATES LIMITED

STATEMENT OF ACCOUNTING POLICIES

VI. Statement of Accounting Policies

Year ended 31 December 2021

Basis of preparation

These financial statements have been prepared in accordance with applicable Guernsey law and International

Financial Reporting Standards (“IFRS”) and IFRIC interpretations adopted by the European Union and therefore

comply with Article 4 of the EU IAS Regulation. The financial statements have been prepared on a going concern

basis and on a historical cost basis. The principal accounting policies are set out below. These policies have

been consistently applied to all the years presented, unless otherwise stated.

The preparation of financial statements in accordance with IFRS requires the use of accounting judgements,

estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses. The

areas involving a higher degree of judgement and areas where assumptions and estimates are significant are

discussed in note 2 – Critical accounting estimates and judgements.

In 2021, Atlas Estates Limited Group has not conducted or intended to conduct any operating activities in the

territory of Ukraine, Belarus and Russia. Thus, Russian invasion of Ukraine that began on February 24, 2022

does not have a material direct impact on the assumption that the Group and the Company will continue as

going concern, nor does it constitute an indication of impairment of the Group's assets. The Russian invasion of

Ukraine will have its imminent consequences for the European economy. Economists say that in Poland inflation

will accelerate and interest rates may rise more than has been expected. The Polish Economic Institute, a

government think-tank, predicts that the war in Ukraine will slow Polish economic growth to 3.5% this year, down

from 4.3% estimated earlier. However at the day of this report the Board of Directors concludes that any precise

determination of the effects of this invasion on the Group is not possible at this moment.

In considering the going concern basis of preparation of the Company financial statements management note

that the Company is in a net current liability position of €3.3m (2020: €12.5m). The going concern of the

Company is dependent on income from its subsidiaries and their ability to continue as a going concern. The

Company obtained a profit for the year of €15.1 million as compared to prior year loss of €23.0 million. Based

upon cash flow forecasts prepared for the Group, management expect that the Company’s subsidiaries will be

able to support the Company as its liabilities fall due.

The Directors consider that the outlook presents ongoing challenges in terms of the markets in which the Group

operates, the impact of COVID-19 coronavirus (see the Property Manager’s Review), the effect of fluctuating

exchange rates in the functional currencies of the Group and the availability of bank financing for the Group.

As at 31 December 2021 the Group held land and building assets with a market value of €168 million, compared

to external debt of €65 million (€156 million and €69 million respectively in 2020). Subject to the time lag in

realising the value in these assets in order to generate cash, this “loan to value ratio” gives a strong indication

of the Group’s ability to generate sufficient cash in order to meet its financial obligations as they fall due. Any

land and building assets and associated debts, which are ring-fenced in unique, specific, corporate vehicles,

may be subject to repossession by the bank in case of a default of loan terms but will not result in additional

financial liabilities for the Company or for the Group. There are also unencumbered assets, which could

potentially be leveraged to raise additional finance.

In assessing the going concern basis of preparation of the consolidated financial statements for the year ended

31 December 2021, the Directors have taken into account the fact of ongoing working capital management and

noted the following:

• the Group is in a net current assets position of €24.3m (2020: €30.9m);

• Assets held for sale included in current assets are held at cost and are forecasted to realise cash

revenues in excess of this carrying value in future period. The assets held for sale have a net

carrying value of €2.7 million and are in the process of sale for €7.7 million. Till 31 December 2021

the Group received €1.2 million advance in respect of this transaction, which is to be completed in

April 2022,

• ongoing negotiations with the bank financing the projects and the fact that there is sufficient time

to agree and sign the extension to the loans expiring in September and December 2022.

Although the Directors are aware that the management of the liquidity position of the Group is a high priority

considering the impact of COVID-19 coronavirus, the Company underlines that the Group holds significant cash

reserves and over the past years proved their abilities in managing its cash position carefully and will continue

to do so.

ATLAS ESTATES LIMITED

STATEMENT OF ACCOUNTING POLICIES

The Group’s forecasts and projections have been prepared taking into account the economic environment and

its challenges and the mitigating factors referred to above. These forecasts take into account reasonably possible

changes in trading performance, potential sales of properties, favourable arrangements for the payment

timetable for the AMC performance fee and the future financing of the Group. They show that the Group will

have sufficient facilities for its ongoing operations.

While there will always remain some inherent uncertainty within the aforementioned cash flow forecasts, the

Directors have a reasonable expectation that the Company and the Group have adequate resources to continue

in operational existence for the foreseeable future. Accordingly, the Directors continue to adopt the going

concern basis in preparing the Company’s and consolidated financial statements for the year ended 31

December 2021.

The financial statements present the individual financial data of the Company for the year ended 31 December

2021. The financial information is prepared in Euro and presented in thousands of Euro (“€’000”). Atlas Estates

Limited also prepares separate consolidated financial statements, which incorporate the financial statements of

the Company and its subsidiaries up to 31 December 2021.

Foreign currencies

The functional currency of the Company and the presentation currency for the financial statements is Euro.

Transactions in foreign currencies other than the Company’s functional currency are recorded at the rates of

exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities

that are denominated in foreign currencies are translated at the rates prevailing on the balance sheet date. Non-

monetary items carried at fair value, which are denominated in foreign currencies, are translated at the rates

prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of

historical cost in a foreign currency are not re-translated.

Gains and losses arising on the settlement of monetary items and on the re-translation of monetary items are

included in the income statement for the year.

The following exchange rates were used in preparation of these financial statements:

Polish Zloty

Hungarian Forint

Romanian Lei

Bulgarian Lev

Closing rates

31 December 2021

4.5994

369.00

4.9481

1.95583

31 December 2020

4.6148

365.13

4.8694

1.95583

% Change

Average rates

Year 2021

4.5674

358.52

4.9204

1.95583

Year 2020

4.4448

351.17

4.8707

1.95583

% Change

Finance income

Interest-bearing loans receivable are initially recorded at fair value, net of direct issue costs, and are then

subsequently measured at amortised cost with interest being calculated using the effective interest rate method.

All lending income is recognised in the income statement in the year in which it is incurred.

Financial assets

The Company classifies its financial assets in the following categories: measured at amortised cost, measured

at fair value through profit or loss and measured at fair value through other comprehensive income. Classification

is performed on initial recognition and depends on the business model for managing of financial assets adopted

by the entity and on the characteristics of the contractual cash flows from such instruments

• Financial assets measured at fair value through profit or loss

As at 31 December 2021 and 2020 no financial assets at fair value through profit or loss were held by

the Company.

• Financial assets measured at amortised cost

ATLAS ESTATES LIMITED

STATEMENT OF ACCOUNTING POLICIES

A financial asset is measured at amortised cost if both of the following conditions are met:

− the asset is held within a business model whose objective is to hold assets in order to collect

contractual cash flows; and

− the contractual terms of the financial asset give rise on specified dates to cash flows that are solely

payments of principal and interest on the principal amount outstanding.

Loan receivable from subsidiary (note 8) and cash and cash equivalents (note 9) are classified as financial

assets measured at amortised cost.

Financial liabilities

a) Fair value through profit and loss

The Company does not have nor has it designated any financial liabilities as being at fair value through profit

and loss.

b) Amortised cost

Interest-bearing loans are initially recorded at fair value, net of direct issue costs, and are then subsequently

measured at amortised cost with interest being calculated using the effective interest rate method. Trade and

other payables are classified as financial liabilities measured at amortised cost (note 10).

Investments in subsidiaries

Investments in subsidiary companies are recognised initially at cost.

The carrying amounts of the investments are reviewed at each reporting date. If any indication of impairment of

the value of these assets exists, the recoverable amount of the asset is assessed.

The method applied to assign recoverable amount to the Company’s investments is fair value less costs to sell

and has been based on the property valuations assessed by independent experts and, where appropriate,

management. In assessing the value of each investment the Company has considered not only the asset value

recognised in the books of the individual entities but also the valuation amount of elements held at cost.

Substantially, this has resulted in the carrying values of investments and loans receivable from subsidiaries being

compared to the adjusted net asset value of the Group.

An impairment loss (or subsequent reversal) is recognised in the income statement whenever the carrying

amount of an asset exceeds its recoverable amount.

Loans receivable

Loans receivable are recognised initially at fair value and subsequently measured using the amortised cost

method. The carrying amounts of other loans receivable are reviewed at each reporting date. If any indication of

impairment of the value of these assets exists, the recoverable amount of the asset is assessed. An impairment

loss is recognised in the income statement whenever the carrying amount of an asset exceeds its recoverable

amount.

Trade receivables

Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course

of business. Trade receivables are recognised initially at the amount of consideration that is unconditional unless

they contain significant financing components, when they are recognised at fair value. The Company holds the

trade receivables with the objective to collect the contractual cash flows and therefore measures them

subsequently at amortised cost using the effective interest method.

As of 31 December 2021 the Company hold only other trade receivables (prepayments) (note 8).

Cash and cash equivalents

Cash and cash equivalents consist of cash balances, deposits held at banks and other short-term highly liquid

investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown

within bank loans in current liabilities on the balance sheet. Bank overdrafts that are repayable on demand and

which form an integral part of the Company’s cash management are included as a component of cash and cash

equivalents for the purpose of the statement of cash flows.

Trade payables

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the

effective interest method.

ATLAS ESTATES LIMITED

STATEMENT OF ACCOUNTING POLICIES

Treasury shares

The costs of purchasing Treasury shares are shown as a deduction against equity. The purchase or sale of own

shares does not lead to a gain or loss being recognised in the income statement.

Taxation

With effect from 1 January 2008, Guernsey's corporate tax regime has changed. From that date the exempt

company and international business regimes have been abolished as a consequence of which the Company is

treated as resident for tax purposes subject to 0% tax. These changes do not adversely affect the tax efficiency

of the AEL group corporate structure.

Dividends

Final dividend payments in respect of a financial year are recognised as a liability in the year in which the dividend

payment is approved by the Company’s shareholders. Interim dividends paid are recognised in the year in which

the payment is made.

Changes to accounting policies since the last period

The accounting policies adopted and methods of computation are consistent with those of the annual financial

statements for the year ended 31 December 2020.

The following standards and interpretations, issued by the IASB or the International Financial Reporting

Interpretations Committee (IFRIC), are also effective for the first time in the current financial year and have been

adopted by the Company with no impact on its individual results or financial position for the current reporting

period:

(a) Amendment to IFRS 16 Leases: COVID-19 Related Rent Concessions (applicable for annual periods

beginning on or after 1 June 2020);

(b) Amendments to IFRS 4 Insurance Contracts – Extension of the Temporary Exemption from Applying

IFRS 9 to 1 January 2023 (applicable for annual periods beginning on or after 1 January 2021);

and IFRS 16).

The following standards and interpretations issued by the IASB or IFRIC have not been adopted by the Company

as these are not effective for the current year. The Company is currently assessing the impact these standards

and interpretations will have on the presentation of its results in future periods; those that may have a material

impact on the financial statements are:

(a) Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37);

(b) Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16);

IAS 41);

(d) References to Conceptual Framework (Amendments to IFRS 3);

(e) Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2);

(f) Definition of Accounting Estimates (Amendments to IAS 8);

(g) Deferred Tax Related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS

12); and

(h) Amendment to IFRS 16 Leases: COVID-19-Related Rent Concessions beyond 30 June 2021

(applicable for annual periods beginning on or after 1 April 2021).

ATLAS ESTATES LIMITED

NOTES TO THE FINANCIAL STATEMENTS

VII. Notes to the Financial Statements

1. Financial risk management

1.1. Financial assets and financial liabilities

31 December 2021

31 December 2020

€’000

Note

Financial assets

Financial assets held at amortised cost

Loans receivable from subsidiaries

Cash and cash equivalents

277

417

375

507

Financial liabilities

Liabilities at amortized cost

Trade and other payables

(3,787)

(12,493)

Borrowings

(5,937)

(5,870)

(9,724)

(18,363)

1.2. Financial risk factors

The activities of the Company’s subsidiaries exposes the Group to a variety of financial risks: market risk (including

currency risk, price risk and cash flow interest rate risk), credit risk and liquidity risk. As a result, the Company is also

exposed to the same financial risks. The Company’s financial risks relate to the following financial instruments: loans

and receivables, cash and cash equivalents and trade and other payables. The accounting policy with respect to

these financial instruments is described above.

Risk management is carried out by the Property Manager under policies approved by the Board of Directors. The

Property Manager identifies and evaluates financial risks in close co-operation with the Group’s operating units. The

Board approves written principles for overall risk management, and is overseeing the development of policies

covering specific areas such as foreign exchange risk and interest-rate risk. The Property Manager may call upon

the services of a retained risk management consultant in order to assist with its risk assessment tasks.

Reports on risk management are produced periodically on an entity and territory level to the key management

personnel of the Group and of the Company.

(a) Market risk

(i) Foreign exchange risk

Through its subsidiaries, the Company operates internationally and is exposed to foreign exchange risk arising from

various currency exposures, primarily with respect to the Euro, Polish Zloty and Romanian Lei. Foreign exchange

risk arises from future commercial transactions, recognised monetary assets and liabilities and net investments in

foreign operations.

In the year covered by these financial statements the Group has not entered into any currency hedging transactions.

Foreign exchange risk is monitored and the cost benefits of any potential currency hedging transactions are reviewed

to determine their effectiveness for the Group.

The majority of the Company’s assets and liabilities are Euro-based, minimising the Company’s individual exposure

to foreign exchange risk. The tables below summarise the Company’s exposure to foreign currency risk. The

Company’s financial assets and liabilities at carrying amounts are included in the table, categorised by the currency

at their carrying amount.

ATLAS ESTATES LIMITED

NOTES TO THE FINANCIAL STATEMENTS

2021

€’000

GBP’000

Total’000

Loans receivable from subsidiaries

Cash and cash equivalents

277

Total financial assets

375

Trade and other payables

(9,596)

(128)

(9,724)

Total financial liabilities

(9,596)

(128)

(9,724)

Net financial assets / (liabilities)

(9,221)

(128)

(9,349)

2020

€’000

GBP’000

Total’000

Loans receivable from subsidiaries

Cash and cash equivalents

417

Total financial assets

507

Trade and other payables

(18,276)

(87)

(18,363)

Total financial liabilities

(18,276)

(87)

(18,363)

Net financial assets / (liabilities)

(17,769)

(87)

(17,856)

The sensitivity analyses below are based on a change in an assumption while holding all other assumptions constant.

In practice this is unlikely to occur and changes in some of the assumptions may be correlated – for example, change

in interest rate and change in foreign currency rates. The Company manages foreign currency risk on an overall

basis. The sensitivity analysis prepared by management for foreign currency risk illustrates how changes in the fair

value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.

If the euro weakened / strengthened by 10% against either of the Polish Zloty, Hungarian Forint or Romanian Lei,

with all other variables held constant, post-tax loss for the year would have remained the same (2020: post-tax loss

for the year would have remained the same).

(ii) Price risk

Through its subsidiaries, the Company is exposed to property price and property rentals risk. It is not exposed to the

market risk with respect to financial instruments as it does not hold any equity securities, other than its investment in

subsidiaries.

(iii) Cash flow and fair value interest rate risk

The Company’s interest rate risk arises from long-term receivables from subsidiaries. Loans issued at variable rates

expose the Company to cash flow interest rate risk.

The Company’s cash flow and fair value interest rate risk is periodically monitored by the Property Manager. The

Property Manager analyses its interest rate exposure on a dynamic basis. It takes on exposure to the effects of

fluctuations in the prevailing levels of market interest rates on its financial position and cash flows. Interest costs may

increase as a result of such changes. They may reduce or create losses in the event that unexpected movements

arise. Various scenarios are considered including refinancing, renewal of existing positions, alternative financing and

hedging. The scenarios are reviewed on a periodic basis to verify that the maximum loss potential is within the limit

given by management.

Trade and other receivables and payables are interest-free and have settlement dates within one year.

The sensitivity analyses below are based on a change in an assumption while holding all other assumptions constant.

In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated – for example,

change in interest rate and change in market values.

ATLAS ESTATES LIMITED

NOTES TO THE FINANCIAL STATEMENTS

An increase in 100 basis points in interest yields would result in a decrease in the post-tax profit for Company for the

year of €58 thousand (2020: decrease in the post-tax profit for Company for the year of €58 thousand). A decrease

in 100 basis points in interest yields would result in an increase in post-tax profit for the year of €58 thousand (2020:

increase in post-tax profit for the year of €58 thousand).

(b) Credit risk

The Company’s credit risk arises from cash and cash equivalents as well as credit exposures with respect to

outstanding receivables from subsidiaries (note 9). Credit risk is managed on a local and Group basis and structures

the levels of credit risk it accepts by placing limits on its exposure to a single counterparty, or groups of counterparty,

and to geographical and industry segments. Such risks are subject to an annual and more frequent review. Cash

transactions are limited to high-credit-quality financial institutions. The utilisation of credit limits is regularly monitored.

As at 31 December 2021, the Company had one major counterparty, Barclays PLC. Given that Barclays PLC is a

high-credit-quality financial institution, with a rating of A in 2021, as well as the short-term nature of those investments,

the credit risk associated with cash and cash equivalents is estimated as low. The maximum exposure of the

Company in respect of cash and cash equivalents and outstanding receivables is equal to their gross value at the

balance sheet date.

Prudent liquidity risk management for the Company implies maintaining sufficient cash, the availability of funding

through an adequate amount of committed credit facilities as well as availability of cash reserves in the Group (which

can be distributed to the Company). Additionally within trade payables there is a performance fee payable to the

Property Manager (as disclosed in note 13a). The payment terms of this fee is subject to consultation between the

parties, and the actual payment will be subject to available cash flows of the Group.

The Company’s liquidity position is monitored on a weekly basis by the management and is reviewed quarterly by

the Board of Directors.

Below there is summary of maturity analysis of undiscounted cash flows for financial liabilities held by the Company.

2021

2020

€’000

Financial liabilities – non-current borrowings

Over 5 years

(7,552)

(8,018)

(7,552)

(8,018)

Financial liabilities – current

Trade and other payables – maturity within one year

(3,787)

(12,493)

(3,787)

(12,493)

1.3. Capital risk management

The Directors consider capital to consist of the Group’s debt and equity. The Company’s objectives when managing

capital are to safeguard the Company’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 Company may adjust the amount of dividends paid to

shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

1.4. Segmental reporting

The Company is only a holding company and therefore the results reported in the income statement and the

statement of financial position are also in accordance with the segmental reporting requirements.

2. Critical accounting estimates and judgements

Estimates and judgments are continually evaluated and are based on historical experience as adjusted for current

market conditions and other factors.

ATLAS ESTATES LIMITED

NOTES TO THE FINANCIAL STATEMENTS

Impairment of investments in the Company’s subsidiaries

In assessing the carrying value of the Company’s investments in its subsidiaries, the management consider the

adjusted net asset value of the Group. The adjusted net asset value takes the basic net assets as per the consolidated

financial statements and adjusts these for the fair value of the property portfolio, which is not included in the reported

balance sheet due to the accounting standard requirements. To calculate the fair value of the property portfolio the

Property Manager engages qualified experts to assist in its assessment. A valuation of the entire property portfolio

is carried out on an annual basis by external and internal experts. The valuations are prepared in accordance with

generally accepted international valuation methods and procedures. Any assumptions made by the valuer are

reviewed by the Board and the Property Manager for their reasonableness.

3. Administrative expenses

2021

2020

€’000

Audit and tax services

- Fees payable to the Group’s auditor for the audit of the Company and its consolidated

financial statements

(139)

Fees payable to the Group’s auditor for the other services:

- Non audit services – interim reviews

(45)

Performance and management fee (note 13a)

(2,046)

(2,554)

Legal and other professional fees

(166)

(128)

Insurance cost

(12)

Staff costs

(65)

(62)

Administrative expenses

(2,473)

(2,940)

4. Other operating income/ (expenses)

2021

2020

€’000

Gain on settlement agreement between AEL and AMC

10,000

Reversal of impairment of investments in subsidiaries (note 7)

7,660

Other operating income

17,660

2021

2020

€’000

Impairment of investments in subsidiaries (note 7)

(19,987)

Other operating expenses

(19,987)

5. Finance income and finance costs – net

2021

2020

€’000

Bank and other similar charges

(2)

Interest payable on loan received from subsidiary (note 13b)

(67)

(74)

Finance costs

(69)

(76)

Interest receivable on shareholder loans (note 13c)

Finance income

Finance income, excluding foreign exchange – net

(68)

(75)

Realised foreign exchange (losses)/ gains

(6)

Other losses – foreign exchange

(6)

Finance income, including foreign exchange – net

(74)

(73)

ATLAS ESTATES LIMITED

NOTES TO THE FINANCIAL STATEMENTS

6. Earnings per share

Basic earnings per share is calculated by dividing the profit after tax attributable to ordinary shareholders by the

weighted average number of ordinary shares outstanding during the period.

Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below:

Year ended 31 December 2021

Loss

Weighted average

number of shares

Per share

amount

Continuing operations

€’000

Eurocents

Basic EPS

Profit attributable to equity shareholders of the Company

15,113

46,852,014

32.3

Diluted EPS

Adjusted profit

15,113

46,852,014

32.3

Year ended 31 December 2020

Loss

Weighted average

number of shares

Per share

amount

Continuing operations

€’000

Eurocents

Basic LPS

Loss attributable to equity shareholders of the Company

(23,000)

46,852,014

(49.1)

Diluted LPS

Adjusted loss

(23,000)

46,852,014

(49.1)

7. Investments in subsidiaries

2021

2020

€’000

Shares in subsidiary undertakings

Cost

At beginning of period

216,281

217,681

Decrease

(1,050)

(1,400)

At the end of the period

215,231

216,281

Impairment

At beginning of period

(78,889)

(58,902)

Impairment

(19,987)

Reversal

7,660

At the end of the period

(71,229)

(78,889)

As at 31 December

144,002

137,392

Investments in subsidiary undertakings are stated at cost. Cost is recognised as the nominal value of the company’s

shares and the fair value of any other consideration given to acquire the share capital of the subsidiary undertakings.

A list of principal subsidiary undertakings and joint ventures is given in note 17.

The Company has carried out an annual impairment review of the carrying values of investments and loans

receivable from subsidiaries. The Company considers the best indication of value of investments and loans to

subsidiaries to be the valuation reports produced by the independent qualified experts.

It should be underlined that the valuation of one of the Group’s key assets i.e. Hilton hotel, owned by the Company’s

subsidiary as of 31 December 2021 was reported by Emmerson Evaluation Sp. z o.o. with degree of uncertainty :

“The Covid 19 pandemic announced by the World Health Organization (WHO) on 2020-03-11, had a strong impact

on global financial markets. Restrictions have been placed on travel and the activities of certain industries. This is a

situation that the real estate market has never encountered before. The valuation is based on historical data and

takes into account the impact of the pandemic on the real estate market, which was identifiable in the first phase of

the phenomenon. Due to the still uncontrollable development of the pandemic and the recurring restrictions and lock

downs, this valuation has been prepared with a high degree of uncertainty as to the future price development in the

ATLAS ESTATES LIMITED

NOTES TO THE FINANCIAL STATEMENTS

real estate market, including commercial real estate, to which the valued property belongs. A post-pandemic

revaluation is recommended to verify the impact of the current situation on the value of the property.”

The inputs to the valuation of the hotels include the forecast of performance of the hotel that has been prepared

based on a number of assumptions including occupancy levels and average room rates which are affected by the

uncertainty of the continued impact of Covid-19.

In 2021: €7.7 million was recognised in other operating income in respect of reversal of impairment of investment in

subsidiaries.

In 2020: €20.0 million was recognised in other operating expenses in respect of impairment of investment in

subsidiaries.

The method applied to assign value to the company’s investments is fair value less costs to sell and has been based

on the property valuations assessed by independent experts and, where appropriate, management. In assessing the

value of each investment, the Company has considered not only the asset value recognised in the books of the

individual entities but also the valuation amount of elements held at cost. Substantially, this has resulted in the

carrying values of investments and loans receivable from subsidiaries being compared to the adjusted net asset

value of the Group. The Adjusted Net Asset Value of the Group has increased from €119.5m to €134.7m which

facilitates an impairment reversal of €7.7m such that the Company’s net assets match and do not exceed the Group’s

Adjusted Net Assets.

8. Trade and other receivables

2021

2020

€’000

Amounts falling due within one year:

Other third party receivables (prepayments)

As at 31 December

Non-current – loans receivable from subsidiaries:

Loans receivable due from subsidiary (Atlas Estates Antilles BV) (note 13c)

As at 31 December

All trade and other receivables are financial assets, with the exception of prepayments and accrued income.

Loan receivable from subsidiary is interest bearing, with interest charged at EURIBOR plus an agreed margin. The

loan has an agreed maturity date in 2024.

The carrying amounts of trade and other receivables are denominated in the following currencies:

2021

2020

€’000

Euro

Other

The maximum amount of exposure of the Company to credit risk at the balance sheet date approximates the total of

loans receivable from subsidiaries. The Company applies the IFRS 9 simplified approach to trade receivables for

measuring expected credit losses. The Company has determined that the current loss allowance is €nil

(2020: €nil).

9. Cash and cash equivalents

2021

2020

€’000

Cash and cash equivalents

277

417

277

417

ATLAS ESTATES LIMITED

NOTES TO THE FINANCIAL STATEMENTS

10. Trade and other payables

2021

2020

€’000

Current

Amounts due to Atlas Management Company Group in respect of management

and performance fee (note 13a)

(3,520)

(12,254)

Trade payables

(267)

(239)

(3,787)

(12,493)

Non-current

Loan from subsidiary- HGC Gretna Investements Sp. z o.o. Sp. J. (note 13b)

(5,937)

(5,870)

(5,937)

(5,870)

Total trade and other payables

(9,724)

(18,363)

Loan payable to the subsidiary is interest bearing, with interest charged at EURIBOR plus an agreed margin. This

loan has agreed maturity date in 2045.

11. Share capital account

Number of

Ordinary shares -

Total

share capital

account

€’000

Authorised

Ordinary shares of €0.01 each

100,000,000

1,000

Issued and fully paid

As at 31 December 2021 and 2020

46,852,014

6,268

During 2007, 3,470,000 ordinary shares of €0.01 each with aggregate nominal value of €34,700 were purchased and

held in Treasury. There are no issued and unpaid shares in 2021 and 2020. See more details in Directors’ Report.

12. Other distributable reserve

The Other Distributable Reserve includes amounts relating to cancellation of share premium, shares bought back

and cancelled or held in Treasury, and dividends paid.

€’000

At 31 December 2020 and 2021

194,817

13. Related party transactions

a) Key management compensation

31 December 2021

31 December 2020

€’000

Fees for non-executive directors

The Company has appointed AMC, a company under common control, to manage its property portfolio. In

consideration of the services provided, AMC charged a management fee of €2.0 million for the year ended

31 December 2021 (2020: €2.5 million). Under the agreement, AMC is also entitled to a performance fee based

on the increase in value of the properties over the year. The Company has not accrued a performance fee for

the year ended 31 December 2021 and 31 December 2020, as disclosed in the Remuneration Report.

As of 31 December 2021, €3.5 million included in current trade and other payables was due to AMC

(2020: €12.2 million). In 2021, €0.7 million was paid to AMC in respect of management and performance fees

(in 2020: €1.0 million). On 21 April 2021 AEL and AMC have agreed to decrease by €10.0 million the outstanding

balance resulting from unpaid performance fees.

b) The loan payable to the subsidiary (HGC Gretna Investments Sp. z o.o Sp. J.) is interest bearing and the

Company was charged €67 thousand as interest (2020: €74 thousand as interest). As at 31 December 2021 the

ATLAS ESTATES LIMITED

NOTES TO THE FINANCIAL STATEMENTS

loan balance including interest due to subsidiary amounted to €5.9 million (as of

31 December 2020: €5.9 million).

c) The loan receivable from the subsidiary (Atlas Estates Antilles B.V.) is interest bearing and the Company

charged €0.9 thousand (2020: €0.8 thousand) as interest. As at 31 December 2021, the loan balance including

capitalised interest due from subsidiary amounted to €97.4 thousand (2020: €89.9 thousand).

14. Post balance sheet events

There are no significant post balance sheet events that require disclosure except for the event described below:

a. The effects of the Russian invasion of Ukraine that began on February 24, 2022 and its potential impact on

the Company and the Group and the assumption that the Company and the Group will continue as going

concern is disclosed in VI. Statement of Accounting Policies (Basis of preparation).

b. on 4 March 2022 AEL and AMC reached an agreement based on which basic management fee amounting

to €2.3 million for the year ended 31 December 2021 was reduced to € 345 thousand. Additionally the

parties confirmed that no performance fee is due in respect of 2021.

c. On 16 March 2022, the Group acquired 100% shares in Baroja Sp. z o.o., an entity owing leased rights to

the underground parking located next to Atas Tower in Warsaw.

d. On 11 April 2022 the Group completed the sale agreement (described in note 15 of the consolidated

financial statements) of its investment in D.N.B Victoria Tower.

15. Significant Agreements

In 2020 and 2021, the Company did not enter into any significant agreements.

16. Other items

16.1. Information about court proceedings

The Company is not aware of any proceedings instigated before a court, a competent arbitration body or

a public administration authority concerning liabilities or receivables of the Company, or its subsidiaries, whose joint

value constitutes at least 15% the Company’s net equity.

There are no other material legal cases or disputes that are considered material to the consolidated financial

information that would either require disclosure or provision within the financial information.

16.2. Financial forecasts

No financial forecasts have been published by the Company in relation to the year ended 31 December 2021.

17. Principal subsidiary companies and joint ventures

The table below lists the current operating companies of the Group. In addition, the Group owns other entities which

have no operating activities. On 10 February 2021 the Group established a joint venture company (Atlas MG Sp. z

o.o.) together with PL Properties Sp. z o.o. (Magnus Group).

Country of

incorporation

Name of subsidiary/

joint venture entity

Status

Percentage of nominal

value of issued shares

and voting rights held

by the Company

Holland

Atlas Estates Cooperatief U.A.

Holding

100%

Holland

Atlas Estates Investment B.V.

Holding

100%

Holland

Atlas Projects B.V.

Holding

100%

Guernsey

Atlas Finance (Guernsey) Limited

Holding

100%

Curacao

Atlas Estates Antilles B.V.

Holding

100%

Cyprus

Fernwood Limited

Holding

100%

Poland

AEP Sp. z o.o.

Management

100%

Poland

AEP Sp. z o.o. 2 SKA

Holding

100%

Poland

AEP Sp. z o.o. 3 SKA

Holding

100%

Poland

Platinum Towers AEP Sp. z o.o. SKA

Development

100%

Poland

Zielono AEP Sp. z o.o. SKA

Development

100%

Poland

Properpol Sp. z o.o.

Investment

100%

ATLAS ESTATES LIMITED

NOTES TO THE FINANCIAL STATEMENTS

Country of

incorporation

Name of subsidiary/

joint venture entity

Status

Percentage of nominal

value of issued shares

and voting rights held

by the Company

Poland

Atlas Tower Sp. z o.o. (former name: Atlas Estates

(Millennium) Sp. z o.o.)

Investment

100%

Poland

Atlas Estates (Sadowa) Sp. z o.o.

Investment

100%

Poland

Atlas Estates (Kokoszki) Sp. z o.o.

Investment

100%

Poland

Capital Art Apartments AEP Sp. z o.o. Sp. j.

Development

100%

Poland

HGC Gretna Investments Sp. z o.o. Sp. j.

Hotel operation

100%

Poland

Mantezja 3 Sp. z o.o.

Hotel operation

100%

Poland

HPO AEP Sp. z o.o. Sp. j.

Other

100%

Poland

Atlas Estates (Cybernetyki) Sp. z o.o.

Development

50%

Poland

Atlas MG Sp. z o.o.

Development

50%

Poland

Le Marin Sp. z o.o.

Other

100%

Poland

Atlas Estates (Przasnyska 9) Sp. z o.o.

Development

100%

Poland

La Brea Management Sp. z o.o.

Other

100%

Poland

CAA Finance Sp. z o.o.

Development

100%

Poland

Gretna Investments Sp. z o.o.

Holding

100%

Poland

Gretna Investments Sp. z o.o. 4 SKA

Holding

100%

Poland

Gretna Investments Sp. z o.o. 4 SKA

Holding

100%

Poland

Atlas Estates (Wilanów) Sp. z o.o. (former name:

Negros 3Sp. z o.o.)

Other

100%

Hungary

CI-2005 Investment Kft.

Other

100%

Hungary

Atlas Estates (Moszkva) Kft.

Other

100%

Romania

World Real Estate SRL

Investment

100%

Romania

Atlas Solaris SRL

Investment

100%

Romania

D.N.B. - Victoria Towers SRL*

Hotel operation

100%

Bulgaria

Immobul EOOD

Investment

100%

Luxembourg

Gretna SCSP

Holding

100%

Luxembourg

Residential SCSP

Holding

100%

Luxembourg

Gretna Projects Sarl

Holding

100%

Luxembourg

HPO SCSP

Holding

100%

Luxembourg

Residential Projects Sarl

Holding

100%

* An agreement was signed in 2021 to sell this entity (see note 15 to the consolidated financial statements).

18. Ultimate Parent Company and Ultimate Controlling Party

The Company’s immediate parent company is Fragiolig Holdings Limited, a company incorporated in Cyprus. The

ultimate parent company is Revaia Ltd, a company incorporated in Israel and the ultimate controlling party by a virtue

of ownership is Mr Ron Izaki.